Educational Tax Credits: Increasing Public Funding of Private Schools at the Expense of Public Schools

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In the last few days of the legislative session, state lawmakers are fast-tracking a bill that would expand and unify the Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC).  Tax credits provide taxpayer subsidies to businesses that fund scholarships to students attending private and religious schools, pre-K through 12th grade.  House Bill 1207, a proposal by Rep. Jim Christiana (R – Beaver County), would make more tax credits available for businesses and combine the tax credit programs so any money left in one program could be used by the other.  Taxpayers would pay up to 90% of the tab.

A PBPC analysis shows why taxpayers foot nearly the entire bill: the triple dip tax reduction.  In addition to the tax credits, businesses could file for state and federal tax reductions for “charitable” contributions.  Despite the heavy investment of taxpayer dollars, the Keystone Research Center notes that there is no enforcement of requirements or guidelines, and no data exists on how well these programs perform.  While public schools are required to let taxpayers know how well they perform, these programs still cannot answer the most basic question:  Do the students receiving scholarships or aid from these programs improve academically?  A House Amendment by Rep. James Roebuck (D – Philadelphia) took modest steps toward accountability by requesting descriptions of grant programs, including demonstrated or expected results, and basic auditing of financial statements.  The Amendment was not adopted.

Without evidence of academic improvement, proponents try to claim that these tax credits keep private enrollment from nose-diving, particularly in areas with struggling Catholic schools that have made it their mission to serve low-income children.  When we look at private school enrollment since 1997-98, we see that a decade of tax credits has not stopped a steady decline in students attending private schools, most of which are Catholic schools.  Meanwhile, we see that charter school enrollment grew substantially, suggesting charter growth possibly came at the expense of private schools.

Source: PBPC analysis of Pennsylvania Department of Education Data

We all care about improving the education of Pennsylvania’s children, especially those in poverty, but tax credits don’t work.  There is no proof that the students who have received any scholarship or aid have improved academically.  None.  Instead of giving taxpayer dollars to programs without accountability or a proven success record, we should instead use public money to reinvest in public education for the benefit of all our children and lay the groundwork for a strong economy for today and tomorrow.

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