How a Pennsylvania tax credit program works for Catholic schools

Harrisburg, Pa., Jan 29, 2019 / 14:49 pm

For Catholics sympathetic to Catholic schools, the financial expense of tuition is always a concern. But continuing efforts from donors and recent programs like Pennsylvania's tax credit system are opening new ways to make tuition affordable for Catholic and other private schools.

"Many people who would benefit from a Catholic education are afraid they couldn't afford it," Dr. Greg Bisignani, an orthopedic surgeon in the Greensburg area, told the Pittsburgh Tribune. "My personal goal is no one will be able to use the excuse that they can't afford it again."

Bisignani chairs the advisory council and enrollment committee at Greensburg Central Catholic High School. He said the Diocese of Greensburg doubled its scholarship fund in 2018 and aims to grow it each year.

Pennsylvania's Education Improvement Tax Credit program, which dates to 2001, allows any company that does business in Pennsylvania and owes state taxes to apply to the program for approval to join organizations that Pennsylvania recognizes as "special purpose entities." If the application is approved, they can divert state taxes to a scholarship organization and receive business tax credits.

Donations go directly to a state-approved Opportunity Scholarship Organization which then distributes it to a school or schools. Donors can claim up to a 90 percent tax credit on a two year-commitment against their state taxes, Catholic Philly reports.

The tax credit-funded scholarship program is not limited to low-income families. A family of four with two children can earn up to about $116,000 a year before hitting eligibility limits set by Pennsylvania. For each additional child, the cap increases by about $15,600.

About 66 percent of Pennsylvania families with children are eligible for the program. In 2017, the program produced more than 34,000 scholarships for Pennsylvania students at participating private schools, according to figures from the school choice advocacy group EdChoice, formerly known as the Milton and Rose Friedman Foundation. The average scholarship value was more than $1,600.

In 2014, legislators expanded the donor base by allowing individuals to divert their state taxes to the program through membership in a special purpose entity.

Michael Lucotch, director of development for the Greensburg diocese, told the Pittsburgh Tribune that the 2014 modification was "a game changer." The total of available tax credits was not affected but it widened the pool of potential donors in the diocese, with increased participation from Catholic parishioners.

"It allows participants to redirect their personal income tax obligation to a Catholic school of their choice for use as tuition assistance," Lucotch said.

The availability of funding depends on both participation from donors and on allocation limits set by the state legislature. The most recent state budget allocates $160 million statewide to the EITC program. Another $50 million goes to the Opportunity Scholarship Tax Credit, for which only about eight percent of Pennsylvania families with school-age children are eligible.

In 2018 about there were about 4,900 applications seeking the tax credit, an increase from 4,100 in 2014.

In the Archdiocese of Philadelphia the Foundation for Catholic Education aims to distribute over $2.4 million in grants this year to parish schools and regional Catholic schools, Catholic Philly reports. In addition to fundraising through galas and direct donations, it also takes advantage of the opportunities provided by the tax credit program.

The Greensburg diocese established its Scholarship Partners Foundation to take part in the tax credit program. It promoted its scholarship program through the Central Pennsylvania Scholarship Organization.

There are about 2,300 students in the Greensburg diocese's 11 elementary schools and two high schools. Many students who begin in the diocese's Catholic elementary schools leave between junior high and high school, when tuition increases from about $6,000 per year to almost $9,000.

Backers of Catholic schools hope Pennsylvania's tax credit programs and other aid can help reverse a steep decline in enrollment.

In the Greensburg diocese's elementary schools, enrollment dropped 35 percent from the 2007-2008 school year to the 2017-2018 school year. Its high school enrollment dropped 31 percent.

For the Diocese of Pittsburgh, school enrollment numbers fell from 26,000 to 17,000.

While Pennsylvania public school enrollment numbers have also declined in the same period, they fell only by two percent, the Pittsburgh Tribune says.

The National Catholic Education Association said its member schools witnessed a decline of 19.4 percent in enrollment. Declining enrollment means school closures and mergers.

The Opportunity Scholarship Tax Credit program dates back to 2012 legislation. It allows eligible residents living in the catchment boundaries of a school with low-achievement on student assessments to apply for a scholarship to attend another school, whether public or non-public. About eight percent of students are eligible in Pennsylvania. About 14,500 scholarships were awarded from 2016-2017, with an average value of about $2,400.

Jan. 27 to Feb. 2, 2019 marks Catholic Schools Week. Many Catholic school systems are marking the event by highlighting the contributions of schools and holding open houses for prospective students, their parents and the community.