Choice in the States: Georgia with Lisa Kelly
The president and executive director of GOAL discusses the state's tax-credit scholarship program
Georgia has two private school choice programs: the Georgia Special Needs Scholarship and the Georgia Qualified Education Expense Tax Credit. The Georgia GOAL Scholarship Program (GOAL), one of the state’s largest scholarship organizations, participates in the tax-credit scholarship program. Lisa Kelly discusses the organization’s involvement and the expansion of the program.
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Our Podcast Transcribed
Jason Bedrick: Welcome to EdChoice Chats. I’m Jason Bedrick, director of policy at EdChoice, and this is another episode of our policy podcast series. I’m joined today by Lisa Kelly, the executive director and president of GOAL, the scholarship organization in Georgia. Lisa, thanks for joining us.
Lisa Kelly: Thank you, Jason. I’m happy to be talking to you today.
Jason Bedrick: So, like I said, we’re going to be talking today about the school choice programs in Georgia. Georgia has two private school choice programs, the Georgia Special Needs Scholarship and the Georgia Qualified Education Expense Tax Credit. So, Lisa, your organization participates in the tax credit program. Why don’t you tell us a little bit about how it all works and how it was enacted.
Lisa Kelly: Well, terrific. I love talking about this program. It’s just a wonderful law and it’s achieving wonderful results here in Georgia. I’ll tell you just a little bit about how we got this law. Way back in 1998, the first bit of school choice legislation actually passed in Georgia. That was after efforts by a Georgia businessman and philanthropist named Frank Hanna and Jim Kelly, an attorney who worked with Frank Hanna, who happens to be my husband, who began the conversation to lead the school choice effort in Georgia. A couple of years later, there was actually passage of a charter schools act in our state. That effort was the only thing we had in Georgia for another decade. It was 10 years after that before we got the Qualified Education Expense Credit. I will say actually, 2007 did see passage of a voucher for special needs students. So that happened in 2007. Then 2008, we got the tuition tax-credit law that our program implements.
This was a very fair and free-market law. We’ve done a lot of contrasting and comparing of our law to others from around the country, the other 18 states that have these laws. And ours is very hands-off in terms of testing and reporting mandates extending to the private schools. There are very few requirements of the private schools other than that they’d be accredited and that they adhere to all the rules, the Civil Rights Act, and the rules for private schools in our state. There is allowance for donors to designate which private school they would like to receive their designations or which private school they would like their contributions to be used at. They, of course, cannot designate a specific student but they can designate a specific region or even a specific private school. And there is relatively free and open eligibility requirements for students.
Basically, any student first grade and below is eligible just by virtue of their age. And beginning in second grade, the students must be transferring from a public school, which the student has to have attended for at least six weeks immediately before getting the scholarship. The contribution limits are $1,000 for a single taxpayer, $2,500 for a married couple filing a joint return, pass-through owners or any individuals that own a pass-through entity like an LLC, S corp or partnership are allowed to contribute up to $10,000. And C corporations can contribute up to 75 percent of their tax liability for the year. So, all taxpayers, corporate and individual, are able to contribute under this program.
Jason Bedrick: And when they make a contribution to a scholarship organization like GOAL, what happens then?
Lisa Kelly: When the funds come to a student scholarship organization, I’ll just call it SSO. That’s the terminology we use in Georgia. Those dollars, other than the administrative fee that we are allowed to take, must immediately be deposited into a separate account and they’re immediately available for the provision of scholarships. That’s the most important thing, obviously, that we do. We go through the effort of soliciting and collecting the contributions and then begins the effort of providing the scholarships to eligible students all over the state of Georgia.
Jason Bedrick: And then those individuals or corporations receive a dollar-for-dollar tax credit, correct?
Lisa Kelly: That’s exactly right. The contributors themselves, this is how it’s begun to work in Georgia. I’ll just say, in 2008 when this law passed, there was a $50 million cap on the tax credits available at that point in time. We thought, “OK, this would be a little slow to get started.” People didn’t understand it. It was an entirely new concept in Georgia and in truth, in the beginning, contributors joined in and participated in this program because they liked the idea of a tax credit, although many of them were skeptical that they were going to get a 100 percent Georgia income tax credit. We still were able to get the ball rolling and get people enthused about the idea based on that economic component that they would get the money credited to them on their state income tax return.
It took only about three years till the entire cap was met, early in the year because number one, contributors saw that in fact, it did work exactly as it was supposed to. They did, in fact receive a 100 percent income tax credit on their state income taxes. But number two, and more importantly and more fascinating in my opinion, is the fact that they became advocates of the purpose of this thing. They became school choice believers and school choice proponents. In large part, it was the first time they had ever heard of such a concept. As we began really putting a lot of effort into being accountable to them in terms of letting them know how their dollars had been spent, letting them know the demographics and the ethnicity and the levels of income, not on an individual basis but in aggregate, in terms of the way their funds have been used and the families who had been helped under this program, there began to be a level of commitment and engagement and grassroots support that developed all over Georgia.
