FSBA leader twists truth on tax credit scholarships

If truth is the first casualty of war, then Florida School Boards Association executive director Wayne Blanton may have been suiting up back in June. His Capital Dateline interview then with Steve Wilkerson described tax credit scholarships for low-income students as a financial drain not only on public schools but on all state government services.

Blanton, a seasoned educator, knows better. So let’s assume the association’s planned lawsuit against the scholarship, to be announced today, was his motivation.

Blanton’s financial assertion is short enough to quote in full:

“We are not a big fan of those type of scholarships. There’re a couple of reasons. No. 1, it’s taking a substantial amount of money every year away from public schools. But the bigger issue, I think, is over the next two years those corporate scholarships are going to siphon off about 2 to 2 ½ billion dollars from the state. Now making my assumption earlier that we get 36 percent of that, for every $1 billion that would be $360 million that public schools do not get. But then there’s over $600 million that doesn’t come into the state at all. It doesn’t come in for child care, it doesn’t come in for health services, it doesn’t come in for the Division of Family Services and things of that nature, it doesn’t come in for corrections. Those dollars not coming into the state are not just detrimental to public schools, it’s detrimental to a lot of other services the state is trying to deliver and has a hard time getting those dollars to them now. So I think we’ve got to take a real close look at that in the big picture – not just education but how those dollars are disappearing from a lot of other entities.”

Readers should be aware that I’m the policy director for Step Up For Students, a nonprofit that co-hosts this blog and helps administer the scholarship that Blanton calls into question. But his misstatements are at such odds with the fiscal reality that they are rebutted by basic state revenue reports and fiscal evaluations.

Let’s begin with the “siphon.” Under state law, the amount of tax credits that can be used toward contributions for the scholarship is capped every year. The Department of Revenue is responsible for overseeing the cap, and here is the link to its latest calculation. The maximum possible amount for scholarships in the next two years is in fact $805.1 million – not $2.5 billion. That’s one-third the amount that Blanton claimed.

Now let’s look at how the loss of those dollars is “detrimental” to all those public services, including schools.

Yes, the state treasury could be reduced by as much as $805.1 million over the next two years. But this assertion quite purposefully misses the difference between the tax credit scholarship and other tax credits for business investment or economic growth or Habitat for Humanity. The money contributed through tax credit scholarships must by law be spent to educate economically disadvantaged students who for the most part would otherwise attend a public school. In fact, tax-credited money not spent on private school scholarships must be returned to the state treasury (section (6)(j)2.), minus a 25 percent carryover in any given year.

We know that most of these scholarship students would otherwise be attending a public school. An independent researcher who evaluated U.S. Census data prior to the passage of the scholarship law in 2001 found only 5 percent of all students (page 13) whose household income qualified them for free or reduced lunch – the current eligibility standard for the scholarship – were attending a private school.

We also know the scholarships this year cost $5,272, which is only 76 percent of the operational amount public schools would have spent on the same student through the Florida Education Finance Program formula. We further know this FEFP operational amount typically covers only 74 percent of the total state and local spending per student each year. And we can only guess the impact on school construction if 69,000 students were returned to public schools – students who are concentrated in urban areas where many schools are full. These concentrations are so great that 75 different zip codes this year have more than 100 scholarship students each, 25 zip codes have more than 400, and two adjacent zip codes in west Orlando have 1,495. If districts had to build schools to accommodate only half of these students, the capital cost alone would exceed $1.1 billion.

This is where Blanton, whom I have known to be an honorable man, is willfully twisting the truth. No fewer than five different independent organizations and government agencies have produced reports that have examined these variables, and all of them have reached the same conclusion. Without even considering the potential savings in school construction, they say the loss in tax revenue is more than offset by the savings in educational operation costs.

Most observers consider the Florida Office of Program Policy Analysis and Government Accountability to have offered the most definitive study to date, and it found that the state saves $1.49 for every $1 lost in revenue. That study is now six years old, but the Consensus Revenue Estimating Conference projected two years ago that the scholarship saved $57.9 million in 2012-13. This year, the House Education Appropriations Subcommittee estimated savings of $60.5 million in 2014-15 – though that number was slightly inflated by tax credit cap growth that was removed from the legislation and projected a decline in savings over the next five years. For what it’s worth, PolitiFact in May ruled a less audacious claim by gubernatorial candidate Nancy Rich to be “mostly false.”

Pick whatever study you want, but the point is that no serious evaluation of the financial impact of the tax credit scholarship treats the tax-credited dollars as though they are being used to fund the Russian incursion into Ukraine. The scholarship represents actual savings – not a loss – to the state, and Blanton is smart enough to know that.