‘Trapped’ on the Main Line: Expensive private schools benefit from Pa. tax credits but report zero low-income students
Many schools that benefit are located in the state’s wealthiest suburbs, where students have access to some of Pennsylvania’s highest-rated public schools.Listen 5:34
Any debate over the tax-credit programs that subsidize private-school education in Pennsylvania could begin here:
There is very little public data on the students who benefit.
Backers often say that scholarship money raised through the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC) goes to poor families who’d be “trapped” in “failing” public schools if they didn’t have tuition assistance.
Skeptics paint another picture. Because the scholarship programs have income limits nearly twice the state median, they say the state is forgoing tax revenue in order to fund private schools for families who have other quality options.
Based on an analysis of right-to-know records and other state data, Keystone Crossroads found muddled evidence to support both claims. The analysis comes with caveats and strong indications that private schools and scholarship organizations regularly report incomplete or incorrect information.
We looked at 151 schools that administer their own tax credit scholarship programs, and then examined demographic data those same schools report separately to the Pennsylvania Department of Education.
Of those schools, 57 — more than a third — report enrolling zero low-income students or said they couldn’t determine how many low-income students they have. Another 15 schools told the state that less than five percent of their student body was low-income.
Many of these schools are located in the state’s wealthiest suburbs, where students have access to some of Pennsylvania’s highest-rated public schools.
Keystone Crossroads also analyzed the 50 scholarship organizations that received the most money through the OSTC initiative in 2017-18 and found evidence that seems to support the claims of program backers.
In all, these 50 organizations gave out nearly 11,000 scholarships totaling just over $30 million. The vast majority of those scholarships — 78% — went to families below 185% of the poverty level.
But again, there are caveats. The OSTC program more specifically targets low-income families and is the smaller of the two tax-credit initiatives.
We also found obvious and repeated errors in the forms submitted by scholarship organizations. Those errors muddy the lone sliver of information mandated by the state about the recipients of scholarship money.
Pennsylvania currently caps these tax break programs at a combined $210 million a year. Republicans led by Speaker of the House Mike Turzai pushed hard this session to boost the cap by $100 million and allow it to rise automatically in future years.
Democratic Governor Tom Wolf recently vetoed that proposal. He argued it would siphon too much money away from state coffers and, by extension, public schools.
As the state budget takes shape in Harrisburg this week, the issue is again in the middle of negotiations, and there’s momentum behind a deal that would increase the EITC program by $25 million.
But there’s a big question looming over this entire debate. In a state where about half of the public school population is considered low income, does most of the money actually go to the neediest students?
‘A great deal’
You may find no better endorsement of Pennsylvania’s ETIC and OSTC programs than graduation day at the Gesu School in North Philadelphia.
Inside a cavernous cathedral, the 42 graduates of this K-8 Catholic school run through a series of scripted movements, standing and sitting in unison as classmates orchestrate with hand signals.
The ceremony’s orderly vibe is impressive and instructive. It captures the essence of Gesu’s appeal to parents like Eboni Scott, who sent two children to Gesu and has a third heading into fifth grade.
Scott, like many family members in the mostly black audience, isn’t Catholic. But she wanted a school that offered small class sizes and a positive, aspirational environment. Scott said those things are hard to find in the nearby public schools, which produce some of the state’s lowest scores on standardized tests.
“It’s not cool everywhere to be smart,” she said. “It’s not cool to have perfect attendance and get good grades.”
There’s one more thing Scott loves: the price. The average Gesu family pays $800 a year, according to the school’s president.
“It’s a great deal,” Scott said, before repeating the words “great deal” twice more.
About eight in 10 Gesu students are low-income, according to the school’s self-reported enrollment data kept by the state.
Gesu relies on donors to help its families out with tuition. And it leans heavily on EITC and OSTC, collecting donations totalling $816,000 in 2017-18.
“It’s really critical for us as a school to survive,” said Bryan Carter, Gesu’s president and CEO.
Here’s how the programs work:
EITC and OSTC provide tax breaks to people who donate scholarship money to private schools. Basically, it’s an incentive to give money to private schools instead of giving it to the state.
Most Pennsylvania families are eligible for this scholarship money. A family with two kids can make up to $116,000 a year, roughly double the state’s median household income.
But those aren’t the families supporters of the program tend to highlight. Literature and rhetoric suggest that the money mostly goes to families who would be in poor-performing public schools if they didn’t get scholarships.
