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September 1, 2014, 5:15 am

Education tax credit means easy money

Application process to fund scholarships simple for Pa. businesses

 

It just got that much easier for businesses participating in the Opportunity Scholarship Tax Program to recoup a portion of the $50 million Governor Tom Corbett earmarked for the initiative. The plan represents an expansion of sorts to the Earned Income Tax Credit plan, also referred to as “EITC 2.0.”

The front end of the program is designed for parents and caregivers to easily transfer students from perennially low-performing schools to better learning institutions, while reimbursing them for the costs related to the move. On the back end, the program allows for companies to receive tax credits for donating funds to eligible schools.

“The governor is committed to providing students with the best opportunity to access quality educational programs,” Department of Community and Economic Development Secretary C. Alan Walker said via a statement released by the DCED. “This new and innovative program is a win for everyone, as businesses will be able to help students in their communities transfer from low-achieving schools to higher performing schools.”

According to the Pennsylvania Department of Education, the program enables eligible students residing within the boundaries of a low-achieving school to apply for a scholarship to attend another public or nonpublic school. A low-achieving school is defined as a public elementary or secondary school ranking in the bottom 15 percent of their designation based on the combined math and reading scores on the previous school year’s Pennsylvania Scholastic System of Achievement.

More than 100 schools in the School District of Philadelphia are considered low-achieving by these standards, and this plan has the potential to affect thousands of public school households.

The Pennsylvania School Boards Association broke down the requirements of the program for the coming school year, noting that an eligible family’s net income must not exceed a cap of $60,000 plus $12,000 per eligible household member, After June 2013, those numbers bump up to $75,000 for family net income. The per-member number will remain at $12,000.

However, the PSBA has been at odds with lawmakers and Corbett over this plan, issuing a statement last month that decried the effort as a “stealth” voucher program that would strip funds from traditional public schools.

“This new law shifts limited state funds away from public school districts, by siphoning valuable dollars from the general fund, via tax credits, that could otherwise be used for public schools. As a result, millions of dollars will not be available to restore funding levels of important education programs,” the PSBA wrote in its opinion. “Students do not actually need to attend one of the schools on the list to be eligible for an opportunity scholarship; they merely need to live within the attendance boundary of one of these schools. As a result, students who attend private or nonpublic schools and have never set foot in one of the schools on the list may be eligible for a scholarship under the program.”

Currently, there are three PDE-endorsed Opportunity Scholarship Organizations which parents can use to participate in the program: Lancaster-based ACSU Children’s Tuition Fund (717) 285-3022; Eastern Pennsylvania Scholarship Foundation-Diocese of Allentown (610) 871-5200 and the Pittsburgh-based Scholastic Opportunity Scholarship Fund (412) 456-3090.

“Pennsylvania businesses can begin applying for Opportunity Scholarship Tax Credits through DCED’s electronic, single application system beginning on August 8. Tax credit applications will be processed on a first-come, first-served basis by day submitted,” read the PDE’s explanatory statement. “All applications received on a specific day will be processed on a random basis before moving on to the next day’s applications. Applications will be approved until the amount of available tax credits is exhausted.

“Tax credits may be applied against the tax liability of a business for the tax year in which the contribution was made,” continued PDE’s statement. “The tax credits awarded to businesses will be equal to 75 percent of their contribution amount, which can be increased to 90 percent upon the business committing for two years. The total may not exceed $400,000 per taxable year.”

 

Contact staff writer Damon C. Williams at (215) 893-5745 or This email address is being protected from spambots. You need JavaScript enabled to view it. .