HARRISBURG, Pa. (AP) — Lawmakers moved past a monthslong budget feud in Pennsylvania’s Capitol on Wednesday, advancing legislation to tie up loose ends and send millions more to subsidize private school tuition and child care tax credits for parents.
After days of negotiations that typically play out before June 30’s end of the fiscal year, the House and Senate traded a flurry of just-unveiled legislation, each agreeing to concessions in bills that Democratic Gov. Josh Shapiro said late Wednesday night he would sign.
Shapiro suggested that the dragged-out process of passing budget legislation carried a silver lining, in that leaders of the politically divided Legislature overcame partisanship to finish important pieces of legislation long in the making.
“I think it’s important to note that we learned how to work together, and that is critically important,” Shapiro said.
In addition to subsidies for private schools and parents who send kids to child care, lawmakers agreed to raise the monthly fee on telephone bills by 30 cents, from $1.65 to $1.95, to help raise another $60 million for county 911 emergency response services. Raising the fee to $2.30 a month has been a top priority of counties that say they are forced to raise property taxes because they are paying a growing share of the cost of the service.
More tax credit for private school donations
Education funding had become a key sticking point in finalizing the spending plan, with the Republican-controlled Senate aiming to expand private school subsidies and the Democratic-controlled House pressing for more aid for the poorest public schools.
In the end, Democrats dropped a demand that Republicans had opposed to send another $100 million to the poorest public schools.
In exchange, Republicans agreed to transparency measures sought by Democrats in a program that allows businesses to receive tax breaks for donating money to defray the cost of tuition at private and religious schools.
“Thirty-five thousand more kids could take advantage of it, so it’s very significant,” said Steven Bloom, senior vice president at Commonwealth Foundation, which lobbies in Harrisburg for school choice.
Under the bill, the state will expand that private school tax credit program by $130 million — from $340 million to $470 million. Republicans also agreed to scale back the amount of money that middleman administrators could keep — from 20% down to 10% — and to require the disclosure of more demographic information about the students who benefit.
The bill also boosts the amount of tax credits — from $12 million to $60 million — for donations that go to private schools that serve a larger proportion of students from lower-income families.
“Expanding school choice is critical because it’s a life and death situation for these kids .... It gives them a pathway toward getting a good education ... they can then use that as a platform for success for the rest of their lives,” Bloom said.
Public school advocates have criticized the program as discriminatory, saying many of the eligible schools cherry-pick the students they want to teach and have policies that discriminate on the basis of religion, LGBTQ+ status, disability or another reason.
They also say it siphons money away from public schools at a time when a landmark court decision found that the state’s system of school funding is violating the constitutional rights of students in the state’s poorest districts.
Expanded child care tax credit
Another key concession won by Democrats is the expansion of a year-old state child care and dependent tax credit.
The bill raises the current child care tax credit from 30% to 100% of the federal child care and dependent tax credit, at an annual cost of hundreds of millions of dollars to the state.
The size of the child care tax credit is based on income, but the biggest tax credit would be $2,100 — instead of $630, under current state law — for families making below $43,000 and spending $6,000 or more on child care for two children.
“Anything that we can do at the federal or the state level that offsets some of the costs of child care … is a good thing for kids, and it’s a good thing for parents,” said Donna Cooper, executive director of Children First.
“For young families, child care is their second biggest expense after housing .... Many families have to choose between going to work or paying for child care.”
That bills also carry another win for Democrats: $175 million in one-time aid to fix up schools, including cleaning up lead, asbestos, mold and other environmental health hazards in school buildings — still a drop in the bucket compared to the billions the School District of Philadelphia says it needs for deferred maintenance.
“It’s small potatoes compared to the need, but I really commend people for recognizing we’ve got to start somewhere,” Cooper said.
Uncertainty ends for community college funding
Meanwhile, the bills headed to Shapiro’s desk allow hundreds of millions of dollars to flow after spending months snarled in the Legislature.
That includes more than $300 million for libraries and community colleges, and $100 million in federal aid for school mental health services.
Montgomery County Community College had to spend tens of thousands on borrowing costs to mitigate the impact on students.
"We've pulled out of our investment portfolio. We've taken out a line of credit and, of course, that equals out to additional borrowing costs and lost revenue that we might have if we invested those funds," said Michael Bettinger, director of government and external relations.
Bettinger says budget impasses are common, but these negotiations stood out.
"This was a little bit different, being that the budget was approved but not released,” he said. “The political realities in Harrisburg sometimes causes these things. We're just grateful that they came to a bipartisan agreement.”
State Rep. Mary Isaacson of Philadelphia County said, “Our community colleges have become hostages.”
Dr. Guy General, president of Community College of Philadelphia, said, “The pressure that the colleges — and ultimately the students — would feel were as a result of this negotiation. I don't know the issues that were related but we definitely were the victims.”
Community colleges will receive $262 million now that the school code provision is approved.
To encourage more college students to become teachers, one of the bills creates a program to give a stipend of up to $15,000 to student teachers. With numerous schools having difficulty hiring or retaining teachers, the stipends are aimed at easing a hardship for college students finishing up a teaching degree who each must student-teach in schools for 12 weeks without pay.
KYW Newsradio's Conner Barkon and Nigel Thompson contributed to this report.