Tax Credit Scholarship bill signed into law
in bipartisan ceremony at the Capitol

Thursday, April 22, 2010

TALLAHASSEE — A bill that expands a scholarship program for low-income schoolchildren was signed into law today in a ceremony that brought together Republicans, Democrats and a civil rights icon.

The bill, SB 2126, passed the House April 8 by a 95-23 margin that included 20 of the 43 Democrats present. It passed the Senate March 24 on a 27-11 vote that included four Democrats. A majority of the Black Caucus and nearly the entire Hispanic Caucus voted in support.

“The Florida Tax Credit Scholarship Program offers families an invaluable opportunity to choose a learning environment that gives their children the best chance for success,” Gov. Charlie Crist said. “I am confident Florida will continue to provide more educational opportunities and options with the partnership of the business community through great programs like this.”

Gov. Crist has repeatedly praised the bipartisan support of the Florida Tax Credit Scholarship, which currently serves 27,700 low-income students at 1,017 private schools. During a March 24 rally in front of the Capitol where 5,500 parents, students and educators urged passage of SB 2126, Crist told the crowd, “There’s no partisan politics about kids. As long as we put the children first, we cannot get it wrong.”

The bipartisan support was evident at today’s signing ceremony. Among the guests were Democrats Al Lawson and Gary Siplin of the Senate and Mack Bernard of the House, who were joined by Republican bill sponsors Rep. Will Weatherford and Sen. Joe Negron.

“I have witnessed the leadership in these schools and they are helping these kids become the next generation,” said Lawson, the Senate Democratic leader, during the ceremony.

The event also featured the presence of a civil rights icon in Florida. H.K. Matthews, who has fought to strengthen the Florida Tax Credit Scholarship for the choices it provides to poor families, said that Crist has contributed to what Matthews believes is a natural extension of the civil rights movement.

“I have devoted my life to the cause of social justice, and this scholarship promises equal educational opportunities to our most at-risk students, regardless of the financial circumstances they come from,” Matthews said. “It is heartening to see my Democratic friends and my friends in the Black Caucus embrace that as well. We all have risen above the partisan divide, and our children will benefit.”

The bill takes two new steps with accountability: requiring individual schools to disclose standardized test score gains if they have at least 30 tested scholarship students, and requiring individual schools to file a financial report by a certified public accountant if they receive at least $250,000 in scholarship revenue. It
indexes the maximum scholarship to 80 percent of the base legislative formula for each public school student— or roughly half the total cost per public school student. (The increase would be phased in over at least six years.) And it increases the cap on tax credits from $118-million to $140-million next year, allowing it to increase by 25 percent in any future year in which 90 percent of the cap is reached.

The eight-year-old scholarship program provides educational options for students from households whose income meets federal guidelines for free and reduced-price lunch. Currently, companies receive a dollar-for-dollar tax credit on their corporate income or insurance premium tax liability for money they contribute to state-approved nonprofit scholarship funding organizations. Those organizations, in turn, must spend at least 97 percent of that money directly on scholarships. The legislation signed into law today adds severance tax.

HOW FAMILIES CAN APPLY:

To qualify for the scholarship, a student must:

1. Be entering kindergarten or first grade or have attended public school the prior year

2. Have a household income meeting the threshold for free or reduced-price lunch, which is 185 percent of the federal poverty guideline. For the 2010-11 school year, that computes to a current monthly income of, for instance, $2,247 for a household of three.

Applications are already being accepted for the 2010-11 school year. To apply, visit www.stepupforstudents.org or call 1-877-735-SUFS.

PROVISIONS OF SB 2126:

Academic transparency: Publicly disclose the test gains of any school with at least 30 tax-credit students whose norm-referenced scores are currently counted under law (grades 3-10 with a prior-year score). Thirty also is the threshold for public school grades and for counting the scores of economically disadvantaged children under the federal No Child Left Behind Act.

Financial accountability: Require a financial report from a certified accountant each year for any school with at least $250,000 in scholarship funds the previous year. The $250,000 threshold is half the level at which the state requires audits for nonprofits receiving state aid.
Scholarship amount: Set the maximum Tax Credit Scholarship, now $3,950, at four-fifths of the state FEFP (Florida Education Finance Program) formula per-student — or roughly half the total cost of a public school student. The change would be made incrementally over at least six years, from 60 to 64 to 68 to 72
to 76 to 80 percent.

