State ‘opportunity scholarships’ for private schools not likely to kick in this year

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

By Bill Hangley, Jr.

A new state scholarship program can benefit Philadelphia students who live near struggling schools, but it isn’t likely to have a big impact in the coming school year.

Program officials and local scholarship organizations say that they hope that by this time next year, the Opportunity Scholarship Tax Credit (OSTC) will be running as smoothly as a similar, more broad-based program, the Educational Investment Tax Credit (EITC) program.

“We’re sort of stuck in the weeds right now, but hopefully in a year, things will smooth out,” said Ida Lipman of the Children’s Scholarship Fund Philadelphia.

“The earliest any organization will be able to provide [OSTC] support is probably January …. Forget about this year. But parents can start to plan, and that’s always a good thing.”

The OSTC program, signed into law by Gov. Tom Corbett in July, is designed to offer scholarships for private school tuition to students who live near the state’s lowest-performing public schools. Blasted by some as a back-door voucher program, it covers both students who now attend those low-performing schools and students who have already opted to attend private schools.

While EITC is available to anyone who meets the income criteria, OSTC is targeted specifically to students who live in the attendance area of low-performing schools. Because so many Philadelphia schools are on the OSTC list, including every single District-run neighborhood high school, this new program potentially opens up a significant new source of scholarships for city students.

On Tuesday, the Archdiocese of Philadelphia announced that it was forming a foundation to operate all of its 17 high schools, including eight in the city, and its four special education schools. At the announcement, Archbishop Charles Chaput said that the move is designed to take advantage of the OSTC program.

Between the designation of so many city neighborhood public schools as “failing” and the relatively generous income standards – starting at a maximum of $60,000 for a family of four, with $12,000 added for each dependent in the household – the great majority of city students making high school choices will be eligible.

The only exceptions are people who live in the attendance areas of three neighborhood high schools that have been converted to Renaissance charter schools. No other charter schools, by definition, are on the low-performing list because they normally don’t have attendance areas.

But Olney, Audenried, and Gratz High Schools, under the Renaissance program, function as neighborhood schools with their own catchment areas.

Obtaining a scholarship is a several-step process. Parents and students must apply to an approved scholarship organization, which must still raise the money from businesses that obtain tax breaks in return for the contributions. Then the participating schools must accept the students.

And the statewide cap on the program is $50 million, meaning that there are not unlimited funds to accommodate everyone who applies. That sum could potentially fund about 6,000 scholarships statewide.

How many of the scholarships will go to new students seeking to leave their low-performing public schools and how many to students already in schools depends on decisions by the scholarship organizations and the schools.

Right now the maximum scholarship amount of $8,500 exceeds the tuition at most archdiocesan high schools, which is $6,000. The top scholarship amount for special education students is $15,000.

Process just starting

Although state officials have released lists of eligible private schools (known as “receiving schools”) and approved scholarship organizations, the process of approving businesses that will ultimately provide the cash has only just begun – meaning that at this point, scholarship organizations have no funds to share.

State officials began taking applications from businesses wishing to contribute on Aug. 8, and officials can’t say exactly when the first approvals will be complete.

“They’re going to try to do this as quickly as possible,” said Steve Kratz of the Department of Economic and Community Development, which administers the program. “This is very important to the governor.”

Nothing in the OSTC law prevents students already attending private schools from being awarded an OSTC scholarship. The only requirement is that a student live within the attendance area of one of the 414 Pennsylvania schools – including 158 in Philadelphia – that have been deemed “low-performing .” And students’ families must meet the income requirements.

To access OSTC scholarships, families need to apply directly to an approved scholarship fund. OSTC scholarships can, in theory, be used at any approved receiving school. Kratz said that 698 schools statewide have been approved as receiving schools so far. The list includes everything from elite private schools charging more than $20,000 per year, to small schools charging less than $3,000.

State officials have also released a list of 39 approved OSTC scholarship organizations, including a half-dozen in the greater Philadelphia area.

That list, which state officials say can be updated at any time, now includes two large organizations that provide scholarships to multiple schools: Business Leadership Organized for Catholic Schools (or BLOCS, the main scholarship provider for area Catholic schools), and the Children’s Scholarship Fund Philadelphia (the region’s largest scholarship provider, offering a total of $4.5 million in scholarships, on a lottery basis, that are good at any accredited regional school).

The list also includes three scholarship organizations affiliated with specific schools: the Gesu School in North Philadelphia, La Salle Academy in Kensington, and the 58-student Jubilee School in West Philadelphia. (A sixth organization, West Philadelphia’s Sky Community Partners, did not immediately respond to requests for information.)

These organizations have been fielding requests since the state released their names, taking some by surprise.

“Within a day of [the list] being posted, we started getting calls from Allentown, from Harrisburg – we’re being flooded,” said Jubilee’s Karen Falcon. “I had no idea we were going to be one of just a few organizations.”

At BLOCS, a phone message welcomes OSTC calls but notes that BLOCS can’t give out scholarships until it raises funds from businesses. A similar message at the Children’s Scholarship Fund (CSF) asks parents to check back in November.

CSF’s Lipman said she’s optimistic about fundraising for OSTC.

“I’m hoping that companies are out from under the bad economy,” she said. "Give us a year, and I’m hoping that both [EITC and OSTC] will be fully funded.”

But Lipman also said that given the competition from other scholarship organizations statewide, area parents shouldn’t expect a bonanza of new dollars.

“Fifty million statewide is not going to provide significant impact in the Philadelphia market,” she said. “It’s not going to impact as many children as we would like.”