At issue, 2008 November

Volume 3, Number 3

State of Georgia

November 2008

School Choice in Georgia A New Life for

and Beyond

By: James Touchton Policy Analyst
The issue of school choice has found its way to the forefront of educational policy decisions in many states across the nation, including Georgia. In the past two years, the Georgia General Assembly has passed legislation that created a charter school commission, provided scholarships to special needs students, and offered state income tax credits to individuals and couples who donate money to non-profit organizations that provide scholarships to public students to attend private schools. Legislation may be introduced in the 2009 Legislative Session providing for a statewide voucher program, available to all parents that would allow tax dollars spent on education to follow the student.
There are different programs that can be used to provide school choice. Perhaps the most obvious is private schooling in the traditional sense, which is available for those in an area with a desirable school who can afford the tuition with-

out help from public funding or scholarships. According to the U.S. Department of Education,
11 percent of students in the U.S. are enrolled in private schools. Families can also exercise school choice by moving to a neighborhood in order to be zoned for a particular school. The Department of Education in a different study found that 24 percent of public school students fall into this category.
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Tax Allocation Districts in Georgia

By: Bill Perdue Senior Policy Analyst

Recently, the citizens of Geor-

gia approved a constitutional

amendment authorizing the

use of education money for

redevelopment of economi-

cally depressed areas. The

amendment passed with

51.5% of the vote. Many

Georgians seemed unsure

about allowing school systems

to use education money for

redevelopment

purposes.

While this may sound like

something schools would not

be interested in doing, most

school boards in the state

were strongly in favor of this

amendment. In fact, a few

were already engaged in this

practice despite it technically

being unconstitutional at the

time. Using education dollars

to finance redevelopment was

authorized by a state law en-

acted in 1985 however, the

State Supreme Court found

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State of Georgia11/26/2008Senate Research Office

(Continued from page 1)

Another program of school choice involves the use of tax credits, tax deductions, and education savings accounts. Tax credits and deductions for education are tax policies that allow parents to claim a credit or deduction against their tax liability for approved educational expenses, including tuition. These tax policies also enable individuals or corporations to receive a tax credit for contributions to tuition scholarship organizations. States that currently use these tax policy initiatives include Arizona, Florida, Pennsylvania, Illinois, Iowa, and Minnesota. Education savings accounts are bank accounts that are free from taxation and parents are allowed to save up to $2,000 annually for funds to be used toward educational expenses.
Publicly funded vouchers and scholarships are a third type of school choice that provide certificates with a specific dollar value that may be applied toward tuition at an eligible school. Currently, these programs are available in the District of Columbia, Florida, Utah, Cleveland, Ohio, and Milwaukee, Wisconsin.
Statistics indicate that homeschooling by a parent or guardian is by far the fastest growing form of school choice. The number of home-schooled students rose vastly - from 345,000 to 1,100,000 between 1994 and 2003. Studies have shown that home-schooled stu-

dents perform better than students in both public and private schools, and that by high school, they are performing at four grade levels above the national average.
Magnet schools are known as one of the oldest forms of school choice. Magnet schools have a specific academic focus, and draw students of widely varying ethnic backgrounds. Entrance into a magnet school is selective and decided by testing. According to the U.S. Department of Education, there are 1,736 magnet schools in 28 states. Georgia currently has 80 magnet schools, as of the 2007-2008 school year.
Open enrollment laws also allow parents the choice of any school system in the state. These laws have proven promising in research by the National Center for Education Statistics, which found that parents of students in either private schools or public schools cho-

sen by the parents were "more likely to say that they were `very satisfied' with their children's schools, teachers, academic standards, and order and discipline" than were parents of students attending an assigned public school.
A final option for school choice is charter schooling. A charter school is a public school sponsored by a local school board, university, state board of education, or other state governing body and is operated by groups of parents, teachers, other individuals, or private organizations. Charter schools have a great deal of autonomy; however this autonomy requires more accountability for student performance. Over 3,000 independent public schools (charter schools) have opened their doors since 1991. Georgia currently accounts for 114 of those schools. Charter schools are open to all students, and are funded primarily through taxes. Currently, 40
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(Continued from page 1)
this law to be unconstitutional in February of 2008. The Georgia Redevelopment Powers Law allowed local governments, including school boards, to create or participate in the creation of Tax Allocation Districts (TADs) which are very popular in metropolitan Atlanta, and in use in almost every other state.
A TAD is established for the purpose of encouraging investment in underdeveloped areas. This is done by financing certain redevelopment activities through the use of bonds. These bonds are repaid through the future incremental increases in property taxes generated by the new development. Areas considered for TADs may be severely blighted, have vacant properties, or be otherwise economically or environmentally depressed.
A Redevelopment Plan is required for each TAD and it must specify the authorized uses of TAD funds. These funds must be spent within the boundaries of the district, and spending must be consistent with the Redevelopment Plan. In Georgia, TAD funds can be used in a variety of ways, including for capital costs such as: new construction, renovation, rehabilitation, demolition, or expansion of existing buildings, public works improvements, acquisition of equipment, and clearing and grading of land.

