Frequently Asked Questions about Pennsylvania's Educational Improvement Tax Credit (EITC) and Vouchers for Private and Religious Schools

Oct 15, 2026

Uploaded by Damian

Pennsylvania runs two tax-credit voucher programs, the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC), providing $230 million annually to private scholarship organizations that issue tuition vouchers for private and religious school enrollment. The programs function as workarounds to constitutional limits on public funding of religious education. Limited accountability, broad eligibility thresholds, lack of public auditing or performance data, and school-level discretion enable discrimination while channeling resources toward a narrow set of interests instead of public schools.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages9

Reading Time23 min

AccessFree to download

Executive Summary

Program Structure and Funding

Accountability and Oversight Gaps

Eligibility Limits and Lack of Data

Discrimination and Impact Considerations

Historical Development of the Tax-Credit Programs

Frequently Asked Questions about Pennsylvania's Educational Improvement Tax Credit (EITC) and Vouchers for Private and Religious Schools by Susan Spicka and Eugene Henninger-Voss | June 2022 Executive Summary Pennsylvania has two programs that give tax money to private schools: the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC) programs. Each year, EITC and OSTC provide $230 million to private scholarship organizations, or “SOs,” which award tuition vouchers to families whose children attend private and religious schools. Because the Pennsylvania Constitution prohibits using tax dollars for religious education, the EITC and OSTC programs are workarounds designed to evade this prohibition. Instead of paying their taxes to the Commonwealth, companies direct their tax payments to an EITC or OSTC “scholarship” organization. These businesses get to take credit for making donations to private and religious schools via these EITC and OSTC programs even though all they really did was pay what they owe in taxes to an organization instead of to the Commonwealth, leaving their fellow taxpayers to fill the $230-million hole their diverted tax dollars left behind. And since such “philanthropic” contributions are likely to lower federal taxes for those that pay them, after getting both a state and federal tax break, some businesses may not be making any net contribution at all.1 To compound the problem, there is virtually no financial or academic accountability in the EITC/OSTC programs. Scholarship organizations that receive diverted tax dollars are allowed to keep up to 20% of the total funding they receive, the highest amount allowed by any state that has a similar program. There is no legislative or public oversight over these tax dollars and no reporting requirements for how SOs spend these dollars. 1 Stephen Herzenberg and Rachel Tabachnik,“Still No Accountability With Taxpayer-Funded Vouchers for Private and Religious School Tuition,” Keystone Research Center, April 15, 2017, 3. [https://krc](https://krc)[pbpc.org/research_publication/still-no-accountability-with-taxpayer-funded-vouchers-for-private-and](pbpc.org/research_publication/still-no-accountability-with-taxpayer-funded-vouchers-for-private-and)religious-school-tuition-3/ . These programs aren’t designed to direct funds to poor children. In Pennsylvania, the school voucher law sets the family income limit of roughly 500% of the federal poverty level, or $130,710 for a family of four, the highest in the nation for any state with a similar program that has an income limit.2 Because there are no public auditing powers associated with these programs, EITC/OSTC funds can support families whose incomes significantly exceed the limit. In addition, there is no policing of “side deals”, under which wealthy families make contributions via EITC/OSTC in exchange for reduced tuition for their own children.3 A prohibition in the law against collecting data about the socio-economic status of voucher recipients means no one knows how many children need a voucher to attend a private/religious school versus how many vouchers are given to families who could send their children to a private/religious school without one. State law also prohibits collecting any information about the academic performance of students who receive vouchers. Discrimination is a feature, not a bug, of the EITC/OSTC programs. Pennsylvania law allows private/religious schools that receive diverted tax dollars to discriminate against students for reasons including their sex, disabilities, sexual orientation, religious beliefs, socioeconomic status, and gender identity or expression. The EITC/OSTC programs take money out of the state budget, and they serve a narrow set of special interests at the expense of everyone else. Funding for K-12 private/religious school vouchers via the EITC/OSTC programs has increased nearly twelvefold over the past two decades,

FAQs

What are the EITC and OSTC programs in Pennsylvania?

Pennsylvania’s EITC and OSTC are tax-credit programs that fund private scholarship organizations. These organizations award tuition vouchers for children attending private and religious schools.

Why do EITC and OSTC operate as “workarounds” under Pennsylvania’s constitution?

Pennsylvania prohibits using tax dollars for religious education. The programs redirect tax payments to scholarship organizations that support private and religious schooling instead of sending the taxes to the Commonwealth.

What accountability and reporting limits affect EITC/OSTC voucher programs?

Scholarship organizations may keep up to 20% of total funding, and there is no legislative or public oversight or reporting requirement on how the diverted tax dollars are spent.

Oct 15, 2026

Uploaded by Damian