Audit finds problems at scholarship organization
September 4, 2019
Ana Ceballos
TALLAHASSEE --- Florida’s largest K-12 scholarship funding organization put at risk assistance to more than 500 students with special needs ahead of the 2018-2019 school year because staff members made a “processing error” involving enrollment documentation, a Florida auditor general report found.
The audit, issued last week, said special-needs students who were eligible for awards under the Gardiner Scholarship Program saw a delay in funding due to the error by the organization Step Up for Students. The error affected 583 students before it was fixed.
Other issues flagged by auditors involved the non-profit organization’s failure to properly check applicants’ household-income eligibility for the Florida Tax Credit Scholarship Program, which provides voucher-like scholarships for low-income students to attend private schools.
“During the eligibility determination process, there is an increased risk that scholarships will be awarded to ineligible recipients or for incorrect amounts,” state auditors warned, adding that the Florida Department of Education’s input “should be solicited” to fix the matter.
The Department of Education did not immediately respond to requests for comment from The News Service of Florida.
Step Up for Students administers a series of voucher-like programs for the state, including the Family Empowerment Scholarship Program, which lawmakers created this year. The organization has deep political connections in Tallahassee, with its board including longtime school-choice leader and Republican donor John Kirtley, Democratic Congressman Al Lawson and former Republican state Sen. John Legg, according to the Step Up for Students website.
Under state law, the organization is allowed to keep 3 percent of each voucher amount for administrative costs.
The scholarship programs have long been controversial, as GOP leaders have sought to expand school choice. Teacher unions and many Democratic lawmakers have argued that the programs strip money from public schools.
“We’re not surprised the auditor general found that Step Up has misused funds,” said Fedrick Ingram, president of the Florida Education Association, the state’s largest teacher union. Ingram alleged the non-profit has “a history of these types of findings and of getting away with it.”
Auditors warned that failing to properly manage applications for the Gardiner and Florida Tax Credit scholarship programs could keep students from receiving funding. The Gardiner program, named after former Senate President Andy Gardiner, R-Orlando, serves students with disabilities.
Doug Tuthill, president of Step Up for Students, wrote in an Aug. 26 letter to state auditors that the organization fixed some issues ahead of the 2019-2020 school year.
“Effective with the opening of the 2019-20 school year, processing for the Gardiner Scholarship program, system business rules were updated, and employees were trained to address the issue,” Tuthill assured state officials.
Tuthill also said changes were made to the process of determining household income for eligibility in the Florida Tax Credit Scholarship Program during the 2019-2020 school year.
But Tuthill “respectfully disagreed” with other issues highlighted in the audit, which included a finding that the organization spent $280,000 meant to be used for the Florida Tax Credit Scholarship Program for purposes unrelated to the program.
The audit, first reported by Politico Florida, said the money involved interest that had accrued and was spent in the 2017-2018 school year on costs that included a $196,000 “web-based application system” not used exclusively for the program.
Based on auditors’ calculations, Step Up for Students earned $1.4 million in interest on tax-credit dollars in 2016-2017 and 2017-2018, which could have been used to fund up to 237 scholarships.
Tuthill defended the use of the interest money by pointing to “start-up costs” for scholarship-funding organizations to carry out new programs.
“The Florida Legislature has established three new programs in the last 5 years, but hasn’t provided the SFOs with start-up funding,” Tuthill wrote. “Therefore, as permitted by law, Step Up uses the interest earned on the investment of FTC funds to help pay for the start-up implementation and improvement of new Florida programs.”
While Tuthill disputed the audit finding, he said the organization has used other money to make up the disputed interest income.
Auditor recommended that Step Up for Students should ensure that interest earned should only be used to benefit that program.
Ingram told the News Service that Education Commissioner Richard Corcoran and Gov. Ron DeSantis should be more proactive about holding Step Up for Students accountable.
“When it comes to public schools, we’ve seen Commissioner Corcoran and Gov. DeSantis take quick, decisive action to correct wrongs,” Ingram said. “Unfortunately, they have not shown the same desire when it comes to voucher schools and voucher funding organizations.”
