Pennsylvania Education Tax Credit Program Changes Facilitate Discrimination and Block Access

By Julie K. Ambrose, Ph.D.

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Based on Ambrose, J. K. (2019). Purpose, Policy, Politics and Power: Analysis of the Pennsylvania Educational Improvement Tax Credit Program (Doctoral dissertation, Indiana University of Pennsylvania).


Drawing upon my doctoral social policy analysis of the Pennsylvania Educational Improvement and Opportunity Scholarship Tax Credit (ETC) program, I demonstrate how school choice advocates effectively shape the policy to allow discriminatory practices by schools and nonprofits accepting tax credit funds. The ETC is a collaboration between business firms receiving a tax credit for contributions to a participating intermediary nonprofit organization, and the nonprofit organizations that redirect these funds to individuals and schools as scholarships and educational enrichment programming. Purported to increase educational capacity in public and private schools, the lack of any evaluation plan to assess the ETC’s efficacy limits the public’s understanding of program effects, hides discriminatory practices, and masks deceptive reporting.

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The ETC was established in 2001 with two components: Scholarships for students attending private schools with a $20,000,000 tax credit allocation; and Educational Improvement grants for students attending public schools with a $10,000,000 tax credit allocation.  The ETC has expanded to include Pre-K Scholarships and Opportunity Scholarships; and PA Act 16 of 2019 set the toal tax credits available at $240,000,000.  The Educational Improvement portion has fallen to 18% while the amount designated for non-public school scholarships has expanded to 82% or $202,500,000 per year.

The tax credit scholarships move pre-collected funds from the PA Treasury and redirect the funds to non-public schools. The process is administered by the Pennsylvania Department of Community and Economic Development (DCED) as asserted in the legislation.  By assigning the DCED to facilitate the program, legislators remove oversight from the Department of Education, and remove discussion of allocations from the annual budget process.

Limited Regulation Facilitates Discriminatory Practices

The provisions of PA Act 85 of 2012 specific to participating nonpublic schools state “THE PARTICIPATING NONPUBLIC SCHOOL MAY NOT DISCRIMINATE ON A BASIS WHICH IS ILLEGAL UNDER FEDERAL OR STATE LAWS APPLICABLE TO NONPUBLIC SCHOOLS,” (Tax Reform Code of 1971, 2012).  It does not stipulate that nonpublic schools may not discriminate on a basis which is illegal under federal or state law applicable to public schools.

One of the early creators and a proponent of the ETC, Dr. Ronald Bowes, stated that using a tax credit rather than a voucher to fund school choice “avoids almost every impediment to school choice(U.S. Department of Education, 2008, p. 142). Well-organized advocacy groups pay attention and work to ensure the policy functions to their advantage.  Public goods and social services, like education, are expected to be distributed equitably and without discrimination and public agencies have a duty to be accountable and transparent to the public.  However, by routing tax credit funds and their allocation policies through nonprofits, the public accountability and transparency expectations are not protected and expectations for equitable distribution without discrimination are reduced.

The April 2018 Department of Community and Economic Development (DCED) guidelines for Scholarship Organization (SO) and Educational Improvement Organization (EIO) participation included the following nondiscrimination statement,


No assistance shall be awarded to an Organization under this program unless the Organization certifies that the Organization shall not discriminate against any employee or against any person seeking employment by reason of race, gender, creed, color, sexual orientation, gender identity or expression, or in violation of the Pennsylvania Human Relations Act, which prohibits discrimination on the basis of race, color, religious creed, ancestry, age, sex, national origin, handicap or disability, or in violation of any applicable federal laws.  (Pennsylvania Department of Community and Economic Development, 2018d, p. 8)

Guidelines for the same program were updated to a July 2018 version that eliminated the Nondiscrimination statement altogether (Pennsylvania Department of Community and Economic Development, 2018b, p. 8).  The inclusion of a nondiscrimination statement would have a significant impact on the nonprofit organizations’ ability to participate, as evidenced in this call for action on the Association of Christian Schools International Pennsylvania (ACSIPA) website:

EITC / OSTC: Nondiscrimination Statement Removed.

The administration and DCED have removed the nondiscrimination statement that included gender, gender identity and sexual expression language from the EITC and OSTC guidelines and applications. This is a significant blessing from God. If you are a scholarship organization, the forms are updated on the website and we can participate once again in these incredibly important programs to our families in good faith [emphasis added].

Consider and pray about several things that the DCED very pointed example makes clear:

This decision was uncovered because schools paid close attention and knew what to look for as a problem. Without a quick uncovering of this issue, we might have been pushed to other deadlines that would have made this outcome more unlikely. Vigilance is an important thing.

The work done in the past and currently by both our leadership at ACSIPA, ACSI National, and our individual schools played an important part of the puzzle. Not the central piece, but something that we can stand upright about in taking civil responsibility within a Godly perspective.

The remediation of this problem was a matter of public policy and public pressure made by a LARGE network of connections and groups. We have noticed several groups looking to take credit for the fix but in reality know that this was ONLY accomplished by us being connected with a larger group of like-minded people both inside and outside of the beltways. The legislature, our friends in the administration, and the amount of outcry all brought what we believe to be darkness into the light.

Please understand that YOU and your school community MUST be a critical part of public policy. We are grateful to ACSI leadership, our ACSIPA leaders, and all of you for your work. Please don’t let the enemy lull you into thinking that you are not important, or that you are too busy.

