OPED: Tax credit programs save money and help kids

Otto V. Banks
REACH Foundation and Alliance

In a Feb. 9 op-ed, “PA should prioritize public education students,” Eric Wolfgang writes that he believes every dollar matters. I couldn’t agree more. Unfortunately, he alleges that “legislators are trying to tinker with the budget in a way that would negatively impact public schools across the commonwealth.” That is where he and I part ways. House Bill 250 would add $50 million to the existing Educational Improvement Tax Credit (EITC) and $25 million to the Opportunity Scholarship Tax Credit (OSTC) programs, both of which benefit public and private schoolchildren.

Otto V. Banks

Mr. Wolfgang argues that due to an estimated $716 million revenue gap and a nearly $3 billion structural deficit, “now is not the time for the General Assembly to redirect tax dollars into programs that largely benefit private, nonpublic schools.” This is not true. The EITC and OSTC programs are designed to benefit children who are trapped in failing schools such as the Davis School in York, where only 17.5 percent of the students are proficient in English and a mere 6.3 percent are proficient in math. The scholarship programs provide low-moderate income children with resources to transfer to another public or private school that will provide them a high-quality education.

The EITC and OSTC programs are budget neutral — they allow corporations to redirect their tax liability to fund educational scholarships for low- and moderate-income children. These programs are not “siphoning valuable dollars from the general fund.” In fact, many public schools throughout Pennsylvania use the EITC program to fund programs for their students through the Educational Improvement Organization component. Moreover, a $75 million increase is minimal compared to the whopping $5,995,079,000 in basic education funding the governor is proposing for fiscal year 2017-18.

OPED: PA should prioritize public education students

Mr. Wolfgang further states, “the EITC/OSTC programs fail in transparency and oversight.” This is another falsehood. The EITC and OSTC programs are managed by the Pennsylvania Department of Community & Economic Development. The law sets strict rules for participating in the programs. The federal government, through the Internal Revenue Service and in some cases the Securities and Exchange Commission, has the authority to provide oversight and prosecute instances of fraud, waste and abuse.

The OSTC program is offered to the bottom 15 percent of the lowest-performing elementary and secondary public schools throughout Pennsylvania. However, Mr. Wolfgang avers that other components of the school’s performance are not looked at in making that determination. For the sake of argument, let’s take another look at the Davis School. Besides its students’ low rates of proficiency in English and math, what would you like us to consider? The 100 percent promotion rate or the 93.79 percent attendance rate? If we included those numbers and juxtaposed them with the English and math scores, I’m certain that someone would get indicted.

Martin F. Lueken, Ph.D., conducted an audit on 10 tax credit programs throughout the nation titled, “The Tax Credit Scholarship Audit” and found a cumulative net savings of $1.7 billion to $3.4 billion from when the programs were launched to 2014. With that being said, tax credit programs save districts and taxpayers money. The fact that many school districts are struggling financially has more to do with pensions, fraud, waste and abuse than it has to do with a tax credit program that represents 0.03 percent of the proposed spend on basic education.

— Otto V. Banks is executive director of REACH (Road to Educational Achievement through Choice) Foundation and Alliance.