FOR IMMEDIATE RELEASE:
Date: February 8, 2016
From: Kate Saylor, Director of Marketing & Communications, Georgia GOAL Scholarship Program, Inc.
Subject: Court Upholds K-12 Tax Credit Scholarship Program
Court Upholds K-12 Tax Credit Scholarship Program
Judge Dismisses Claims that Education Tax Credit Program is Unconstitutional
ATLANTA – Yesterday, thousands of parents who receive scholarships for the K-12 education of their children in Georgia received good news about the future of the program that is the source of those funds. In an Order issued late last week, Fulton County Superior Court Judge Kimberly M. Esmond Adams dismissed claims made in a lawsuit that the Georgia Education Expense Credit program is unconstitutional. However, Judge Esmond Adams did not dismiss the portion of the lawsuit that would require the Georgia Department of Revenue to disqualify student scholarship organizations who the Plaintiffs allege are engaging in unlawful scholarship award practices.
Under the current program, each year, the Department of Revenue grants up to $58 million of state income tax credits to Georgia taxpayers who contribute to qualified student scholarship organizations, or SSOs. The SSOs use the donations to award scholarships to students to attend the private schools of their choice. On the first day of 2016 on which taxpayers could seek DOR approval for the tax credits, they applied for $108.7 million worth of credits, exceeding the annual cap by $50.7 million.
In dismissing claims that the popular tax credit program is unconstitutional, Judge Esmond Adams decided that the Plaintiffs in the case lacked "standing," or the legitimate right to sue. In doing so, she relied on a 2011 U.S. Supreme Court decision holding that contributions to these types of programs are private, not public, funds, thereby eliminating the right of taxpayers to challenge them.
"We are very thankful that Judge Esmond Adams issued a ruling that respects the right of citizens throughout Georgia to decide how best to use their private funds to promote the educational choices of low- and middle-income families," said Lisa Kelly, President of Georgia GOAL, the largest SSO in the State. "By permitting taxpayers to receive a tax credit for these contributions, Georgia lawmakers made a wonderful policy decision that is positively impacting thousands of children and hundreds of private school communities."
In her order, Judge Esmond Adams permitted an action to proceed that would require the DOR to enforce the laws relating to the program, specifically, a provision that prohibits donors from designating that their contributions be used for the direct benefit of a particular individual. In their Complaint, the Plaintiffs alleged that some SSOs may be violating that provision and, as the law requires, the DOR should revoke their status as SSOs. GOAL does not engage in that practice.
Meanwhile, on Monday, a House Ways and Means Subcommittee considered HB 865, a bill that would create an entirely separate $25 million K-12 tax credit scholarship program. Unlike the current program, the new program would be limited to low-income students who are eligible under federal guidelines for free or reduced price lunches. Also, it would require participating private schools to administer standardized tests and report the results to the state. Late last year, Governor Nathan Deal's Education Reform Commission rejected a bill containing provisions comparable to those in HB 865.
At the hearing, supporters of the GOAL program urged the Subcommittee members to preserve, protect, and expand the existing program and reject the proposal to create a new one. In her testimony, Lisa Kelly explained to the Subcommittee that the existing tax credit program is extremely successful and popular among Georgia taxpayers, private school communities, and the deserving families to which SSOs are awarding scholarships. According to Kelly, since the program was started in 2008, lawmakers have adopted several key reforms. "If there is evidence that further improvements to the existing program are needed, then we look forward to working with you and others to secure them."
After hearing from Rep. Mike Dudgeon (R-Johns Creek), the main sponsor of HB 865, and from witnesses who testified for and against the proposed legislation, the Subcommittee deferred final consideration of the bill until a later hearing.
###
Media Contact: Kate Saylor at ksaylor@goalscholarship.org or 770-828-4032
Georgia GOAL Scholarship Program, Inc. | 3740 Davinci Court, Suite 375 | Peachtree Corners, GA 30092