Are current Indiana Scholarship Granting Organizations following the law?
Indiana legislators should investigate and assure citizens and taxpayers that the law is being followed before investing another $10 million dollars of public tax money in SGO's in the new 2-year budget. Governor Pence and the House budget want to hike the SGO budget from $7.5 million to $12.5 million each year for the next two years, with an escalator clause to go even higher.
Here are the reasons for the questions about whether they are operating within the law and the intentions of the General Assembly:
- SGO's are required by law to limit "administrative costs" to 10% (IC 20-51-3-3). Before a 2013 amendment, the legal requirement was to spend 90% of the donations on scholarships. The intent is clear that all but 10% of the donations should be used for scholarships.
- In 2013-14, the four SGO's combined received contributions of $16.1 million, according to a summary report on the IDOE website prepared August 25, 2014. "Administrative costs" of 10% would be expected at most to be $1.61 million. That would leave $14.5 million to be given out as scholarships.
- The actual amount the four SGO's reported giving out as scholarships was $11.8 million, which is short of the $14.5 million expectation by $2.7 million.
Here are additional questions that must be answered by the General Assembly before entrusting SGO's with an enormous 67% increase, from $7.5 million to $12.5 million per year:
- Are the SGO's keeping the $2.7 in the bank to give out next year or did they overspend the "administrative costs"?
- If they claim they are keeping that much money in reserve for the future, does the General Assembly approve of their delaying $2.7 million in unused scholarships? Haven't SGO's used $1.35 in public money for tax credits to raise that money? Shouldn't they turn the money around faster and get it to students as intended?
- Before any additional money goes for this purpose, shouldn't timelines and guidelines be tightened to guarantee taxpayers that their tax money has been handled appropriately?
- Since having a previous SGO scholarship became in 2014-15 the biggest path for voucher eligibility, who is monitoring the SGO program that is now the biggest reason vouchers are expanding among students who have always been in private schools?
Keeping $2.7 million is a lot to have in reserve, if that is where the money is now sitting. From the very brief August 1st reports that are required from SGO's, it is hard to know if they have gone over the 10% figure or not. It is certainly clear the original legislative intent of $14.5 for scholarships did not happen. It is also clear that the $2.7 million that may be sitting in the SGO bank accounts cost the taxpayers 50% in tax credits, or $1.35 million.
That's a high taxpayer cost to pay for money that is sitting idle, and sitting idle is the nicest interpretation of what is happening. If it has been spent on "administrative costs" beyond the 10%, they are breaking the law.
We should all ask legislators to clear up these questions before any additional money is handed over to SGO's for tax credit scholarships.
As you discuss this concern with Senators for the budget debate, don't forget to contact Senators on the Education Committee to oppose HB 1638 as they vote this Wednesday, March 25th. HB 1638 would give appointed members of the State Board of Education new and unprecedented power to take over an entire school district from its elected school board. That move is over the top and must be stopped in the Senate.
Indiana School Scholarship Tax Credit Program Report
The full one-page IDOE report on the last three years of the SGO program, dated August 25, 2014, is attached.
The numbers in the section above are totals for the most recent year, 2013-14, for the four SGO's that reported data.
Another way to review the data is to look at each SGO separately.
Totals for the three years reported (2011-12, 2012-13 & 2013-14) for each SGO are as follows:
The Institute for Quality Education received $14.0 million in contributions in three years and awarded $9.2 million in scholarships, which is 66% of contributions. Taking out $1.4 million (10%) for "administrative costs", they apparently are carrying $3.4 million in reserve which might have gone to scholarships.
The Lutheran SGO of Indiana received $1.75 million in contributions in two years and awarded $1.30 million in scholarships, which is 74% of contributions. Taking out $.175 million (10%) for "administrative costs", they apparently are carrying $.275 million in reserve which might have gone to scholarships.
The Sagamore Institute received $8.6 million in contributions in three years and awarded $6.6 million in scholarships, which is 77% of contributions. Taking out $.86 million (10%) for "administrative costs", they apparently are carrying $1.1 million in reserve which might have gone to scholarships.
The SGO of Northeast Indiana received $2.5 million in contributions in three years and awarded $1.7 million in scholarships, which is 68% of contributions. Taking out $.25 million (10%) for "administrative costs", they apparently are carrying $.55 million in reserve which might have gone to scholarships.
Thus, all four SGO's have been carrying contributions in reserves for years, without promptly distributing those funds as scholarships. Is this really what the General Assembly intended?
Why do SGO's need more tax money when they aren't currently distributing all the donations that they are currently getting?
It is very easy to get lost in all the numbers, but here is the bottom line:
In the most recent year reported (2013-14), the four SGO's:
- either held $2.7 million in reserve which were intended for scholarships
- or else they overspent the legal limit on administrative costs.
- either held $5.3 million in reserve which were intended for scholarships
- or else they overspent the 10% legal limit on administrative costs.
The General Assembly should hold SGO's accountable for the money they have been previously given. To date, accountability for SGO's has not reached the high level of accountability given to public schools. There should be no questions about the use of SGO money. Entities that are authorizing the use of millions of dollars in tax credits deserve more scrutiny and oversight than they now receive.
This issue is not in a separate bill, but rather is in the budget. To register your strong opposition to expanding vouchers by expanding funding for Scholarship Granting Organizations, you need to contact the Senators working on the budget, starting with the Senators on the Subcommittee on School Funding and the Appropriations Committee.
Once again, an easy way to contact members of the committee is to go to the Indiana General Assembly website and click on Committees, then on Standing Committees, and then on the name of the committee. The pictures of committee members appear on the left. As you click on each picture, an email form comes up that you can use to register your concerns with each member.
[Click HERE to go to the Senate Education page]
Help stop the expansion of vouchers through SGO's. Thanks for your advocacy for public education!
Vic Smith firstname.lastname@example.org
“Vic’s Statehouse Notes” and ICPE received one of three Excellence in Media Awards presented by Delta Kappa Gamma Society International, an organization of over 85,000 women educators in seventeen countries. The award was presented on July 30, 2014 during the Delta Kappa Gamma International Convention held in Indianapolis. Thank you Delta Kappa Gamma!
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Some readers have asked about my background in Indiana public schools. Thanks for asking! Here is a brief bio:
I am a lifelong Hoosier and began teaching in 1969. I served as a social studies teacher, curriculum developer, state research and evaluation consultant, state social studies consultant, district social studies supervisor, assistant principal, principal, educational association staff member, and adjunct university professor. I worked for Garrett-Keyser-Butler Schools, the Indiana University Social Studies Development Center, the Indiana Department of Education, the Indianapolis Public Schools, IUPUI, and the Indiana Urban Schools Association, from which I retired as Associate Director in 2009. I hold three degrees: B.A. in Ed., Ball State University, 1969; M.S. in Ed., Indiana University, 1972; and Ed.D., Indiana University, 1977, along with a Teacher’s Life License and a Superintendent’s License, 1998. In 2013 I was honored to receive a Distinguished Alumni Award from the IU School of Education, and in 2014 I was honored to be named to the Teacher Education Hall of Fame by the Association for Teacher Education – Indiana.