Most other states use the term order to facilitate redevelop-

Tax Increment Financing (TIF) ment. In order for an area to be

to describe TADs as found in designated as a TAD, the local

Georgia Law. In Georgia, the government must authorize the

term Tax Increment Financing area for redevelopment, specify

is still applicable; however the why the area is in need and

TAD is the geographic area in what type of redevelopment will

which that financ-
ing occurs. Simply Notable TADs in Georgia:
put, TIF is the eco-

nomic development tool used in a TAD. Atlantic Station: This is a mixed use developTax increment re- ment built on a former brownfield site in Midfers to the differ- town Atlanta. Nearly complete, it will include

ence between the approximately 6 million square feet of offices,

amount of property 5000 residences, and 2 million square feet of tax revenue gener- retail and entertainment space. It will also ated when the TAD create an estimated 30,000 jobs. is established and

the amount of property tax reve-

Beltline

Project:

This

22

mile

loop around At-

nue generated af- lanta's central business district will include

ter the TAD desig- parks, transit, trails, and new development of

nation. When a old railroad right of ways. The project will

TAD is created, the impact 45 Atlanta neighborhoods.

State sets the base

value for the dis- Camp Creek: The city of East Point created a

trict. Any growth in shopping district and is creating a major busi-

property tax revenues resulting from increases in prop-

ness park. The shopping area was the first major retail development in South Fulton in 30

erty values above years.

this base value are collected in a spe- Lakeside: This is a $7 million cleanup of a

cial fund and used landfill and brownfield site in Acworth. Rede-

for the redevelop- velopment will include a major shopping area ment costs in the for the city. TAD. Only prop-

erty taxes generated by these increases are avail-

City South Renaissance: The City of Marietta is revitalizing part of its downtown area by

able for use by the replacing its aging housing projects with new

TAD.

roads, sidewalks, infrastructure, and new resi-

dential developments.

The Georgia Rede-

velopment Powers Law gave be authorized. A city may not

additional powers, including the create a TAD if the total taxable

authority to issue tax allocation value of the existing TADs plus

bonds, to local governments in

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the proposed TAD is greater states and the District of Colum-

than 10 percent of the total bia have enacted laws relating

value of taxable property for to charter schools. These laws

that city. Atlanta is the only vary in the flexibility provided to

city in Georgia that has met the schools.

this limit.

Current School Choice ProThe Educational Purposes grams Clause of the Georgia Consti- The nation's two best-known tution states that local govern- voucher programs are found in ments could not use school Milwaukee (created in 1990) revenue for costs unrelated to and Cleveland (created in education. Opponents of 1995). Both programs resulted TADs claimed that these dis- from the dissatisfaction of partricts essentially facilitated ents and community leaders, overdevelopment by giving and the general feeling that the education revenue to develop- public school districts in these ers and businesses. However, two cases were failing both the each TAD must be approved students and the communities. by the voters in the commu- This chart depicts the growing nity in which it will exist, and number of students participating more than 30 TADs already in the Cleveland program: existed in Georgia at the time

the law was found unconstitu-

tional. Those in favor of TADs

pointed out that school boards

were some of the loudest

voices urging for this constitu-

tional amendment. In fact,

school systems have a lot to

gain from TADs in their dis-

tricts.

In Cobb County, where more

people voted against this con-

stitutional amendment than for

it, two school systems have

benefitted from these districts.

Marietta's city school system

enjoys profit sharing in a city- Source:SchoolChoiceInfo.org

owned hotel that is being revi-

talized as part of a TAD. In 1999, Florida enacted the "A+

Cobb County Schools has re- Opportunity Scholarship Pro-

negotiated their bond repay- gram." This was the first school

ment schedule in order to re- choice program to link student

pay bonds more quickly due eligibility for a scholarship to at-

to excess revenue generated tend a public or private school of

from a TAD redevelopment their choice with academic per-

project.

formance; Ohio has also

(Continued on page 6) adopted a similar scholarship,

called EdChoice Ohio, which allows students attending schools that have been on Ohio's "academic watch list" for three years to receive a scholarship.

The logic behind these scholarship programs has resonated with a great number of people, including policymakers and state leadership that if a school system is not making sufficient academic progress and providing the education that a student deserves, then that student should be able to transfer the public's investment in their education to a school system that will.

Several major studies, a 2004

Manhattan Institute study, a

2004 Cornell University study,

and a 2005 Harvard University

study, have determined that

Florida's A+ Opportunity Schol-

arship program has produced

significant academic improve-

ments for both the students re-

ceiving scholarships and the

students remaining in the failing

schools. This phenomenon is

credited to the fact that failing

schools work hard to improve

and outpace their more suc-

cessful counterpart schools, be-

cause these schools do not

want to lose students. In 2006,

the Florida Supreme Court held

that this program violates the

state's constitution by violating

the uniformity provision of the

education article. This means

that private schools are no

longer included in the plan, only

better-performing

public

schools.

