How Pennsylvania’s Tax Credit Program Models Support for Public School Students

Pennsylvania high school counselors manage caseloads exceeding 300 students, dividing their time between mental health needs and college application deadlines according to the74million.org.

In Philadelphia, Kelsey Smith works as a college access coordinator at Furness High School to help bridge that gap. Her position is funded by donations from individuals and corporations who give to the Philadelphia Education Fund in exchange for a state tax credit. Smith recalled helping a 17-year-old student in foster care complete unwieldy financial aid paperwork and tuition waiver uploads without parental support.

“It’s not that any of these things are impossible, but she is 17 and does not live with her parents,” Smith told the74million.org. “The process is just unwieldy.”

The Philadelphia Education Fund is one of more than 900 organizations participating in Educational Improvement Tax Credit program. These groups direct donor funds toward public school students to supply extra support that school districts cannot always provide. Another participating nonprofit, Andrew’s Gift, equips classrooms with consultants, iPads, software, and sensory items for students with autism.

Federal Program Launches in January

Clear differences separate Pennsylvania’s established model from the upcoming Federal Scholarship Tax Credit, which begins Jan. 1. Under the federal program, donations will fund student scholarships rather than staff positions. Although school choice advocates pushed for the federal initiative to expand private school access, the Treasury Department confirmed that public school students are also eligible.

As Pennsylvania Gov. Josh Shapiro considers whether to opt into the federal program, existing providers are evaluating what adjustments they must make. Organizations would need to form or work with a scholarship granting organization meeting Internal Revenue Service criteria.

“If we could continue to accomplish what we’re doing right now without a whole lot of hoops to jump through, I would definitely do it,” said Andrew Ward, founder of Andrew’s Gift. “If there are 25 obstacles that we’re trying to climb over to fit this program into what we’re doing, it may not be worth it.”

During an October gubernatorial debate, Shapiro stated his staff was digesting Treasury Department regulations and would announce a decision soon. “I’m very open to this,” Shapiro said during the debate. Meanwhile, New Mexico Gov. Michelle Lujan Grisham opted into the program.

Conversely, governors from California, Connecticut, Massachusetts, Michigan, and New Jersey sent a letter to Treasury Secretary Scott Bessent requesting clarity on expenses covered for public school students and state authority over scholarship organizations.

States Collect Minimal Outcome Data for Tax Credit Programs

Past evaluations of state tax credit programs reveal a lack of adequate data collection. A 2022 report from Pennsylvania’s Independent Fiscal Office indicated that despite having one of the largest tax credits, the state collects and publishes minimal outcome data. A 2021 audit of Georgia’s Qualified Education Expense Tax Credit similarly showed that the state failed to consistently enforce reporting rules or track demographic data.

Colyn Ritter, a research analyst at EdChoice, said that poor reporting stems partly from state revenue departments administering the programs instead of education agencies.

Opponents of the federal program express concern that districts might attach fees to services that should form part of adequate public education. Kimberly Dauksha, a teacher in the Central Dauphin School District, said that interactive e-books and literacy apps help her students build reading skills.

Common Questions About Tax Credit Programs

How do corporations claim the Pennsylvania tax credit?

Corporations claim credits through the Educational Improvement Tax Credit program, which operates on a first-come, first-served basis and carries an annual statewide cap of $590 million.

Are public school students eligible for the Federal Scholarship Tax Credit?

The U.S. Treasury Department confirmed that public school students are eligible for the federal program, though donations will fund student scholarships rather than staff positions.

Which states currently use private donations to fund public school support?

States such as Pennsylvania, Alabama, and Oklahoma utilize private donations through tax credit programs to fund hybrid courses, technology, and specialized classroom support in public schools.

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