2015 ANNUAL REPORT. Opportunity Scholarship Fund
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1 2015 ANNUAL REPORT Opportunity Scholarship Fund An Oklahoma Scholarship Granting Organization September 1, 2014 December 31, 2015
2 FRIEDMAN FOUNDATION PERSPECTIVE Oklahoma s tax-credit scholarship program could be one of the most generous in the nation because of the high-income limit for eligibility and per-student funding. In practice, however, the $3.5 million cap on credits severely restricts the number and amount of scholarships that can be awarded. If all scholarships awarded were $5,000, only 700 students could participate. Additionally, the pro-rata distribution of tax credits to donors makes administration very difficult for SGOs, as they cannot notify donors of the credit they will receive until the state tax commission receives all credits claimed for the year. Donors are also only allowed a 50 percent tax credit for donations (unless they commit to two years of giving, which raises their credit to 75 percent). The program has a reasonable level of school regulations: Participating schools must provide progress reports to parents, be accredited, follow health and safety codes, and obey nondiscrimination laws. The program has a tremendous opportunity to be one of the nation s strongest, if the eligibility and overall funding cap are raised or removed entirely and the pro-rata method for distributing tax credits is removed. SOURCE ABCs of School Choice 2016, Friedman Foundation, page OSF Annual Report February 9,
3 BOARD OF DIRECTORS Michael Carnuccio (President), Oklahoma City Charles Daniels (Vice President), Bartlesville Mark Stephens (Secretary), Tulsa Brandon Dutcher, Edmond Todd Kolczun, Member, Miami Brittoni Lantz, Member, Moore TW Shannon, Member, Tulsa Jabar Shumate (until June 2015), Tulsa STAFF Michael Lapolla, Executive Director, Tulsa Renae Page, Office Manager, (January 2014 current), Oklahoma City Brittoni Bobek, Office Manager, (November December 2014), Moore Kelli Hughes, Office Manager (July October 2014), Tuttle CONTRACT SUPPORT Website: Rogez Designs, Chad Rogez, Edmond Banking: Becky Weese, BancFirst, Oklahoma City Insurance: Philadelphia Insurance Companies, Bala Cynwood, PA Accounting: FD, Thompson & Company, P.L.C., Patsy Starks, Oklahoma City 2015 OSF Annual Report February 9,
4 ORIGIN The Opportunity Scholarship Fund is a Scholarship Granting Organization as authorized by the Oklahoma Legislature in 2011 per Senate Bill 969. SB 969 was amended by House Bill 1693 in 2014 and by HB 1693 in The OSF was operationally launched July 10, As of December 31, 2015, the OSF has been operational for 18 months. It is now comprised of 47 member schools. Of that number, 35 have raised funds for scholarships in SOURCES OF REVENUE In 2015, the OSF enjoyed a productive year. The collective results of our member schools exceeded expectations. The reasons were many but all are tied to efforts of school leaders. New schools joining OSF, significant corporate gifts, and a large increase in the number of individual donors enhanced our totals. As of December 31, 2015, our OSF schools have raised $1,577,508 (September 2014 December 2015), and now have $966,506 million available on-hand for scholarships in In 2014, 18 schools and 135 donors raised $322,955. In 2015 the number of active schools more than doubled; the number of individual donors tripled and the amount raised quadrupled. In 2015, the 35 active member schools generated 401 donations valued at $1.25 million. As of December 31, 2015 total donations have been $1,577,508; funds available after the operating fee assessment was $1,419,757; and schools have awarded scholarships valued at $453,251. Therefore the current balance available for scholarships in 2016 is $966,506. Most of that money will be expended in the Fall semester of the school year. Included in this report is all donation and scholarship detail since the program inception OSF Annual Report February 9,
5 SCHOLARSHIP RECIPIENTS From program inception through February 8, 2016, the Opportunity Scholarship Fund has granted 220 scholarships valued at $544,000 The law states that the OSF should spend a portion of scholarship money on low-income students (below 185% of poverty) in the percentage as lowincome students in the state. The state percentage is 59%. To-date the OSF has awarded 55% of funds to low income students (see table below). Additionally, it is recognized that the income range of % of FPL generally defines the lower middle class incomes in the country. OSF spends 28% on this group. Thus the OSF will expend 83% of dollars on low income or lower middle class income families. The OSF does not centrally control what families/students receive the scholarships. Our agreement with the member schools is that they should award scholarships based upon demonstrable need, and that percentages and distributions would take care of themselves. So far that has been true. The OSF schools now have almost $1 million available for scholarships. Most of that money will be used during the Fall 2016 semester. Family Income Scholarships Pct Under 185% FPL $299,150 55% % FPL $153,498 28% Over 300% FPL $91,503 17% TOTAL $544, % Family Income Median Average Scholarships $2,250 $2,473 Family Income $42,475 $51,840 Family Size OSF Annual Report February 9,
6 VALUE TO OKLAHOMA All revenues generated by OSF will be expended for tuition scholarships. OSF scholarships help lower income families afford private schools. The average scholarship has been $2,500 per year. Therefore the foregone revenue in tax credits was $1,250 per scholarship. The current state/local per pupil costs for public schools is $8,525. Therefore the OSF could scholarship 2,800 students at a cost to Oklahoma of $3.5 million in tax credits ($3.5 million/$1,250). If all of these students attended public schools the cost would be almost $24 million (2,800 x $8,525). The net taxpayer savings would be over $20 million. See table below. The scholarship reliance rate breakeven point is 15%. If more than 15% of low-income scholarship recipients rely upon the scholarship to remain in private school then there is no cost savings at all by eliminating to the program. In fact, damage will be done to both the taxpayer and public school financing not to mention the students/families. The current reliance rate estimate by member schools is 80%. Scholarship Reliance Rate Value of Tax Credits Reduced Costs Public Schools Taxpayer Net Savings 100% $3,500,000 $23,871,596 $20,371,596 80% $3,500,000 $19,097,277 $15,597,277 60% $3,500,000 $14,322,958 $10,822,958 40% $3,500,000 $9,548,638 $6,048,638 20% $3,500,000 $4,774,319 $1,274,319 15% $3,500,000 $3,580,739 $80,739 10% $3,500,000 $2,387,160 - $1,112,840 0% $3,500,000 $0 - $3,500, OSF Annual Report February 9,
7 SUMMARY Our schools did great work in By now all member schools are realizing that we are just scratching the surface of the potential for OSF to provide scholarships to students and families. The attachments for this report are for Board of Director Eyes Only. They contain information that should not be shared external to the Board. ATTACHMENTS The following data tables will be included in our permanent records. All data are for the entire operating period of the Opportunity Scholarship Fund (September 1, 2014 December 31, Account Balances by School (Board Members only) 2. Master Check Register (By Executive Director/Board approval) 3. Individual Donations in Date Order By Executive Director/Board approval) 4. Individual Donations by School By Executive Director/Board approval) 5. Scholarships Awarded by School (By Executive Director/Board approval) Prepared and submitted to the Board by: Michael Lapolla, Executive Director Renae Page, Office Manager February OSF Annual Report February 9,
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