Ten Thousand Lifeboats

In 2001, Pennsylvania became the first state in the nation to enact an education tax credit aimed at corporations. Since then, the popular Educational Improvement Tax Credit (EITC) program has provided more than 430,000 scholarships to students from low- and middle-income families across the commonwealth seeking the right school for their child. These families were searching for alternatives to the sometimes dangerous and oftentimes failing government-run schools assigned to them according to their ZIP codes.

In 2012, the commonwealth added a second program, the Opportunity Scholarship Tax Credit (OSTC), which enables eligible students residing within the boundaries of a low-achieving school to apply for a scholarship to attend another public or nonpublic school. A low-achieving school is defined as a public elementary or secondary school that ranked in the lowest 15 percent of schools each year based on their combined Mathematics/Algebra I and Reading/Literature scores from the annual state assessments.

Because of the direct engagement of businesses in the educational process, where businesses fund scholarships in exchange for state tax credits, the EITC program and new OSTC program are tremendously successful public-private partnerships. During the first 12 years of the EITC program’s operation, businesses have contributed nearly $470 million to fund student scholarships—oftentimes helping families directly in the communities where they operate their businesses.

Additionally, the landmark EITC program has saved Pennsylvania taxpayers millions of dollars each year.

With an average scholarship of approximately $1,900, the EITC serves students for a small fraction of the $14,621 that public schools spend per student. If each of the 34,534 students receiving EITC scholarships in 2012-13 failed to receive scholarships in the next school year and were instead placed into a public school, schools would require an additional $505 million in revenue to handle the additional enrollment. The EITC and OSTC create partnerships between parents, businesses, and scholarship organizations. These partnerships allow funding to follow students, giving children and their families choices in schools that best fit their needs. The success of the EITC program is demonstrated not just in the hundreds of millions of dollars it has saved taxpayers and relief to high-growth school districts, but also in parental satisfaction with education outcomes. Demand for EITC and OSTC scholarships far outweighs what is available from participating Scholarship Organizations (SOs) across the commonwealth. For example, the Children’s Scholarship Fund Philadelphia turns away 7,000 scholarship applicants each year due to incredible demand. The EITC, and now the OSTC, provide choices parents deserve and offers better outcomes for children. 

EDITOR’S NOTE: Scholarship totals and average scholarship amounts are updated (Jan 2015) to reflect new data from Pennsylvania DCED.