In regards to this particular issue please take a moment as a school on behalf of your parents to thank DCED and Jim O’Donnell for the change in policy ( [Emphases Added] (Gottschalk, 2018)

ACSIPA is “A Network for PA Christian Schools advocating Christian Education in Pennsylvania,” (ACSIPA, 2019).  The ACSI statement conveys the organization’s attention to and perceived influence over public policy that, in the absence of a nondiscrimination statement, could allow the tax credit dollars to go to organizations that choose to discriminate.  It appears ACSI organizations took issue with protections based on gender, gender identity and sexual expression. If the nondiscrimination statement is included in the operating guidelines for the program, the ASCI Children’s Education Fund and other organizations with similar discriminatory policies would not be able to accept the tax credit funds.  ACSI Children’s Education Fund d/b/a Children’s Tuition Fund of Pennsylvania alone received $1,188,285 in 2017-18 (Hardison, 2019).  Students’ ability to choose a school is reduced if participating nonprofits collect the tax credit funds but operate in ways that are discriminatory.

Lack of Program Assessment and Accountability

The 2009-2010 Legislative Budget and Finance Committee (LBFC) review of all PA Tax Credit programs included the ETC.  One of the findings of the LBFC was that in the beginning, the DCED was randomly approving Business Firm tax credit applications but found that business firms lost interest in the program when they were not approved in a given year (LBFC, 2010, p. 25).  The law was written to prescribe the first-come, first-served system (LBFC, 2010, p. 182).  The LBFC recommended the General Assembly to permanently change the system from random or first-come, first-served to a system that prorated tax credits for all businesses that applied by a certain date.  Maintaining the first-come, first-served system prioritizes those business firms that had early access to the program, the nonprofits that receive their contributions, and the schools that benefit through scholarship awards; and it maintains boundaries to entry for new and different participants.  The change to a prorated system for all businesses that applied by a certain date would build in a path to access for all businesses, making the program more equitable and reducing barriers to access.  However, that recommendation was not followed, and the less equitable system persists.  Modifications to the program have been made or not made specifically to protect the interests of long-term Business Firm supporters (Legislative Budget and Finance Committee, 2010).

In order to assess program effectiveness and efficiency, the LBFC recommended that, “When the General Assembly creates or reauthorizes a tax credit program, it [should] attempt to articulate the program’s goals, objectives, program elements, and the measures against which the program’s effectiveness can be judged,” (Voras, 2010, p. 6).  As of March 2020, the General Assembly has failed to take this action. The ETC policy calls for minimal reporting to the General Assembly each year. The reports are primarily financial reports of the amount of tax credits available and those awarded, and the amount of contributions from business firms for this program. There are no reports of educational achievement based on the Educational Improvement and Opportunity Scholarship Tax Credit program. Nor is there a report of which schools enroll students using these funds.

Evidence from the Legislative Budget and Finance Committee recommendations and responses demonstrated that the policy operates to benefit long-time participants by design.  Similarly, both the Bowes testimony (Bush, G.W., 2008) and the Penngift website (Penngift Foundation, 2019) describe backroom jockeying to create a policy that operates outside the normal public system of accountability and debate to support a school choice agenda that was not clearly articulated to the public.  The values held by proponents of the ETC underlie policy design decisions, and the values of those with the most power become embedded in the policy.  These values include privatization, reducing taxes, supporting faith-based schools, increasing school choice, and controlling the education and educational environments to which children are exposed.

Limited Regulation Supports Public Misinformation

The public lacks a clear understanding of the Educational Improvement and Opportunity Scholarship Tax Credit program due to the lack of any evaluation plan to assess the ETC’s efficacy.  Legislators have failed to establish program objectives against which outcomes can be measured and have designed the policy to prevent the collection of academic data.  Yet, they justify the expansion of the ETC tax credits by pointing to the program’s popularity.  This popularity is built into the design by systematically providing prioritized access to long-term participants while making it difficult for others to gain access.  The policy hides discriminatory practices by funneling money to schools that are not always identified through nonprofit organizations that may embrace discriminatory policies. All of this occurs under the knowing watch of the Department of Community and Economic Development, because the General Assembly fails to require accountability measures and transparency in the policy.


ACSIPA. (2019). ACSIPA, A network for PA Christian schools advocating Christian education in Pennsylvania. Retrieved from

Bush, G. W. (2008). Remarks at the White House Summit on inner-city children and faith-based schools. Office of the Federal Register, National Archives and Records Administration. Retrieved from

Gottschalk, S. (2018). EITC / OSTC: Nondiscrimination statement removed. Retrieved from

Hardison, E. (2019). Who gets Pennsylvania’s educational tax credits, and who gets money? Search the EITC data yourself. Pennsylvania Capital Star, (June 16, 2019). Retrieved from:

Legislative Budget and Finance Committee. (2010, June). Pennsylvania’s tax credit programs. Harrisburg, PA: A Joint Committee of the Pennsylvania General Assembly. Retrieved from

Penngift Foundation. (2019). From the cradle of liberty, Pennsylvania leads the nation with private school tax credit programs. Retrieved from

Pennsylvania Department of Community and Economic Development. (2018b). Educational improvement tax credit program: Organization guidelines for scholarship & education improvement organizations. Retrieved from

Pennsylvania Department of Community and Economic Development. (2018d, April 12). Educational improvement tax credit program: Organization guidelines for scholarship & education improvement organizations. PA Department of Community and Economic Development. Retrieved from: not available.

Tax Reform Code of 1971, PA. Assemb. P.L.751, No. 85 (PA. Stat. 2012).

United States Department of Education. (2008). Preserving a critical national asset: America’s disadvantaged students and the crisis in faith-based urban schools. Washington, DC: US Department of Education. Retrieved from

Voras, E. (2010). Final report on Pennsylvania’s tax credit programs. Harrisburg, PA: Legislative Budget and Finance Committee. Retrieved from




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