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Controversial tax credit fund "lottery" for private school grants
Yesterday, The Children's Scholarship Fund Philadelphia held its annual "Lottery Day," an event that announces the winners of nearly 2,000 educational grants that are designed to help famiilies in Philadelphia afford private school tuition. The event marked the 15th such lottery since CSFP's founding in 1998, but also the first instance that a controversial new tax credit program, the Opportunity Scholarship Tax Credit Program, was used to finance a portion of the scholarships.
Controversial tax credit fund "lottery" for private school grants
Last Thursday, the Children's Scholarship Fund Philadelphia held its annual "Lottery Day," an event that announces the winners of nearly 2,000 educational grants that are designed to help families in Philadelphia afford private school tuition. The event not only marks the 14th year the privately funded philanthropic organization has dispensed such grants, but also the first instance that a controversial program, the Opportunity Scholarship Tax Credit (OSTC), will be used to finance a portion of the awards.
That program allows private companies to defer up to 90 percent of their state business tax obligation to a "scholarship organization" of their choice in order to finance the private education of low-income children that would otherwise go to underperforming local schools. CSFP is the largest K-8 scholarship provider in Pennsylvania, and about 700 of the 2,000 awardees will receive four-year scholarships funded fully by the OSTC program.
Advocates say the program helps needy students get a quality educations, while critics have assailed it as a "backdoor" school-voucher program that diverts resources from struggling public schools to private academies and religious institutions.
The event was nonetheless a joyous occasion for the thousands of families that learned their child would be afforded a four year scholarship to the Philadelphia-area private or parochial school of their choice. Winners were randomly chosen from a pool of nearly 10,000 applicants.
"Two years ago we started a campaign called "10,000 Children" where we committed to issuing 2,000 new four- year scholarships over five years. It's a $50 million campaign," said Ina Lipman, executive director of the fund, noting major corporate sponsors of the campaign, like Wawa, PNC and ACE INA insurance. "Right now we have 3,500 children active in our program. ... They are being empowered to get the school that best suits their needs."
In a ceremony held above Logan Circle in the conference room of the politically influential law firm Drinker, Biddle & Reath, a small crowd gathered around a sprawling buffet table.
After a heartfelt speech from a black mother who had previously won the scholarship lottery, Lipman took the stage to instruct the crowd on how, exactly, to go about informing a mother or father that their child had won a grant — the various attendees, most also donors to CSFP, would be acting as an ad hoc phone bank to personally inform parents they had won.
As they flocked to phones scattered across the conference tables, it was hard not to notice the how the attendees contrasted with the nearby promotional placards featuring smiling black children that had previously won scholarships. Most were decidedly older, whiter and more suburban than the demographic they had assembled to help. This gulf has added fuel to the controversy over new schooling practices, sometimes characterized as a conspiracy by out-of-towners to break unions and manipulate the majority-black school district for financial gain through privatization.
Lipman defended the program as purely philanthropic, dismissing critics that say the new tax credits could rob public schools of resources by diverting corporate taxes to private schools.
"Actually the reverse happens," says Lipman. "What you're doing is giving opportunities to children trapped in failing schools. When you do that and put them in a private school, the funding for Philadelphia public schools does not go down. They maintain the same funding level, they just have to divide it among fewer students."
Lipman said in this way she thought scholarship programs were actually less harmful to traditional public schools than charters.
"Had they moved them to a charter school, they are still on the financial books of the city, but by completely moving them out of the system, the city still gets the same amount of money," she said.
Lipman referred to herself as "as a real public school advocate", and noted that her three children all attended public schools. Although her work almost exclusively affects the Philadlephia School District, Lipman is from Springfield Township in Montgomery County, which is also where her children went to school.
While there is no doubt of the good will on the part of donors to the program, it is worth noting that the lottery event was promoted by the Bravo Group, a consulting firm headed by Chris Bravacos, who also leads the pro-voucher REACH Alliance and sits on the board of the Philadelphia School Partnership, a well-known school choice advocate. The Bravo Group itself was noted as a conduit, like the role the CSFP now serves in disbursing the OSTC, for corporate donations through an earlier, now-exhausted program called the Educational Improvement Tax Credit (Some EITC money was also used to fund a portion of the grants given out by the CSFP last night).
The earlier program was almost identical to the OSTC, except that there were a finite number of credits. The Bravo Group had pushed for that program to be expanded, as chronicled in a previous City Paper article, but the OSTC, which any company can apply founder seems to have filled that gap.
OSTC has also come under criticism for its loose income guidelines, which critics say include more than just poor residents and speak to an intended scope for the program that is much broader than its champions let on. When asked about the upper limit of the guidelines, Lipman said "it's complicated" because the number varies depending on household size, later saying she thought the income cap was around $45,000 for a family of four.
"All I can tell you is we serve the low-income families, so our average family of four makes $29,000 dollars [a year]," said Lipman.
However, the state program's website indicated that OSTC, while nominally targeted at low-income students, has an income cap of $60,000 for a family of four. This means that most families in Philadelphia, which has a median household income of $37,026 and many "underperforming" public schools, would likely qualify for the program.
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