A Decade of Success: Pennsylvania's Educational Improvement Tax Credit

AUGUST 17, 2011 | Policy Brief by ANDREW LEFEVRE

EITC Success

Executive Summary

For the past 10 years, Pennsylvania's highly innovative and popular Educational Improvement Tax Credit (EITC) Program has provided educational options to low- and middle-income families across the commonwealth. These families were searching for alternatives to the sometimes dangerous and oftentimes failing government-run school assigned to them according to their ZIP code. 

Through the direct engagement of businesses in the educational process, by providing the funding for scholarships in exchange for state tax credits, the EITC program has proven a tremendously successful partnership, awarding more than 284,000 scholarships worth $335 million.

Additionally, this landmark program has saved Pennsylvania taxpayers millions of dollars each year. With an average scholarship of approximately $1,000, the EITC serves students for a small fraction of the $14,000 spent per student by school districts.  If each of the 38,600 students receiving EITC scholarships in 2009-10 returned to public schools, schools would require an additional $512 million in revenue to handle the additional enrollment.

Educational Improvement Tax Credit Program
Scholarship Organization & Pre-K Scholarship Organization Figures
FY Total SO Credits Available SO Receipts K-12 Scholarships Avg. Scholarship Amount Total Pre-K Credits Available Pre-K Receipts Pre-K Scholarships Avg  Scholarship Amount
01-02 $20,000,000 $19,066,825 17,350 $1,099 - - -
02-03 $20,000,000 $22,207,444 20,208 $1,099 - -
03-04  $26,666,665 $28,434,178 25,875 $1,099 -  -  -
04-05  $29,333,333 $29,342,885 26,701 $1,099 $5,000,000 $3,023,258 2,445 $1,237
05-06 $36,000,000 $32,569,421 29,638 $1,099 $5,000,000 $5,389,543 4,358 $1,237
06-07 $36,000,000 $40,115,095 36,540 $1,098 $5,000,000 $5,159,055 4,172 $1,237
07-08  $44,666,667 $48,709,293 44,334 $1,099 $8,000,000 $7,516,133 6,078 $1,237
08-09  $44,666,667 $49,488,166 44,893 $1,102 $8,000,000 $8,136,724 6,580 $1,237
09-10  $37,967,000 $40,338,741 38,646 $1,044 $6,400,000 $6,664,757 5,390 $1,237
10-11  $40,202,400 $6,396,000
* Author's tabulations based on data provided by Pennsylvania Department of Community and Economic Development

The EITC creates partnerships between parents, businesses, and scholarship organizations. These partnerships allow funding to follow students, giving children and their families choices of schools that best fit their needs. The success of the EITC program is demonstrated not just in the millions it has saved taxpayers and relief to high-growth school districts, but parental satisfaction with education outcomes. Demand for EITC scholarships far outweighs what is available from participating Scholarship Organizations across the commonwealth. For example, the Children's Scholarship Fund Philadelphia had 95,000 applications for 7,700 scholarships awarded over the last decade.  The EITC provides choices parents demand and offers better outcomes for children.

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