How To Take In $33 Million In Taxpayer Dollars: Partner With The Catholic Church
Illinois lawmakers last August passed a scholarship program that allows thousands of low- and moderate-income kids to attend private schools, with taxpayers footing the bill.
Now, the small advocacy organization that drafted the tax credit scholarship legislation and lobbied for it behind the scenes, has emerged as the main group collecting donations and handing out scholarships. The group changed its name in November to Empower Illinois and now controls $33 million in taxpayer contributions. That’s 74 percent of all scholarship donations pledged statewide since the program began in January.
Crucial to Empower Illinois’ meteoric growth has been an alliance with the Catholic Church — a setup that is benefiting both groups in their rush to secure scholarship money and the power it could bring with it, including the power to influence future state education policy.
The “Invest in Kids” state tax credit scholarships are funded by taxpayers, who then get a credit to reduce or eliminate their tax liability with the state. The cap on donations — $100 million — makes it the biggest first-time tax credit scholarship program in the country.
The program, which opponents liken to a backdoor school voucher plan because it diverts tax dollars to private schools, was never debated in the General Assembly. It was tucked into the historic overhaul of Illinois’ public school funding formula passed last year. Cardinal Blase Cupich lobbied for its passage. More than half of the state’s private schools are Catholic.
Families apply for the private school scholarships — worth up to roughly $13,000 — through state-authorized “scholarship granting organizations.” There are nine of these charities this inaugural year, including Empower Illinois.
Director Myles Mendoza attributes his group’s extraordinary growth to its focus on “unity.”
“When the law passed the finish line in August … everyone realized there was strength by coming together,” Mendoza said. “So we brought Muslim, Jewish, Lutheran, Catholic, along with Montessori and other secular schools.”
Mendoza said the group has built a "clearinghouse" for schools to take advantage of the new tax credit scholarship program by offering donors a place to give, and students a place to apply for scholarships. Mendoza said 80 percent of private schools are "part of the Empower network."
But Empower Illinois was built from the ground up with the Archdiocese of Chicago.
How Empower Illinois became a powerhouse
Under the new program, charities like Empower Illinois can keep 5 percent of all contributions for salaries and overhead. Turbocharged by the Catholic Church’s large donor base, Empower Illinois is in line to net an estimated $1.67 million, and that’s just based on donations to date.
The group, which previously had just three employees, now has a layer of top management, including two partners, a managing partner and executive director Mendoza, plus five paid consultants. The consultants include Juan Rangel, who was fired from his job at the helm of UNO Charter School Network in 2013, after the Chicago Sun-Times revealed top UNO execs had steered contracts to relatives. Mendoza said he hired Rangel to do outreach because “in the country, there’s no one with a better ability and skill set to organize than Juan.”
For the Church, the partnership with Empower Illinois gives it access to the wheel of a car it wouldn’t normally be allowed to drive.
Entities that run schools can’t serve as scholarship organizations in the new tax credit program, presumably to safeguard fairness. Despite that, the church and particularly the Archdiocese of Chicago was quick to push its way into control at Empower Illinois.
Empower Illinois Chairman Jim Perry was the founding chair of the Archdiocesan School Board and served there eight years. The businessman resigned in September from the Catholic school board to ensure neutrality within Empower Illinois, he said. Perry also sits on Chicago Public Media's Board of Directors.
Other well-known, significant financial backers of Catholic education sit on the board at Empower Illinois as well — and played an outsized role as the organization launched. Notes from one Empower Illinois meeting state that “Catholics are considered ‘anchor tenants’ … who will bring in the most business, so will have greatest representation on board.”
Catholic Church is critical to growth
The Chicago Archdiocese has tried to channel all potential donations to Empower Illinois, producing donor letters and marketing materials for parish bulletins and schools that frequently mention only Empower Illinois. A Chicago Archdiocese web page, for instance, directs potential donors to call either the Archdiocese or Empower Illinois to contribute.
The church also has encouraged donors to designate their funds for Catholic schools only, which is allowed under the law. Empower Illinois said 90 percent of its funds are restricted to particular schools or school systems. Information about where donations are being directed is not public.
The word about Empower Illinois has gotten out; 77 percent of all donors statewide have chosen “Empower Illinois” from a dropdown menu with the nine scholarship organizations listed.
Tim Cawley, director of parish and school operations for the Archdiocese of Chicago, denies the church chose to work with Empower Illinois because of the power it could wield over the group. “That’s just a false inference,” Cawley said.