“We also know that kids can’t learn in a failing school, in a public school, maybe an inner-city school, where it’s not safe,” said State Senator Mike Regan, R-Cumberland, who sponsored a tax-credit expansion bill in his chamber. “You can’t learn when you’re afraid.”
Backers highlight the altruistic purpose of EITC and OSTC, arguing that demand for the program outstrips supply.
“We still have a lot of students who come from poverty and are in violent neighborhoods, people who are coming from drug neighborhoods, who wanna get out of that neighborhood school and get to where their children are safe,” said State Rep. Stan Saylor, R-York, chair of the House Appropriations Committee.
But is Gesu the exception or the rule? And do scholarship students typically come from “violent…drug neighborhoods?”
In Pennsylvania, there’s been little effort to answer this question.
State law prohibits regulators from tracking anything about the students who receive EITC or OSTC scholarships — that includes income and academic outcomes. And the scant data available may not be accurate, as our analysis discovered.
There is, however, numerical and anecdotal evidence that suggests a significant portion of the money goes to families of greater means.
Like the Gesu School, Villa Maria Academy is a Catholic institution that benefits from the EITC and OSTC programs.
That’s where the similarities end.
Gesu is coed and located in a zip code where most live below the poverty line. Villa Maria sits on 45 acres in Malvern, a posh Philadelphia suburb, and serves all girls.
Villa Maria is surrounded by some of Pennsylvania’s highest-rated school districts, a fact not lost on Ron Lance, director of business operations.
“We’re in a very competitive area here where the public schools are very good and the parochial schools are very good,” Lance said. “You kinda scratch your head sometimes as to why someone would stretch so far to send their kids here, as opposed to Conestoga [School District] or Great Valley [School District] or one of the Downingtown schools. But hey, different strokes for different folks.”
In 2017-18, Villa Maria raised a combined $141,201 through the EITC and OSTC programs. Lance described scholarship recipients as the children of single parents living in well-to-do areas — parents who aren’t wealthy enough to afford the $23,000 tuition at Villa Maria. The school reported serving no low-income students from its enrollment of 445.
Ron Lance said it’s difficult for Villa Maria to attract students from poor families because of its location and the fact that its school is predominantly white.
“I understand the pushback on EITC and OSTC,” Lance said. “And I guess I get that you’re not reaching the poverty folks. But I think it’s difficult for a private school to appeal to some of these minorities.”
Several independent schools described their EITC and OSTC recipients as a mix of students from both low and middle-income families.
Many of those schools charge tuition that tops $20,000 a year and said they wanted to open their doors to families who couldn’t otherwise afford it.
“We’re a blue-ribbon school that provides top education for the brightest girls,” said Jody Romano, vice president of institutional advancement at Mount Saint Joseph Academy, a private school outside of Philadelphia. “Why wouldn’t you want them, just because of economic issues, not to come to the best possible school they could where they could get the best education that could launch them forward?”
Mount Saint Joseph Academy was one of the 57 schools that received scholarship money through their own EITC or OSTC collection organization but reported serving no low-income students.
But administrators say they do have some low-income students, even though they put “zero” on the state’s enrollment form.
The state does not force private schools to calculate the number of low-income students they serve and said private schools can put “zero” if they’re not able to calculate a figure.
Even though private schools have to track student income as part of their participation in EITC and OSTC, when we approached schools that put “zero” on the state form, more than a dozen said it was a mistake, an oversight, or a function of the fact that they couldn’t make a determination.
Some of the state’s most renowned private schools said they overlooked or couldn’t calculate a low-income percentage, including William Penn Charter, Episcopal Academy, Westtown School, and St. Edmund’s Academy.
After being contacted, some of those schools volunteered the information. Episcopal Academy, which accepted $1.3 million in tax credit scholarship money in 2017-18, said about two percent of its students were low-income. Penn Charter reported roughly five percent. Westtown School and St. Edmund’s said their numbers were higher than zero, but could not calculate an exact percentage in time for publication.
Other schools did not respond or declined to comment.
YSC Academy, a school for elite soccer prospects run by the Philadelphia Union, raised $339,046 for a student body of 75. It reported serving no low-income students and declined to comment.
Academy of Notre Dame de Namur, an all-girls school on Philadelphia’s Main Line, raised $273,475 through the tax-break programs and reported that less than one percent of its student body was low-income.
The Kiski School, a boarding school in Westmoreland County, raised $216,350, and did not report serving any low-income students. Officials did not respond to requests for an interview.
