Pennsylvania’s Independent Fiscal Office (IFO) expressed concerns regarding two state tax credit programs: the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC), as per a report released in January. Both programs give tax credits to businesses that support scholarship programs for religious and private schools.
The report was released after the Senate Education Committee voted on Bill 527 that would allocate hundreds of millions of dollars toward expanding the EITC and OSTC.
The OSTC gives tax credits to businesses that contribute to an opportunity scholarship organization, and thereby provide tuition assistance to students who live in the boundaries of a low-achieving school.
The EITC also gives tax credits to businesses that give to a scholarship organization, educational improvement organization, or a pre-kindergarten scholarship organization.
One of the IFO’s concerns about these programs is that there is no data available on how student performance in school differs with these scholarships, since the state is prohibited from collecting data on private schools, the Pennsylvania State Education Association (PSEA) said in a news release. Because of the lack of data, it remains unclear whether or not these tax credit programs improve the educational opportunities accessible to students in Pennsylvania. Other concerns stated in the IFO report include high overhead allowances, family income eligibility, big businesses pocketing bigger tax credits and the exclusion of educational improvement organizations.
Chris Lilienthal, assistant director of communications at PSEA, said there are multiple uncertainties regarding Bill 527, the largest being that the effectiveness of the tax credit programs is unknown.
“It is very troubling that the state is prohibited from collecting any data to assess the effectiveness of these tax credit programs,” Lilienthal said. “It is particularly troubling when this is occurring at the same time that some senators want to dramatically expand these programs.”
To demonstrate what the amount of money diverted to the EITC and OSTC would look like if this bill passes, Lilienthal and his team calculated some financial predictions.
“If Senate Bill 527 were to be enacted today and go into effect with the next fiscal year, within five years this program would rise from a cost of $280 million a year to a cost of $854 million,” Lilienthal said. “Within 10 years it would be up to $2.6 billion every year in taxpayer funds.”
Since Bill 527 requires significant funding from the state budget, passing it could increase the risk of decreased funding for some Pennsylvania public schools, the PSEA news release said.
The IFO report concerns reached the ears of public schools.
Principal of Nitschmann Middle School in Bethlehem Peter Mayes said he believes that if this bill were to pass, it would be detrimental to the entire public education system.
“I think it just slows and drains the public education system which is so powerful for change in the United States,” Mayes said.
Mayes is not the only local principal with concerns about Bill 527.
“I do not know how significant it would be, but every dollar we do not get impacts us,” said Principal Theodoro Quinones of Northeast Middle School in Bethlehem.
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