That component of the program in Georgia and the fact that 70 percent of the contributors in Georgia are individuals and only about 30 percent of the contributions come from corporations, those individuals have been very much engaged as a part of the political process and a part of the advocacy for educating lawmakers and asking them to increase this program as they’ve seen the direct results in their own communities for the provision of scholarships under the program.
Jason Bedrick: So, the program grew rapidly. In the first year, there were fewer than 2,000 students participating. By the third year, you had more than 11,000 students participating. And in the last year, we had closer to 14,000 students participating. But you mentioned that these scholarship families and the donors and the schools, all of these different stakeholders in the program have been active in not only defending the program but also expanding it. Why don’t you talk a little bit about the expansion of the program last year?
Lisa Kelly: I’ll happily talk about that, Jason. It felt like literally a decade of effort. I mentioned that the first school choice program in Georgia passed in 1998. This program became law in 2008. But it took another 10 years, literally until this year, 2018 for us to get a meaningful cap increase on this program. We had moved from $50 to $58 million a few years back but this year, we moved from $58 million to $100 million. This is huge for us and I’ll tell you the main reason why. We had been stuck at being only able to serve about 13,000, 13,500 students in the state of Georgia at that $58 million cap. With this cap having moved to $100 million, thousands of additional students, I would say upwards of 20,000 a year, their parents will be able to choose the schools that they attend in K–12. That’s significant. Of course, the demand is much higher than that but that is almost doubling of the impact of the program on students’ families and communities throughout Georgia. So, that’s huge.
The effort to get the cap increase has been ongoing and has literally been a part of our educational outreach and accountability to lawmakers and to taxpayers. Since the inception of the program, we began very early on publishing an annual report. We disclosed much more information than we are required to by our law, in terms of the makeup of the scholarship recipient families, all of our financial information, the fact that we take less of the administrative fee even than as required by our law. We basically wanted to affirm the lawmakers for the incredible thing they have done, and to let them know how much it’s appreciated and how much more demand there is. As you know, Jason, because you swim in this world all the time, there’s tremendous pushback and there’s tremendous opposition to providing parents with this level of choice in the education of their children.
There’s disinformation that is spread at the capitol each year. There are fear tactics, I would almost say, that are shared with public educators, making them afraid that the funds are going to dry up for them. In reality, even with $100 million dedicated to our cap this year, that is about one half of 1 percent of what the state of Georgia spends on K–12 education. And yet, it is providing tremendous relief for very concerned parents all around the state, who for a variety of reasons, were not having their children’s needs met in their assigned public schools. And we assessed our graduation rate this year and it’s upwards of 91 percent. But the surveys that we have conducted of the parent community who are receiving scholarships and there are three of those now, has indicated their level of incredible satisfaction and delight at having their children in schools that they’ve chosen for them when previously they were prevented from doing that by economics alone.
Jason Bedrick: So, it’s no wonder that there are so many families who want their children to participate in the program. Why don’t you tell us a little bit about the demographic makeup of the students who are participating in the program, at least the ones that are getting scholarships from your organization? And GOAL is one of the largest, if not the largest scholarship organization in Georgia. Maybe you could tell us how many students you’re serving and how many are on your wait list.
Lisa Kelly: OK, Jason. Actually, let me tell you a little bit about the SSO community in Georgia to add some context to the GOAL data that I’ll share with you. There are actually 33 student scholarship organizations in Georgia. We have a lot of healthy competition in the marketplace of SSOs in Georgia. And although it’s challenging, I’m a believer in competition. I’m a believer in competition in terms of K–12 education and I’m a believer in competition for SSOs. We are the largest SSO, have always been the largest. I would say we were the leading SSO in many ways. But I will say we have raised more than one-third of all contributions statewide since the inception of the program, even though there are 33 organizations like ours in the state. We have provided scholarships to more than 14,300 students in the amount of 129 million so far. The average award we have provided is just over $3,700. The average adjusted gross income of the families adjusted for family size is $27,275. The percentage of our scholarships that have been awarded to minority recipients is 45 percent.
Jason Bedrick: And that’s a dollar figure on family income for a family of four?
Lisa Kelly: It’s actually adjusted for family size, so it takes into account all sizes of families. We’ve actually rolled that factoring into it but the average family size is a family of four.
