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Embarrassing loopholes



The bill’s many loopholes and missing safeguards make it embarrassing. Here’s how it works:

The bill authorizes $3.5 million of lucrative tax credits, which are employed as a fundraising incentive to subsidize a $10 million dollar scholarship fund for K-12 private school students only. This perpetual “earmark” continues even if state revenues decline. Even if, sadly, public school per-pupil spending must drop, this bill maintains the full $3.5 million in tax credits.

It has majority Republican approval, even though the bill violates my state Rep. David Dank’s dictum: Tax credits are too valuable to be used for anything other than new job creation.

There’s no prohibition against “double-dipping” or “insider dealing.” Any group of parents can create their own “scholarship-granting organization” (SGO). Each couple contributes $2,000, then receives a $1,000 tax credit shelter, meaning $0 state tax paid on $20,000 in income. (Plus, they could get back their $2,000 as a private school scholarship for their child, grandchild, friend’s child, etc.) Corporations can form their own $100,000 SGOs, which distribute scholarships benefitting only their own executives and employees.

Students do not have to attend a public school “in need of improvement” — just reside nearby. That makes many OKC private school students eligible. Even a student living in a “good” school area whose family-of-four is getting-by on $124,000 a year is eligible for these private school scholarships.

Once an existing private school student receives a grant, even if the family moves out of a school area “in need of improvement,” the scholarships continue. Eligibility extends to all children in that family, including the unborn.

About 60 percent of scholarship money goes to low-income students — but not necessarily more low-income kids get into private school. Most thoughtful private schools already support low-income students; the money from this bill may take the pressure off their own private scholarship funds.

Still, would Janet Barresi add $7 million dollars every year to any school system without measuring the results? The bill does not require answers to questions about effectiveness: Was there a reasonable distribution of funds and students to all private schools? Did the tax credit money increase the number of newly enrolled students, or newly enrolled lowincome students? What was their graduation rate? How many grant recipients were athletes? Did private schools avoid a revolving door of low-income students coming and going after a year or two?

—Steven Goldman
The Village

Goldman is an independent analyst of public policy.

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