Ep. 142: Choice in the States – Pennsylvania with Marc LeBlond and Andy LeFevre

October 17, 2019

In this episode of our Choice in the States series, Director of Policy Jason Bedrick talks with Marc LeBlond and Andy LeFevre. They discuss the tax-credit scholarship programs and next steps for school choice in Pennsylvania. LeBlond is the senior policy analyst at the Commonwealth Foundation, and LeFevre is the former executive director of the REACH Alliance and REACH Foundation.

Jason Bedrick: Hello, and welcome back to another edition of EdChoice Chats. I’m your host, Jason Bedrick, director of policy here at EdChoice, and this is a part of our state policy series. Today we’re going to be turning our attention to the state of Pennsylvania. And I’m very excited to have not one but two guests today.

We are going to hear from Andy LeFevre. He’s the executive director of the Arizona Criminal Justice Commission. But what we’re interested in is his time as the executive director of the REACH Alliance and REACH Foundation, which was Pennsylvania’s statewide school choice coalition. We’ll also be hearing from Marc LeBlond. He is the senior policy analyst at the Commonwealth Foundation in Pennsylvania. So, I’m excited to have both of you on the show today.

Marc LeBlond: Thank you, Jason. Thanks for having us.

Jason Bedrick: Yeah, so, first I want to start with Marc. Marc, could you tell us a little bit about the two tax-credit scholarship programs that you have in Pennsylvania? What are their names? How do they work and what makes them different from each other?

Marc LeBlond: Absolutely, Jason, thank you. As you mentioned, there are two programs, EITC and OSTC. EITC is the Educational Improvement Tax Credit Program. OSTC is the Opportunity Scholarship Tax Credit Program.

And just for kind of a big picture overview, over the historical life of the program, they’ve empowered hundreds of thousands of students to choose the education that meets their needs and frankly give them the chance at a better life, which is why we all do what we do as ed reform advocates.

So, the differences in the programs. EITC is statewide. There’s an income limit of about $85,000 on the program plus $15,000 and change per child to be means-tested in. And then of course the major difference with the OSTC program is OSTC, same income limits for the program, but it’s targeted specifically to students in bottom 15 percent of underperforming schools in Pennsylvania according to standardized tests.

Jason Bedrick: And so about how many scholarships are awarded on an annual basis for these two programs?

Marc LeBlond: In the fiscal year 2017-18, it was 58,000 total if you include the pre-k component. If you take out pre-k, it’s 52,000. So, how that breaks down is 37,725 for EITC, 14,419 for OSTC. Average scholarship for EITC is right around $1,800, and average for OSTC is right around $2,500.

Jason Bedrick: That’s great. And so you have about two-thirds of families in the state that are actually eligible, at least for the EITC. If a family wanted to apply, where do they apply?

Marc LeBlond: They typically work with their school. They can go directly to a scholarship organization if they want to. Some scholarship organizations, like Children’s Scholarship Fund in Philadelphia, work directly with the families. But for the most part it’s through the schools. You’ll have a school like Logo Academy in York or the Gesu School in North Philadelphia where the school, they’re set up either as their own scholarship organization or they’re hooked up with another scholarship organization. And the family would work with the school to get their tax-credit scholarship.

Jason Bedrick: And I should note that is one thing that makes Pennsylvania almost unique. It’s one of very few states, out of the 18 states that have tax-credit scholarship programs, that has scholarship organizations that work with individual schools. In most states they require that a scholarship organization serve two or more schools so you tend to have fewer scholarship organizations serving a large number of schools. In Pennsylvania you have those types as you mentioned, but that’s why Pennsylvania has over 250 different scholarship organizations, because many of them are just working with one particular school or sometimes a small sets of schools.
But where does the money come from? How is this program funded? It’s not directly publicly funded, correct?

Marc LeBlond: Great question, Jason. These are not direct dollars. And that’s actually been a big part of the political debate, which we’ll talk about later on, and a big part of the confusion among lawmakers.

