Governor Wolf vetoes scholarships for kids in failing schools

As expected, Governor Tom Wolf catered to the powerful teachers’ union by vetoing legislation that would have rescued additional thousands of kids trapped in underperforming public schools.

HB 800 would have doubled the size of an indisputably successful program, the Educational Improvement Tax Credit (EITC), that grants tax credits to businesses that provide scholarship money to kids, allowing them to attend a different school, including private and religious schools. The bill provided an additional $100 million in tax credits for a waiting list of 40,000 kids.

“Sadly, Governor Wolf and the bureaucrat unions are more concerned about the employment of adults than the education of children,” said PMA President & CEO David N. Taylor. “Wolf Home Products in York participated in the EITC program when the governor led his family’s business, which makes this veto even more disappointing.”

In his veto message, the governor objected to funds diverted from public schools “that are structurally deteriorating, contaminated by lead, and staffed by teachers who are not appropriately paid and overstretched in their responsibilities.” He also objected to the “drastic escalation of the cost” of the EITC.

Both arguments are diversionary. As House Speaker Mike Turzai (R-Allegheny), the bill’s champion in the General Assembly, points out Pennsylvania dedicated a record $32 billion in state and local taxes to funding public education in the 2018-19 school year. State appropriations for K through 12 public education have increased by 25% over the past five years and are set to be increased further in the upcoming budget.

“The notion that we are neglecting our public schools is disingenuous,” Turzai said in response to the governor’s veto. “Rather, we have increased investments in public education K-12 to record levels. What we have neglected to provide is adequate support for those families who are looking for an alternative choice.”

In addition, EITC costs are extremely minimal compared to the billions of taxpayer dollars spent on public education.

The EITC and its sister program, the Opportunity Scholarship Tax Credit Program (OSTC), currently represent 0.64% of the General Fund Budget, according to a study by the Commonwealth Foundation.

“Based on projections, if all the increases in HB 800 are used, by 2024 EITC & OSTC would grow to a still minuscule 1.02% of the General Fund. There is no evidence to suggest expanding tax credit programs would result in cuts to other education line items,” the study said.

In addition, the programs actually free-up more funding for the public schools, studies show.

An analysis by Turzai’s office shows that based on a $18,000 average per-student expenditures by public schools, the programs save the public school system a substantial amount of money
A school district may not be able to save the full $18,000 amount for each student who uses the scholarship money to transfer to public and private schools – not all EITC recipients after all would otherwise attend public schools.’

Even if the school district can only save half of that money, a low estimate, that would represent $9000 in savings per student who switches to a private school, the analysis shows.
“The tax cost required for each EITC scholarship is $1600; even if only one in three EITC recipients would otherwise attend public school, that still represents a $4200 savings for each student who switches, or $1400 in tax savings for every EITC scholarship given,” the analysis said.

“That is under an extremely low estimate both of the potential per-student savings for school districts as well as the rate at which EITC recipients would otherwise enroll in public schools.”

In total, the two programs have produced a cumulative savings of $3 to $5 billion, according to new study by Martin F. Lueken, Ph.D. of EdChoice. That more than offsets the $1.1 billion in tax credits issued by the state treasury since the start of the program in 2001, the Commonwealth Foundation notes.

The programs have been so successful that U.S. Senator Pat Toomey (R-PA), in a rare comment on legislation on the state level, urged the governor to sign the bill. In response to Wolf’s comment that the proposed expansion of the EITC program is "...not something I think is good for Pennsylvania," Toomey said:

"It is breathtaking that one could reach this conclusion with the knowledge that approximately 40,000 Pennsylvania children are currently on a waitlist to receive scholarships,” Toomey wrote in a letter to the governor. “In the 2016-17 school year, 43 percent of scholarship applicants were turned down because there were not enough scholarships available. This is not for lack of available donations: Businesses have over $105 million on the donations waitlist. Increasing the tax credit cap would allow this funding to benefit tens of thousands of lower-income kids in the state.”

Some expansion of the EITC could still make its way into the final budget deal, which by constitutional mandate must be approved by June 30. If it does, it should include the escalator in HB 800, guaranteeing the programs could continue to grow to meet demand. The Florida Legislature inserted an escalator in its tax credit program, approved like Pennsylvania’s in 2001. Florida now awards twice as many student scholarships as Pennsylvania and the average amount is significantly higher, the Commonwealth Foundation notes.
An escalator would also keep the programs away from the all too powerful influence of the teachers’ unions.