Status of what's being proposed

Taxpayer-Funded School Voucher Legislation

SB 1: What’s happened to date

Jan. 26, 2011 – Senators Jeff Piccola (R-Dauphin), the Chairman of the Senate Education Committee and Anthony Williams (D-Philadelphia), introduced SB 1 to create a taxpayer-funded tuition voucher program. 

Seventeen senators agreed to co-sponsor the legislation, including Senators Piccola, Williams, Scarnati, Pileggi, Folmer, Browne, Smucker, Alloway, Erickson, Rafferty, Eichelberger, Pippy and Don White.   Senator Dinniman, the Senate Education Democratic Committee Chairman, was not listed as a co-sponsor.

March 1, 2011 –  The Senate Education Committee approved SB 1with a vote of 8-2, with Senators Jim Ferlo (D- Allegheny, Armstrong, Westmoreland) and Daylin Leach (D-Delaware, Montgomery) opposing the bill. The bill moved out of the committee following a lengthy discussion on a number of amendments relating to issues of funding and costs, constitutional impediments, measures of academic success and mandated religious instruction. Discussion in favor of the bill was dominated by Senators Piccola and Williams, the prime sponsors of SB 1. Concerns about the bill were raised by Senators Dinniman, Ferlo and Leach, who each offered amendments addressing various points. None of these amendments were adopted. 

Only three amendments were adopted, none of which substantively change the provisions of SB 1. These amendments, offered by Sen. Piccola, would: 1) Prohibit athletic recruiting of opportunity scholarship recipients by either school districts or participating nonpublic schools; 2) Require participating nonpublic schools to be nonprofit entities that are tax-exempt under section 501(c)(3) of the Internal Revenue Code and to make their written policies. regarding such matters as academics, extracurricular activities, admissions, tuition, religious studies and discipline available upon the request to parents seeking to enroll their children in the school; and 3) Make technical amendments to the bill to clarify the following: (a) eligibility of students to participate in years 1 and 2; (b) definition of "persistently lowest achieving school"; (c) reimbursement of transportation expenses; (d) manner of awarding vouchers; (e) funding of program by appropriations and moneys in the excess scholarship fund; (f) transitional funding for students currently attending public schools; (g) timing of EITC applications; and (h) division of EITC funds among scholarship organizations and educational improvement organizations.

April 11, 2011 -- With a 15-11 vote, the Senate Appropriations Committee amended and approved SB 1. The committee attached a fiscal note to the bill prepared by Republicans, showing that the total cost to the state will be $1 billion over the first five years and the ongoing annual cost will be around $300 million. Democrats estimated that the real costs are several times larger. A final vote on the Senate floor was expected to occur the following day.

Highlights of the omnibus amendment included:

• New "Middle-Income Scholarship Program" -- As amended, vouchers were no longer targeted just for the poorest students whose family income does not exceed 130% of the federal poverty line. The new language made vouchers available to children whose family income is at 130-300% of the poverty level. The new "middle-income scholarship program" would be available beginning in 2014-15, the fourth year of the voucher program.
• Cap on Costs – The amendment would set a cap of $250 million beginning in the third year of the voucher program for costs for vouchers to low-income children who do not reside on the attendance boundary of an underachieving school.  . 
• New Definition of "Persistently Lowest Achieving School" – The definition is revised to include any school among the lowest performing 5% of public schools excluding charter and cyber charter schools and area vocational technical schools.  The bill also includes any other school with the exception of those who met federal Adequate Yearly Progress requirements in at least one of the two most recent school years.  In addition, the bill requires all schools not excluded to be ranked based upon their most recent assessment data.
• Nonpublic Schools Administer Tests of Their Choice – The amendment establishes a weak system of "accountability" by requiring nonpublic schools to administer a test of their choosing to voucher students (only) in grades 3, 5, 8, and 11.  The test may be a nationally normed standardized achievement test, or it can simply be "an assessment."  The nonpublic school must release the test results to the parents of the student, and post aggregate test results on its web site (if it has one), provided that the results would not reveal the identity of any student.
• Limit on Laws Applicable to Nonpublic Schools -- New language restricts the laws private schools have to follow to limit them to the ones that are in effect "on the date prior to the effective date of this section." 

