Pennsylvania Tax Credit Program Celebrated for Six Years of Choice

Published June 1, 2007

After six years of increasing educational opportunities, Pennsylvania’s tax credit program remains the state’s best hope for expanding school choice, says a leading reformer.

Since its inception in 2001, more than 2,300 businesses have taken advantage of the incentive provided by the Educational Improvement Tax Credit (EITC). Businesses have donated more than $260 million to approved organizations that give private education scholarships to needy students or that develop innovative public school programs.

The REACH Foundation, a prominent Pennsylvania advocate for school choice, hosted a May 8 rally at the state capitol to celebrate the EITC’s sixth anniversary. More than 2,300 attended the rally–an increase over the 1,600 that attended the 2006 rally.

“We do it to thank the legislature for the program,” said Andrew LeFevre, executive director of the Harrisburg-based REACH Foundation. “We don’t necessarily call for new programs, but use [the rally] to highlight the success of the EITC program.”

Giving Thanks

Some lawmakers, LeFevre added, find it a relief to show up at an event where they are showered with gratitude rather than complaints.

While REACH has considered promoting targeted voucher programs for autistic and foster care children, LeFevre believes tax credit expansion holds the most hope for enhancing school choice in Pennsylvania.

“At this stage in the political climate here, EITC is the best vehicle we have,” LeFevre said.

LeFevre estimates more than 33,000 students in Pennsylvania currently receive tuition assistance through EITC-funded scholarships. The current $54 million cap on EITC contributions represents a $36 million cap for scholarships and an $18 million cap for public school innovations.

The original 2001 program had a $30 million total limit ($20 million for scholarships and $10 million for innovations), which has been expanded by legislative action several times. LeFevre believes there is plenty of room for the tax credit to continue growing. He said the contribution cap has been met every year except the first.

“We’re clearly not meeting demand from the business community,” said LeFevre. “Last year [the tax credits] were out on the very first day.”

Expanding Cap

One piece of legislation that would further expand EITC was under consideration by the Pennsylvania General Assembly at press time. Senate Bill 680, sponsored by state Sen. Jane Orie (R-Pittsburgh), would raise the cap by $20 million.

Other prominent state lawmakers applaud the tax credit’s effectiveness.

“The Education Improvement Tax Credit program is an important and successful state program that benefits both businesses and the local school community,” said state Rep. Mario Civera (R-Upper Darby). “This program empowers parents to choose the best educational setting for their children.”

The REACH Foundation began working to promote school choice in Pennsylvania in 1991. Several attempts to enact school vouchers fell short before EITC passed with the support of then-Gov. Tom Ridge (R) in 2001. Current Gov. Ed Rendell (D) has signed two expansions of the tax credit during his tenure.

“EITC is very popular and has strong, bipartisan support in Pennsylvania,” LeFevre said. “It’s a great program. It has the support of parents and legislators and a good chance of increasing.”

Ben DeGrow ([email protected]) is a policy analyst for the Independence Institute, a free-market think tank in Golden, Colorado.

For more information …

Educational Improvement Tax Credit,

S.B. 680,