Still No Accountability with Taxpayer-Funded Vouchers for Private and Religious School Tuition

Read the full report

Still No Accountability with Taxpayer-Funded Vouchers for Private and Religious School Tuition

By Stephen Herzenberg and Rachel Tabachnick

Executive Summary

Despite Pennsylvania’s structural deficit and Governor Wolf’s proposal to cut tax credits by $100 million in 2017-18, lawmakers are currently considering expanding by 44%, or $55 million, two programs that already provide $125 million in taxpayer-funded vouchers to attend religious or other private schools. As well as diverting additional revenues from the General Fund without a revenue source in sight, this expansion is problematic because of a complete lack of financial and educational accountability within the Opportunity Scholarship Tax Credit (OSTC) program and the part of the Educational Improvement Tax Credit (EITC) program that funds taxpayer-funded vouchers. Two of many issues with these voucher programs, revealed in this report, are the extent to which curricula at schools attended by taxpayer-subsidized scholarships teach creationism and present the bible as literal truth in history and other subjects; and the extent to which tax-credit dollars, while marketed as serving low-income students in low-performing school districts, subsidize exclusive private schools catering mostly to the very affluent.

Our assessment of available information on Pennsylvania’s Opportunity Scholarship Tax Credit (OSTC) and Educational Improvement Tax Credit (EITC) programs finds:

  • Both the newer OSTC program and the taxpayer-funded vouchers paid out of the EITC program still serve primarily large urban areas of the state, especially in southeastern and south central Pennsylvania, and in Allegheny County.
  • In 2016-17, 40 counties do not have a single so-called OSTC “scholarship organization” (non-profit intermediary that receives and disburses for vouchers contributions from businesses who receive tax credits). Thirty counties have no scholarship organization (SO) linked with the EITC program. Almost no organizations that provide OSTC or EITC scholarships service Pennsylvania’s more rural “T” area.

Neither the EITC or OSTC program requires meaningful educational or financial accountability: 

  • Schools that receive EITC and OSTC scholarships are not required to report on student’s progress or to provide other information documenting school quality. In fact, state legislation prohibits the Department of Community and Economic Development from asking for information on achievement of EITC voucher students.
  • We estimate that about three quarters (76%) of the funds for OSTC and EITC vouchers go to religious schools – about $95 million dollars in 2014-15 (the last year for which data are available). In Pennsylvania, religious schools do not have to be accredited and have no meaningful curriculum standards.
  • Some religious schools have curricula similar to public schools. But a significant number teach creationism as science (which public schools cannot do) and teach subjects such as history and economics from a theological perspective. Examples include the 155 Pennsylvania schools in the Association of Christian Schools International (ASCI) (an SO that received $2.2 million in OSTC and EITC dollars in 2014-15). ACSI describes its schools as having “the highest belief in biblical accuracy in scientific and historical matters.” Other examples include the 35 schools in the Keystone Christian Education Association, which describes itself as fundamentalist and claims to have received $2.41 million from the EITC program since its inception. Without an audit, we don’t know how many other religious schools that receive voucher funds use similar curricula and textbooks.
  • A significant portion of voucher dollars go to expensive private schools that serve high proportions of affluent children. Just 23 of the most exclusive – and most expensive (average tuition of $32,000) – Pennsylvania private schools received $11.2 million in EITC and OSTC tax credits in 2014-15, 9% of the total. Haverford School alone received $2.2 million, buying down its $37,500 tuition for…we have no idea. We know nothing about the racial or ethnic makeup of scholarship recipients. Further, while the OSTC and EITC programs are supposed to be income-limited, there does not appear to be any auditing of whether students receiving scholarships meet the income requirements. Lastly, there is no policing of “side deals” in which affluent families provide, for example $35,000 in tax credits for a cut in tuition to half that level. Everyone wins…except the taxpayer. 
  • Students on EITC and OSTC scholarships are not required by the state to take any tests.
  • As noted, no data has been collected on the socio-economic characteristics of EITC or OSTC scholarship recipients, their families, their communities, or the student population of private schools that scholarship recipients attend. Such data would be necessary to systematically analyze the overall achievement of scholarship students compared to students in public schools. Thus, we know nothing about the outcomes of two programs that have, since their inception, received a combined total of over a billion dollars to educate school children at religious and other private schools.
  • Pennsylvania allows scholarship organizations to keep up to 20% of the funding that they receive, compared to only 3% in a similar program in Florida. In Arizona, which allows SOs to keep 10% of the funding, extraordinary examples of personal enrichment have been documented, including by a legislative leader who draws $125,000 annually as Executive Director of an SO and owns businesses paid over two-thirds of a million dollars by that same SO in 2014. Does that happen in Pennsylvania? We don’t know.
  • Businesses contributing to the two programs can “triple dip” by receiving a state tax credit, a reduction in their state taxable income, and a reduction in their federal taxable income. They sometimes get back more in tax breaks than they provide in contributions.

The expansion of Pennsylvania’s unaccountable taxpayer-funded voucher programs has been fueled by a false narrative that our public schools are failing. In fact, National Assessment of Education Progress (NAEP) tests show that Pennsylvania schools are within shouting distance of the best-performing states and countries. With more adequate and equitable funding to lift Pennsylvania’s lowest-performing schools, our public schools could become a model. By contrast, voucher programs that can be evaluated have not improved educational outcomes. For example, a new high-quality (random assignment) study found that Louisiana voucher students performed much worse than a control group that stayed in public schools. Florida’s voucher program, the only one evaluated that is funded by corporate tax credits similar to the EITC and OSTC, has not increased test scores.

The inadequate accountability in Pennsylvania’s $125 million OSTC and EITC programs makes clear that the state should not divert another $55 million in taxpayer dollars to these programs, more than half the $100 million increase in basic education funding proposed by Governor Wolf for public schools statewide in 2017-18. So that lawmakers need not in the future consider whether to extend or grow these voucher programs in a vacuum of information, we call on Auditor General Eugene DePasquale to conduct a comprehensive audit of the programs. As well as analyzing their educational and financial accountability more generally, an audit should evaluate the curricula used by schools attended by scholarship students and make recommendations regarding the need for basic curriculum standards.

Read the full report


About the Authors

Stephen Herzenberg is the executive director of the Keystone Research Center (KRC; and holds a PhD in economics from MIT. He has written widely on issues that include education, workforce and economic development, economic inequality, labor unions, the auto industry, and international labor standards. Most of his KRC and PBPC publications are online at or His writings for national audiences include Losing Ground in Early Childhood Education, New Rules for a New Economy: Employment and Opportunity in Postindustrial America, and U.S.-Mexico Trade: Pulling Together or Pulling Apart?

Rachel Tabachnick, a member of the KRC board of directors, researches, writes, and speaks about the impact of ideology on policy related to education, environment, civil rights, and labor. Rachel, a former fellow at Political Research Associates, has provided research for award-winning documentaries, journalists, and non-profits, and has been interviewed on NPR and other media across the nation on topics including education privatization.