Revisions to Accountability Act Would Keep Riley SGO from Failure

March 30, 2015

By Bill Britt
Alabama Political Reporter

MONTGOMERY—Current legislation before the State Senate Finance and Taxation Education Committee changes the terms of the Alabama Accountability Act to potentially benefit one particular Scholarship Granting Organization (SGO). The primary beneficiary of the revised law would appear to be the Florida-owned SGO led by former Governor Bob Riley (Riley’s SGO is a whole subsidiary of Florida-based Step Up for Students, according to its 990s).

According to an internal memo from Riley’s SGO, the Alabama Opportunity Scholarship Fund (AOSF), needs approximately $15 million by May 1, 2015, just to renew its current scholarship obligation. Under the provisions of the current law, Riley’s SGO could default on renewals and would not be able to enroll new students. 

However, SB71 would change current law in such away the Riley’s SGO would survive.

If SB71, sponsored by Senate President Pro Tem Del Marsh (R-Anniston), fails to pass, Riley’s AOSF could be the first SGO to fail under the Accountability Act, which was lauded as an historic measure to help children in failing schools.

AOSF’s own accounting shows that the group needs $15,110,300 just to renew students from the 2014-2015 school year.

AOSF Director Leslie Sercy confirmed in December 2014 that Riley’s SGO had only raised $641,000 in 2014, far short of what is needed to even renew students who are counting on scholarships from AOSF.

The organization blames the anemic fundraising on the lawsuit that was before the Alabama Supreme Court:  “Because of the lawsuit, donors waited until the Alabama Supreme Court ruled before committing their donations.”

However, other SGOs raised substantial funds during this period, including Scholarships for Kids, which is headed by former Riley ally and Chief Justice Drayton Nabers, which is said to have raised around $13 million while the suit was pending.

According to AOSF, it needs needs $15,110,300 to renew students from 2014-2015 school year, $14,675,700 for renewing students from 2015-2016 and $772,405 for operational fees.

According to internal numbers, the group needs a total of $41,631,158 to meet all its goals, which accedes not only the current cap but the proposed increase under SB71.

Under current law, the total funds available to all SGOs is $25 million, under the revised law the cap would be raised to $35 million.

According to Riley’s own reports, the AOSF has $12 million on hand from 2014, which it proposes to bring forward to partially cure its funding woes. Yet, current law does not allow for SGOs to use money from previous years.

This is another instance where the revised bill as written by Marsh, would allow Riley to benefit by changing the law to allow funds from previous year to be carried forward.

Also under the revised law, Riley’s SGO would be allowed to raise money until May 2015, and still permit its contributors to retroactively take the donation off their 2014 taxes. This is accomplish by permitting donors to file an extension on their 2014 tax and then receive a tax credit even through the fund were given in 2015.

So, it is that under the revised law Riley’s SGO (and others) could raise money past the deadline, allow donors to receive a tax credit for the previous year, raise the cap on giving and bring funds forward from previous years.

SB71 would not fix all of the problems faced by Riley’s SGO, but it would keep them from default or worse.

© Copyright 2017 Alabama Political Reporter