President Trump and Education Secretary Betsy DeVos visited a Florida Catholic school to extol the state’s tax-credit program, which provides public support for private-school tuition. (Joe Burbank/Orlando Sentinel via AP)

Senate Democrats are asking the Government Accountability Office to examine state programs that offer tax credits in exchange for donations for private-school scholarships, arguing that it’s important to identify potential risks of financial misconduct at a time when the Trump administration might push for a new tax credit at the federal level.

“With the strong possibility of federal legislative activity on tax-credit vouchers at the federal level in the near future, we are interested in how states have designed these programs, whether they have strong internal controls, and whether they pose a risk of waste, fraud, abuse, misconduct, or mismanagement,” three senators wrote in a letter to Gene L. Dodaro, head of the GAO.

“A multi-state analysis of this issue by GAO would help inform the advisability of any future federal programs and help ensure proper fiscal accountability and transparency for federal funds,” they wrote. The letter, dated April 13, was signed by the ranking Democrats on the Senate education and finance committees, Sens. Patty Murray (Wash.) and Ron Wyden (Ore.), and by Sen. Sheldon Whitehouse (D-R.I.).

Tax-credit scholarship programs function much like traditional private-school vouchers, but they were designed to work differently to get around state bans on using public funds to benefit religious institutions. Companies can receive a full or partial state tax credit if they donate funds to help children pay for private school, which means instead of sending tax dollars to the state treasury, they send the money to a scholarship-granting organization. That organization is then responsible for giving out the money to families.

Seventeen states now offer such tax credits, and they each have different rules regarding which students are eligible for the money, how much money each student gets, and whether and how much information private schools must publicly report about how they use the dollars and how their students perform academically. Rules also differ regarding which organizations qualify to receive and then dole out tax-credit donations, and how much of that money they can use for overhead expenses.

“These inconsistencies make it challenging for policymakers to assess the consequences of instituting these types of tax credit schemes on fiscal accountability,” the senators wrote. They asked GAO to answer four questions in its review:

How have states structured tax credit voucher or incentive programs?

What financial accountability requirements — including any requirements intended to guard against fraud, waste and abuse — have states established for organizations that administer and manage the programs?

How have selected organizations administered tax credit voucher or incentive programs (including any steps taken to ensure transparency, efficiency, and accountability)?

How have selected states monitored these programs? What are best practices and the challenges the programs have encountered?

Read the full letter:

2017-04-13 Letter to GAO School Choice Tax Incentives Request