The Urgent Need for Tax Credit Scholarships

Pennsylvania’s tax credit scholarship programs have helped many students, but thousands of students are turned away each year, as demand outpaces supply. Senate Bill 1204 would end the supply problem by annually increasing tax credit caps by 25 percent if 90 percent of available credits are used.

Background

Since its inception in 2001, Pennsylvania’s Educational Improvement Tax Credit (EITC) program—and subsequent Opportunity Scholarship Tax Credit (OSTC) program in 2012—have offered educational choice to hundreds of thousands of low to moderate-income Pennsylvania students. But each year, thousands of students remain trapped in schools that don’t meet their unique needs due to arbitrary limits, or caps, placed on tax credits. Waiting lists are common among the 450 scholarship organizations. More than 17,000 Philadelphia students from two scholarship organizations were denied scholarships last year.

Tax Credit Scholarships Save Money

Graphic: Pennsylvania Public Education Funding

• The EITC alone saved taxpayers more than $1 billion from 2002-2014, according to an EdChoice audit.
• Education choice programs increase per-student funding in public schools.

Pennsylvania’s Tax Credit Programs are Popular

Nearly 50,000 students are served each year by EITC and OSTC. Due to intense demand, thousands more are wait listed. Polling shows overwhelming support for tax credit scholarships.

• 76 percent of likely voters support EITC.
• 71 percent of likely voters support raising the cap on tax credits.
• Cross party support is strong, with 70 percent of Republicans and 75 percent of Democrats in favor of increasing tax credit scholarship caps.

Graphic: EITC Cap Poll

Tax Credit Scholarships Serve Many Students—At a Fraction of the Cost

EITC and OSTC programs educate thousands of Pennsylvania children for a fraction of the school districts’ costs. Tax credit scholarships save taxpayer dollars and help resolve district funding disparities, while shifting the focus from funding buildings to funding students.

• As a percentage of total school district spending last year, EITC and OSTC scholarships represent less than one-half of one percent.
• At $4.5 billion, school district reserves could fund the EITC and OSTC for 33 years.
• Philadelphia public schools serve four times as many students, but at 30 times the cost, of EITC and OSTC scholarships.
• Pittsburgh public schools serve half as many students, at 5 times the cost, of EITC and OSTC scholarships.

Graphic: Education Funding vs EITC

Allowing the money to follow the child is the best way to provide a fair, thorough, and efficient education system. SB 1204 would save tax dollars, help reduce funding inequities, and—most importantly—rescue thousands of students currently trapped in schools that don’t meet their educational needs.