Regulatory compliance: Empower the education commissioner to remove or deny from the Tax Credit program any school operator that has a previous history of operating schools in a manner contrary to public health, welfare or safety.

Program cap: Increase the cap on tax-credit contributions from $118-million to $140-million next year and allow it to grow by 25 percent after 90 percent of the cap is reached in future years. The scholarship would remain as the only major state education option with a cap.

Tax Credit Base: Add three new sources to the base of dollar-for-dollar state tax credits: alcoholic beverage excise tax; direct pay self-accrual sales tax, and the oil and gas severance tax.

Scholarship renewals: Reduce the scholarship as household income increases. Students receive a full scholarship as long as income is no more than 200 percent of the federal poverty level, up to a 75 percent scholarship if income rises above 200 but less than 215 percent, get 50 percent if income is between 215 and 230 percent, and lose eligibility if income exceeds 230 percent. The income requirement to enter the program would remain at no more than 185 percent.

We have our 2010 web page up and running with all the coverage and commentary to date and various studies and background information. This page will be constantly updated.

http://scholarshiplegislation.sufs.org

LEGISLATIVE FACTSHEET

HB 1009 by Rep. Will Weatherford: Florida Tax Credit Scholarship

On April 12, 2007, more than 4,000 students, parents and educators from around the state marched to the capital to support Tax Credit Scholarships.

HB 1009 PROVISIONS, BRIEFLY
Accountability, stability, leveling the playing field

Academic Transparency: Publicly disclose the test gains of any school with at least 30 tax-credit students whose normreferenced scores are currently counted under law (grades 3-10 with a prior-year score). Thirty is also the threshold for public school grades and for counting the scores of economically disadvantaged children under the federal No Child Left Behind Act. This would take the current law down to the school level.

Financial Accountability: Require a financial report from a certified accountant each year for any school with at least $250,000 in scholarship funds the previous year. The report is required to provide information on basic accounting practices and track the use of scholarship money, and misuse of money would be reported to the state Department of Education.

Regulatory Compliance: Empower the education commissionerto remove or deny from the Tax Credit program any school operator that has a previous history of operating schools in a manner contrary to public health, welfare or safety. This is intended to protect against any owner who would attempt to reconstitute a new school after being suspended or revoked by the state.

Scholarship Amount: Set the maximum Tax Credit scholarship, now $3,950, at four-fifths of the state FEFP (Florida Education Finance Program) formula per-student — or roughly half the total cost of a public school student. The scholarship is currently the lowest-cost education option in the state and has lost ground to perstudent funding. The change would be made incrementally over four years, from 65 to 70 to 75 to 80 percent. The average tuition and fees for Tax-Credit participating schools this year is $6,335.

Program Cap: Allow the annual cap on tax-credit contributions to grow by 25
percent after 90 percent of the cap is reached in the prior year. The change would help the program, like McKay Scholarships and charter schools, grow or shrink according to student demand.

Tax Credit Base: Add three new sources to the base of dollar-for -dollar state tax credits: alcoholic beverage excise tax, direct pay sales and use tax, and the oil and gas severance tax. These would allow more companies to participate in the program, but would not increase or decrease the bottom line of the program. The total amount of potential tax credits is determined by the program cap.

Scholarship Renewals: Reduce the scholarship as household income increases. Students receive a full scholarship as long as income is no more than 200 percent of the federal poverty level, up to a 75 percent scholarship if income rises above 200 but less than 215 percent, get 50 percent if income is between 215 and 230 percent, and lose eligibility if income exceeds 230 percent. The income requirement to enter the program would remain at no more than 185 percent.

AN INTRODUCTION
Leveling the playing field for the poorest, lowest performing

Eight years have passed since the Florida Tax Credit Scholarship was created to provide options for low-income students in grades K-12, and the program has compiled a solid record of financial and regulatory fitness, academic merit and parental support.

Last year, the scholarship program served 24,871 low-income students in 1,002 private schools. Three-fourths of these students were of color, three-fifths from single-parent homes, and the average household of four income was $25,400.

