Bobbing for Dollars. Former Governor Riley sets up plan to cash in on privatization of Alabama schools
Former Gov. Bob Riley and his millionaire out-of-state partners are putting Alabama schools up for sale through a scheme to further shift state funds to private schools while giving more tax breaks to businesses and big corporations.
To accomplish their goal, they grease the pockets of friendly legislators, lobbyists, and businesses and corporations on the side.
Republican legislative leaders fooled Democrats and many Republicans during the 2013 session when the so-called Alabama Accountability Act (AAA) was whipped through the Legislature without so much as a single committee hearing.
Riley and his influential partner, wealthy venture capitalist John Kirtley of Tampa, Fla., aim to steer even more public education funds to unregulated private schools this year.
While tax credits go to parents and corporations that participate in the program, Riley and his corporate partners get a million dollar management fee.
The state of Florida already has such a program in place because of the large number of charter schools that operate in the Sunshine State.
Kirtley serves as chairman of the board of directors for Step Up for Students, an organization that manages Florida’s tax credit voucher version of Alabama’s Accountability Act. The group receives a 3 percent “management fee” for overseeing Florida’s charter schools. They received approximately $7 million in management fees from the state of Florida in 2012.
Alabama lawmakers included a 5 percent management fee in the Alabama Accountability Act – 2 percent higher than the already profitable fee allowed in Florida.
In December 2013, Riley, now a lobbyist for many of the corporations he helped lure to Alabama with state funds, announced he had set up his own version of Step Up for Students.
Riley said he had established the Alabama Opportunity Scholarship Fund, adding that the program was working well in Florida and Alabama students deserved the same opportunity. What Riley failed to mention was that he and Kirtley would be following Kirtley’s Florida model, allowing them to skim millions of taxpayers’ dollars off the top. John Kirtley sits on the board of directors of Riley’s group.
Like Florida, Alabama’s voucher law allows an administrative fee for Scholarship Granting Organizations (SGOs). That is how Step Up for Students is collecting millions of dollars each year, and presumably Riley hopes to duplicate that scheme in Alabama.
Although there are nine SGOs in Alabama, Riley’s group has, by far, the highest profile and has received the most funding, $20 million, from corporate donations.
Supporters say these organizations were established so that low-income students could transfer to private schools or “non-failing” public schools in Alabama. But the truth is these organizations are the primary conduit for tax dollars to support private schools in Alabama.
Riley’s Alabama Opportunity Scholarship Fund serves as a mechanism by which corporations and wealthy individuals donate to scholarships in return for substantial state tax credits.
With the tax credits, the state doesn’t technically write the check. A business or corporation writes a check, for example, to Riley’s nonprofit for the scholarship, and then the business or corporation gets a 100 percent tax credit — money that would have otherwise gone to state education coffers.
The Alabama Opportunity Scholarship Fund is basically a way for corporations to get large tax breaks for contributions to the Riley non-profit.
The Alabama Opportunity Scholarship Fund has deep ties for political operatives in Florida, including Majority Strategies, a Ponte Vedra Beach, Fla., firm used by House Speaker Mike Hubbard to print many of the Alabama GOP’s mailers during the 2010 election cycle. Majority Strategies and Hubbard’s printing company are reportedly at the center of the ongoing grand jury proceedings in Lee County.
Doug Tuthill, president of Step Up for Students, defended Kirtley in an op-ed in The Birmingham News following a meeting earlier this year with Senate Pro Tem Del Marsh, and Mike Hubbard in Birmingham.
“Tuthill’s impassioned defense doesn’t change the reality that Kirtley is a wealthy political hard-baller whose efforts benefit the education for profit industry,” wrote a Florida blogger. “How he may or not be financially benefitting is unknown. And by playing an aggrieved party, Tuthill has opened the door for speculation into his motives.”
There is no question the real power behind Step Up for Students is Kirtley, who is chairman of the organization’s board of directors, and a co-founder and partner of KLH Capital.
According to the National Institute on Money in State Politics, Kirtley has personally given $369,267 to Florida legislative candidates since 1989.
Kirtley was in Alabama last September for a meeting at The Club. At that meeting with Kirtley were Hubbard, Marsh and former state Rep. John Hilliard, who was representing the Alabama Black Alliance for Educational Opportunities.
Hilliard left the House under a cloud after the Alabama Ethics Commission found probable cause in 2004 that he steered taxpayer funds to a program that employed his relatives. The case was referred for prosecution to then-Attorney General Troy King, who opted not to prosecute.
Riley and his Republican compatriots in the charter school/voucher movement run by Kirtley have already set up shop in Alabama.
Ryan Cantrell, who worked as deputy political director for the Alabama Republican Party when Hubbard was chairman and later as Marsh’s policy analyst, is the new Alabama representative for Step Up for Students.
Kirtley, who successfully lobbied in 2001 to get the corporate tax credit scholarship program approved by the Florida Legislature, is now involved in the programs in Alabama and Florida.
Kirtley has a bit of a shady past of his own. He was sanctioned in 2008 in Ohio for illegal campaign contributions. Kirtley contributed $100,000 to All Children Matter and $2,200 to six legislative candidates.
The Ohio Elections Commission ruled that All Children Matter illegally funneled $870,000 to Ohio through a Virginia PAC, allowing it to exceed the state’s $10,000 limit on PAC contributions. The $5.2 million fine levied was the largest in Ohio history.
And a report by an Orlando, Fla., television station in 2013, said Step Up For Students, which receives hundreds of millions in tax dollars, has ties to big money being used to influence Florida legislators.
The report by WFTV cited a 2011 video where Tuthill unwittingly revealed his organization’s political strategy. It reported that hundreds of thousands of dollars in political contributions were coming from the organization’s address, even though non-profits are not allowed to make political contributions.
Step Up For Students is not allowed to make any political contributions, but in the video posted on YouTube, Tuthill talked about utilizing a PAC to defeat Democratic Party candidates.
In the video, Tuthill, said, “One of the primary reasons we’ve been so successful is we spend about $1 million every other cycle in local political races, which in Florida is a lot of money.”
Step Up For Students received $286 million in 2013 alone, according to WFTV. The rapidly growing program diverts public tax dollars into private school scholarships.
Reporters for WFTV said it discovered hundreds of thousands of dollars in contributions coming from Step Up’s address over the past decade.
Kirtley claimed Step Up didn’t contribute any money to political committees or candidates. He said he used the Step Up mailing address because he is also the chairman of the board for the organization.
But charter school, voucher and online education companies poured more than $2 million into last fall’s political campaigns in Florida, primarily those of Republicans who are again demanding more alternatives to traditional public schools.
Kirtley alone channeled nearly $1.5 million into the 2012 campaign to support voucher and charter school legislation, and has already donated $50,000 to Florida Gov. Rick Scott.
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