The Alabama Accountability Act – More Changes

UPDATE: Changes were made to the AAA in June 2015. Here is a link to the update.

The Alabama Accountability Act (AAA) changed again as it made its way through the House Ways and Means Education committee last Wednesday.

The committee added two amendments (here and here), which means that if the full House passes it, the Senate has to concur with the changes or a conference committee will be called.

These are substantial changes from the original AAA, and the two amendments are substantively different from the version the Senate passed.

To better understand these changes, they are divided into five sections (below) according to whom the changes affect: the “failing” public school, the students, the donors, the scholarship granting organizations (SGOs) and the nonpublic qualifying schools.

Then the new reporting and testing requirements will be addressed.

Remember that what follows are only the changes and additions from the original 2013 version that have been approved by the full Senate and now by the House committee. Read the Senate-approved version for how these changes fit into the 2013 version. The amendments (here and here) then must be added to the Senate-approved version.

The “Failing” Public School

Schools that exclusively serve children with special needs will not be placed on the list. A school that is either designated by the State Department of Education (ALSDE) or is listed in the lowest six percent of public schools based on the state standardized assessment in reading and math will be labeled “failing” for purposes of the AAA.

The Students

An eligible student is one whose family earns not more than 185% of the federal poverty level (FPL). That level changes from year to year and differs by how many people are in the family. Here are the 2015 numbers. For a family of four, that number is $44,862.50.

Students remain eligible until their family income exceeds 275% of the FPL, which currently is $66,687.50 for that same family of four. (This was the amendment offered by Representative Phil Williams, R-Huntsville.) The original version said that once a student became eligible, the student remained eligible regardless of whether the family’s income level increased.

The total amount of the yearly scholarship is capped as follows:

• Elementary school: $6,000
• Middle school: $8,000
• High school: $10,000

It is unclear if this refers to grade levels or actual schools. A better way to delineate this might have been by grade levels, but for now, this is how the bill reads.

The parent of a child zoned to a “failing” public school can request verification of that zoning from the local board of education (BOE), which the local BOE must provide.

All students participating in this program (whether through a parent claiming a tax credit or receipt of a scholarship from an SGO) must take the state achievement test in the grades that students in public schools take the tests. Currently, public school students in grades 3 through 8 take the ACT Aspire.

The SGO must foot the cost of the testing. It is unclear who will pay for testing for students whose parents claim the tax credit (as opposed to receive a scholarship from an SGO).

Test results must be provided to parents.

The Donors

An individual taxpayer can claim 100% of the donation to an SGO as a tax credit, up to 50% of the taxpayer’s liability. The $7,500 cap was removed.

A tax credit can be claimed by an S corporation or a corporation under Subchapter K and passed through to an individual who is a shareholder, partner or member thereof.

The total cap on donations was raised to $30 million.

Donations for the 2014 calendar year can be made and tax credits claimed, through October 15, 2015. Donations for the 2015 calendar year can also be made and claimed for the entire 2015 calendar year.

Donors cannot restrict their donation to either a particular student or a particular school or set of schools.

The SGOs

Overall, the SGOs must take more responsibility in many areas, most of which are related to testing and reporting requirements.

SGOs are solely responsible for initially determining a student’s eligibility and making a new determination every other year. No other entity can be charged with making that eligibility determination.

Priority for scholarships must be given to students zoned for “failing” public schools. However, after July 31 of each year, any scholarships funds not accounted for can be awarded to students not zoned for “failing” public schools.

Any scholarship funds left over at the end of the academic year following the year in which donor funds are collected must be turned over to the ALSDE for use for at-risk students by local boards of education.

SGOs must ensure that 75% of its first-time scholarship recipients were not enrolled in a nonpublic school during the previous academic year.

SGOs are allowed to utilize and spend up to 5% of contributions in a given calendar year during that year and/or the subsequent calendar year.

SGOs are required to ensure that students receiving scholarships conform to the attendance requirements of the school they attend. [The school is required to notify the SGO if a student does not conform to attendance requirements.]

Regarding testing, the SGO must ensure that schools administer the state achievement tests to all students receiving educational scholarships from the SGO.  What changed here is that the school no longer has the option of choosing a norm-referenced test, but must administer the same achievement test that the state requires students in public schools to take. For now, that test is the ACT Aspire.

