2012 State Budget

Identifying the issues, influencing legislation and shaping the debate on key education issues

New "EITC 2.0" Tax Credit Program Enacted

During the last few weeks of budget talks, some negotiators were pushing for an expansion of the current Educational Improvement Tax Credit (EITC) program and the creation of another scholarship program to provide tax credits to students in the lowest performing schools to attend private schools or other public schools.

On June 13, Rep. Jim Christiana (R-Beaver) introduced HB 2468, a "school choice" plan that includes two elements: an expansion of the established EITC program, and a new Educational Improvement Scholarship Credit (EISC) program to fund larger scholarships for poor students residing in the attendance boundary of an underperforming school  – often referred to as "voucher lite" or "EITC 2.0." The House Education Committee quickly announced a public hearing, and PSBA testified in opposition to the bill. His plan called for $100 million for the original EITC program and $100 million for the new scholarship program.

With no time to run HB 2468 through the General Assembly, the plan was to take the concept of the bill and insert it as an amendment into another piece of legislation that was further along the process so that it could move more quickly.  The chosen vehicle was HB 1330, a bill passed by the House and in the Senate. HB 1330 transferred the provisions of the existing EITC program from the Tax Reform Code into the Public School Code and also expanded the program to make several other significant changes.

The EITC 2.0 plan was amended into HB 1330 by the Senate, passed and sent to the House.  However, the Senate has also inserted other changes, most notably a charter school reform plan that resulted in the bill being stalled on the House side.  The EITC 2.0 language was then inserted into HB 761, a Tax Reform Code bill, where it eventually was passed in both chambers and was sent to Gov. Corbett.

HB 761 expands the existing EITC program from $75 million to $100 million. It also gives $50 million to the new EITC 2.0 that applies to the lowest performing 15% of elementary and secondary public schools (charter and cyber charter schools and career and technical centers are excluded from the list).  The scholarship amount may not exceed $8,500 for regular education students and $15,000 for special education students. The money can be used to pay tuition at participating public and private schools. Funds also can be used for fees charged by a school for uniforms, books, instructional materials, technology equipment and activities. 

To be eligible, a student's family income cannot exceed: 

  • Through June 30, 2013 - $60,000, plus $12,000 for each dependent member of the household.
  • After June 30, 2013 - $75,000, plus $12,000 for each dependent member of the household.
  • An additional amount, to be determined by a formula, would be added to the income limit for students receiving special education services.

The scholarships are available to students residing in the attendance area of an underperforming public school. Further, students are not required to have attended the underperforming school, and may qualify for a scholarship even if they are currently attending a private school.

By Sept. 1, 2012, and by Feb. 1 of each year thereafter, the state Department of Education (PDE) will publish a list of the bottom 15% of elementary schools and the bottom 15% of secondary schools, based on combined math and reading PSSA scores.  By Aug.1, 2012, and by Feb. 1 of each year thereafter, PDE will notify every school district identified as having at least one low-achieving school of its designation and shall furnish the school district with a list of the low-achieving schools located within the school district.

School districts in which a low-achieving school is located would be required to notify parents of the scholarship program with instructions about how to apply.

Funding for the original Educational Improvement Tax Credit program, enacted in 2001, was increased from $75 million to $100 million; funding for the EITC 2.0 as set at $50 million.

Here are some of the key provisions under the new EITC 2.0 program:

List of low-achieving schools: By Sept. 1, 2012, and by Feb. 1 of each year thereafter, the PDE will publish on its website and in the Pennsylvania Bulletin a list of the low-achieving schools for the following school year.

Notice: By Aug. 1, 2012, and by Feb. 1 of each year thereafter, PDE will notify every school district identified as having at least one low-achieving school of its designation and furnish the district with a list of the low-achieving schools located within the school district.

Publication: Within 15 days of receipt of a notification, a school district must post on its website notice of all of the following: (1)  A description of the scholarship program; (2)  Instructions for applying for a scholarship; (3)  A list of schools in the school district that have been designated by PDE as low-achieving schools; and (4) Notice that a parent must contact directly a school district of a participating public school or a participating nonpublic school if the parent seeks to enroll the student in the program.

Notification to parents:  Within 15 days of receipt of a notification, a school district must notify the parents of each student who is currently attending or residing within the attendance boundary of a low-achieving school during the school year of the school's designation. Upon registration of a kindergarten student, the district shall notify the parents of the kindergarten student that the student will be assigned to a low-achieving school during the school year of the school's designation.
The notice must be in a form provided by PDE and provide the following information regarding the EITC program: (i) A description of the scholarship program; (ii) Instructions for obtaining information about applying for a scholarship under the program; and  (iii) Notice of the parent's responsibilities with regard to applying to a school district of a participating public school or a participating nonpublic school if the parent seeks to enroll the student in the program.

Average daily membership: A recipient who was enrolled in the recipient's resident school district or in a charter school, regional charter school or cyber charter school when the recipient first received a scholarship will continue to be counted in the average daily membership of the school district for a period of one year after enrolling in a participating public school or a participating nonpublic school.  During that year and each school year thereafter, a school district of a participating public school in which the recipient is enrolled cannot include the recipient in the school district's average daily membership.

