State budget impasse jeopardizing private school stipends

Nov 23, 2015 by

By Mary Niederberger –

As the state budget impasse continues, concerns are growing that tax credit programs that provide up to $150 million in scholarships for students in grades K-12 statewide could be eliminated this year.

That’s because the state Department of Community and Economic Development has not approved any of the corporate applications for tax credits to the Educational Improvement Tax Credit program or the Opportunity Scholarship Tax Credit program. The deadline for approvals is Dec. 31.

Cancellation of the programs would cost the Diocese of Pittsburgh, the largest local participant, $5 million and revoke the scholarships of 4,500 of its 18,000 students for the 2016-17 school year, said superintendent Michael Latusek.

The EITC has allowed schools to raise general scholarship money through business tax credits since 2001. The OSTC program, approved in 2012, provides scholarships for students in the attendance areas of the state’s lowest-performing schools to transfer to other public or private higher-performing schools.

Limits on the amount of tax credits permitted under the program are set in the tax code, a document approved by the state Legislature after the state budget is adopted, said Lyndsay Kensinger, spokeswoman for the DCED, which administers the tax credit programs.

With no approved state budget, there is no new tax code, which means the DCED has no defined limits for the tax credits, Ms. Kensinger said. As a result, the agency has taken the stance that it cannot approve applications for any amount of tax credits.

That stance was reiterated by DCED Secretary Dennis Davin in a recent letter to state Rep. Stanley Saylor, who questioned why approvals were not forthcoming to corporations applying to the programs.

Mr Saylor said he disagrees with the DCED’s legal interpretation. He believes the department could use the most recent caps as set in the tax code, which are $100 million for the EITC program and $50 million for OSTC.

“There is no reason for this not to continue — for these companies not to be able to get these checks written,” Mr. Saylor said. “This is a misunderstanding of the law. The current tax credit is in place. We can increase it, but we are not going to go backwards.

“These scholarships are going to kids who can least afford the tuition. They are going to students who are in true need. This is set up to help the students who are in the most need.”

Steve Robinson, spokesman for the Pennsylvania School Boards Association, said his organization has been getting calls from schools and the foundations they have set up to raise money about the lack of approval on applications.

In response, the PSBA also sent a letter to the DCED asking why approvals have not been given.

The Pittsburgh Diocese raises about $3 million a year through the EITC program and $2 million a year through the OTSC program, said Ronald Bowes, assistant superintendent for public policy and development for the Pittsburgh Diocese.

He said it’s unlikely the students would be able pay their tuition without the scholarships.

“Some of these kids are very, very poor,” Mr. Bowes said.

Source: State budget impasse jeopardizing private school stipends | Pittsburgh Post-Gazette

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