Keystone Crossroads could only examine the data for schools that have set up their own scholarship funds. Other schools receive EITC and OSTC money, but through intermediary organizations that don’t have to report what schools their scholarship students attend.
‘Taken as fact’
The OSTC program does require some measure of transparency. Organizations benefiting from the tax credit must submit a yearly renewal form to the state’s Department of Community and Economic Development that asks how many scholarships were given to students from families at or below 185% of the poverty level. For a family of four, that’s about $46,000 a year.
Diving into those forms, though, also reveals questions and irregularities.
Twenty-two organizations — such as Philadelphia’s Girard College — reported giving every scholarship to families below the poverty threshold.
Three organizations — Drexel Neumann Academy, Springside Chestnut Hill Academy, and the Children’s Jubilee Fund — said they didn’t give a single scholarship to a low-income student.
When we contacted organizations that reported giving relatively few scholarships to low-income families, several said they didn’t understand the form. A woman at Drexel Neumann Academy, located in Chester, said her school had always put “zero” on the form and never received any questions from state officials. Similarly, an official at Springside Chestnut Hill Academy also thought the school’s number of low-income recipients was higher than zero, but was not able to provide an exact number.
The Diocese of Scranton — which said only one percent of its scholarship recipients were low-income — blamed a mathematical error. A spokesperson said the proper number was 39%.
Several organizations filled out the form in ways that are mathematically impossible.
For instance, the ACSI Children’s Fund — which backs independent, Christian schools — reported giving more scholarships to poor families than total scholarships. The Neighborhood Academy in Pittsburgh made the same error.
Some of these errors seemed fairly obvious, but state regulators said they’re not allowed to ask private schools about the income level of scholarship recipients.
The reported figures are “taken as fact,” said Jim O’Donnell, the tax credit division director at the Department of Community and Economic Development, which oversees the programs.
‘I don’t know’
There has been at least one official attempt to understand who benefits from the EITC and OSTC programs.
In 2009, the Legislative Budget and Finance Committee issued a preliminary report on the EITC program (the OSTC program did not yet exist). The committee asked DCED the “average” annual income of students participating in the program.
Officials then said the average annual income of scholarship recipients was $29,000.
DCED was asked how it came up with that figure and if it could provide an updated number. (The program’s income eligibility limit has gone up considerably since 2009 when it was $50,000.)
Officials said they could not determine how the department came up with the figure and that the calculation was done by employees who left. They added that it would be an impossible number to calculate since the department is explicitly barred from asking scholarship organizations for that kind of information.
“The agency itself has never been permitted to track the household income of families,” O’Donnell said. “So I don’t know where that $29,000 number came from originally.”
With little reliable data available about the EITC and OSTC programs, opinion and projection have rushed in from all sides to fill the void.
“We have surveyed schools and we have done public records requests and the data are not ambiguous,” said Charles Mitchell, CEO of the Commonwealth Foundation, a libertarian think tank that supports expanding EITC and OSTC. “There are still many families that we would all characterize as trapped and in need who want these scholarships, who can’t get them.”
The Commonwealth Foundation is attempting to collect data from scholarship organizations to determine the average income of scholarship recipients. That work is not yet finished, Mitchell said, but he believes it will show that most recipient families are low-income.
Mitchell also relies on anecdotal data from his own visits to schools that benefit from the scholarship money. Mostly, he said, he finds those schools serve low-income students.
“I know those people are the beneficiaries of the program because I know them, because I meet them, because I care about them,” Mitchell said.
Julie Ambrose, a former Allentown school board member, isn’t convinced. Ambrose is writing a dissertation on the EITC and OSTC programs and believes much of the money goes to families who were already enrolled in a private school or would have chosen a private school even if scholarships weren’t available.
Ambrose points to the fact that private school enrollment has dropped year over year since 2005-06 (the furthest back state data go), despite the gradual expansion of the EITC and OSTC programs during that time.
In 2005-06, there were about 295,000 K-12 students enrolled in private schools. In 2017-18, that number was about 223,000.
“It appears that students who were already enrolled in private schools are receiving the money,” Ambrose said.
It’s impossible, however, to rule out the possibility that other factors — such as the expansion of charter schools — influence these overall enrollment numbers for Pennsylvania private schools.
Despite this ambiguity, proponents of the tax credit programs swear they are an escape route for students badly in need of another option.
Pennsylvania lawmakers haven’t delivered the data to prove it.
Naomi Brauner contributed to this article.
Disclosure: WHYY benefits from the Educational Improvement Tax Credit.
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