Original URL: http://www.azcentral.com/arizonarepublic/local/articles/1211edreport11.html

Tuition-aid program called flawed Poor students not getting enough help, group says
The Arizona Republic
Dec. 11, 2003
12:00 AM
Pat Kossan

An Arizona law meant to give needy public-school kids a chance to go to private schools is instead helping to pay tuition for students already there, according to a study to be released today by the Goldwater Institute.

The report recommends major changes to a program that has diverted more than $85 million in tax money from state coffers into private, mostly religious, school scholarship funds.

The law allows a couple to subtract $625 from their state tax bill if they donate that money to scholarship organizations that were created specifically to collect and distribute the donations. The idea was to allow poor public-school students to get the money they need for private schooling and save the state the cost of educating them.

But the study shows the scholarship organizations gave most of the money to kids already enrolled in private schools, largely because the groups operate without oversight or restrictions.

Among the study's findings:

Since 1998, the law has helped only about 2,000 kids move from public to private schools.

A program designed to save the state money is costing millions in lost revenue. The number of children moving from public to private schools would have to triple before the state could break even, it concluded.

As of 2002, 43 percent of all private-school students were each getting about $1,000 from the scholarship funds generated by the tax credit.

Some parents report that they could not remain in private schools without help from the scholarship fund, said the study's author, Carrie Lips Lukas, policy director of the Independent Women's Forum, a Washington D.C.-based education research organization.

Despite the problems, Lukas said she supports continuing the program.

"But policymakers should seek new ways to give more low-income parents the option to choose a school for their children," Lukas said.

The report's findings don't surprise Lucy Ranus, president of Arizona PTA, who said the law never has lived up to its promises.

"It funnels public money into private schools," Ranus said. "There's no accountability."

The tax credit donations are collected by about 47 private organizations, called School Tuition Organizations, which act as middlemen between donors and the private schools, mostly religious.

For example, the Catholic Tuition Organization of Diocese of Phoenix and the Arizona Christian School Tuition Organization together received more than $12 million in 2002 alone.

Not much is known about where the money goes, according to the report.

These groups never have been required to report to any state agency. Some volunteer to make partial reports upon request by the state Department of Revenue.

For the first time this year, a new law will require the STOs to report the amount of contributions, the number of children receiving scholarships, the amount of the scholarship and the names of the schools receiving the money.

However, the law includes no penalties for the organizations that don't report, said Georganna Meyer, chief economist for the Arizona Department of Revenue. And taxpayers making donations to organizations that don't report still will be permitted to receive the tax credit, Meyer said.

Alex Molnar, who heads a team of Arizona State University researchers who have reached similar conclusions about the law, said the state should collect more data about who is benefiting from the money and if the program is worth continuing at all.

"These are good recommendations and sensible recommendations given the current program," Molnar said about the study.

But he said that scholarships never have been big enough to help poor kids attend private schools and that private schools could never accommodate the number of public-school kids who would need to switch to save the state money.

Reach the reporter at pat.kossan@arizonarepublic.com.