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Pennsylvania’s Educational Improvement Tax Credit supports services for public school students through donations to eligible organizations, including college advising and autism-related literacy support. The federal scholarship tax credit begins Jan. 1, but Pennsylvania Gov. Josh Shapiro has not said whether the state will opt in, and the federal program is limited to scholarships.
Pennsylvania’s Educational Improvement Tax Credit is funding college advising and classroom support for public school students through donations to nonprofit organizations, a model drawing attention as Gov. Josh Shapiro weighs whether to opt into a new federal scholarship tax credit. The federal program is scheduled to begin Jan. 1, but its rules do not allow donations to pay for staff positions like the college access coordinator featured in Philadelphia.
The Philadelphia Education Fund is among more than 900 participating organizations in Pennsylvania. Corporations and individuals donate to the fund in exchange for a state tax credit, and the organization uses the money to support public school students. At Furness High School, that funding pays for college access coordinator Kelsey Smith, who organizes college visits, helps students with financial aid and guides them through postsecondary options.
Smith described assisting a student in foster care with college applications and paperwork for a tuition waiver. She said the student was 17 and did not live with her parents, making the process difficult to manage alone. “It’s nice to have us in the building because the only thing we do is college and career,” Smith told The 74.
Andrew’s Gift, another Pennsylvania nonprofit in the program, supports students with autism. Its Literacy Project provides classroom consultants, reading materials, tablets and software, and sensory items. Susquenita Elementary teacher Amy Anderson said one student who had struggled to stay engaged with reading lessons advanced three skills on the science of reading ladder after using materials that held his attention. The examples show services reported by participants; they do not establish the program’s overall impact across schools.
Services Beyond Scholarship Checks
Pennsylvania’s model illustrates that tax-credit-funded support can reach public school students through services delivered in schools, not only through money for tuition. College advising can help students handle applications and financial aid, while classroom resources and specialist assistance can support instruction. Such services may fill gaps where district staff have limited capacity: the report says Pennsylvania school counselors can have caseloads exceeding 300 students.
The distinction matters as states assess the federal program. Its scholarships may be available to public school students, according to the Treasury Department, but the federal credit is designed to fund scholarships rather than staff positions. Pennsylvania’s experience therefore offers a possible example of the kinds of support that can benefit public school students, while not showing that the same services would qualify under federal rules.
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How Pennsylvania’s Credit Works
Pennsylvania’s Educational Improvement Tax Credit directs donations through participating organizations that use the funds for eligible educational purposes. The Philadelphia Education Fund and Andrew’s Gift provide different examples of how organizations can direct support toward students attending public schools. The model described in The 74 depends on donations and a state tax credit, and includes services that are not simply scholarships.
The federal Education Freedom Tax Credit is a separate program, scheduled to begin Jan. 1. School-choice advocates supported it in part as a way to expand access to private schools, but Treasury has confirmed that public school students are also eligible for scholarships. The federal program’s eligibility for public school students does not mean that every form of Pennsylvania-style school support will be covered.
In an October gubernatorial debate, Shapiro said his staff was still reviewing Treasury’s regulations and that he expected to announce whether Pennsylvania would opt in. New Mexico Gov. Michelle Lujan Grisham opted in the week before the report. Governors of California, Connecticut, Massachusetts, Michigan and New Jersey have sought further details from Treasury.
“He’s moved three skills up the science of reading ladder. We absolutely saw him blossom.”
— Amy Anderson, Susquenita Elementary School teacher
Rules and State Decision Pending
Shapiro had not announced whether Pennsylvania would opt into the federal program at the time of The 74 report. The report said Treasury had not yet released specifics on which expenses scholarships could cover for public school students. It is also unclear how much authority states will have over scholarship-granting organizations, or whether organizations such as Andrew’s Gift could adapt their existing services to meet federal requirements.
Organizations seeking to participate would need to form a scholarship-granting organization or work with one that meets IRS criteria, according to the report. Ward said the administrative demands could determine whether his nonprofit takes part. The eventual effect on students is also difficult to measure: Pennsylvania’s Independent Fiscal Office has identified a need for student performance and demographic data to evaluate program effectiveness.
Awaiting Pennsylvania’s Opt-In Call
The next major development is Shapiro’s decision on whether Pennsylvania will join the federal tax credit program. Treasury’s regulations and additional guidance will shape which public school expenses qualify and what scholarship-granting organizations must do. The governors who wrote to Treasury are seeking answers on eligible expenses, state oversight and the collection of information about scholarship recipients.
If Pennsylvania opts in, existing providers will still need to determine whether federal scholarship rules can support their work or whether participation would require a different structure. If it does not, the state’s existing tax credit will remain a separate way for participating organizations to fund services, subject to its own rules. The available information does not yet establish whether the federal program will reproduce or expand Pennsylvania’s school-based supports.
Key Questions
What does Pennsylvania’s Educational Improvement Tax Credit fund?
Donations made through participating organizations support educational programs, including the college advising and autism-related classroom services described in The 74 report.
Can public school students use the federal scholarship tax credit?
Treasury has confirmed that public school students are eligible for scholarships. The specific expenses those scholarships can cover were still awaiting further guidance in the report.
Has Pennsylvania decided whether to join the federal program?
Not at the time of the report. Gov. Josh Shapiro said his staff was reviewing the regulations and that he expected to announce a decision.
Can Pennsylvania nonprofits use federal funds to pay for school staff?
The federal program described in the report funds student scholarships, not staff positions. Organizations would need to meet IRS requirements to participate, and it remains unclear whether existing service providers can adapt their work.
Source: the74million.org
