Some glaring problems with HB84

(For more on this topic, go here.)

One problem with hiding a bill before passage, as the Legislature did with HB84 last night, is that the sponsors receive limited input on the effect of the bill before passage. In the case of HB84, the ramifications of sloppy legislation could be huge. The most devastating impact will be on the already beleaguered Education Trust Fund.
Here are problems that were apparent on a first reading of the bill, which passed the House and Senate:
1) Despite the press releases, the school receiving the students does not have to be accredited. Page 8 of bill gives list of criteria a non-accredited school has to meet.
2) Legislators failed to delete this from the flexibility portion of the act: “(d) No provision of this act shall be construed or shall be used to authorize the formation of a charter school.” That begs the question, what is a charter school?
3) The act will allow every family that already attends a private school, but is assigned to a failing public school, to get a tax credit. Students get a tax credit after “certification by the parent that the student was enrolled in or was assigned to attend a failing school.” The scholarship portion of HB84 makes clear that students currently enrolled in a private school, but assigned to a failing school, benefit from the tax credit: “g. Ensure that at least 75 percent of first-time recipients of educational scholarships were not continuously enrolled in a private school during the previous year.” This makes no sense unless people who are assigned to a failing school but enrolled in a private school get the tax credit. This strikes me as huge from a financial standpoint. All of the tax credits come out of ETF. Did the Legislature figure out the cost of this tax credit?
4) The scholarship tax credit is bizarre. It caps at $25 million, and it probably will hit that amount. It’s a 100 percent credit up to $7,500 for individuals. Many who owe taxes of up to $7,500 (or less, actually, since they can defer credit over three years) may use it as a tax-avoidance tool, whether or not they have an interest in the scholarship program. The ETF’s sales tax revenues, which fund the tax credit, probably will drop by $25 million.
5) Failing schools still have to provide services to disabled students, even if the students transferred out. So they lose the taxes on their most expensive students, but still have to provide the services.
6) The not-for-profit scholarship organizations are guaranteed 5 percent of the aggregate $25 million in administrative costs. Lots of potential for abuse.
7) A portion of the scholarships must go to students at 200% or less of poverty level, but the portion is tied to the percentage of low-income students in the COUNTY, not the school district. For urban school districts, I suspect county percentage is lower than in school district, which reduces the number of scholarships.
8) There are lots of regulations on schools that receive scholarship funds, but almost none on those that receive the tax-credit vouchers. Schools that charge less than 80% of per-capita cost of public schools, or who decline to participate in the scholarship program, are subject to few regulations.
9) The public schools don’t have to report student outcomes for three years, whereas the failing schools have to report every year. That lag time could convince a lot of students to transfer to private schools, later to find outcomes are no better.
10) The state has 202 schools that meet the definition of “failing” in HB 84. The Education Trust Fund’s exposure, therefore, includes the total number of students in these schools, multiplied by 80 percent of the per-capita tax cost, plus most of the $25 million in income-tax revenue being diverted to the scholarship fund.
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Filed under Alabama politics, charter schools, education

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