But it’s not direct dollars. These are tax credits issued on the revenue side. So what you have is a situation where businesses are privately funding students’ tuition. So the business will make a donation to the scholarship organization, then they’ll receive a credit. It’s either 90 percent or 75 percent depending on their commitments, you know, whether it’s a one-year commitment or a two-year commitment. And then of course the student has a scholarship to attend the school of their choice.

And as you know, Jason, the landscape in Pennsylvania is such that many students who are applying for these scholarships, many students unfortunately who are getting waitlisted, they might have a good option or they might not. And that tends to break down a little bit by your suburban versus your urban areas. But many of these students do not have good alternatives or they would not if not for these programs.

Jason Bedrick: Now, these programs, one of them is more recent. The OSTC was enacted in 2012. But the EITC is actually the second tax credit program that was enacted in the country. Arizona was first, I believe in 1997, roundabout there. Pennsylvania was second in 2001, followed shortly after the same year by Florida.

Andy, you were there for that. And then you served as executive director of the REACH Alliance, which is sort of an umbrella organization for these different scholarship organizations that are awarding scholarships to children in Pennsylvania. Could you tell us a little bit about how these programs were enacted?

Andy LeFevre: Sure, I’d love to, Jason. Great to be with you and Marc today.

So, interestingly enough, the REACH Alliance and REACH foundation had been around before, prior to the creation of the tax credit program. The group was created by some business leaders who were meeting and discussing the future climate of business in Pennsylvania.

One of the things they noticed was that the educational system that was producing its workforce wasn’t necessarily meeting their needs. So, they began talking about what they could do around that and started coming together and were very much involved in the initial fight in Pennsylvania to try and get a voucher bill passed. That was not successful.
But when Governor Ridge was elected governor, he very much took to heart trying to do something around school choice, again, the voucher bill failed.

So, what happened was in the legislative session of 2000 and 2001, there was a couple of big legislative issues that were out there that he was dealing with. One of them was pension reform. And he basically, in politics talk, horse-traded pension reform on one hand for the creation of the educational improvement tax-credit program. He said, “If you guys want this, I have some things that I want.” And in order to get them to agree and for him to support it, the creation of this tax credit program was one of the things that was traded back and forth across the table.

So, legislatively, it was created in 2001 at a $30 million level. And it was created in a way that the proponents of it were in essence also trying to get public schools’ support for the program. The $30 million was split into two pots. Two-thirds of it or $20 million was provided for the private school scholarships, and $10 million of it was provided for the different type of organization called educational improvement organizations, which worked with public schools to help provide additional programming in the public schools. So, this would be something the school normally wouldn’t provide, but because of, again, the funding that flowed from these tax credits into these organizations, they could do additional programming for the kids.

What was interesting about that development is, what we’ve seen kind of over the years of the EITC program, was with the growth of that and the additional dollars being able to go into the public schools that it did in essence blunt public school opposition to the growth of the EITC program over years, which is always helpful to not have them quite as vocal at the table.

But again, in essence, Governor Ridge made this happen. And we were very pleased to be the first state in the nation to create a program that was directed towards corporations. And that was specifically done because the Pennsylvania Constitution does not allow a difference in individual tax contributions. So we had to do it towards corporations in order to make it work.

Jason Bedrick: And there was this other program that, more than a decade later, was enacted. That was the OSTC, the Opportunity Scholarship Tax Credit Program. What was the genesis of that?

Andy LeFevre: You know, I mean, really it came down to looking at a growing public awareness, with having better data about how schools were performing, and then really having that data available and really trying to drive dollars at those schools that were really at the bottom performing level.

Again, the EITC program has continued to grow to some degree. But there really was, I think, a view by the legislature, a view by community leaders, that there was additional help needed in some very specific school areas. And those were the schools that were not meeting the educational needs because they were low-performing.

Jason Bedrick: And so the policy-makers wanted to make sure that we have this broader program that’s helping all low- and middle-income families, but we also want to have a separate pot of money that’s specifically directed to those who are most in need of choice, given the limited alternatives that they otherwise have.

