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Report: PA Scholarship Tax Credit Lacks Transparency


Monday, February 7, 2022   

UPDATE: Added comment from Gov. Tom Wolf's office. (10:00 a.m. EST, Feb. 7, 2022)

A corporate tax break in Pennsylvania funding scholarship programs for K-12 private and religious schools lacks sufficient data to determine its success, according to a new report.

The program, worth about $280 million annually, includes the Educational Improvement Tax Credit and the Opportunity Scholarship Tax Credit.

Supporters contended the programs help low-income students in underperforming public schools.

Rich Askey, president of the Pennsylvania State Education Association, said the report from the state's Independent Fiscal Office (IFO) paints a troubling picture of lack of accountability for the programs. He is concerned some lawmakers want to increase the tax credits.

"The bottom line is this: From that report, we do not know if it's working for students," Askey asserted. "That brings us to the question of why would we dramatically expand these programs to the point they want to expand them, when we're not sure if they're even working?"

Companies donating to a scholarship organization can receive a 75% to 90% credit on their taxes. A bill which cleared the Senate Education Committee last month would automatically increase the annual number of tax credits available by 25%.

The IFO report recommends obtaining data on student outcomes after switching to private schools and tracking scholarship awards by family income, among other metrics, but state law prohibits the collection of such data.

Susan Spicka, executive director of the group Education Voters of Pennsylvania, argued it is time for the law to change.

"It is really extraordinary that there are lawmakers in Harrisburg who claim to be fiscal conservatives, and who claim to be looking out for taxpayers, who support a program that has zero accountability for how over a billion dollars in tax money has been spent over the years on these scholarships," Spicka remarked.

Funds from the tax credits also go to pre-K and educational improvement programs. A spokesperson for the governor's office says the administration believes scholarship organizations and schools should be more accountable to families and taxpayers. The administration expects a bill to be introduced soon that would reduce the amount of tax dollars scholarship organizations can keep for themselves and improve transparency.

Disclosure: Pennsylvania State Education Association contributes to our fund for reporting on Budget Policy and Priorities, Early Childhood Education, Education, and Livable Wages/Working Families. If you would like to help support news in the public interest, click here.

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