Georgia Association of Homes and Services for Children

Testimony Before the Tax Reform Council
Normer Adams, Executive Director
Georgia Association of Homes and Services for Children

August 26, 2010

Mr. Chair and Members of this Council,

It is an honor to speak before you this afternoon concerning some of the most important work before the State at this time. This economic crisis has taken a toll on all Georgians. It is the worst economic crisis since the Great Depression. This Great Recession has revealed in crystal clear fashion the structural problems that we have with our tax code. Its present configuration is unsustainable and unbalanced. Because of this structural imbalance, Georgia is having a difficult time meeting its obligations to its most vulnerable citizens.

It is for this reason, I speak today.

I am the Executive Director of the Georgia Association of Homes and Services for Children. Our membership represents more than 140 programs statewide that care for Georgia's at-risk children. These children are at-risk for involvement with Georgia's child protective services system, juvenile justice and mental health delivery systems.

We know that one of the items "on the table" for the Council is the elimination of what are called "tax loopholes, credits, and exemption." They have been described as being expanded at the "expense of adequately funding services." Each one of these exemptions and credits need to be considered on their on merit.

I come to speak toward one exemption that we believe meets the criteria for inclusion in a tax code that fosters growth in the things that we want to see in a tax code.

O.C.G.A & 48-8-3(41) provides sales tax exemptions to non profit (501 c 3) organizations that are licensed as child caring institutions, child placing agencies and maternity homes for items purchased for the operation of the services that they provide. Often these providers are called "children's homes," "group homes," "foster care agencies", "therapeutic foster care agencies," "residential treatment facilities," and "contract home agencies." All who are exempted under this code are charitable agencies designated by the Internal Revenue Service as 501 c 3 organizations, which are exempted from federal income taxes and authorized to receive tax deductable contributions for the care.

These agencies serve about 3000 children or half of the children who are in Georgia's foster care system. About a third of the children who are in the care of these agencies are placed there privately by their parents or guardians. Virtually all of this care is provided by agencies on a "charity" basis. Parents who place with private agencies generally place their children because if they did not, they would incur the supervision of the State. The State pays for none of this care. These agencies give over $30 million in free care each year.

This sales tax exemption is important for the following reasons:

This exemption enables these agencies to provide charitable care to thousands of children who otherwise would be in the foster care system.
This exemption enables these agencies to enhance the services contracted by the state to these children. Without this sales tax exemption, agencies would have to pass this cost to the State or discontinue some of the services provided to foster children.
This exemption shows the support of the State for these community support child welfare agencies by exempting them from this additional economic burden.

We ask that this important exemption be secured in the tax code. It is important to these agencies that serve children. More importantly, it is important to the welfare of these children.

Thank you,

Normer Adams

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