Jason Bedrick: OK. And you mentioned earlier that there has been opposition to the program. One way that the program was opposed was through a lawsuit. Could you talk a little bit about that?
Lisa Kelly: Yes, absolutely. There were anti-school choice forces and anti-school choice foundations that sued the state of Georgia claiming that the education expense credit law was unconstitutional. One of their reasons was that “public funds were flowing to religious schools.” Both the state of Georgia attorney general’s office defended the program and the Institute for Justice intervened in Georgia, representing a few GOAL scholarship recipient parents under that judicial effort. And also, GOAL filed an amicus brief and we were joined by state and national education reform groups. In fact, EdChoice and Cato also filed brief. Following U.S. Supreme Court precedent, the Supreme Court of Georgia unanimously upheld our program, deciding that the plaintiffs actually lacked standing to sue. They also made their points quite strongly in their decision that these were not public funds. So, the issue of public funds flowing to private schools was invalid because these funds are private contributions by private citizens to private 501(c)(3) student scholarship organizations in our state. And there are many, many private decisions every step of the way that connect these taxpayer contributions to scholarship recipient families.
Jason Bedrick: Right. So, it was interesting in that following the U.S. Supreme Court precedent and the precedent of state Supreme Courts in Arizona and elsewhere, the Georgia Supreme Court ruled that the plaintiffs had no standing to sue but they actually also address the merits of their argument. They could have simply stopped there. But they did address the merits of the argument and they said that these scholarship dollars, like you mentioned, they’re donations from private citizens to private scholarship organizations. And the state exercises no control, really at almost any step of the process. There are eligibility guidelines in terms of who can contribute and who can receive a scholarship and what constitutes a private school. But the state exercises no control over which scholarship organizations the donors choose to support, which students receive a scholarship from the scholarship organizations, which schools those families choose to use the scholarships at. None of that is under the government control. And at no point does the money enter the state treasury. So, it was ruled constitutional.
Lisa Kelly: It was a fabulous decision from our perspective. And you raise a great. In terms of the Georgia law being a very free-market law with very little oversight or intervention by the state. Not only do we believe that that’s the best law for consumers in terms of free market and very little government intervention or regulation, provides the best option for the ultimate consumer, which is the scholarship recipient family, but it also serve to further protect this program rather than being an extension of the Department of Education or government-controlled educational system. We are completely at arms-length from the state in terms of the way our program is managed and handled and the way the funds flow, as you indicated.
Jason Bedrick: It’s worth noting that the other school choice program in the state, the Georgia Special Needs Scholarship Program, is government-run. It does use public funds and yet, it was not legally challenged, quite possibly because it serves special needs students. There are about a little more than 4,000 students participating in the program. They received scholarships that are, on average, about $5,600. And so, although it’s not as large as the tax-credit scholarship program in Georgia, it is serving a very high-need population and fortunately has not actually drawn a legal challenge. But Lisa, perhaps you could tell us a little bit more about where you think school choice is headed in Georgia.
Lisa Kelly: Sure, Jason. Just to quickly recap and also to give a shoutout to some essential leaders in our state, without whom we would not be here talking about these tremendous opportunities for families. When the original law, the Education Expense Credit law passed in 2008, that effort was led by representative Earl Ehrhart. Also though, education reform groups assisted in that effort, like the Georgia Center for Opportunity, the Christian Coalition, Georgia Public Policy Foundation, and the Georgia Catholic Conference. It was a narrow and incredibly meaningful victory in Georgia. Fast forward 10 years and this year, representative John Carson led the effort to increase that cap from $58 million to $100 million, as I mentioned. This was an ongoing and persistent team effort among GOAL, American Federation for Children, Walton Foundation, EdChoice, and others who for a decade have kept these lawmakers informed about the positive results and the budgetary savings of our program, providing compelling testimonies and lots of transparent data defending the program against attacks in the media and in the courts, as we’ve discussed.
I would say that going forward, we want to build on that momentum achieved this year. One of the drawbacks of that cap increase is that it’s expiring. It’s sun setting in another decade. Well, obviously we need to have that sunset clause eliminated and keep that cap increase at $100 million beyond the next decade. And actually, we need an automatic escalator each time our cap is reached. That may be possible in the future as we have just seen that our governor-elect in the state is Brian Kemp, the current secretary of state in Georgia. And he has been very vocal and very strong in his support of school choice and we are very enthused about that and about what the future holds for Georgia.
Jason Bedrick: My guest today has been Lisa Kelly, the president and executive director of Georgia GOAL. This has been another edition of EdChoice Chats. You can subscribe on SoundCloud, iTunes and Stitcher. Follow us on social media, @edchoice. And sign up for email on our website, edchoice.org. Thanks for tuning in. We’ll see you next time.