Andy LeFevre: Yeah, that’s 100 percent correct. I mean, you mentioned earlier the fact that we have the most scholarship organizations in the country. And that was by design of, once the program was put in place, the REACH Foundation, the REACH Alliance, had a very specific plan in mind, which was to make this program as broad in support as possible. The program has a very generous administrative limit that organizations are allowed to use. That was done very specifically to allow organizations to be created and have funding available to get up and running.

I think when you look at the programs now, the average administrative cost that’s being used is under 10 percent. So, as programs mature, they come back into alignment with utilizing most of those dollars for student scholarships.
But they very specifically wanted to make sure, if at all possible, there was a scholarship organization in every legislative district if we could get one. Because when we went and talked to our legislators, we very much wanted to make the program personal to somebody in their district. So, that’s why we have as many scholarship organizations in Pennsylvania today as we do.

Jason Bedrick: And could you tell us a little bit more about what the REACH Alliance is and how it operates?

Andy LeFevre: Sure. So, the REACH Alliance and REACH Foundation are C3 and C4 organizations in Pennsylvania that were created, again, to primarily act as a grassroots coalition for school choice. So, the REACH Alliance and Foundation supports everything from charter schools to EITC to… Ultimately, if a voucher bill would have legs, they would support that as well. It’s funded primarily through the business members and folks that are part of it.

But the interesting thing that the REACH Foundation took on as a role for itself was really to represent the program, the EITC program. So, they have an advisory board that’s made up of a good number of the scholarship organizations, that meets regularly to talk about programmatic needs, changes in legislation that may benefit the program, and then also serves as kind of a resource for those scholarship organizations and does a lot of producing of materials, tax guides and things that those organizations use when they go out into the business community and talk to them about why they should support or why they should be involved in the EITC program.

Jason Bedrick: And who were the other coalition partners that you worked with outside of the REACH Foundation? What other types of groups in Pennsylvania were working toward passing these laws and defending and expanding them?

Andy LeFevre: I mean, REACH is really a super broad coalition. You know, one of the things that Pennsylvania has that was always very helpful for us during any of our political discussions and fights is obviously we have the Catholic Conference as a member of the REACH Alliance and Foundation. But that strong network of Catholic schools in Philadelphia and Pittsburgh and the different dioceses across Pennsylvania was always very helpful. The legislative members from those cities are very aware of the presence of many of those Catholic schools in neighborhoods is the one thing holding them still together. Again, we have a lot of groups that were involved early on that dealt with the private schools and the different coalitions of private schools in Pennsylvania.

But the thing that I thought great was the addition of some business leaders that really were able to put their emphasis and their kind of business thought behind why education was important.

And I agree with Marc’s assessment. Without these tax credit programs for the tens of thousands of students that are able to take advantage of them, they were going to be put into a school that probably was not going to do them a very good service and get them ready to be successful in life versus putting them in a school, say, one of our Catholic schools in inner city Philadelphia, where the graduation rate is 98 percent of students graduating from high school and 90 percent of those students going on to college. That’s a life-changer for those students and families.

Jason Bedrick: Now, Marc, we mentioned that there are tens of thousands of families that are participating in the program now. And it really has seen tremendous growth. I mean, in the first year, you had just over 17,000 scholarships that were issued. This last year, if you combine the two programs, you said it’s greater than 50,000 scholarships that were issued. Do we know anything about the types of students who are receiving these scholarships? Do we have any demographic data on them?

Marc LeBlond: We have some, Jason. And it’s kind of difficult because when the data is turned over to the state, or I should say when the data are turned over to the state, it’s de-identified. But we’ve been able to proxy it somewhat.

So, if you look at OSTC, for instance, 92 percent of the students in those schools are on free and reduced lunch. So, you can kind of gauge poverty or income level that way.

We see that 40 percent out of EITC scholarships are distributed in the five, I guess, lowest-income counties in Pennsylvania. It’s Philadelphia, York, Allegheny, Erie and Dauphin County.
And then if you look at some of the organizations we work with, so Children’s Scholarship Fund in Philadelphia I mentioned previously, and they’ve got a waitlist. They’ve got a lottery waitlist unfortunately because they can’t serve all the students who apply because of the caps on the program, which I’m sure we’ll get into. But 76 percent of their recipients are eligible for free and reduced lunch.

