Ciresi introduces legislation to reform educational tax credit programs

Southeast Delegation    February 23, 2024 | 4:40 PM

HARRISBURG, Feb. 23 – State Rep. Joe Ciresi, D-Montgomery, today introduced House Bill 2063 which would reform the commonwealth’s educational tax credit programs, the Educational Improvement Tax Credit and the Opportunity Scholarship Tax Credit, to ensure they are better serving those who need them.

According to Ciresi, although funding for Pennsylvania’s educational tax credit programs has increased significantly over the past few decades, there has been little oversight to determine their effectiveness or how the money is spent, which has resulted in those in need not getting necessary assistance.

“The state has awarded billions of dollars in state tax credits for private and religious school vouchers, but because of how the programs have been set up, it’s been difficult to determine their success and whether the money has been spent properly,” Ciresi said. “My legislation would reform our educational tax credit programs and ensure this money is serving its intended purpose by refocusing the programs on those truly in need of assistance, freeing up more money for scholarships, closing loopholes that have diverted money from students, and expanding data collection.”

Ciresi’s legislation would seek to implement multiple recommendations that the Independent Fiscal Office made in 2022 after reviewing the programs’ operations. First, the IFO found that statutory limits on the programs’ data available for collection make it impossible to determine whether state funds are used effectively and the extent to which these tax credits increase educational opportunities. Second, much of the money is not going to the low-income students who need it. As Pennsylvania has a higher scholarship eligibility income limit than any other state with a limit, taxpayers are subsidizing private school tuition for many families who could afford it even without the taxpayer-funded scholarships. Finally, the highest administrative expenses cap in the country and a lack of guidelines restricting how that money can be spent by scholarship organizations also reduces the number of scholarships available to low-income families.

“We have the opportunity to reform these programs to incorporate accountability, create confidence that the money we’ve authorized for these programs is going to students who need it, and provide more scholarships for low-income families without needing any new money from the taxpayers,” Ciresi said.

Ciresi’s legislation would:

  • Refocus the programs on those in need of assistance by lowering the eligibility income limit for EITC and OSTC scholarships – currently the highest in the country – to 200% of the federal poverty line and adjusting definitions of household income to better align with what’s used for other state programs;
  • Free up more money for scholarships to students and be fiscally responsible by reducing the cap on administrative expenses, and closing loopholes by requiring this money to truly be spent on administrating scholarship programs; and
  • Expand data collection that will allow for the meaningful evaluation of program effectiveness and to ensure that scholarships are going to those who need them. 

Ciresi said this legislation aligns program parameters to be more fiscally responsible and is similar to the overwhelming majority of other states with like programs.