By Emily Leayman | From Watchdog.org
In Pennsylvania, tax credit scholarships do more than help 50,000 children attend private schools. The savings yielded by students leaving public schools while leaving their per-pupil funding behind has significantly reduced the burden on taxpayers, says a new study by a school choice advocacy group.
In a new audit, EdChoice, a nonprofit focused on advancing educational choice, analyzed 10 tax credit scholarships in seven states. Pennsylvania’s Educational Improvement Tax Credit reaped the biggest overall savings.
EITC, one of two tax credit scholarship programs in Pennsylvania, has saved taxpayers between $722 million and $1.7 billion since 2002, the report said. That equates to $3,000 to $5,800 per student. The report did not analyze the state’s Opportunity Scholarship Tax Credit Program.
Nationally, tax-credit scholarship programs have resulted in an estimated $1.7 billion to $3.4 billion in total net taxpayer savings from the 1998 launch of the first programs through the 2013-2014 school year. Savings have grown every year.
The program receives funding through corporate donations. Businesses that donate can receive 75 cents for each dollar as a corporate tax credit. Total Pennsylvania tax credits are capped at $100 million for any one year. Because this is money forgone to the state government, it results in less revenue available for public school funding based on scholarship amounts and per-pupil funding levels for each district. But, EdBuild’s study says, that is more than offset by revenue that stays behind when the student leaves for another school.
“A district with school choice programs typically ends up with more resources available for the students who remain in the public school,” said study author Martin Lueken, director of fiscal policy and analysis for EdChoice.
Pennsylvania’s average $13,961 per pupil spending falls above the $11,009 national average, based on 2014 Census data. In 2013-14, the average scholarship was $1,587.
Pennsylvania’s tax credit scholarship program is the second largest in the country (behind Florida). Enacted in 2001, EITC covers students’ tuition and school-related fees. The program is limited to families that have a $90,000 household income or less, plus $15,000 for each child.
EdChoice’s calculations are based on approximately 34,000 students utilizing tax credit scholarships in 2014. The program now serves more than 50,000.
A key variable in determining savings is where students would be attending school in the absence of the program, according to Lueken. The study accounts for a lower-bound estimated 40 percent of students that would enroll in private schools even without tax credit scholarships.
“If the majority of students would have gone back to the public schools, if not for the school choice program, then they would effectually represent savings to taxpayers,” Lueken told Watchdog.org. “If some students would have gone to a private school anyway without the program, then they would represent a pure cost.”
Lueken concedes that tax credit scholarships reduce revenue, particularly affecting districts with numerous students leaving the public schools. But after the deductions for tax credit scholarships, the remainder of per-pupil funding goes to the school district despite the child not attending.
He also notes that student movement is not limited to private school choice — students change school districts, leave the state or attend public charter schools.
“When critics of school choice programs say that they siphon dollars, I think that they’re mistaking the drop in revenue as the full cost, and that’s not necessarily the case,” he said.
The $68.1 million in tax support for EITC represents about 0.2 percent of public school revenues in Pennsylvania. Pennsylvania schools collected $27.6 billion in revenue from school district, state and federal taxpayers in 2013-14.
“It’s difficult to say that this program is creating hardships,” Lueken said. “They might be creating challenges, but these are challenges that I think we should expect our public officials to be able to handle.”
Next year, the Republican-controlled legislature could consider expanding both tax credit scholarship programs. In October, House Speaker Mike Turzai (R-Allegheny) unveiled a proposal to expand tax credit scholarships. He wants to raise the cap on corporate tax credits for donations to educational programs to $250,000. The $75 million boost would be twice the size of the expansion approved for the current state budget.
“All families and all children should be able to choose the best education regardless of their background, regardless of their household income. The end game is to expand options,” said Lueken. “Public schools do pretty well for a lot of kids, but they don’t do well for all kids.”
Watchdog.org intern Erin Clark contributed to this report.