• Lottery Selection for Public School Transfers – School districts that accept voucher students would be required to randomly select them from a pool of names, rather than the first-come-first-served basis that was under the original bill.
• New Pilot Public-to-Public Choice Program – Beginning in the fourth year, a public school choice demonstration program would be established to provide vouchers for public school students who wish to attend a nonresident public school. A district could not receive more than $500,000.

April 12, 2011 -- The expected vote on the Senate floor was stalled when Republicans and other supporters recognized the close vote count for the bill’s consideration on the Senate floor. What was claimed to be an easy victory for voucher proponents turned into a tight horse race as the day progressed.  A noon rally filled the Capitol with about 1,500 pro-voucher advocates, which was expected to be followed by an easy Senate passage of SB 1 in the afternoon.  However, numerous phone calls and emails throughout the day opposing the bill made a very strong impact. By 1 p.m., the unofficial vote count was only a few votes apart.

Gov. Corbett met briefly with the Republican senators to seek "yes" votes on the bill. Following that meeting, some senators wanted more clarity on the governor's position on specifics of the bill, and others raised concerns because there was no commitment in the House of Representatives to support SB1. As the day wore on, a decision was made to postpone putting the bill on the floor for a final vote.

April 27, 2011 – SB 1 was taken off the Senate calendar and re-referred back to the Senate Education Committee. It was suggested that the bill was returned to the committee so that additional changes could be made based on a agreement by the governor’s office and Senate Republican leaders. No official word was announced, no language was released and no details were available.

Provisions of SB 1, Printer’s Number 1031
As re-reported from the Senate Appropriations Committee, April 11, 2011
SB1, called the "Opportunity Scholarship and Educational Improvement Tax Credit Act," would provide taxpayer-funded tuition vouchers to students from low-income families to be used for either public, private or parochial schools. The program is phased in, with a focus first on providing vouchers for children attending underperforming schools, then expanding the program in the third year to all low-income children attending any school. Therefore, each year more students would be eligible to participate. Underperforming charter schools, cyber charter schools or area vocational-technical schools are excluded under the act. In addition, the bill also includes an increase of $25 million in the Educational Improvement Tax Credit program.

Four-Year Phase-In Voucher Program
The First Year -- Beginning with the 2011-12 school year, the bill creates an opportunity scholarship program to help low-income children currently attending a public school to pay tuition to attend a nonresident public school or a participating nonpublic school. In the first year, the program is available to low-income children who attended a "persistently lowest achieving school" during the 2010-11 school year or will be a kindergarten student and who will reside in the attendance boundary of a persistently lowest achieving school during the 2011-12 school year. 

"Persistently lowest achieving school" -- SB 1 defines "persistently lowest achieving school" as a public elementary or secondary school located in Pennsylvania that is among the lowest performing 5% of schools. To determine the lowest performing 5% of schools, the Department of Education will consider all public schools with the exception of charter schools, cyber charter schools and area vocational-technical schools, and then exclude those that have made Adequate Yearly Progress for at least one of the two most recent school years or that have not been measured for at least one of the two most recent school years.  All remaining schools would be ranked based upon their performance on the most recent assessment for which data is posted on PDE’s website. The bill requires the Department of Education to publish a list of the persistently lowest achieving schools by April 1, 2011 and then by February 1 of each year thereafter on PDE’s website.

"Low-income child" as a school aged child with a household income that does not exceed 130% of the federal poverty line for the school year preceding the school year for which an opportunity scholarship is sought. It is important to understand that under SB1, this definition covers only those students who receive free school breakfast and lunch.  Those receiving reduced price meals would not be eligible to receive vouchers.

The Second Year -- In the 2012-13 school year, the scholarship program is expanded to include not only those students who qualified for the program for the 2011-12 school year, but also to low-income children already enrolled in a nonpublic school.  SB 1 allows students who attended a nonpublic school during the 2010-11 school year and will reside within the attendance boundary of a persistently lowest achieving school as of the first day of classes of the 2012-13 school year to receive vouchers.

