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Georgia charter schoolGrowing concern about the safety and quality of education in our public schools has led many parents to put their children in private schools. But what about poor families who lack opportunities to pursue better options?

To ensure underprivileged children have access to more education options, Georgia and several other states have passed private school scholarship programs. However, according to a recent New York Times story, some private schools are using these funds to discount tuition for current students instead of offering scholarships for students from low-income families.

More Tax Breaks for the Wealthy

Georgia attracts funding for its scholarship program by offering dollar-for-dollar tax credits to each family for donations up to $2,500. As a result, funds that would otherwise be owed to the state are redirected to private schools.

Lawmakers argued that these tax breaks would provide scholarships for students whose families cannot afford to send them to private school. However, not all scholarship programs seem to follow the same mission.

  • According to The New York Times, an administrator at Gwinnett Christian Academy told families that most of the money raised by these donations would be redirected back to the families of those who made the donations and that only "a very small percentage of that money" would be set aside for needy students.
  • A Southern Education Foundation report found that metropolitan areas containing most of the private schools covered by the scholarship program saw private school enrollment increase by only 0.3% from 2007 to 2009 (the year before and the year after the program started). In the rest of the state, private school enrollment increased by only 1.3%.
  • Some parents in Georgia took advantage of a language loophole -- the use of the word "enrolled" rather than "attending" -- in Georgia's scholarship bill in order to qualify for scholarship funds, according to the Southern Education Foundation report. This loophole allowed families to enroll their children in the public schools, even as they attended private schools, thus making them eligible for scholarship money.

Accountability Concerns

Some argue that these scandals are anomalies and that the scholarship fund is fulfilling its stated purpose of helping the needy. However, there are no data to support or refute that claim. And, Georgia's law doesn't include income limits to help ensure the scholarship fund fulfills its purpose of helping needy students.

One useful way to measure the program's success would be to determine how many students switched to private schools after the creation of the program who would have been unable to do so without the scholarship money. However, when The New York Times requested this information, a policy analyst for the Georgia Department of Education indicated that they did not collect that data and did not regulate the use of those scholarship funds.

The issue is further complicated by the way these tax credits blur the line between public and private money. The funds are being collected and distributed by private foundations rather than the state, making it difficult to challenge their use from a constitutional standpoint. Funds that would have gone into public coffers instead go into private hands, and citizens have a limited ability to determine the appropriate use of what would otherwise have been state money.

Growing Movement

While the Times report highlights the scholarship programs in Georgia, Pennsylvania, and Arizona, other states have implemented similar programs, and several others are thinking about jumping on the bandwagon.

Concern about the quality of education in our public schools is understandable, but the question remains -- do these private school scholarship programs fix the underlying problems with our children's education?

Motley Fool contributor M. Joy Hayes, Ph.D. is the principal at ethics consulting firm Courageous Ethics. She doesn't own shares of any of the companies mentioned. Follow @JoyofEthics on Twitter.

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