Educational Tax Credits Are Often a Bait-and-Switch

By Stephen Herzenberg, Third and State

A story in Monday’s New York Times explores the use of state tax credit programs to pay for “scholarships” for students who attend private schools. The story suggests that many of the students who receive such scholarships already attend private school and are not low-income.

To the extent that this is true, the political marketing of these programs as alternatives (for a select few students) to public schools in distressed communities is a “bait and switch.” Educational tax credits actually siphon taxpayer dollars to subsidize private schools, reducing state revenues available for public schools.

Is this how the scholarships to attend private schools work under Pennsylvania’s Educational Improvement Tax Credit (EITC) program?

Probably: there is no prohibition on EITC scholarships going to students already attending private schools; middle-class families are eligible to receive scholarships (the income limit for a family of four is $84,000); and there is no evidence that even this income limit is enforced. In fact, Pennsylvania’s Act 46 of 2005 prohibits the state from requesting from scholarship organizations any information other than the number and amount of scholarships that they give out. I guess we’re just supposed to trust the scholarship organizations to self-enforce the income limit.

The lack of definitive evidence on who receives scholarships under Pennsylvania’s EITC program is consistent with the overall lack of accountability in the program, which has now cost Pennsylvania taxpayers more than a third of a billion dollars. EITC scholarships lack both financial accountability (how money is actually used) and educational accountability (who gets the scholarships and how scholarship students perform in school compared to similar public school students) – as we documented in a report last year. 

The New York Times story documents that Pennsylvania’s program works very well for some businesses, lobbyists, and lawmakers. The lobbyists set up scholarship organizations, solicit business clients whose donations actually make them money (because the state tax credit alone is worth up to 90% of donations and the federal tax write-off takes the savings well over 100%), and the lobbyists and key lawmakers then influence which schools (and students?) get the scholarships. Then there’s a photo op at the private school that local media write up as a demonstration of the business’s generosity and the legislator’s good work.

Everybody wins. Except perhaps the children whose public schools face funding cuts that much bigger because of the revenues lost to the EITC program.

News & Notes May 6, 2011

I had some good stuff gathered for today’s article then awoke to discover Firefox crashed overnight and everything is gone.  My new desktop is a 64 bit system and Firefox won’t hold tabs, remember passwords or much of anything on it.  Frustration…

The economy created another 244,000 jobs last month but the unemployment rate rose to 9%.  We’re turning this around slowly but the refusal of neanderthals to allow the government to create jobs through economic stimulus is even more frustrating than a bad browser.  By the way where is that GOP jobs program?  All I’ve seen so far are 700,000 job cuts in their legislative agenda.

The helicopter which crashed in Bin Laden’s compound may have been a super secret stealth version.  Meanwhile Al Qaeda has confirmed the death of its leader.  Of course nothing will satisfy those who choose to live in an alternate reality.

I’m reminded how John McCain and Republicans ridiculed Barack Obama during the 2008 campaign for saying he’d go into Pakistan and get Bin Laden.  Where are all those jeers now?

Amid massive budget cuts schools are shedding teachers but not sports.  What’s more important curriculum or entertaining the public?  I thought schools were about education.  Some are considering going to four day weeks to cut costs.  This will be a nightmare for working parents but schools aren’t day care centers either.

Three GOP presidential candidates rose their hands last night at a debate and said they’d use torture.  So much for the GOP assuming the high moral ground…

Before the debate Rick Santorum answered a query about any prepared remarks by saying “you know me, its ready, shoot, aim.”  Yes Rick, we know all too well.

I reported last fall (on Huffington Post) that Lois Herr filed an FEC complaint against the Chester County Republicans for illegal videos posted on web sites calling her “Left Wing Lois.”  Interestingly they have since erased all of them from the internet.  Consciousness of guilt?

Lou Barletta is on his evil anti-immigration trek again.  Apparently not happy with only causing one death so far the idiot is introducing legislation cutting off all federal funds from so called “sanctuary cities.”  Didn’t he already destroy Hazleton?

You might recall the ruckus created by Republicans several years ago about filibustering federal judges.  They decried attempts to derail George W Bush’s radical nominations by Democrats and swore that all judicial nominations get an “up or down vote.”  Since then they have paralyzed the federal judiciary by refusing to hold hearing on Obama’s nominees.  Still though, they hadn’t actually conducted a filibuster…until this week.  It failed when 11 Republican Senators defected.

I chuckle when I hear conservatives saying the government should “live within its means” just as families do.  Have you seen the level of personal credit levels?  Americans haven’t lived within their means since the credit card was invented.  Let’s get real.