Billionaire privatization activists pushing 'neovouchers' for North Carolina

North Carolina lawmakers are moving ahead with plans to establish an indirect voucher system that would help low-income children attend private or religious schools with public funds -- and they are doing so with the financial support of billionaire school-privatization advocates from outside the state.

The North Carolina Opportunity Scholarship Program would allow corporations to donate to nonprofits that would provide scholarships of up to $4,000 per student. In turn, the corporations would receive tax credits allowing them to divert a total of up to $40 million of their state taxes next year, and even more in the future.

While proponents of the approach say it improves educational access, critics charge that the programs -- which are based on a model drafted by the American Legislative Exchange Council, a right-wing corporate interest group funded in part by the billionaire Koch brothers -- drain money from public coffers to benefit private institutions.

Kevin Welner, a professor of education at the University of Colorado, wrote a book on the tax-credit scholarship programs, now operating in eight states including Florida and Georgia, in which he described them as "neovouchers" -- distinguishing them from traditional voucher programs that directly provide public funding for private schools and that consequently have run into legal trouble because of the constitutional prohibition on public funding for religious education.

Here's how Welner described the neovoucher programs in a column for the magazine The School Administrator:

With conventional vouchers, the state effectively bundles tax revenue and distributes it as vouchers. With neovouchers … the taxpayer and the nonprofits play that role, while the state backfills the funding, reimbursing the taxpayer.

Yet after all these machinations, the end result is almost unchanged. The state’s final budget still reflects the loss of tax revenue, and the voucher remains in place. The main practical difference is that neovoucher plans place parents at the mercy of taxpayers’ choices since those donors decide which organizations to fund. And since wealthier residents tend to be the ones who owe substantial state taxes, the decision-making authority is effectively transferred from low-income parents to high-income taxpayers.

The programs have generated controversy in states where they're already operating. The New York Times recently reported that Georgia's corporate tax-credit scholarship program has benefited wealthier families. It also showed how the programs there and elsewhere have been used to attract star athletes and spread the theology of creationism.

Wal-Mart, Amway families' money is key

The group that has been publicly leading the push for neovouchers in North Carolina is Parents for Educational Freedom in North Carolina (PEFNC), a 501(c)(3) charitable nonprofit that held a rally last month calling for the tax-credit scholarship program. PEFNC stands to benefit financially from the legislation by becoming one of the scholarship-granting organizations, enabling it to keep 9 percent of the money for administrative expenses -- about $8.8 million over the first five years, according to the Associated Press.

PEFNC has also received scrutiny recently for flying N.C. House Speaker Thom Tillis and 10 other lawmakers to Miami in March to learn more about that state's neovoucher program -- apparently violating a state law banning lobbyist gifts to lawmakers. The group's political action committee also contributed thousands of dollars to several of the lawmakers' campaigns.

An analysis by the Independent Weekly newspaper in Durham, N.C. found that PEFNC receives most of its money from the Walton Family Foundation, which is run by the billionaire family behind the Arkansas-based retail giant Wal-Mart. The foundation focuses on policies hostile to public schools, according to Sourcewatch.org, a project of the Center for Media and Democracy.

PEFNC received grants from the Walton foundation of $275,000 in 2010, $525,000 in 2011 and $625,000 in 2012, the Independent Weekly reported.

But PEFNC is not working alone in campaigning for neovouchers in North Carolina: It's getting help from a 501(c)(4) independent political committee called NC Citizens for Freedom in Education (NCCFE), which has operated largely under the radar to date.

According to state Board of Election records, all of NCCFE's funding in the current election cycle so far -- $52,900 -- came from the American Federation for Children, a national organization that promotes privatization of public schools and has played a key role in the creation of neovoucher programs in other states.

The chair of AFC is Betsy DeVos, billionaire wife of Amway founder Richard DeVos and former chair of the Michigan Republican Party. Betsy DeVos' younger brother is Erik Prince, founder of the North Carolina-based private security firm previously known as Blackwater; their father was the wealthy founder of an auto parts company noted for his right-wing politics. The DeVoses have spent tens of millions of dollars to support school privatization efforts.

Betsy DeVos has been upfront about her belief that wealthy families like her own should be allowed to have outsized influence on government, writing in a 1997 op-ed for the Capitol Hill newspaper Roll Call:

"[M]y family is the largest single contributor of soft money to the national Republican party…. I have decided, however, to stop taking offense at the suggestion that we are buying influence. Now, I simply concede the point. We expect to foster a conservative governing philosophy consisting of limited government and respect for traditional American virtues. We expect a return on our investment; we expect a good and honest government. Furthermore, we expect the Republican party to use the money to promote these policies, and yes, to win elections."

NCCFE spent over $24,000 of AFC's money on mailers in the run-up to the May primaries in support of three Democratic lawmakers -- Reps. Marcus Brandon of Guilford County, William Brisson of Bladen County, and Jim Crawford of Granville County. Brandon and Brisson both won their primaries, while Crawford lost to state Rep. Winkie Wilkins, who was placed in the same district by the Republican majority's redistricting plan.

Brandon and Brisson were also among the candidates who received contributions from the PEFNC political action committee in the pre-primary period, with Brandon receiving $2,500 and Brisson $1,000. In addition, Brandon was one of the lawmakers who took the controversial trip to Florida sponsored by PEFNC.

Brisson and Brandon went on to become primary sponsors of the corporate scholarship tax credit legislation introduced on May 23, along with House Majority Leader Paul Stam (R-Wake). Crawford is one of the bill's co-sponsors.

Nasty politics ahead?

Organized in September 2010, NCCFE got its first contribution -- for $100 -- from Darrell T. Allison, president of PEFNC, according to state Board of Election records. The group refunded his contribution less than two weeks later.

Since then, all of NCCFE's money has come from out-of-state individuals and organizations, according to disclosure reports.

During the 2010 election cycle, its work was funded by a $20,000 contribution from Patrick Byrne, CEO and chair of Overstock.com in Salt Lake City, Utah and son of insurance billionaire John J. Byrne.

Patrick Byrne co-chairs the Friedman Foundation for Educational Choice, which was founded by Milton and Rose Friedman and promotes educational vouchers. Byrne and his family also contributed most of the funds to support Utah House Bill 148, a proposal creating a statewide school voucher system that was passed by lawmakers in 2007 but was repealed in a referendum before it took effect.

NCCFE took in no contributions during 2011, a non-election year, but it jumped into action again this year with the $52,900 contribution from AFC on April 17.

Given that it spent just shy of $25,000 on the primary, NCCFE has almost $28,000 of AFC's money in the bank to spend on the general election.

In other states, AFC's money has funded some rather nasty politics, as the New York Times reported:

In Florida’s 2010 election, the federation supplied $255,000 to finance an organization that paid for advertising against Dan Gelber, who was running for attorney general and had opposed state financing for private schools.

The ads, mailed to Jewish neighborhoods, called Mr. Gelber "toxic to Jewish education." His staff found out about them from his 11-year-old daughter, who called the office in tears after finding an ad in their mailbox.

The mailers financed by AFC in North Carolina's 2012 primary did not spark any controversies. But what tone the group will take in the general election in the key battleground state remains to be seen.

In the meantime, N.C. House leader Stam has predicted that the neovoucher legislation will win quick passage in the legislative session now underway.