Supporters of Pennsylvania’s Educational Improvement Tax Credit Program (EITC), the state’s biggest statewide school choice program, say Gov. Josh Shapiro’s proposed 2026-27 budget prioritizes increased public school funding over continued support for the tax credit program.

The debate over the education budget comes as the state continues to grapple with how to improve student outcomes, address disparities between school districts and balance public school funding with expanding school choice options.

For more than two decades, the Commonwealth Foundation, a conservative nonprofit, has promoted school choice initiatives in Pennsylvania. On Wednesday, officials with the group held a press call to criticize Shapiro’s budget priorities and push for a boost in the school choice tax credits to cut into the waiting list of students seeking to use the program.

Shapiro’s budget proposal features a $923 million (about 5%) increase in state support to public schools, but does not provide additional funding for tax credit programs like EITC, that help low- and middle-income students attend private or independent schools. The 2025-26 budget allocated $590 million to fund EITC.

“Governor Shapiro’s proposed budget proposes to keep EITC’s overall cap ‘unchanged,’ which seeks to repurpose or shift funding away from tax credit scholarships and towards educational improvement organizations,” Rachel Langan, a senior policy analyst at the Commonwealth Foundation, said. “EITC is effectively part of the budget fight.”

EITC, which was created in 2001, allows individuals and businesses to receive a state tax credit equal to up to 90% of their state tax liability for eligible contributions. Donors write checks to different scholarship organizations and educational improvement organizations across the state, and these organizations distribute the funds to students in need of financial assistance.

Since the program’s inception, it has awarded more than 1 million scholarships in all 67 Pennsylvania counties, according to a 2026 Commonwealth Foundation report. However, tax credit caps, set each year by the state legislature, leave about 69,000 students on the waitlist for scholarships, according to the report.

“The enduring popularity of the EITC Program shows school choice works. Pennsylvania can lead the nation by prioritizing EITC,”

Langan said.

The Pennsylvania State Education Association, the state’s largest teachers’ union, and other education-

funding groups, have criticized the tax credit program in the past, saying that it diverts taxpayer dollars away from public schools.

Shapiro, however, has not completely rejected school choice. He has signed budgets that increased funding for the tax credit programs by nearly 50%. But at the same time, he has opposed Republican-backed efforts to expand the programs, including a proposal that would provide up to $8,000 in tuition assistance for low-income students.

In 2023, Shapiro signaled he would support expanding a school choice program for students in poorly-performing school districts but backed down due to opposition from House Democrats and used his line-item veto to remove the funding from the state budget.

The debate has also expanded to the federal level, where a new tax credit scholarship initiative allows states to opt in.