He said the relationship between Empower Illinois and the Catholic Church is like the relationship between Walmart and one of its large suppliers.
“We’re like Walmart, and we’re the largest customer for Empower Illinois, in that our donors are donating to them and our students are applying to them,” Cawley said.
“A large customer would say … ‘We’d like you to do this because it makes things easier for us,’” Cawley said. “It’s in their best interest, since we are their largest customer, for them to listen to us, but they don’t always do what we want them to do.”
Michael Murphy, director of Catholic studies at Loyola University and an observer of Church politics, said he doesn’t view the church’s ties to Empower Illinois as a power play.
“It’s more of a survival play I think, especially in Chicago,” Murphy said. “Catholic schools are closing, and anybody who believes in Catholic education doesn’t want to see that happen,” he added, citing the precipitous drop in Catholic school enrollment in Chicago over the last several decades. The archdiocese now educates about 79,000 Chicago-area students, down from a height of 365,000 some 50 years ago.
“Are the motivations nefarious? I don’t think so,” Murphy said. “They’re mobilizing politically to use the tools that are being carved out in this landscape.”
Empower Illinois has made explicit efforts in the last month to bring non-Catholics on as members of its board and working committees. And Mendoza insists Empower Illinois is harnessing the power of the Archdiocese for all groups, not just for Catholic schools.
But, he added, Empower Illinois “really wouldn’t exist without what I call the ‘anchor’ of the Archdiocese, and we're lucky to have had that as our base to be able to build this larger model.”
Little experience with scholarships
Before re-launching as Empower Illinois in November, the group had almost no track record with scholarships, and some organizational practices that raise questions.
Tax forms from 2015 show management and general expenses for the organization were six times greater than what the charity spent on programming, a rate far higher than comparable organizations. Mendoza was paid $189,750. Empower Illinois declined to say how much he makes now. The group has had four different names since 2010.
One of Empower Illinois’ only experiences with scholarship granting came in the summer of 2012, in the gymnasium at St. Benedict the African Academy in West Englewood. The group, then called Freedom to Learn Illinois, raffled off elementary school scholarships to 15 lucky kindergarteners and first-graders.
But just a year after they were awarded, Freedom to Learn asked an experienced Catholic school scholarship group, Big Shoulders Fund, to take over the scholarships. Mendoza said that’s because Freedom to Learn’s focus at the time was on policy, not scholarship granting. The kids are still getting their scholarships, Mendoza said; his group pays for some of them. And, he says, Empower Illinois today is not the organization it once was. There has been a wholesale shift in board, leadership and mission, he said.
The Chicago Archdiocese, when asked about partnering with a group with so little experience distributing scholarships, said its confidence in Empower Illinois was bolstered because the group contracted with Step Up for Students, a nonprofit that helps administer Florida’s tax credit scholarship program. Step Up for Students was hired to manage all “backend systems and processes.”
Those systems collapsed last month, when Empower Illinois’ online application crashed because of “extreme demand” from 24,000 applicants. Parents were unable to apply for scholarships for a month. The group successfully relaunched its application Tuesday night. It says it has received applications from more than 40,000 students.
Scholarships and advocacy
In other states — including Arizona, where tax credit scholarships were born 20 years ago — scholarship groups have become a cottage industry; some 55 groups operate there. Newspapers have caught them enriching their executives and board members. Arizona allows groups to take 10 percent for administration, double what Illinois allows.
As Illinois’ program ramps up, it’s clear that Empower Illinois will be a beneficiary of the legislation it drafted and lobbied for (the group was known as One Chance Illinois at that time), with taxpayer dollars bolstering a politically-connected organization that wants to keep influencing statewide education policy.
Empower Illinois also has an affiliated political action committee and a lobbying group, with Mendoza serving as director there as well.
And with every scholarship it awards, Empower Illinois is building a greater number of students and families that can be mobilized to advocate for education policies.
The re-launched Empower Illinois’ scholarship application includes a link for applicants to “Thank Your Lawmaker” and asks if they want to share contact information with other groups “related to the mission of Empower IL, including information about how parents, grandparents, and guardians can be involved to support making this scholarship possible.” The scholarship program sunsets after five years and will need support from lawmakers to continue.
Mendoza says having an influence on education policy in the state is another reason Empower Illinois was an attractive choice for the Archdiocese of Chicago.
“They knew this is not just scholarship granting, this is also advocacy, this is communicating with legislators who are in charge of this,” he said. “Empower Illinois integrates all those things into one model.”
Linda Lutton covers education for WBEZ. Follow her on Twitter at @WBEZeducation.