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PA: Expansion of EITC to $200 million on hold in House Education Committee

By   /   June 25, 2012  /   No Comments

Some lawmakers are trying to give students more options when it comes to their education as the budget session comes to a close in Pennsylvania.

By Eric Boehm | PA Independent

HARRSIBURG — For the second consecutive year, lawmakers are trying to shoehorn a new school-choice proposal into the final week of the state budget session.

The idea is about  giving students trapped in Pennsylvania’s worst-performing public schools a chance to learn elsewhere.

But again, for the second consecutive year it’s proving tough to get the measure across the finish line.

Gov. Tom Corbett‘s administration has some urgency to approve a plan that would provide low and middle-income students with scholarships, paid with business tax credits. But more than two hours of discussion in the House Education Committee on Monday failed to yield a vote on such a bill, leaving it stuck in the committee with five working days remaining before the budget deadline.

State Rep. Paul Clymer, R-Bucks, chairman of the committee, said the bill is still “a work in progress,” though he indicated the state has to find a way to specifically address students who are not getting a good education in failing public schools.

The purpose of education is to provide a quality education, and that’s the bottom line,” he said.

Unlike the failed voucher proposal, which would have directed money from school districts to help pay for students to attend school elsewhere, the new plan from state Rep. Jim Christiana, R-Allegheny, would have businesses contribute to a scholarship account and receive a 75 percent tax credit in return.

The model for the plan is an existing state program — the Educational Improvement Tax Credit, which is generally viewed as a success by groups across the political spectrum.

Advocates for the proposal argued it would not take a single dollar from the existing budgets of school districts, a major sticking point for a voucher proposal that passed the state Senate but never garnered enough votes in the state House last year.

Overall, the $200 million program would total less than 1 percent of the state’s $26 billion bill for basic education.

Opponents say using tax credits would prevent money from flowing into the state budget and would hurt funding for public education in the long term.

Christiana’s plan would expand the EITC from its current $75 million level to $200 million, to be  divided into two pots of $100 million each and distributed to scholarship organizations around the state.

The first pot would continue to operate like the existing EITC program, with students from families making less than $75,000 annually able to qualify for scholarships to attend private or nonpublic schools. A top scholarship amount would be $8,500 for most students; $15,000 for students with disabilities.

The second pot would be the new part of the program and would be open only to students who live within the boundaries of the lowest-performing 15 percent of school districts, as determined annually by combined reading and math scores on state assessments.

The total amount of tax credits available would increase to $300 million by the 2014-15 school year and could continue to increase by 5 percent in later years, as long as the program is maxed-out in each previous year.

The state House in 2011 voted 190-7 to expand the regular EITC from $75 million to $100 million, though the bill was never picked up by the state Senate, which preferred the voucher plan.

Christiana said he hoped to tap into that bipartisan support for the EITC to pass the larger expansion this year.

“I think it shows the success of the program over the last decade that Republicans and Democrats from across the state have joined together to support and expand this program,” Christiana said.

State Rep. Eddie Day Pashinski, D-Luzerne, said the EITC expansion would hurt the public school system, although he was one of more than 80 Democrats to support the smaller expansion last year.

You’re taking from one child and giving it to a different child,” Pashinski said. “Where does that money come from? It’s going to come from the public schools.”

Education Secretary Ron Tomalis said the governor’s support for expanding the EITC was about putting students first.

Our focus, the governor’s focus, is making sure that we focus on the needs of the students in the public education system, not the system,” he said.

Tomalis said he questions the motivation of Democrats who supported EITC last year but have now had “a change of heart.”

State Rep. James Roebuck, D-Philadelphia, one of the seven members who opposed the EITC expansion last year, said he would still not support it because the expansion would allow kids already in private schools to remain eligible for the scholarships as long as they lived within one of the qualifying districts.

“It doesn’t necessarily help kids get into alternate schools; it helps the kids who are already there,” he said.

Roebuck cited the cost of the program, arguing that $200 million in tax credits would cause lower tax collections for the state and threaten all parts of the budget with more cuts.

They would not be able to get more in scholarships than the cost of tuition at the new school, and receiving schools may not discriminate against or recruit scholarship recipients in any way.  The receiving schools would have to allocate scholarship based on a lottery system to prevent cherry-picking, Christiana said.

Thomas Gentzel, executive director of the Pennsylvania School Boards Association, which represents the governing bodies of school districts in the state, said there were concerns about cost of the program because it would undercut some funding for school districts.

“Passing legislation that voluntarily diminishes the state tax revenue going into the general fund in favor of private and nonpublic schools does not help school districts,” he said. “This is simply the wrong time for such a dramatic expansion of these tax credit programs.”

Gentzel said districts want to see more accountability and disclosure from schools that accept students who use the scholarships.

In a statement, the Pennsylvania chapter of the American Federation of Teachers, a teachers’ union, said they opposed the plan because it would direct public money to private schools.

Corbett declined to comment on whether he would refuse to the sign the budget if lawmakers did not pass the measure — or anything else on his to-do list — before the June 30 budget deadline.

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Eric is a reporter for Watchdog.org and former bureau chief for Pennsylvania Independent. He lives in Minneapolis, Minnesota, where he enjoys great weather and low taxes while writing about state governments, pensions, labor issues and economic/civil liberty. Previously, he worked for more than three years in Harrisburg, Pennsylvania, covering Pennsylvania state politics and occasionally sneaking across the border to Delaware to buy six-packs of beer. He has also lived (in order of desirability) in Brussels, Belgium, Pennsburg, Pa., Fairfield, Conn., and Rochester, N.Y. His work has appeared in Reason Magazine, National Review Online, The Freeman Magazine, The Philadelphia Inquirer, The Washington Examiner and elsewhere. He received a bachelor's degree from Fairfield University in 2009, but he refuses to hang on his wall until his student loans are fully paid off sometime in the mid-2020s. When he steps away from the computer, he enjoys drinking craft beers in classy bars, cheering for an eclectic mix of favorite sports teams (mostly based in Philadelphia) and traveling to new places.