darts and laurels

Darts and Laurels

The East Valley Tribune uncovers abuse of a school tuition program
November 12, 2009

Editor’s Note: After this “Laurel” went to press, the East Valley Tribune announced that it will cease publication online and in print after December 31. Parent company Freedom Communications, which is reorganizing under Chapter 11 bankruptcy, had unsuccessfully attempted to sell the publication and announced the Tribune‘s closing on Nov. 2, citing “the economic recession and changes in the newspaper industry.” Read about the paper’s final days from the perspective of one of its former Pulitzer Prize-winning reportershere.

It started as yet another one of those “It’s the economy, stupid” stories for Michelle Reese, the education reporter at the East Valley Tribune, a free daily in Phoenix. With the country in the midst of a recession and Arizona hit hard by the collapse of the housing market, Reese had been assigned a steady diet of formulaic economic-impact stories. So in April, when her editor asked her to find out how the recession was affecting parents’ ability to pay for private school, Reese was surprised to learn that there had been no mass exodus from the expensive private-school system. Instead, the main economic indicator in the system seemed to be an increase in demand for free-tuition money collected and dispensed by nonprofit charities called school-tuition organizations, or STOs. Was there a connection?

In 1997, Arizona state legislators set up a system of tax credits to fund private-school scholarships through private donations in order to help financially needy students. Donors got a smaller state tax bill, and children got tuition money. It was supposed to be a win/win situation—and it was. But the winners continued to be the privileged few who already attended private schools, because the legislation failed to establish standard criteria to determine who got the scholarships. A handful of STOs required that the money go only to children who qualified for free or reduced lunch, but most did not. And the only restriction on the credits was that tuition money couldn’t go directly to a donor’s child. But parents got around this restriction by asking family and friends to donate to the tuition fund and “recommend” their specific student for the scholarships. Some even made deals to donate on behalf of each other’s children.

Reese had stumbled onto the biggest open secret in Arizona’s private-school world: a cumulative $350 million in taxpayer-subsidized, private-school tuition. “I think the parent interviews for that story were what set the wheels going,” Reese says. “Parents were getting seventy, eight, ninety percent of their education costs covered by these tax credits. I said, ‘Wait a minute. Is this how this is supposed to work?’ ”

That first story spawned a three-day, six-part investigation called “Rigged Privilege” that uncovered abuses of private-school tax credits at almost every level. Parents were gaming the system; schools were producing manuals to help them to do so while simultaneously hiking their tuition; and some of the STOs created to shepherd the funds were profiting by keeping more than the 10 percent of total donations they were allowed for overhead. Meanwhile, students at the schools receiving the most scholarship money remained overwhelmingly white while the state’s Hispanic population boomed, suggesting that the tax credits had failed to increase minority students’ access to private schools.

The East Valley Tribune is not a big paper. Earlier this year, it cut its print edition to three days a week, and it had just fifteen reporters when it embarked on the series. But when assistant editor CeCe Todd realized the size and significance of Reese’s story, she freed up reporter Ryan Gabrielson to help. They planned to finish the series in three weeks; it took two months. “I’m very proud that we devoted the amount of space that we did to this,” says Todd. “Not all newspapers our size would be willing to do that.”

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Gabrielson, who won a Pulitzer Prize this year for a series that showed how routine police protection suffered as Maricopa County Sheriff Joe Arpaio focused on combating illegal immigration, was accustomed to deep document dives for his investigations. But because the schools were private, the usual documents and statistics weren’t available. Instead, he and Reese had to rely on interviews. “It was a lot of talking to people, and it was a lot of pounding the pavement,” Reese says. Parents were willing to talk, Gabrielson says, because most felt justified in taking the tax credits and sincerely believed their children would fall through the cracks of public education without them.

Since the series was published in the first week of August, two state legislative task forces, one Democratic and one Republican, have launched inquiries into the tax credits with the intent of amending the bill to give it some teeth. The series has also blazed a trail for reporters in seven other states that offer private-school-tuition tax credits. “I talked to school tax organizations in other states while reporting the story,” Reese says, “and one comment made to me from someone at the Department of Education in Georgia was, ‘You ought to see what they’re doing here.’ I thought, ‘Wow, some Georgia newspaper is going to have a heyday with that one.’ ” Sure enough, a week after the Tribune’s series was published, The Atlanta Journal-Constitution had its own story about parents exploiting a loophole in Georgia’s tax-credit law.

Gabrielson has since left the paper for a fellowship at the University of California at Berkeley’s Graduate School of Journalism, but Reese remains at the Tribune, and her first investigative story has inspired her to pursue others. But that doesn’t mean she’ll forget about those routine daily stories, like the one that helped her uncover school-tax-credit abuse. “It was a very simple story,” she says, “that triggered a thought: ‘Here’s something that’s been around for twelve years. When is the last time anyone looked at it?’ ”

Alexandra Fenwick is an assistant editor at CJR.