Private school tax credits, money for crumbling schools: Here’s what’s new for education in the finally finished Pa. budget

Lawmakers on Wednesday voted to expand Pennsylvania’s existing tax-credit scholarship programs — which enable donors to pay less in taxes if they fund tuition for students to attend private schools — by nearly 40%.

The $150 million increase to the programs came as lawmakers resolved a budget battle that began during the summer, when Democratic Gov. Josh Shapiro voiced his support for school vouchers — a more direct method of subsidizing private school tuition that has been long pushed by Republicans.

House Democrats blocked that program, but approved the tax-credit expansion — with the caveat that the state will now be required to track some information about students accessing the programs. Shapiro signed the bill into law Wednesday night.

It wasn’t the only education funding-related measure passed Wednesday: Lawmakers devoted $175 million to school facilities repairs, and created a new program that will pay some student teachers $10,000 stipends.

Here’s a breakdown of what passed, and the bigger school funding issues that remain as the next state budget approaches:

The additional $150 million for tax-credit scholarships represented the largest-ever increase in the programs — the Educational Improvement Tax Credit and Opportunity Scholarship Tax Credit — which Republicans have pushed to expand.

The legislation “marks a critical step toward expanding opportunities for children and enhancing educational freedom in Pennsylvania,” said Stephen Bloom, vice president at the conservative Commonwealth Foundation.

The increase had been opposed by the Philadelphia Federation of Teachers, whose president, Jerry Jordan, told elected officials Wednesday that any bill that “contains significant policy gains but also includes a significant EITC expansion will have those gains largely offset” by the expansion.

Private and religious schools “will use these tax dollars to advance blatant and explicit discrimination against students,” said Susan Spicka, executive director of Education Voters PA, a nonprofit that recently found that many schools participating in the OSTC program had policies allowing discrimination based on religion, LGBTQ+ status, disability, academic performance, pregnancy or abortion.

But the bill that included the increase to the program’s expansion passed the Democrat-controlled House by a vote of 175-28, with all 102 Democrats supporting it. Legislative leaders were able to get Democrats on board by adding a few transparency requirements, including whether the student meets income requirements for the program or if they have a disability.

Rep. Mary Isaacson, the lone Philadelphia Democrat on the House education committee, said she’s never voted in favor of expanding the scholarship programs before, but supported the bill because of the transparency additions.

“I feel better about it,” Isaacson added.

Spicka said the new requirements didn’t appear to include verification of family income levels; a family of two adults and two children can qualify for an EITC scholarship with a household income of $146,620. They also don’t provide for tracking what school a student attended before getting the scholarship, making it unclear to what extent awards may go to children already attending private schools, Spicka said.

Student teachers will now be eligible for $10,000 grants under a new program aimed at tackling teacher shortages.

With Pennsylvania producing far fewer teachers than in the past — a record-low 4,220 certified teachers came out of the state’s education programs in 2021-22, down from more than 16,000 a decade prior, according to a Penn State professor’s analysis — officials say more incentives are needed.

“We think this is a way to show that Pennsylvania believes education is important,” said state Sen. Vincent Hughes, a Democrat representing parts of Philadelphia and Montgomery Counties.

Under the legislation, student teachers — who are required to complete 12 weeks of teaching — may be eligible for an additional $5,000 grant if they serve in a school with a high rate of open teaching positions. Details are still being worked out, but Hughes said he believed Philadelphia would benefit from that provision.

This year’s budget includes $10 million for the program; Hughes said he hoped it could be expanded going forward.

Lawmakers set aside their first-ever funding stream of $175 million to help address deferred maintenance and environmental issues at crumbling schools across the state.

Senate Majority Leader Joe Pittman (R., Indiana) said he recognized these funds were a priority to Shapiro and House Democrats, and Senate Republicans supported them if it was guaranteed that schools across the state would get them.

Hughes, who is the Senate Democrats’ chair on the appropriations committee, said he was proud to secure the funds, but recognized the billions still needed to help districts address facilities issues. Philadelphia’s capital needs alone have been estimated at $5 billion.

But it was the school closures around Philadelphia and the state due to asbestos or other environmental dangers that really helped lawmakers make their case, Hughes said.

“Unfortunately, the largest voice has been the time that schools have had to close down,” Hughes added.

The votes provided relief for Pennsylvania’s 15 community colleges, which will finally receive $261 million in state funding that was held up amid budget negotiations.

The legislation “comes just in time as college leaders were confronting the need to borrow money at high interest rates just to keep their doors open,” Aaron Chapin, president of the Pennsylvania State Education Association, said in a statement.

While Wednesday’s votes addressed the current budget, a bigger school funding debate is looming. A legislative commission is due to produce a report next month recommending changes to address a Commonwealth Court judge’s decision earlier this year that found Pennsylvania’s school funding unconstitutional.

An expert for plaintiffs told lawmakers this fall that school districts need an extra $6.2 billion to adequately educate students.

In the meantime, poor schools will be receiving less money than they were expecting. As part of the budget agreement, Democrats conceded $100 million they had intended to steer to the state’s poorest school districts — including the School District of Philadelphia — through the Level Up program.

Several Philly Democrats said they were hopeful that the new school funding system would eliminate the need for such a program because funding will be more equitably distributed.

Hughes said the new school funding system has the potential to be “Level Up on steroids.”