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Going Private

As public schools suffer, big tax breaks for private education

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Here's how things work in today's Pennsylvania. Harrisburg Republicans push budget cuts that make life harder for residents. Then, politicians make it easier for allies to profit from the misery. 

So last week we had the state House voting, largely along party lines, to legalize "payday loans" that charge interest rates above 300 percent. State government has cut everything from insurance for the working poor to programs that help homeowners avoid eviction. But if you have trouble paying for medication or housing, here's the answer: more check-cashing outlets! That's what they call compassionate conservatism, apparently.

Similarly, the state seems poised to capitalize on dramatic cuts to public education ... by expanding a tax giveaway that shunts tax dollars to private schools.

The program, the Educational Improvement Tax Credit (EITC), was hatched in 2001. Here's how it works: The state provides $40 million a year in tax credits for businesses that donate to so-called "scholarship organizations." Those groups funnel the money to private schools, helping low-to-moderate-income students pay tuition. 

What's in it for business? As one scholarship organization's website put it, the credit "enables companies to support local nonprofit charities ... instead of sending their tax dollars to Harrisburg." 

"In many cases, the actual total out-of-pocket expense to a company is zero," boasts another. 

The EITC can be worth as much as 90 cents for every dollar donated — a great deal even by corporate-giveaway standards. 

"It's the only policy I know of where a business gets a very generous credit for something that has no relationship to what they do," says Stephen Hertzenberg, of the liberal Keystone Research Center. And when federal tax benefits are factored in, he adds, the tax benefits could outweigh the original donation. Meanwhile, there's the PR benefit of helping the kids at Our Lady of Eternal Tax Avoidance High School.

Sounds great. Imagine if, instead of paying the salaries of politicians who denounce Planned Parenthood, we could donate to the organization instead ... and come out ahead on the deal!

But this is today's Pennsylvania, where every policy must benefit right-wing religious groups. In May, The New York Times reported that in Pennsylvania and seven other states who have them, EITC-like programs "have amounted to a lifeline for many religious schools," including those who "spread the theology of creationism." 

Do all these schools really help students? Who knows? While public-school kids spend more and more hours taking standardized tests, private schools are exempt from standard testing. But Harrisburg politicians are doubling down on the bet that they work. Last month, the House passed HB 1330, which would expand the amount of available credits to $120 million — a six-fold increase from back in 2001. The bill passed with massive bipartisan support.

Why? With public schools hurting, and Gov. Tom Corbett proposing $30 million cuts from early education alone, why are we bailing out private schools? 

One reason might be that, as the Times reports, some of the players here have "become enmeshed in politics": One of the state's largest scholarship groups, for example, is run by the wife of Corbett's former campaign manager. A bigger reason: The EITC is accompanied by a separate, smaller program which allows businesses to contribute to cultural organizations with educational programs, and to public schools with foundations of their own. But even in those districts, "You have to wonder if this is the right time to increase credits," says Beth Winters, the Pennsylvania School Board Association's chief lobbyist.

Defenders argue that districts save money when kids opt out of public school. Last year, the conservative Commonwealth Foundation estimated that taxpayers saved $13,260 for each $1,040 in tax credits. As for the absence of student testing? Let the market decide, Commonwealth argues: "Parents with choices can vote with their feet, sending their child to another school."

But trying to make that decision without test scores is like trying to prepare nutritious meals without food labels. And school officials say the savings of EITC are overstated, because teaching a class of 21 students isn't really much cheaper than teaching a class of 22. "Students don't leave in groups of 20 or 25," says Winters. 

Not yet. But if Harrisburg keeps this up, maybe they will. And maybe that's the point. 

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