Independence Mission Schools in Philadelphia is another. It’s a network of schools independent from the diocese. They serve 5,000 Philadelphia students—70 percent of those eligible for free and reduced, 80 percent live in families making less than 50,000 a year.
And then another thing in terms of the open enrollment model of some of these schools and the diversity of some of these schools, 75 percent of their students are non-Catholic, 71 percent African-American.

And then just to mention one other, Logos Academy in York serves 275 students through an open enrollment policy. Their students are 82 percent minority and 66 percent below the poverty line.

And actually, I’m sorry, I know I said one more, but I don’t want to forget to mention Gesu School in North Philadelphia. This school in particular, it’s a Jesuit school. So, they teach that Jesuit model of service and value to the students. So, it’s really focused on the whole child and developing the spiritual and academic growth of the student. But they serve the poorest congressional district in Philadelphia. And so you’re talking generally a very low-income population that Philadelphia school district claims that they are unable to teach or unable to serve adequately. But Gesu School in North Philadelphia, they’re serving the same exact population. Ninety-nine percent African-American, very low income generally. Ninety percent of them are completing school on time. Eighty-five percent of them are going on to college.

Jason Bedrick: Now, you mentioned that the program is capped. So, here we have a program that is, you noted, is serving some of the poorest of the poor, students that often don’t have great access to high-quality schools already. And these are generally speaking, ethnically diverse students. But the program has a cap, and a lot of these scholarship organizations have long waitlists. So, what has the legislature been doing in the past year to expand educational opportunities to more students?

Marc LeBlond: I’ve got to give a lot of credit to the legislature, to the House and the Senate. The strength and swiftness with which they’ve acted on behalf of Pennsylvania students has been particularly impressive.
I want to mention in particular four individuals. So there are two bills. And then we’ve got a lot of champions in the General Assembly, but in particular four have been very influential.

So, the two bills are House Bill 800, which we can delve into the details of. There’s a, not a companion bill, but a similar bill on the Senate side, Senate Bill 299.

So, House Bill 800, sponsored by Speaker of the House Mike Turzai, want to give a big thank you to Speaker Turzai for championing that bill. That bill would increase the cap by $100 million, so essentially doubling the program. Also implementing a 10 percent escalator. So, if you hit 90 percent on that credit cap in one year, then the next year you’re increasing the available credits by 10 percent.
And then in the Senate, it’s Senate Bill 299, sponsored by Senator Mike Regan. He’s actually my senator. Been a great champion for school choice. Released a similar bill last session. He continues to do so. Also an advocate for student safety.

And then in terms of actual movement, House Bill 800 moved fairly quickly through the House and then very quickly through the Senate. I have to give a big thank you to both the President Pro Tempore Joseph Scarnati and the Senate Majority Leader Jake Corman for their leadership on putting that on the governor’s desk.

Now, as of the time of this recording, I am not certain when your listeners are going to hear the podcast, but as of today, the bill is on the governor’s desk, waiting to be signed, vetoed or ignored, at which point it could come into law. But the governor has said that he will veto, which is pretty outrageous. And I can tell you why, if you’re interested in getting into that.

Jason Bedrick: Yes, listeners, stay tuned to the end of the podcast where you will hear an update on what has happened in between when this podcast was recorded and when you’re listening to it. But yes, we would like to know more.

First of all, I know that it passed in the Senate roughly on… Actually I think it was just on party lines. In the House, though, there was some bipartisan support. If I recall correctly, 100 percent of the Republicans voted in favor, which makes sense. It was the Speaker’s bill. But there is also a fair number of Democrats as well. What can you tell us about the Democratic support and then what can you tell us about where the governor stands?

Marc LeBlond: So, it’s really astounding. Every single Republican in both chambers voted for the bill. In the House, the vote was 111-85. You had four Democrats who stood on principle and voted for the bill. In the Senate, the vote was 28-21. Strict party lines. All the yeas were Rs. All the nays were Ds.