The Third Year -- In the third year phase-in, the 2013-14 school year, the tuition program is available to all low-income children residing in the Commonwealth regardless of residency or the academic success or failure of the school from which the child seeks transfer.  The aggregate amount of all vouchers awarded for the 2013-14 school year and thereafter who do not reside within the attendance boundary of a low-achieving school may not exceed $250 million.

The Fourth Year – Beginning in 2014-15, the program is expanded to include a "Middle-Income Scholarship. In this year, vouchers would be available to children whose family income is at 130% - 300% of the poverty level.

Voucher Amount
Under this bill, a tuition voucher equals 100% of the Commonwealth’s share of the resident school district’s total revenue per average daily membership of the prior school.  The term "Commonwealth’s share" is not defined under this bill and it is unclear if the Commonwealth’s share is limited to a school’s basic education funding subsidy or inclusive all dollars received from the state including grants, transportation and charter school reimbursements, and federal dollars passed through the Department of Education. Determining the exact definition of what that 100% state share is will make a significant impact on the amount of voucher money that is to be provided at the expense of the resident school district.  As written, this means that all state revenue including payments for special education, transportation, debt service, charter school subsidy, PSERS subsidy, grants and other special funding along with property tax reducing gaming revenue would be calculated as part of the funding that will pay for vouchers. This raises various inconsistencies. For example, the voucher amount would include funding for transportation, but the resident school district still would be required to provide transportation for the voucher student.

Middle Income Scholarship Program
Vouchers would be available to children whose family income is at 130-300% of the poverty level under the "middle-income scholarship program" beginning in 2014-15, the fourth year of the voucher program. School districts must post information about the program on their websites that includes instructions on how to apply for a voucher.

A newly-created state Education Opportunity Board (described in a later section) would promulgate regulations for the administration of the program. The rules would include application and enrollment processes and procedures.

Pilot Public-to-Public Choice Program
Also beginning in the fourth year, a public school choice demonstration program would be established to provide vouchers for public school students who wish to attend a nonresident public school. A district could not receive more than $500,000.

Excess Scholarship Fund
SB 1 also establishes an "Excess Scholarship Fund" that would contain money for vouchers intended to be awarded to students in excess of the amount of the tuition actually charged by a school. The money in the fund would be applied toward costs of the voucher program for upcoming years, beginning in 2012-13, and would be used to fund the public school demonstration grant program and the Middle Income Scholarship Program that would begin in 2014-15.

During the 2014-15 school year and thereafter, the money in the fund would applied as follows: 

• One-half would be designated for the public school demonstration grant program. Any unused money would be added to the total amount of funds available for the middle income voucher program.

• One-half would be designated for the middle income voucher program.

Applying for and Receiving Voucher Money for Nonpublic Schools
A parent of an eligible student who wants to receive a voucher to be used at a nonpublic school must first apply to the Education Opportunity Board. The board would notify the parent whether the voucher will be awarded. The parent then applies for enrollment directly to the nonpublic school, which would decide whether to accept a child’s enrollment application. The nonpublic school must provide written notice to the board of each new voucher student accepted. The board would notify the parents that a voucher will be awarded to them and also notify the resident school district.

The state will issue voucher checks directly to the parents. Voucher checks cannot be awarded for enrollment on a home education program. The parents are to endorse the check for the payment of tuition at the nonpublic school where the student’s enrollment has been confirmed.
If the student withdraws from the nonpublic school, the school must provide notice to the Education Opportunity Board within 15 days of the student’s withdrawl. The school also must return the full amount of the voucher to the board, reduced on a pro rata basis by the tuition for the portion of school year the student was enrolled. 

In instances where the student withdraws from a nonpublic school, there is no language in SB 1 that would require the Education Opportunity Board to return the funds to the resident school district. The funds would remain with the board.

If a student is expelled from a nonpublic school and subsequently enrolls in the resident school district, the board will pay the district the prorated amount fo rhte remaining portion of the school year.

