Page 11: Tax Credits

Tax Credits: Salvation for Catholic Schools

by Ronald Bowes, PhD

In 2005, MSNBC reporter Steve Johnson wrote an article entitled, “Can Catholic Elementary Schools Survive?” He featured statistics showing a wave of inner-city Catholic school closings and the major reasons for this phenomenon. Changing demographics was part of the problem, but rising costs was number one.

The challenge for bishops, Catholic school administrators and supporters is to find a way to garner sufficient financial resources to, not only keep the schools open, but to actually turn the tide and enable them to grow. The only way to do this on a large scale was to advance the cause of parental choice in education and obtain assistance from the state. In Pennsylvania beginning in 1991, the Road To Educational Achievement Through Choice (REACH) Alliance was founded to inform the public, lobby legislators and help pass school choice legislation, which would give tuition assistance vouchers to parents.

Voucher proposals were unsuccessful in 1991, 1995, 1996 and 1999 despite support from the Republican Governor and the pro-voucher Republican Party that controlled both houses of the General Assembly from 1995 to 2006. As in other states, it was the overwhelming power of the teachers’ union, the education bureaucracy and other labor support which halted the choice initiatives.

Before Governor Tom Ridge resigned in 2001 to take the post as Secretary of Homeland Security and with bi-partisan support, he signed the Educational Improvement Tax Credit (EITC) Program which gave businesses in Pennsylvania the ability to divert particular taxes to K-12 scholarship organizations including religious schools.

Tax credits were now able to do what vouchers were supposed to do, i.e. enable parents to choose from a variety of educational providers and receive some public assistance to make this choice. Tax credits, unlike vouchers, do not come from the state education budget but from provisions made from the state tax code. Tax credit donations are administered by a wide variety of private charitable organizations operating under government oversight, while vouchers are directly administered by the state. Tax credit funds are never in government hands.