Report: School-choice demand shows why Pennsylvania lawmakers should expand programs

(The Center Square) — A new report is highlighting the record-high demand for Pennsylvania’s school-choice programs as evidence lawmakers in Harrisburg should consider better ways of expanding access for families.

The Commonwealth Foundation report looks at enrollment figures gleaned from public right-to-know requests for Pennsylvania’s Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs, with a focus on the impact of a combined $30 million tax credit expansion in 2019.

The programs allow businesses or individuals to donate to more than 250 scholarship organizations across the commonwealth to receive a 75% credit (for one-year commitment) or 90% credit (for two years) on their state income taxes. The money is used to provide scholarships to students whose families would prefer an educational option outside of the public school system.

Limits on the program in state law have resulted in more applications denied than scholarships awarded in some years, and the General Assembly expanded the budget for EITC and OSTC by a combined $30 million, starting in 2019. The boost resulted in an additional 1,380 scholarships, bringing the total of students participating in both programs to about 62,000 in 65 counties, according to the report, which was published Tuesday.

Demand for the programs accelerated at a record pace, with 137,000 applications for the 2019-20 school year, up from 103,000 the year before. The unprecedented increase represented the highest level of demand for the programs to date, and it occurred months before the pandemic, the Commonwealth Foundation reported.

“Families are starting to see the positive results that tax-credit scholarships have had on other students in their community,” Commonwealth Foundation Policy Analyst Stefanie Mason said. “Every year, the tax credit scholarship programs become more popular, especially in school districts where parents feel the need to pull their kids out of a situation that isn’t working.”

Right-to-know requests revealed the EITC and OSTC programs awarded 61,767 scholarships in 2019, while 75,651 applications were denied because of enrollment caps. The same year, individuals donated a record $190 million for student scholarships. The caps meant $116 million in business donations for the EITC and OSTC were waitlisted. The data showed the programs turned away 55% of applicants because of rules, not funding.

The report noted the average household income for EITC families was estimated at $64,000 and $52,000 for OSTC families, which also must live within the attendance boundary of a low-achieving public school. The Commonwealth report also stressed the life-changing benefits of the programs, citing actual students such as Erik Gibson, who used a scholarship to transfer from Forest Hills High School, where he struggled with a host of issues, to Bishop McCourt Catholic High School, where he’s on track to earn a full-ride scholarship to Cornell University.

The research was the impetus behind the Commonwealth Foundation’s push to improve Pennsylvania’s school-choice programs by including an automatic escalator designed to end waitlists by 2025. The nonprofit compared Pennsylvania’s situation to Florida, illustrating how both states ran similar tax credit programs with similar scholarship figures until 2011, when Florida enacted an escalator that resulted in the state now serving 40,000 more children than Pennsylvania at three times the average scholarship amount. The change also resulted in Florida outpacing Pennsylvania in academic achievement, according to the report.

The Commonwealth Foundation points to Senate Bill 527, sponsored by Sen. Mike Regan, R-Dillsburg. It would increase caps for the EITC and OSTC programs by 25% every year when at least 90% of available tax credits are claimed the previous year.

The Senate Education Committee heard testimony on the bill last month when Regan cited both the personal and fiscal benefits of the change. He cited a study that showed expanding the program could create $7.4 billion more in lifetime earnings from increased academic achievement and $2.3 billion for increased economic output and reductions in social costs associated with additional high school graduates, as well as $260 million from reduction in crimes.

“The billions of dollars that we will experience in return will more than cover the increase of $100 million (annually) in tax credits,” he said.

Democrats on the committee were hostile toward the proposal and conflated the bill with the commonwealth’s ongoing school funding lawsuit.

Regan countered the funding concerns with the bottom line.

“You have a human factor here,” he said. “Save a kid’s life, what’s that worth? What’s that worth to you?”

The committee made a technical change to the bill before it was approved on Jan. 19. It now is before the full Senate.