But the governor, this is just yesterday actually, up to this point, he had sort of signaled that he would veto, though not explicitly saying it. Yesterday he actually came out and said he would veto. And the quotas, I’ve seen enough to know that’s not something I think is good for Pennsylvania. It distracts from what we ought to be focusing on, which is educating every child through our public school system.

Now, it’s offensive to me on quite a few levels actually. But I mean, the first and most basic level is the governor comes from considerable wealth and privilege. He attended a school called the Hill School, a private, elite prep school, and also send his daughters to that school. Tuition for the school is $59,000 a year, which of course to your average ordinary Pennsylvanian is just unthinkable.

Jason Bedrick: And it’s certainly not a school that they would be attending even with the scholarships, although they’ve got access to a number of great schools that are within their means with the scholarships.

So, the governor’s going to veto. Why did some of the Democrats vote in favor of it?

Marc LeBlond: These particular Democrats, I think they’re just standing on principle. I haven’t talked to them. I’d like to circle back and ask them what caused them to sort of bravely stand up and buck the system. But I’ve got to give them credit for standing on principle and for voting to support Pennsylvania kids in spite of what the party might be saying and party leaders might be saying, the governor and of course the teachers unions here in Pennsylvania.

Jason Bedrick: And it’d be interesting to know too, if they have a large number of scholarship families that reside in their districts and that perhaps they’re just siding with their constituents.

Andy LeFevre: Jason, this is Andy. You know, the great thing about my time in PA in this program in the past is it did experience a large amount of bipartisan support. It may be that the size of the increase that they’re talking that is scary to some of the Democratic members. But I think you’re exactly right. You know, part of the reason that the program and having the large number of scholarships was to be able to go and talk to legislators about specific schools and specific programs in their districts. And by and large, when we were talking about expanding the EITC program in the past, we typically would get a fairly large number of Democrats that would vote for it.

Jason Bedrick: And so how did that come about? Was the coalition actively seeking to create a bipartisan support in the legislature?

Andy LeFevre: Yes. I mean, so when the folks at REACH started talking about how they wanted to put these programs and find programs and seed programs, they specifically crafted it after what we jokingly called the NASA model, which was, why was NASA for so many years successful in getting congressional appropriations every year? It’s because they had a vendor in every congressional district that they could go and talk about with the member of Congress. So we wanted to do that if we could. If there was a school, if there was a need in a local community, we wanted to have a scholarship program that was servicing those families in that community, so that we could very specifically go in and talk. And we very much tried not to talk about numbers on pages, but talk about families in schools.

Jason Bedrick: And that’s exactly where the focus should be. I mean, the numbers often are necessary. Legislators like to vote for a program that’s revenue-neutral, for example. Sometimes it’s necessary to get them over the hill. But at the end of the day, I think what matters most is putting a face on the program and for the policymakers to see that these are real kids whose educations and really their future is at stake when it comes down to whether they’re going to be in a school that just simply doesn’t work for them or a school that is going to allow them to thrive and possibly go off to college and have a better-paying career. So, it really does make a huge difference. Andy, is there anything else that you wanted to add?

Andy LeFevre: No, I appreciate being able to come on today, Jason, and super encouraged to hear about the possibility of something moving in Pennsylvania. I hope that the Governor hears from enough folks that maybe he reconsiders that position. But we worked with now Speaker Turzai back when I was there. He was a strong supporter of EITC and school choice and some of the other members that Marc has mentioned. So, I know there are folks in the legislature from both parties that are supportive of school choice, are supportive of their students in their districts to be able to attend a school that meets their need. And I hope ultimately that the families win and not the system.

Jason Bedrick: And Marc, what do you think is going to be the next step for school choice in Pennsylvania, assuming they are able to get this through despite the governor’s veto or maybe he ends up just not signing it? Is there anything else on the horizon that the school choice community is working toward in Pennsylvania?