Transportation of Voucher Students (Public to Public)
SB 1 creates a new mandate for school districts to provide transportation for their students to attend other public school districts, an expansion of the current requirement to provide transportation to nonpublic schools in certain instances.

Transportation to a non-public or private school would fall under the same guidelines that have been in place since 1972, that is, the school of residence must provide transportation if the school is located 10 miles or less from the border of the resident school district. The bill creates a new mandate for resident school districts to transport resident students attending a public school that is not a part of the resident school district. The bill is not clear on whether that transportation is limited to those receiving vouchers and choosing to transfer to a non-resident public school or to any student attending a non-resident public school. The distances would be the same as for the transportation of students to non-public or private schools. This requirement would apply only if the school district provides its resident students with transportation to its own public schools. Additionally, if the school district does not provide transportation to its own schools for its students, but provides its students with transportation for any field trips then it must transport the resident voucher student to the nonresident public school, including a charter school, that is located not more than 10 miles from the student’s resident school district. The district, in this instance, must also provide transportation for such nonresident public school voucher student for field trips.

School Districts Required to Provide Notice of Voucher Program
By a date established by the Education Opportunity Board, each school district must post notice on its website information about the taxpayer-funded voucher program. As the bill is drafted, this requirement applies to all school districts, regardless of whether or not any of their schools have been declared as "persistently lowest achieving."

The notice must include a statement as to whether any of its schools have been designated as a persistently lowest achieving school, and direct parents to nonresident public schools or participating nonpublic schools for enrollment information. The notice also must include information on a local scholarship program, if available, and provide application instructions.

Local Scholarships Created by School Districts
SB 1 also authorizes school districts to create local scholarship funds for students who leave the district to attend a public school in another district.  For a school district choosing to offer local scholarships, it must by May 1, 2011, and by March 1, of subsequent years notify all residents with school-age children of the availability and amount of the local scholarship for the following school year and the process for application.  The notice must be by mail and posted on a district’s website. It also sets for the deadlines for receipt of application by parents of low-income children for local scholarships and the dates by which the board must notify parents if awards will be made. 

Enrollment of Nonresident Students in Public Schools
The bill’s language is unclear as to whether public schools will be required to enroll a nonresident voucher student. 

The bill first requires each school district to develop guidelines setting forth the terms and conditions under which it will enroll nonresident students receiving vouchers and local scholarships. Districts also would develop an enrollment application form and process.
However, in the next sentence the bill states that if a school district determines to enroll such nonresident students it must accept them through a lottery system, provided that the child's enrollment does not violate a binding desegregation order; the student has not been expelled or in the process of being expelled; or in the instance of a magnet school, the nonresident student meets the established eligibility criteria.  The bill also caps the tuition charged by a nonresident school district to a voucher student to the total amount of the voucher and the local scholarship awarded to the student. 

Payment to Public Schools for Special Education Students
Services for nonresident students with disabilities will be charged to the district of residence. This includes services for students who attend other public schools, including area vocational-technical schools, as well as nonpublic schools. The charge would be against the district’s state’s special education subsidy, provided that the resident district is not charged more than the difference between the current year cost of the services had the student remained in the resident school, and the sum of the voucher, and the per pupil special education funding following the student.

The resident district must provide the Education Opportunity Board with documentation of the prior year’s cost of special education services for a voucher student and an estimate of the cost that would have incurred had the student remained in the district. Any cost not covered by this funding must be borne by the nonresident school district.

Enrollment Flexibility for Nonpublic Schools
SB 1 specifies that nonpublic schools may not discriminate in its enrollment decisions on the basis of race, but provides wide flexibility to these schools regarding their admissions policies. Under these loopholes, it is the nonpublic school -- not the parent -- that has the ultimate decision of whether to admit a student.

Loophole # 1 -- Nonpublic schools may not be prohibited from limiting admission to a particular grade level, a single gender or to areas of concentration of the school.

Loophole #2 -- The state (or any of its agencies, officers or political subdivisions) may not impose any additional requirements that are not already authorized. SB 1 also states that private schools must be in compliance with state and federal laws applicable "on the date prior to the effective date of this section." Does this exempt them from having to comply with laws enacted after SB 1 would be signed into law?

