Neb. auditor questions tax-funded scholarships
Posted: Monday, November 17, 2008
OMAHA (AP) -- Nebraska State Auditor Mike Foley is questioning whether a scholarship program offered by a tiny eastern Nebraska school district is on the up-and-up, and has asked the state attorney general's office for a legal opinion.
The Rising City district, which has fewer than 150 students, has been advertising in neighboring communities' newspapers, offering scholarships of up to $5,000 for high school students who come to their district.
Essentially, students who complete their studies, manage at least `B' grades in their classes and perform some community service can get scholarship money that grows with each year of high school they complete.
Ninth-graders earn $500, 10th-graders get $1,000, 11th-graders earn $1,500 and seniors get $2,000, said Rising City High School Principal Michael Derr. The money set aside for scholarships is paid directly to the accredited college, university or other post-secondary institution in which the student enrolls.
Foley said the problem with the scholarships is that they're funded with state aid money and property tax dollars intended to pay for textbooks, teacher salaries and other costs associated with teaching students.
However, Foley says he can't find anything in Nebraska law that prohibits the practice.
"We don't understand how you can use dollars that are public dollars, that are supposed to go to K-12, and turn them into scholarships," Foley said. "If some wealthy donor said, 'Hey, here's half-a-million dollars to help your school district,' and you created this new program and tried to lure kids in, then I suppose there's nothing we could say about it. But our first question to them is, 'Where's this money coming from?' "
Derr said the money for the scholarships is, so far, slated to come from the district's general fund, which is made up of public moneys. Fewer than 10 students are currently enrolled in the scholarship program, he said.
Derr said he and the district's school board also had questions about whether they could use taxpayer money for the scholarships -- so they consulted an attorney.
The attorney "didn't see any reason why we couldn't do this," Derr said.
However, since this is the first year the scholarship is being offered, he said, the district could use other money, like private donations, if it were to get some.
Derr disputes the suggestion that the program is intended solely to draw students from other districts and, therefore, avoid having to close or merge with another district because of low enrollment.
"Obviously, that was part of it," he said. "But the board of education really sees it as their role to prepare kids for life after K-12 school. One way to do that is to try to encourage post-secondary schooling."
The program was spawned by an earlier scholarship program sponsored by Peru State College, which waived tuition for high school students at Rising City and other rural schools who participated in Peru State's college preparatory program.
Whatever Rising City's intention, Foley bristles at the use of public money -- especially state aid for education -- to fund the scholarships.
"If this passes muster, then where to you draw the line?" he asked. "Rising City is trying to coax students from Columbus. If this works, then why doesn't Columbus start coming up with a similar program? And then Lincoln, Omaha and Millard? Pretty soon, the state aid formula no longer is K-12 money, it's now education through the Ph.D. program."
The Education Department referred questions about the Rising City program to Foley's office.
A spokeswoman with the Nebraska Attorney General's office said her office had received Foley's request, but could not say when the office was expected to issue an opinion on the scholarships.
"We honestly don't know what the answer is; that's why we're posing the question to the attorney general," Foley said. "Intuitively, one would think that the state aid formula statutes would clearly say this money is for K-12 education, but it doesn't quite say that. It just says, this is how the money gets to the school districts."
Having been a state lawmaker for six years, Foley said he believes the intent of the Legislature is that state aid money should go toward the cost of providing public K-12 education -- and only that.
"That may be ultimately what the attorney general opines, is that there needs to be legislative clarification as to what these dollars can and cannot be used for," Foley said.
The Rising City district, which has fewer than 150 students, has been advertising in neighboring communities' newspapers, offering scholarships of up to $5,000 for high school students who come to their district.
Essentially, students who complete their studies, manage at least `B' grades in their classes and perform some community service can get scholarship money that grows with each year of high school they complete.
Ninth-graders earn $500, 10th-graders get $1,000, 11th-graders earn $1,500 and seniors get $2,000, said Rising City High School Principal Michael Derr. The money set aside for scholarships is paid directly to the accredited college, university or other post-secondary institution in which the student enrolls.
Foley said the problem with the scholarships is that they're funded with state aid money and property tax dollars intended to pay for textbooks, teacher salaries and other costs associated with teaching students.
However, Foley says he can't find anything in Nebraska law that prohibits the practice.
"We don't understand how you can use dollars that are public dollars, that are supposed to go to K-12, and turn them into scholarships," Foley said. "If some wealthy donor said, 'Hey, here's half-a-million dollars to help your school district,' and you created this new program and tried to lure kids in, then I suppose there's nothing we could say about it. But our first question to them is, 'Where's this money coming from?' "
Derr said the money for the scholarships is, so far, slated to come from the district's general fund, which is made up of public moneys. Fewer than 10 students are currently enrolled in the scholarship program, he said.
Derr said he and the district's school board also had questions about whether they could use taxpayer money for the scholarships -- so they consulted an attorney.
The attorney "didn't see any reason why we couldn't do this," Derr said.
However, since this is the first year the scholarship is being offered, he said, the district could use other money, like private donations, if it were to get some.
Derr disputes the suggestion that the program is intended solely to draw students from other districts and, therefore, avoid having to close or merge with another district because of low enrollment.
"Obviously, that was part of it," he said. "But the board of education really sees it as their role to prepare kids for life after K-12 school. One way to do that is to try to encourage post-secondary schooling."
The program was spawned by an earlier scholarship program sponsored by Peru State College, which waived tuition for high school students at Rising City and other rural schools who participated in Peru State's college preparatory program.
Whatever Rising City's intention, Foley bristles at the use of public money -- especially state aid for education -- to fund the scholarships.
"If this passes muster, then where to you draw the line?" he asked. "Rising City is trying to coax students from Columbus. If this works, then why doesn't Columbus start coming up with a similar program? And then Lincoln, Omaha and Millard? Pretty soon, the state aid formula no longer is K-12 money, it's now education through the Ph.D. program."
The Education Department referred questions about the Rising City program to Foley's office.
A spokeswoman with the Nebraska Attorney General's office said her office had received Foley's request, but could not say when the office was expected to issue an opinion on the scholarships.
"We honestly don't know what the answer is; that's why we're posing the question to the attorney general," Foley said. "Intuitively, one would think that the state aid formula statutes would clearly say this money is for K-12 education, but it doesn't quite say that. It just says, this is how the money gets to the school districts."
Having been a state lawmaker for six years, Foley said he believes the intent of the Legislature is that state aid money should go toward the cost of providing public K-12 education -- and only that.
"That may be ultimately what the attorney general opines, is that there needs to be legislative clarification as to what these dollars can and cannot be used for," Foley said.
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