More than 1,000 Celebrate Fourth Anniversary of Pennsylvania Tax Credit

Published June 1, 2005

On what turned out to be a stunningly beautiful day, more than 1,000 parents and children joined state legislators at Pennsylvania’s Capitol in Harrisburg on May 10 to celebrate the fourth anniversary of the state’s landmark Educational Improvement Tax Credit Program (EITC).

Signed into law in 2001 by former Pennsylvania Gov. Tom Ridge (R), the EITC provides tax credits ranging from 75 percent to 90 percent to companies contributing to nonprofit scholarship, educational improvement, and pre-kindergarten scholarship organizations. Nearly $27 million is allocated annually for scholarships, a little more than $13 million for innovative programs in public schools, and $5 million for pre-K scholarships.

Funding Has Increased

In the 2004-05 school year, the EITC program helped fund more than 25,000 scholarships and countless educational improvement programs in Pennsylvania’s public schools. To date, more than 2,200 Pennsylvania businesses have participated in the EITC program, contributing more than $140 million to create private school scholarships and to help establish innovative public school programs.

“This program continues to prove a productive and popular way to bring opportunity to kids and confidence to parents with respect to the educational process,” state Senate President Pro Tempore Bob Jubelirer (R-Altoona), one of the EITC’s supporters, told the crowd at the capitol. “It affords businesses a constructive avenue for contributing in a meaningful fashion. An enhanced education system is instrumental in building stronger communities.”

In its first two years, the EITC was capped at $30 million–$20 million for scholarships and $10 million for public school improvement programs. In response to overwhelming demand, however, in 2003 the Pennsylvania General Assembly increased funding by $10 million, doubled the maximum tax credit from $100,000 to $200,000, and created a similar program for pre-K scholarships.

Interest Outstrips Caps

Thanks to the EITC, Pennsylvania currently has more than 165 scholarship, 230 educational improvement, and 50 pre-K scholarship organizations. The cap on the scholarship portion of the EITC program was reached in 70 days last year; the educational improvement portion was reached in one day. A new round of funding will begin on July 1, when the state’s new fiscal year begins.

“For so many years we fought to empower parents and came excruciatingly close,” said Paul Henkels, chairman of the REACH Alliance, a school choice advocacy organization in Pennsylvania. “To finally get over the goal line and see children going to good schools is very satisfying. The business community’s investment in the EITC has enabled tens of thousands of children to receive a quality education and to have a chance for productive and fulfilling lives.”

The REACH Alliance plans to lobby for expanding the EITC program this year in order to allow more businesses to participate. During the 2004-05 school year, more than 100 businesses that wished to participate in the EITC program were unable to do so because the tax cap had already been reached. If the program is expanded, more businesses will be able to participate, creating more opportunities for children to receive scholarships and for additional innovative educational programs to be provided in the state’s public schools.

Andrew LeFevre ([email protected]) is executive director of the REACH Alliance and REACH Foundation in Pennsylvania.