Loophole #3 -- A nonpublic school may not be required to enroll any voucher student if the school does not offer appropriate programs or is not structured or equipped with the necessary facilities to meet the special needs of the student or does not offer a particular program requested. Presumably, this includes special (and gifted) education programs, and can be used to limit admission for other reasons.

Nonpublic Schools Administer Tests of Their Choice
The legislation establishes a weak system of "accountability" by requiring nonpublic schools to administer a test of their choosing to voucher students (only) in grades 3, 5, 8, and 11.  The test may be a nationally normed standardized achievement test, or it can simply be "an assessment."  The nonpublic school must release the test results to the parents of the student, and post aggregate test results on its web site (if it has one), provided that the results would not reveal the identity of any student.

New Education Opportunity Board to Set Rules
SB 1creates a new three-member governing body called the Education Opportunity Board, established within the Department of Education that would develop guidelines and procedures for the administration of the voucher programs, including the application and approval process.  The board also would develop a list of at least eight standardized achievement tests from which a nonpublic school may choose to administer if it is not administering a locally developed test.

The three members of the board would be appointed by the governor and confirmed by the Senate for a term of four years. No more than two of the three members may be of the same political party as the governor. The board members would be unpaid, but may hire an executive director and staff. The board and staff would be housed within PDE at an undetermined expense and have use of the governor’s General Counsel for legal advice and assistance.

The board would have 30 days after the enactment of SB 1 to develop its guidelines.

The guidelines would be developed by the board without any public input and would not be subject to the regulatory review process. Instead, the rules created by the board would simply be published as a "statement of policy" in the Pennsylvania Bulletin, posted on PDE’s website and mailed to each school district.

Further, all programs, procedures and guidelines authorized by the board at any time will not be subject to any regulation or review by the State Board of Education.

Annual Report -- Beginning after the first year of the voucher program, the board would prepare an annual report for the governor and General Assembly that also would have to be made available to parents of voucher recipients and posted on PDE’s website.

The report would include information on the total number of opportunity scholarships requested and awarded, the total dollar amount awarded  and also be disaggregated by: 1) students attending public and nonpublic schools; 2) the grade level of the students; 3) whether the student livs in a school district with at least one persistently lowest achieving school; 4) a list of the nonresident public schools and nonpublic schools where voucher students enrolled; and 5) the total number and dollar amount of local scholarships awarded, disaggregated by the resident school districts that made the awards.

Board will conduct "effectiveness study"
Following the 2014-2015 school year, a study of the effectiveness of the voucher program is to be conducted by the Education Opportunity Board, rather than an independent research group or task force.  The report would be submitted only to the Governor and minority and majority chairmen of the House and Senate Education Committees, and is not required to be made public.

Educational Improvement Tax Credit Expanded
The EITC program was established in 2003 and gives tax credits to businesses on a variety of business taxes for contributing to a scholarship organization or to an education improvement organization (EIO) many of which are school district foundations. A scholarship organization is one that is free from federal taxation and one that contributes at least 80% of its annual cash receipts to a scholarship program.  An EIO is also exempt from federal taxation and contributes at least 80% of its annual receipts to a public school for innovative education programs.

SB 1 would change the ratio of credit amount made available to scholarship organizations vs. educational improvement organizations. Currently, 2/3 of the funds generated by the program go to scholarship organizations and 1/3 goes to the EIOs. SB1 would change that to ¾ going to scholarship organizations and 1/4 going to EIOs.

Additionally SB 1 would increase the current Earned Income Tax Credit from $75 million to $100 million for 2011-12.  With the change in division of funds, funding for scholarship organizations would go from $50 million to $75 million, and money for EIOs would remain at $25 million.

While SB 1 would not change the eligibility guidelines for families receiving scholarships under the program, the bill adds an escalator clause. Beginning July 1, 2012, the Department of Community and Economic Development would be required to annually adjust the maximum annual household income amounts to reflect any upward changes in the Consumer Price Index in the preceding 12 months.