Fla. Tax Credit Program Grows

Published December 1, 2005

The Florida Corporate Tax Credit (CTC) Scholarship Program has enrolled 15,000 students this year–a 33 percent increase since 2003–making it the seventh-largest school choice program in the country. The increase is the result of a cooperative effort among the organizations that encourage the legislature to support the program, raise the scholarship funds, and distribute the scholarships.

The CTC program is limited to students who qualify for free and reduced-price lunches, and who either attended a public school the previous year or are entering kindergarten or first grade.

When the CTC program was created in 2001, the Florida legislature set the cap for the program at $50 million in annual tax deferments. Since its inception, demand for the tax credits has been high, said Denise Lasher, executive director of the Florida Education Freedom Foundation (FEFF), an organization that promotes school choice to state legislators.

“The cap was originally raised in 2004, but it was killed in the special session because of a budget shortfall,” Lasher said. “This year it is back up to $88 million, and we are working to see that it stays there.”

Raising the Cap

In February 2004, Lasher began demonstrating to legislators the increased demand for the program and explaining how it could save the state money. According to analyses conducted by Florida Tax Watch and the Collins Center for Public Policy, the maximum CTC scholarship amount, $3,500 per student per year–about half of what public schools spend per pupil–had saved the state more than $108 million.

At that time, the scholarship waiting list contained the names of 10,000 students.

“We reinforced our data for the leaders in the [state] House and Senate by mobilizing our parents,” Lasher said. “They called and wrote to their legislators and appeared in committee meetings, asking their elected officials to appropriate more funding to the program.”

When legislators again raised the cap in March 2005, it was vital to show Florida corporations wanted to participate, said Kerri Vaughan, executive director of development for Step Up for Students, a nonprofit organization that raises scholarship funds and awareness of the program. Vaughan said the program has a 92 percent donor retention rate. The other 8 percent stop participating because they no longer pay taxes to the state.

Finding the Funds

To raise the extra $38 million, Vaughan tapped new sources of funding, because most donors already contribute the maximum 75 percent of their tax liability.

“Not knowing what companies pay Florida taxes is our biggest challenge,” Vaughan said. “We rely on our ‘true believers’ to introduce us to other companies that owe a tax liability to the state.”

At press time, the CTC program had already doubled its contributions from last year and expected to raise the rest of the $88 million by December, Vaughan said.

Filling the Seats

Heather Moore, chairman of the Florida Association of Scholarship Funding Organizations (FLA-SFO) and executive director of Florida PRIDE, the state’s second-largest scholarship funding organization, said the increase in applications and scholarship awards was primarily the result of well-organized word of mouth. Scholarship funding organizations did very little advertising, in part because it is costly, and relied instead on local centers of influence and satisfied parents to tell their friends about the availability of scholarships.

“When the word is out that we have new scholarships to give away, the response is overwhelming,” Moore said.

To help educate qualified families, Florida PRIDE held informational meetings around the state, during which parents were guided through the application process, informed of their responsibilities, and received immediate answers to their questions.

“Because of the [minority] population we are serving, sometimes reading the application in English is a challenge,” Moore explained. “When we walk them through it, they have a better chance of completing the process properly the first time.”

Creating the Future

The larger influx of applications this year was no problem, Moore said, because almost all SFOs use an independent, third-party processor to determine eligibility.

“Using an independent processor not only avoids the appearance of impropriety, it also means we can approve more students without having to increase our staff,” Moore said.

To increase support for the growth of the program, Lasher said she will be working with the McKay Coalition of Schools and the Florida Council of Independent Schools this winter to get an accountability bill passed during the 2006 legislative session. Together, they will push for stronger financial oversight for scholarship funding organizations, standardized testing of CTC scholarship students, and a longitudinal study of students’ academic gains.

Moore said she hopes those accountability measures will help the program continue to grow.

“The cooperative effort of raising the cap, raising scholarship funds, and awarding additional scholarships has been driven by the demand,” Moore said. “Although we have grown to serving 15,000 students, there are many more who still want school choice.”

Jenny Rothenberg ([email protected]) is a public relations associate at Step Up for Students, a Tampa-based initiative of the Florida Corporate Tax Credit Scholarship Program.