In the past year, a state-contracted researcher reported that the program attracts the poorest and the lowest-performing students from their previous public schools. An analysis of standardized test scores showed these same students were keeping pace with test-takers from all income levels across the nation. A Friedman Foundation survey found that parents in the program were overwhelmingly satisfied with their children’s schools. And a state legislative agency concluded the program saved taxpayers $39-million a year.

With that beginning as the backdrop, the Florida Tax Credit Scholarship is ready in 2010 to take the program to the next level. That next step is intended to bring more accountability, both financially and academically, and to provide financial stability for the families and schools on the program.

The point of this program is to provide learning options for the neediest children in public education, and the journey so far has been immensely rewarding. There are certainly no magic solutions to helping children who live a meager existence, which is why we see ourselves as partners with public schools. We seek to help public education fulfill the promise of equal opportunity.

— John Kirtley
Chairman, Step Up For Students
Step Up is a nonprofit organization that oversees Tax Credit Scholarships

HOW THE SCHOLARSHIP STACKS UP
The scholarship vs. public school per-student spending

The maximum Tax
Credit scholarship in 2009-10 is $3,950, ranking it lower than any other K-12 public education program in Florida.

The total average public school expenditure per student, which includes local, state and federal sources, was $8,868 in the 2007-08 school year (the most recent available). The total revenue per student, which also includes classroom construction and capital costs, that same year was $11,017. That’s three times more than the scholarship. The scholarship is also only about two-thirds the amount being spent this year on virtual instruction.

Source: Financial Profiles of Florida School Districts, 2007-08 Financial Data Statistical Report, April 2009, Florida Department of Education, Office of Funding and Financial Reporting. Full report at: http://www.fldoe.org/ fefp/pdf/07-08profiles.pdf

HOW THE SCHOLARSHIP STACKS UP
The scholarship is losing ground to public school spending

The Tax Credit scholarship has lost ground to perstudent spending in public schools. When first enacted, it represented 55 percent of public school perstudent operational spending and 41 percent of overall spending. In 2007-08, the most recent year for which full financial data is available, it had dropped to 42 percent of the per-student operational amount and 33 percent of overall spending. Compared to the Florida Education Finance Program formula, it has dropped from 67 percent in 2002-03 to 57 percent in 2009-10. Source: Financial Profiles of Florida School Districts, 2007-08 Financial Data Statistical Report

The scholarship is far below high-poverty school spending

The comparison to average public school spending can be misleading. That’s because the Tax Credit scholarship serves only students who qualify for free and reduced lunch, and public schools spend more to educate those students. This chart compares per-student program costs in 2007-08 of schools with 75 percent or more of their students on free and reduced lunch and those with 25 percent or fewer. The difference is $2,152. Source: Florida School Indicators
Report, Per Pupil Expenditures, 2007-08.

The gap between the scholarship and tuition keeps growing

The growing gap between the Tax Credit scholarship and the tuition and
fees at participating private schools is one of the single greatest threats to the
program. The target for this program is economically disadvantaged children,
and their families are the least likely to be able to afford rising out-of-pocket
costs. Remarkably, in 2008-09, these families spent an average of $1,000 out
of pocket to cover the gap. That’s $1,000 for families whose household of four income was $25,400. Because the maximum scholarship has been raised only twice in the first eight years and private school tuitions have been increasing to keep pace with expenses, the gap keeps growing. That gap is pricing poor families out of this option, a result that runs counter to the underlying intent of the program. Source: Step Up For Students 2009-10, Database, Reported and Verified School Tuitions and Fees

TAX CREDIT PROGRAMS IN OTHER STATES
Florida has the most accountability, least administrative cost

Of the seven state Tax Credit Scholarship programs, Florida is poised to become the most academically and financially accountable program in the nation. With passage of the bill, Florida would be the only state with a standardized testing equirement that reports academic gain scores of participating students at both a state and school level. It also would be the only state with a financial reporting requirement for individual schools. Florida already operates with the
smallest administrative cost. Scholarship organizations are allowed under law to use no more than 3 percent of the contributions for administration. Every other state program allows at least 10 percent. The administrative cost in Florida is to process applications, verify family incomes, verify school qualifications and tuitions, solicit contributions, and write more than 25,000 scholarship checks quarterly. Source: School Choice Yearbook, 2008-09, Alliance for School Choice

A SNAPSHOT OF THE TAX CREDIT PROGRAM
The typical student …

Lives near poverty: The average household income of four for recipients in 2008-09 was $25,400, which is only 20 percent above the federal poverty line.
The income threshold for free or reduced lunch in public schools is 185 percent of poverty.

