Pennsylvania’s tax credit scholarship programs are so popular that they could double in size and still not meet demand. That’s a major finding of a new report by the Commonwealth Foundation, showing 52,875 tax credit scholarship applications were denied last year alone.
Scholarship demand outpacing supply is a long-term problem. Since 2012, 50 percent of scholarship applications have been denied, primarily due to program limits.
“These popular scholarship programs give students educational opportunities they couldn’t otherwise access,” commented Charles Mitchell, president and CEO of the Commonwealth Foundation. “While demand for scholarships has skyrocketed, program caps are leaving thousands of children trapped in schools that don’t meet their needs. Our kids’ futures don’t belong on a waiting list. It’s time to raise the limits and give families and students the options they are demanding.”
The Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs provide low- to moderate-income Pennsylvania families scholarships to send their child to the private school of their choice. The scholarships are funded by donations from individuals and businesses, which receive a tax credit of a lesser amount in return.
But despite enormous demand, state law arbitrarily caps these programs at a combined $210 million per year—leaving half of applications unfilled.
(Graphic: Scholarship Demand Far Outpaces Supply)
While the 2018-19 state budget expanded the EITC program cap by $25 million, this one-time boost falls far short of demand.
“Donors want to sponsor more scholarships and families are desperate for more options,” continued Mitchell. “The solution is to automatically raise program caps to meet demand.”
Senate Bill 1204, sponsored by Sen. Mike Regan, and House Bill 2530 sponsored by a group of 13 House members, would resolve this problem by automatically increasing program caps by 25 percent when 90 percent of the available credits are used within a year.
Florida, which instituted a tax credit scholarship program at the same time as Pennsylvania in 2001, passed an automatic escalator bill in 2011. Now, twice as many students are awarded scholarships in Florida as in Pennsylvania, and Florida scholarship amounts are significantly higher.
Tax credit scholarship programs are in high demand among students and families and are extremely popular with voters. Polling shows 76 percent, bipartisan support for the programs among likely Pennsylvania voters. Additionally, 71 percent support raising program caps.
(Graphic: Voters Support Raising Scholarship Program Caps)
“Every child deserves an education that fits their unique needs,” said Mitchell. “There is no reason to deny families this opportunity when individuals and business are waiting to donate the needed funds. State government is all that’s standing in the way.”
Commonwealth Foundation experts are available for comment. Please contact Michael Torres 850-619-2737 or mbt@commonwealthfoundation.org to schedule an interview.
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The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.
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