Defending the Pa. Educational Improvement Tax Credit

In two recent articles, St. Teresa of Calcutta School receives donation (Feb. 18, 2024) and Board resolves to fight for fair funding (Feb. 19, 2024), the Educational Improvement Tax Credit program (EITC) was prominently mentioned or the subject of discussion.

As a former state legislator who authored bills dealing with the EITC program, I would like to provide some added background.

Pennsylvania’s Educational Improvement Tax Credit Program was established in 2001. The program offers tax credits for corporate and individual contributions to the following nonprofit organizations: scholarship organizations (SOs), which provide private school scholarships; educational improvement organizations (EIOs), which support innovative programs in public schools; or prekindergarten scholarship organizations (PKSOs). These nonprofits provide low- and middle-income families private school and prekindergarten scholarships, as well as organizations that support innovative public school programs.

The dollar amount of available tax credits has increased since the program’s inception as well as the income eligibility levels for families seeking scholarships. In 2012 an additional program was added, The Opportunity Scholarship Tax Credit Program (OSTC), which enables eligible students residing within the boundaries of a low-achieving school to apply for a scholarship to attend another public or nonpublic school. In Pennsylvania, a low-achieving school is defined as a public elementary or secondary school ranking in the bottom 15 percent of their designation as an elementary or secondary school based upon combined math and reading Pennsylvania System of School Assessment (PSSA) scores. Since the inception of these programs, students and their families in both public and non-public schools in our area have benefited.

The brief article regarding St. Teresa of Calcutta school receiving a $206,000 donation from The Foundation for Catholic Education to provide every family in the school a $970 credit to their tuition, also stated that individuals and companies can redirect their Pennsylvania tax liability to Catholic schools, and they will receive a 90% tax credit. The EITC program allows the company or the individual to reduce, not redirect, their tax liability by 75% for a one-year commitment or 90% for a twoyear commitment.

The way the process probably worked in this example: Either a company or an individual, donated to The Foundation for Catholic Education, an approved Scholarship Organization under the PA Department of Community and Economic Development, for $206,000. If the company or the individual is only making a one-year donation they reduce their tax liability by 75%, a two-year donation of the same dollar amount reduces their tax liability by 90%. The Foundation for Catholic Education then made the donation of $206,000 to St. Teresa of Calcutta School.

The Pottstown School Board recently passed a resolution calling on Gov. Shapiro and the General Assembly to enact legislation that provides for specific adequate funding targets for public schools and a timeline for implementation based on the recommendations of the Basic Education Funding Commission (BEFC).

The resolution also voiced opposition to proposals to create new school voucher programs. There is no doubt that the Pottstown School District has faced funding challenges for many years. In my time in the Legislature, I co-sponsored bills that would have accelerated the previous fair funding formula to help the Pottstown School District, as wells as, worked with former Senator Bob Mensch to secure an additional one million dollars in funding in the 2018 budget. The Pottstown School Board is right to advocate for and petition the governor and the legislature to implement the recommendations of the BEFC through their resolution.

However, the resolution and the discussion of the Board also take issue with the existing EITC/ OSTC programs. Concerns were raised that “there have been no studies to indicate whether students who receive public funds from EITC/OSTC programs achieve better academic outcomes” and that non-public schools can be segregated or discriminatory.

Opponents of EITC/ OSTC have frequently raised the issue of studies on the academic outcomes of students receiving scholarships, suggesting that parents cannot determine for themselves whether their children are achieving and advancing academically. These scholarships rarely cover the full tuition of the non-public school, with parents paying the rest. It’s hard to believe that parents would pay, with the assistance of the scholarship, to have their children attend a school to receive an inferior education.

The one issue that opponents of EITC don’t mention is safety. In my time in the Legislature, parents would frequently mention safety as one of the reasons they chose to send their child to a non-public school and a scholarship, along with their financial commitment, made that possible. This may not be as much of an issue in our area public schools, but it is certainly a concern in some parts of Pennsylvania.

Regarding the concern that non-public schools can be segregated or discriminatory, a review of demographic information of what is arguably the largest non-public school system in southeastern Pennsylvania, Archdiocese of Philadelphia schools and Independence Mission Schools (14 Catholic schools K-8, independent of the parishes and the Archdiocese)

would suggest otherwise.

The student breakdown for Archdiocese High Schools in the five-county region: Asian 3.7%. Black 23.2%, Hispanic 0.2%, White 65.6%, Native American 0.3%, Mixed Race 7%. Catholic 70.8%, Non-Catholic 29.2%

The student breakdown for the Independence Mission Schools, located primarily in Philadelphia: Asian 6%, Black 68.3%, Hispanic 0.5%, White 6.5%, Native American 1.2%, Mixed Race 12.4%, Unknown 5.1%. Catholic 24.9%, Non-Catholic 70% Unknown 5.1%.

I suspect the upcoming budget negotiations will feature debate and discussion on implementing the recommendations of the Basic Education Funding Commission to achieve fair funding, expanding the exiting EITC/OSTC and establishing an additional voucher program. As always, in the end a compromise will be achieved and a budget will be passed. Regarding those discussions, I have to agree with what my former House colleague and current Gov. Josh Shapiro said as part of his recent budget address:

“And look, one of those conversations will need to be about scholarships that let poor families in struggling school districts put their kids in the best position for them to succeed — whether that’s paying for extra tutoring, books and computers, or yes, going to another school.”