Is black or Hispanic: In 2008-09, 39 percent of students were black and 25 percent Hispanic. Another 12 percent identified as “multiracial” or in no category. About 23 percent were white. Lives with one parent: Sixty percent of the scholarship children are from single-parent households.

Has struggled academically: A state-commissioned researcher looked at the FCAT scores of students who left their public schools for the scholarship option and reported in June that: “Program participants are more likely to come from lower-performing public schools prior to entering the program. In addition, they tend to be among the lowest-performing students in their prior school, regardless of the performance level of their public school.”

The typical school …

Scholarship enrollment has grown by an 18.7 percent annual average in the past five years and is already at 27,600 in 2009-10.

Is small in size: In 2008-09, the average total enrollment was 170 students.

Serves mostly private-paying students: Of the 988 participating
private schools last year, Tax Credit Scholarship students made up an average of 14 percent of the total enrollment. Only 32 of the 988 schools served more than 100 Tax Credit students. Serves elementary students: Last year, 42 percent of all scholarship students were in grades K-2 and 69 percent were in grades K-5.

Is connected with a faith-based institution: Eighty-one percent of
the schools in 2008-09 were faith-based. The 118 Catholic schools
represented the largest single group.

INDEPENDENT EVALUATIONS

UNIVERSITY OF FLORIDA REPORT ON TEST SCORES AND ACADEMIC PERFORMANCE - JUNE 2009

Scholarship students are the poorest and lowest performing students
from the public schools they leave. “Scholarship participants have significantly poorer test performance in the year prior to starting the scholarship program than do non-participants. ... These differences are large in magnitude and are statistically significant, and indicate that scholarship participants tend to be considerably more disadvantaged and lower-performing than their non-participating counterparts.”

In 2007-08, scholarship students kept pace on norm-referenced tests with all students of all income levels nationally. The typical scholarship student scored at the 45th percentile in reading and 46th percentile in math on the Stanford Achievement Test, and managed to achieve the same annual academic gain as all test-takers nationwide. “It is important to note,” the report stated, “that these national comparisons pertain to all students nationally, and not just low-income students.”

? Issued by researcher David Figlio, under contract with the state DOE. Full report at http://www.floridaschoolchoice.org/information/ctc/files/figlio_report_2009.pdf

FLORIDA OFFICE OF PROGRAM POLICY ANALYSIS AND GOVERNMENT ACCOUNTABILITY - DEC. 2008

The scholarship program saved taxpayers $38.9-million in 2007-08.
“While the program reduces the amount of corporate tax revenues received by the state, it produces a net fiscal benefit. This occurs because state education spending for students who receive scholarships is reduced by more than the amount of revenue lost.”

The scholarship program will continue to save taxpayers money.
“We estimate that in Fiscal Year 2007-08, taxpayers saved $1.49 in state education funding for every dollar loss in corporate income tax revenue due to credits for scholarship contributions. Expanding the cap on tax credits would produce additional savings if there is sufficient demand for the scholarships.”

? Issued by OPPAGA, under a legislative directive in 2008. Full report is available at http://www.oppaga.state.fl.us/Summary.aspx?reportNum=08-68

UNIVERSITY OF FLORIDA REPORT ON TEST SCORES AND ACADEMIC PERFORMANCE - JUNE 2009

This document was prepared by Step Up For Students, a nonprofit scholarship funding organization providing Tax Credit Scholarships to low-income students.
Contact: Jon East, research director, Step Up For Students, 337 S. Plant Ave., Tampa, FL 33606; 813-258-2700, ext. 232, jeast@stepupforstudents.org

FRIEDMAN FOUNDATION SURVEY OF PARENTAL SATISFACTION - AUGUST 2009

Of surveyed parents in the scholarship program, 97 percent said they were “satisfied” or “very satisfied” with their child’s academic progress.

Survey found that 80 percent were “very satisfied” with both their child’s academic progress and the individual attention their child receives at the scholarship school. “The opinions of the parents are clear,” said Friedman president Robert Enlow. “They appreciate the opportunities given their children under this program, and they appreciate the options that the program gives them.”

Full report at http://www.friedmanfoundation.org/downloadFile.do?id=383