Marc LeBlond: Well, in the very immediate picture, if the governor vetoes, the goal is to get some sort of an increase through the budget process. But I mean, if you look at… So, our shining star that we kind of look at is Florida, right? So, in terms of tax-credit scholarships, Florida and Pennsylvania tracked pretty evenly until 2011, when Florida adopted their automatic escalator. And since then Florida has just taken off. And they’re serving twice as many students. Their average scholarship is much higher. So, we’re very hopeful now that we’ve seen legislation make it through both chambers with an automatic escalator on it, we’re very hopeful for adopting something similar to what we have in Florida.

And we’ve gamed it out. We ran the numbers on this. So if you look at the current trend, which is $15 million a year increase for both of these programs, we’d catch up to Florida’s current funding level, which I think is close to $900 million. We would catch up in 2066. If we adopted a 10 percent escalator, we’d catch up in 2035. And if we adopted a 25 percent escalator, we’d catch up in 2027. So, I think in the immediate, that’s something to really look forward to, an escalator plan that matches student demand.

Long term, would love to see something like a universal ESA program here in Pennsylvania. That’s going to require support from families, from constituents talking to their lawmakers, from lawmakers seeing the need in their communities.

But as Andy mentioned earlier, and as you mentioned earlier, Jason, I think it’s really important not just to talk about the numbers and talk about dollars, but also to talk about the people, which is why I love so much what AFC is doing, for instance, with their Voices for Choice. They highlighted a gentleman in Philadelphia named Anthony Samuels, who, and if you’re not familiar with his story, Anthony Samuels is from Strawberry Mansion, a neighborhood in Philadelphia that was profiled on Diane Sawyer many, many years ago. But just very, very poor conditions for students. Unsafe, poor academic performance, sort of prison-like conditions at the school. And in terms of Anthony Samuels’s family life, family conditions, the norm was that all of the males in his family would either die young or become incarcerated. And he was able to attend a better school through the EITC program. And he went on to college. And now he’s a successful, thriving adult. So, I think highlighting stories like that really, really brings it home.

Jason Bedrick: And I know most of our regular listeners know what an ESA is. But for some of our new listeners, what Marc referenced was Florida has an education savings account program, as do five other states, that allows families not only to use the funds that otherwise would have been appropriated for them at a public school. Instead they get it in a savings account that they can use for tuition, for tutoring, homeschool expenses, online learning. You can roll over unused funds from year to year and in some cases even use any leftover funds for college after graduating high school. So, that’s the new brass ring really for the school choice movement. They’ve got, in Florida, it’s a program that serves students with special needs as it does in most of the other states.
I know you had a bill this year that would have provided education savings accounts to students from military families, but did that a bill even get a hearing?

Marc LeBlond: It hasn’t yet and it still could. You know, session’s still ongoing. But that bill was sponsored by a representative named Andrew Lewis. And he spent 10 years in the army so he knows what it’s like to be from a military family. And he knows the situation that many military families face in terms of the instability of it. You’re going from base to base. You don’t necessarily put down permanent roots. So, something like an ESA education savings account, education scholarship account, something like that could be so valuable in terms of helping military kids get their best fit education.

Jason Bedrick: Well, we are certainly hopeful to see great things from Pennsylvania in the future. Thank you both for coming on. My guests today have been Andy LeFevre, the executive director of the Arizona Criminal Justice Commission, again, formerly of the REACH Alliance and REACH Foundation in Pennsylvania. My other guest was Marc LeBlond, senior policy analyst at the Commonwealth Foundation.

As promised, here is the update regarding HB 800 which, as Marc explained earlier in the podcasts, would have increased the total available tax credits in Pennsylvania by $100,000,000 and would have allowed that total to grow by 10 percent annually. The bill passed both the house and the senate and was awaiting signature by Governor Tom Wolf who had threatened to veto it. He did carry out his threat to veto the bill. Although on a positive note, subsequently the legislature passed and the governor signed a law increasing the tax credits by $30,000,000, as well as raising the income eligibility requirements so that more families will have access to the scholarships.

So, all in all this is progress for Pennsylvania, although not the amount of progress that supporters of school choice had been hoping for this year.

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Thank you for listening. We’ll catch you next time.