School participation in program: By Aug. 15, 2012, and by Feb. 15 of each year thereafter, public and private schools may elect to participate in the program for the following school year. A school district or nonpublic school that elects to participate must notify PDE of its intent to participate.

For a nonpublic school, the notice must be submitted on a form developed by the PDE and shall specify the amount of tuition and school-related fees attributable to an available seat.

For a school district, the notice must be submitted on a form developed by PDE and specify all of the following:

  • Each school within the school district which the school district intends to make a participating public school.
  • The amount of tuition and school-related fees attributable to each available seat. The amount cannot exceed the amount calculated under section 2561 of the School Code.

Allowances for private schools: Nothing in the law will be construed to prohibit a participating nonpublic school from limiting admission to a particular grade level, a single gender or areas of concentration of the participating nonpublic school, including mathematics, science and the arts.
The commonwealth or any of its agencies or officers or political subdivisions may not impose any additional requirements on a nonpublic school which are not otherwise authorized under the law or require the nonpublic school to enroll a recipient if it does not offer appropriate programs or is not structured or equipped with the necessary facilities to meet the special needs of the recipient or does not offer a particular program requested.

The state or any school district may not:

  • Prescribe the course content or admissions criteria for any religiously affiliated school;
  • Compel any private school to accept or enroll a student;
  • Impose any additional requirements on any private school that are not otherwise authorized; or
  • Require any school to accept or retain a student if the school does not offer 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.

Tuition rates:  No school district of a participating public school or participating nonpublic school may charge a recipient a higher tuition rate or school-related fee than the school would have charged to a similarly situated student who is not receiving a scholarship.

Notwithstanding the provisions of section 2561 of the School Code, a school district of a participating public school may charge a recipient a tuition rate that is lower than that charged to students who are not recipients of scholarships.

Participating public school criteria: A school district must enroll students in a participating public school on a lottery basis from a pool of recipients who meet the application deadline set by PDE until its available seats are filled. The pool may not include a recipient who has been expelled or is in the process of being expelled, or has been recruited for athletic purposes. The enrollment of recipients may not place the school district in violation of a valid and binding desegregation order. Priority must be given to an existing recipient, or a sibling of a student currently enrolled in the district.

Participating nonpublic school criteria: The participating nonpublic school may not discriminate on a basis which is illegal under federal or state laws applicable to nonpublic schools.  The participating nonpublic school shall comply with section 1521 of the School Code. The participating nonpublic school or its representatives may not recruit a student for athletic purposes.

Student rules, policies and procedures:  Prior to enrollment of a recipient, a participating school or nonpublic school must  inform the parent of a recipient of any and all rules, policies and procedures of the school, including any academic policies, disciplinary rules and administrative procedures of the participating public school or participating nonpublic school. Enrollment of a recipient in a participating public school or participating nonpublic school shall constitute acceptance of any rules, policies and procedures of the participating public school or participating nonpublic school.

Transportation: Transportation of recipients shall be provided under section 1361 of the School Code.  Transportation of a recipient attending a participating public school will be subject to reimbursement under section 2541 of the School Code; transportation of a recipient attending a nonpublic school will be subject to reimbursement under sections 2509.3 and 2541 of the School Code.

Tuition grants by school districts: The board of school directors of a school district may use state funds to establish a program of tuition grants to provide for the education of students who reside within the district and attend or will attend a public or nonpublic school on a tuition-paying basis. For students who attend or will attend a nonpublic school, the grant amount for each student shall not exceed the amount of the per pupil basic subsidy. A student who receives a tuition grant under this section shall be included in the average daily membership for purposes of determining the school district of residence's basic education funding.  A student who receives a grant under this section to attend a public school outside the school district awarding the tuition grant shall not be included in the average daily membership of the school district the student attends.

The school board must prepare guidelines establishing an application form and approval process, standards for verification as to the accuracy of application information, confirmation of attendance by a student who receives a tuition grant, restrictive endorsement of grant checks by parents to the school chosen by the parents, pro rata refunds of grants for students who withdraw during the school year, repayment of refunded grants to the school district and reasonable deadline dates for submission of grant applications. The board of school directors of a school shall announce the award of grants no later than August 1 of the school year in which the grants will be utilized. Upon receipt of written confirmation of enrollment from the student's school of choice, grants must be paid to the parents of a student by a check that may only be endorsed to the selected school. In the event a student is no longer enrolled prior to the completion of the school term, the school shall send written notice thereof to the school district.

Original jurisdiction: The Pennsylvania Supreme Court has exclusive and original jurisdiction to hear any challenge or to render a declaratory judgment concerning the constitutionality of this article. The court may take such action as it deems appropriate, consistent with its Supreme Court's retaining jurisdiction over such a matter, to find facts or to expedite a final judgment in connection with such a challenge or request for declaratory relief.