Thank you Speaker Mike Turzai (R-Allegheny), the House Republicans, and the four Democrats who voted to pass HB 800 today with a vote of 111-85. This bill will help more families to send their children to the school of their choice, including private school.
Here is some background:
In 2001, Pennsylvania enacted the Educational Improvement Tax Credit (EITC), allowing businesses to donate funds to provide scholarships to students attending K-12 private schools. A Pre-K scholarship component was added in 2004. In 2012, the Opportunity Scholarship Tax Credit (OSTC) was created, targeting students in the lowest-performing schools.
Through our Family Choice Scholarship Program we provide hundreds of scholarships to needy families all across Pennsylvania.
The state currently caps tax credits at $172.5 million for contributions to scholarship organizations. In 2016-17, the most recent year with scholarship data available, 52,857 K-12 scholarship applications were denied—that’s 52 percent of all K-12 applications. While substantial, helping tens of thousands of students, the $25 million EITC increase in 2018-19 EITC falls far short of filling the demand for scholarships.
According to the latest estimates from the PA Department of Community and Economic Development, businesses have applied for $180 million in EITC and OSTC tax credits beyond the current cap, meaning program funding could more than double to meet student demand. That includes $80 million for EITC K-12 scholarships and $60 million for OSTC.
What this bill will do:
HB 800 will increase the tax credit cap for EITC K-12 scholarships by $100 million next year. This would be the largest one-year increase in the program since its inception. It will enact an automatic annual escalator for the EITC K-12 scholarship cap. Beginning July 1, 2019, the amount of available tax credits would increase by 10 percent if 90 percent of tax credits were used. Raise the maximum family income eligibility by $10,000 (to a base of $95,000). This base family income is adjusted based on the number of dependent children. Scholarship recipients will be grandfathered in, ensuring those receiving scholarships will remain eligible even if their family income rises.
The bill now moves to the Senate where we hope it will see swift passage.