Will education again divide the Pa. legislature this budget cycle? There are signs of smoother sailing

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HARRISBURG — Gov. Josh Shapiro wants to include $565 million in this year’s budget to continue closing an “adequacy gap” among public schools as his fellow Democrats push a proposal to overhaul tax credit programs that fund private school scholarships.

Republicans who control the state Senate have pushed back, calling for changes to the formula adopted two years ago to rectify the funding disparity and for an expansion of the scholarships.

While a dispute over education funding contributed to a months-long budget impasse a few years ago, one key lawmaker thinks the issue won’t be much of a sticking point, in part because lawmakers in the divided state legislature are pursuing a less ambitious agenda.

“Last year’s education code bill was extremely dense and had a lot of things in it that we were extremely proud of,” said state Rep. Pete Schweyer (D., Lehigh), who chairs the House Education Committee, referencing additional oversight of cyber charter schools and a reduction in the money districts pay them.

“This year, I don’t think it’s gonna be quite as robust, but I don’t necessarily think it has to be.”

The state budget, negotiated behind closed doors by the governor’s staff and top lawmakers, is due June 30. While the major players have offered few details about negotiations publicly, they have all sounded optimistic they will avoid a prolonged impasse. Still, there remain differences of opinion, primarily on overall spending.

The ‘adequacy’ conversation

Looming over all discussions about education is a 2023 ruling in which a state court found Pennsylvania’s school funding approach to be unconstitutionally inequitable and ordered lawmakers to fix it.

In response, the legislature in 2024 adopted a state budget that acknowledged a $4.5 billion “adequacy” gap and instituted a formula that uses factors such as poverty and level of English proficiency to decide how much additional money a district should receive. Lawmakers have so far appropriated more than $1 billion to close the gap.

Shapiro proposed an additional $565 million for underfunded schools this year, and state House Majority Leader Matt Bradford (D., Montgomery) told Spotlight PA this month that passing that boost is among his “priorities.” Shapiro also pitched $50 million increases to basic education and special education funding.

But for many Republicans, the adequacy formula has become an issue. State Senate Majority Leader Joe Pittman (R., Indiana) told Spotlight PA in early June that his caucus does not support it and that it should be reevaluated: “We view that formula as picking winners and losers.”

Schweyer said any significant changes to the formula this year would likely “elicit some sort of response from the litigants.”

Hillary Linardopoulos, policy director at the Education Law Center, one of the groups that brought the original school funding lawsuit against the state, declined to comment on the possibility of litigation should lawmakers approve a spending plan advocates deem inadequate.

ELC and other public education advocacy groups have pushed lawmakers to adopt a firm funding timeline, rather than renegotiating an adequacy payment every year. The legislature hasn’t done that.

Linardopoulos said she thinks the General Assembly should accelerate its funding, but the advocates recognize that rectifying the “decades-long injustice” takes time.

“The court’s mandate is clear, and we intend to ensure that it’s properly implemented so that kids can thrive,” Linardopoulos said.

The budget is negotiated by the governor’s office and top lawmakers from each chamber, and no one close to the talks has publicly commented on their status. Still, some Capitol insiders remain optimistic a deal could be signed as soon as early-to-mid July. Such predictions have circulated in the past, before deep divides on certain issues spark hostilities.

Possibly the worst example in recent history happened in 2023. That year, the state Senate passed a budget that included $100 million in taxpayer money to fund private school tuition for students in low-performing public districts. Shapiro had been publicly supportive of a voucher program during his campaign, but — facing pressure from fellow Democrats — vetoed that part of the budget. That decision remains a point of tension in his relationship with GOP leaders.

With a multibillion-dollar gap expected between the state’s revenue and its expenditures, lawmakers will likely need to tap the state’s rainy day fund to offset rising costs, like education. State House Appropriations Chair Jordan Harris (D., Philadelphia) said the public will understand.

“We know that there is a significant cost to carry with public education, as well as we know what the court has required us to do,” Harris told reporters in mid-June. “These are things that must happen.”

Alternatives to public schools

Pennsylvania has for decades run programs that provide tax breaks to businesses and individuals that contribute money to educational nonprofit organizations, which then pay for students to attend private schools.

The Educational Improvement and Opportunity Scholarship Tax Credit programs have grown steadily, and the amount allocated for scholarships is currently capped at $575 million.

Last week, state Senate Republicans passed a budget-enabling tax code bill that makes several tax cuts and expands EITC by $25 million. Pittman said in an interview with WCCS Radio in Indiana County that the move was “very important for empowering parents.”

The state House, meanwhile, has passed a bill that would overhaul these tax credits and replace them with a program that its supporters say targets more funding at disadvantaged students and provides more oversight. (The overall level of funding would stay the same.)

According to the bill’s sponsor, state Rep. Nikki Rivera (D., Lancaster), the legislation was inspired by an Independent Fiscal Office report from 2022 that showed the research agency did not have enough information to determine whether the credits “substantially enhance educational opportunities available to all Pennsylvania students.”

At the time, the IFO’s analysts recommended the legislature permit the state to collect student performance and demographic data so that the programs could be meaningfully evaluated.

Rivera’s bill would require the state’s auditor general to conduct compliance audits of scholarship organizations and participating private schools, while the IFO would produce reports studying overarching trends of contributors, scholarship organizations, and recipients.

“It’s the same level of detail that any public school has to provide,” she said.

The Commonwealth Foundation, a conservative think tank, claims those requirements are designed to “intimidate“ donors, schools, and parents from participating.

Another point of contention over Rivera’s bill is the proposed 2% administrative fee on contributions to help cover the cost of running the program. Rachel Langan, senior education policy analyst at the Commonwealth Foundation, said the fee would unnecessarily take away money from the organizations’ donations.

Schweyer, the chair of the House Education Committee, said he doesn’t “hate” the tax credit programs. He backed the more thorough reporting requirement legislation, which won support from three House Republicans, to ensure the credits are working most effectively.

“I’m not adversarial to it,” Schweyer said. “I want to expand it where it makes sense, and I want to make sure we have oversight over a massive program.”

State Sen. Lynda Schlegel Culver, chair of her chamber’s Education Committee, declined to comment for this story. Her spokesperson deferred emailed questions to Senate GOP leadership.

The state’s longstanding debate over education tax credits is also being projected onto a much larger stage this year — Shapiro has until Jan. 1 to decide whether to enroll the state in a federal program that works essentially the same way as EITC. It offers individuals up to $1,700 in tax credits for contributions made toward private school scholarships.

Even if the General Assembly passes legislation to opt in, the governor’s administration must provide a list of qualifying scholarship providers before the dollars can be rolled out next year.

More than half of states have enrolled in the program, the Internal Revenue Service reported earlier this month, despite opposition from two unions representing 4.8 million educators nationwide.

U.S. Education Secretary Linda McMahon and U.S. Sen. Dave McCormick are among the Republicans urging Shapiro to sign the state up.

But the Shapiro administration has not yet made a decision. Last week, after the U.S. Treasury released more information regarding the program, Shapiro’s spokesperson Rosie Lapowsky said in an email that officials continue “to evaluate as we await additional information on how this will affect use of our existing tax credits, how states will be expected to administer the program, and how eligibility will be determined.”

Langan told Spotlight PA that Shapiro should enroll in the federal program “as early as possible” because families are beginning to look into school tuition rates for the next semester.

“It would just make it a much smoother rollout if we’re going to eventually opt in to do it before the school year starts,” Langan said.

Spotlight PA’s Stephen Caruso contributed reporting.

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