In 2007, 13 states and the Dis-
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trict of Columbia provided public support for private school choice using tuition scholarship or school voucher programs, or tax credits or deductions.
Arizona has four private school choice programs, two new voucher programs, and a tax credit for donations to nonprofit organizations that fund tuition scholarships. In 2006, 24,678 students received scholarships totaling $40.6 million through the program, and taxpayers made donations totaling $51 million.
Florida, in addition to the above mentioned A+ Scholarship Program, has two private school choice programs, including a program for students with disabilities. There is also a tax credit in place for corporations contributing to funds providing private school scholarships for disadvantaged children.
In Georgia, Governor Sonny Perdue signed a new special needs scholarship program into law in 2007, and over 900 students received this scholarship for the 2007-2008 school year. Also, Iowa and Illinois currently have a partial state income tax credit for education expenses, and Iowa has a scholarship tax credit program.
Ohio, in addition to the EdChoice Scholarship program discussed previously, has additional private school scholarship programs. Furthermore, vouchers are awarded through a lottery, with priority given to children from lower-income

families.
Minnesota has a tax credit and deduction program for education expenses and lowerincome families can receive a tax credit for educational expenses, not including private school tuition.
Pennsylvania, since 2001, has allowed tax credits for corporations donating to organizations
that fund private school scholarships or school improvement projects. In 2007, the state expanded this program by raising the caps on tax credits to $75 million, with specific amounts dedicated for private school scholarships, educational programs in public schools, and pre-kindergarten scholarships.
In addition to all of these state policies and initiatives, the controversial federal No Child Left Behind (NCLB) Act, which was signed into law in 2002 and is the latest attempt at standardsbased education reform, requires that states offer students in low-performing public schools the opportunity to

transfer into a higherperforming public school. The standards under the NCLB Act are actually set by the individual states, in order to comply with the Tenth Amendment of the Constitution, which provides for individual state powers. Millions of children are eligible for this transfer option, but according to the U.S. Department of Education, few children have actually bene-
fited. Statistics show that 3.9 million students were eligible to transfer in 20032004, but only 38,000 children, which corresponds to less than 1 percent, actually transferred.
Selected Current State Legislation The majority of the bills introduced in state legislatures this session have dealt with tax credits and charter schools. These charter schools regulations vary greatly, with Arizona House Bill 2037 requiring each school district and charter school to provide a specified minimum amount of recess each day for students in grades 1 through 6, to Hawaii's Senate Bill 2164, which establishes a facilities fund for charter schools that would fund the maintenance, repair, and other facilities needs of charter schools, including a tax credit to those contributing for this purpose. These wide-ranging bills show how states are finetuning their school choice systems, and also improving the funding and support of charter schools.
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The city of Atlanta has invested much more heavily in TADs than other Georgia cities and Atlanta Public Schools (APS) has benefitted from this. APS will receive $7 million from bonds issued from the Atlantic Station TAD for a new elementary school. APS will receive money for a new elementary school from the Perry Bolton TAD as well. APS also received approximately $2 million in revenue from the Eastside TAD.
Voters in the metro area were overwhelmingly in favor of TADs. Based on voter response, Cobb, Douglas, and Paulding Counties were the most opposed to this amendment in the metro area. Most other Georgia Counties were split fairly evenly with a slight majority of voters in favor of TADs.
While, there are more than 30 TADs in Georgia, tax increment financing is only beginning to take flight here. The concept has been in existence for nearly 50 years. Currently, 49 states and the District of Columbia have enabling legislation for tax increment financing. Arizona is the only state that does not allow such financing.

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In the District of Columbia, DC B 140, known as the "Quality Teacher Incentive Clarification Act," provides that public charter school teachers are eligible for specified income tax deductions. In Louisiana, Senate Bill 5b would provide income tax deductions for tuition and fees paid to enroll a child in a parochial, private, or college or university-affiliated elementary or secondary school, limited to a certain amount per child. This bill also would authorize a deduction for public educational expenses such as school uniforms, textbooks, instructional materials, or school supplies.

lic schools are failing today's students. Where we go from here remains to be seen as the issue is sure to remain at the forefront again of our policymakers' agendas.

In Georgia, the General Assembly sent House Bill 1133 to Governor Sonny Perdue, which was signed into law. This bill provides scholarships for children to attend private schools funded through private citizens and corporations' donations to nonprofit scholarship organizations. In return, they will receive an income credit. This is Georgia's most current legislation in relation to school choice.
School choice and vouchers will always be a topic of debate among Georgia citizens and within the General Assembly. Arguments against school choice have traditionally been the separation of church and state, accountability and oversight, and the acceptance method of private schools. Proponents of school choice will in turn argue that competition in the education market improves overall educational quality, that tax money should follow the student and that pub-

The Senate Research Office wishes our Senators, Senate Staff and their families a safe and enjoyable Thanksgiving Holiday.

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