About 50,000 Pennsylvania students get private-school scholarships funded by businesses. Those businesses also get something for their donations: state tax credits.
Pennsylvania’s education tax-credit programs are some of the country’s largest and have been contentious among public-education advocates. But their proponents say they should be bigger, citing unmet demand from both students and businesses.
On Monday, the House Education Committee approved a bill sponsored by Speaker Mike Turzai (R., Allegheny) that would expand Pennsylvania’s Educational Improvement Tax Credit program by $100 million — a boost that would nearly double the current scholarship program.
That’s not all: The bill has a provision that would allow for automatic increases in future years. And it would raise the income limits for participating families.
A Democrat on the committee called it a “totally budget-busting proposal.” Here’s a look at the issue:
How does the Educational Improvement Tax Credit program currently work?
Known as EITC, it’s the larger of Pennsylvania’s two programs that give businesses tax credits for donating to scholarships. A business can get credits equal to 75 percent of its donation to a scholarship organization, up to $750,000 a year. If it agrees to make the same donation for two consecutive years, the credit grows to 90 percent.
Students across the state are eligible for the scholarships. In 2016-17, 34,400 scholarships were granted to Pennsylvania students through the program, averaging $1,660 each, according to a report by the U.S. Government Accountability Office.
The program has one of the highest income limits of the 22 education tax-credit programs nationally. Students in Pennsylvania are eligible if their family’s income doesn’t exceed a certain limit, which depends on the number of children in a household. For a family of four, it’s $116,216 a year.
How would the bill change the program?
For starters, it would make that income threshold higher, raising the base by $10,000. So a family of four could earn $126,216 a year and qualify. In a memo to lawmakers, Turzai said the change would “allow more middle-class families access to the program.”
But the more sweeping changes would be to the program’s size, raising the cap on tax credits that businesses can claim for scholarship donations from $110 million to $210 million.
And in future years, the program could grow automatically. The bill has an escalator provision, meaning that if 90 percent of the available credits are claimed in a given year, the program’s cap will grow by 10 percent.
A similar provision was adopted in Florida, which proponents say has eclipsed Pennsylvania in providing private-school scholarships. “Now they have twice as many kids in the program, an average scholarship three times higher. They’re serving more students, and in a better way,” said Marc LeBlond, senior policy analyst at the Commonwealth Foundation, a conservative think tank in Harrisburg that is advocating for the bill.
The foundation says that close to 27,000 students who applied for EITC scholarships in 2016-17 were denied due to caps on the program.
“We are a commonwealth that believes in choice. Everybody should have the opportunity to make those choices,” said Rep. Curt Sonney (R., Erie), chairman of the House Education Committee.
What are the criticisms of the proposal?
The provision that would automatically grow the program is “unprecedented for any education funding measure,” said Rep. Steve McCarter (D., Montgomery). He proposed stripping the provision from the bill during Monday’s House Education Committee meeting, saying “it sends a very bad message to schools across the commonwealth" that are struggling with budgets.
His amendment failed. The bill passed the committee along party lines (Republicans in favor, and Democrats against).
Rep. James Roebuck (D., Philadelphia) said the proposal to increase the income limit “moves the scholarship program away from the original intent of helping lower-income families and children.”
In a letter to Roebuck, the Education Law Center, which is suing the state over education funding, urged lawmakers "to focus attention on fixing our public education funding, rather than further devastating it through tax credit vouchers.”
Citing a report by the pro-school-choice group EdChoice, LeBlond said the program saves school districts money, because they have fewer students to educate.
The program doesn’t require that students have attended a public school in order to qualify. EITC “has become a subsidy for nonpublic schools for children already enrolled there,” Roebuck said.
Does this have a shot at passing?
A similar proposal has been introduced in the Senate. But it likely will encounter resistance in the governor’s office.
Although Gov. Tom Wolf signed a budget last year that included an added $25 million for the EITC, spokesperson J.J. Abbott said Monday that Wolf’s “priority is ensuring available resources go towards public schools, which still face serious problems with underfunding and inequity.”
“Governor Wolf would be hesitant to increase funding for business tax credits at the expense of funding desperately needed to go into the classroom,” Abbott said.