SGOs must collect all of the test results and turn over those results to whomever the Alabama Department of Revenue (ADOR) chooses to analyze those results (more on this farther down the page) by August 15th each year.

The Schools

A nonpublic school no longer has to be in existence for three years before it can be deemed qualified to participate. It must, however, be governed by a board of directors.

The nonpublic school has three years from the time it is determined to be qualified to subsequently gain accreditation.

Nonpublic schools can now become qualified if they are accredited by any of the six agencies in the original 2013 version or the National Council for Private School Accreditation, AdvancEd, the American Association of Christian Schools, or one of their partner accrediting agencies.

The school must update its web site prior to the start of each semester to include the current tuition and fees.

If a school is to receive more than $50,000 in scholarship money in an academic year, the school must file a surety bond prior to the first receipt of any funds for that academic year.

By August 1 of each year, the school must submit verification to SGOs that the school complies with the Alabama Child Protection Act of 1999.

In addition, the school must submit verification annually to all SGOs from whom it receives funds that it is complying with health and occupancy laws, nondiscrimination laws, and criminal background checks. The school must also verify it will not employ persons that have been prohibited from working in public school or who may reasonably pose a threat to students.

As noted in the previous section, if a student does not conform to attendance requirements, the school is required to immediately communicate that to the SGO who granted the scholarship.

The SGO Reporting Requirements

Annual reporting has been expanded, and the due date for the annual report (here’s the 2013 report) has changed from June 1 to September 1. This is likely due to the change of reporting year from the calendar year to the academic year (July 1 to June 30).

All of the reports are public.

The annual report, submitted by the SGO, will now include the following information about the previous academic year’s scholarships and recipients:

• the number and dollar amount of contributions received,
• the number and dollar amount of scholarships awarded and funded,
• the number and dollar amount of scholarships awarded and funded for students eligible for free or reduced-price meals, and
• the percent of first-time scholarship recipients who were enrolled in public school during the previous academic year.

New quarterly reports are required to be filed by the SGO. The report must be filed by the 15th day after the end of the calendar year quarter. The quarterly report must include:

• the total number of scholarships awarded and funded,
• the names of the schools that received scholarship money, the total amount paid to the school, and the total number of recipients
• the number of scholarship recipients who were zoned to “failing” public schools, and
• the number of first-time scholarship recipients who were enrolled in nonpublic school during the previous academic year

SGOs must submit verification of the following to ADOR:

• An annual verification that the SGO is determining eligibility,
• An annual verification that the SGO is giving priority for scholarships to students zoned for “failing” public schools,
• An annual verification that the SGO’s policies do not restrict a parent’s educational choice (i.e., that the SGO does not have an exclusive contract with a nonpublic qualifying school to only accept students receiving that SGO’s scholarship funds),
• An annual verification that schools are complying with all laws related to health, occupancy, nondiscrimination and criminal background checks (schools are required to submit that information to the SGOs),
• An annual verification that it has received verification from the school that the school complies with the Alabama Child Protection Act of 1999.

Reporting Test Results

This is something entirely new, and was added in an amendment offered by Representative Terri Collins (R-Decatur).

This amendment requires ADOR to “select an independent research organization, which may be a public or private entity or university,” to analyze and report test results every other year on its web site.

The report will aggregate results by grade level, gender, family income level, number of years of participation in the tax credit scholarship program, and race of the student receiving an educational scholarship.

“The report shall also include, to the extent possible, a comparison of the learning gains of students participating in the tax credit scholarship program to the statewide learning gains of public school students with socioeconomic and educational backgrounds similar to those students participating in the tax credit scholarship program.”

It is unclear how “educational background” will be measured.

The costs of these reports and analyses will be borne by the SGOs in proportion to the contributions received over the two years being measured. SGOs will be allowed to use “funds from outside sources” to pay for its portion of the biennial report.

The first report will be due September 1, 2016. This would have been about the time the results would have first been reported under the original version of the AAA, as it did not call for results to be reported until the third year after the test had been administered.

So this is the version that the House committee passed. The full House could vote on these changes as early as this week.