Speaker Mike Turzai calls for boost in tax credits for private schools
A bill to increase the amount Pennsylvania forgoes in taxes to underwrite private school scholarships and public school foundations from $160 to $260 million a year is moving through the state House.
House Speaker Mike Turzai, R-Bradford Woods, penned the measure that was reported out of committee Monday with 43 Democrats and Republicans signing on as co-sponsors. It comes just one year after Turzai championed a measure that boosted the amount of tax credits available for the program from $125 to $160 million a year.
Each year since 2001, the Legislature has approved a figure the state will forgo in taxes that businesses can divert to support the program. Although lawmakers have battled fiercely over funding public schools and colleges, the Education Improvement Tax Credit cap consistently has grown from $30 million in the first year to $160 million this year.
A quiet change in the law in 2014 expanded the potential pool of donors by allowing individuals to divert their personal state taxes to the tax credit program by joining special purpose entities.
Unlike many scholarship programs, the tax credit funded program is not limited to low-income families. Under current state guidelines, a family of four with two children could earn up to $116,216 a year and still be eligible for aid. The eligibility cap grows by $15,608 a year for each additional child.
Those who opt to donate to the program in a single year can claim 75 percent of their contributions in credits against their state tax bill; those who donate two years in a row can claim 90 percent in tax credits.
If this new bill passes, lawmakers might be able to take a break.
The new bill carries a clause scholarship advocates recommended that calls for an automatic 10 percent escalator in the amount of taxes the state will allow taxpayers to divert to the program every year if more than 90 percent of at the prior year’s allocation of tax credits was claimed. It also raised the family income cap by $10,000 a year and provides a clause that guarantees each scholarship recipient will remain eligible for scholarship assistance, regardless of family income, through graduation if he or she received a scholarship in any prior year.
The measure also would lower the cap scholarship organizations are permitted to hold for administrative costs from 20 percent of the total received to 10 percent.
As in the past, the majority of the credits — $210 million — would be allocated to private school scholarship organizations. Another $37.5 million would be reserved for public school foundations and after-school programs and $12.5 million would be set aside for pre-kindergarten scholarships.
Turzai has described the benefits of the program as life-changing for students who benefit from the scholarships or after-school programs in the public sector.
He boasted that the new bill incorporates “the best of what other states have done” with regard to school choice and will help ensure every student has access to an education that fits his or her needs.
Others question whether it reaches that lofty goal. And one critic noted that it has the potential to grow dramatically over a decade.
“I calculated the math and at the end of 10 years it could be as much as $544 million,” said Susan Spicka.
Spicka, a member of the Shippensburg School Board is executive director of Education Voters of Pennsylvania, a public education advocacy organization. She said the bulk of the tax credit funded scholarships, which she characterizes as vouchers, go to privates schools in and around Pittsburgh Philadelphia.
“This bill is just unbelievable. They’re talking about $100 million. If they put this money into special ed or basic education it would actually make a difference for school districts and maybe they wouldn’t have to raise takes. Instead lawmakers are voting to put it into scholarships for rich kids,” Spicka said.
Deb Erdley is a Tribune-Review staff writer. You can contact Deb at 724-850-1209, [email protected] or via Twitter .