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Wednesday, August 28, 2002

By Eleanor Chute, Post-Gazette Education Writer

Jeff Kelly, president of a manufacturing company, has long been grateful for the education he received at Serra Catholic High School in McKeesport.

	(Illustration by Ted Crow, Post-Gazette) Chart: Local impact of education tax credit program

Now Kelly, a member of Serra Catholic's class of 1965, has a new way to contribute to his alma mater: the state Educational Improvement Tax Credit.

His company, Hamill Manufacturing of Penn Township, Westmoreland County, donated $111,111 to the Scholastic Opportunity Scholarship Fund, making the company eligible for a $100,000 state tax credit.

The company asked that its donation to the fund, formed by the Diocese of Pittsburgh to channel scholarships to parochial school students, be used for scholarships at Serra.

"It's a good way for us to basically target our taxes that we would be paying the state into educational opportunities for kids that need assistance," Kelly said.

In the first year of the program -- the state's fiscal 2002 year that ended in June -- businesses contributed more than $6 million to scholarship funds and educational improvement organizations in southwestern Pennsylvania.

Statewide, more than $17 million was given to scholarship organizations and $9.7 million to educational improvement organizations, slightly below state limits on the tax credits of $20 million a year for donations to state-approved scholarship organizations and $10 million a year for donations to state-approved educational improvement organizations. Scholarship organizations grant scholarships, typically to nonpublic schools, while educational improvement organizations spend money on innovative educational programs in public schools.

Tax credits, which are awarded on a first-come, first-served basis, are limited to $100,000 a year per company per tax year. The credit amounts to 75 percent of the gift, if it's just for one year, or 90 percent if a two-year commitment is made.

All scholarship organizations must use the income guidelines set by the state. Household income limits are $50,000, with an income allowance of $10,000 for each eligible student and dependent member of the household.

Among the largest contributors in the state were affiliates of Downtown-based PNC Financial Services Group. Combined, they contributed $1.5 million in 2001 and expect to contribute $1.6 million in 2002 to both scholarship and educational improvement organizations, said PNC spokesman Brian Goerke.

"We feel there are absolutely a lot of challenges in the educational arena, and corporations need to take an active role," he said.

In southwestern Pennsylvania, the Scholastic Opportunity Scholarship Fund is the biggest recipient of donations through the tax credit.

The fund took in $1.9 million from more than 65 businesses in fiscal 2002 and so far has received $286,810 in fiscal 2003, which runs through June, according to state records.

	The Series: Day One: A late bloomer learns to read Day Two: Word is out on how schools can get funding for reading Day Three: A kinder, gentler phys ed Today: Law allows businesses to rack up tax breaks through gifts to schools Day Five: Troubled schools struggle with new transfer law Day Six: When students go wireless, colleges lose money Day Seven: In 2003, students in danger can request school transfer

The Rev. Kris Stubna, secretary of education for the Catholic Diocese of Pittsburgh, said he expected the number of scholarships to grow to near 8,000 this school year, which amounts to about one in every four pupils attending a parochial school in the diocese.

The size of aid ranges from $100 to $1,500, based on need and availability. Average tuition for Catholics is $2,100 for elementary schools and $5,000 for high schools.

Another large recipient was the Crossroads Foundation, which received $259,311 from 2001 taxes. The foundation provides Catholic high school scholarships and educational support for parochial students from lower economic areas.

The Pittsburgh Jewish Educational Improvement Foundation, formed by the United Jewish Federation, received $631,122 in fiscal 2002 for scholarships to four Jewish schools. Tuition ranges from about $5,000 to $8,000 a year.

"It certainly allowed students to be able to attend schools of their choice who otherwise wouldn't have been able to," said Shepard Englander, vice president for community development for the United Jewish Federation. "I think that made a huge difference to students and their families."

Under state law, a scholarship organization cannot serve just one school. However, if a school has several levels, such as Shady Side Academy's junior, middle and senior schools, the state can count each level as a school.

The private Fox Chapel and Point Breeze school, where annual tuition ranges from $13,000 to $17,000, received $360,444 in fiscal 2002, according to the state. The donations helped 35 students with need-based financial aid, said Gena Kovalcik, a Shady Side vice president.

Critics of the law contend that the tax credit was a way for then-Gov. Tom Ridge to get a school voucher program in through the back door. The Legislature, which has rejected school vouchers, approved the tax credit program in May 2000.

But it's not only schools that have received donations through the program. Junior Achievement of Southwest Pennsylvania received the largest gift in the region in fiscal 2002 -- $456,333.

Junior Achievement president S. Lee Strayer said the donations enabled JA to offer its school programs to more than 75,000 students last school year, an increase of 12 percent.

Eleanor Chute can be reached at echute@post-gazette.com or 412-263-1955.