After a lengthy floor debate, the Pennsylvania House of Representatives voted Monday to advance a Democrat-backed bill that aims to increase oversight of the state’s Educational Improvement Tax Credit Program, the state’s biggest statewide school choice program.

Educational choice programs have long been a point of contention in Pennsylvania, with Republicans generally advocating for expanded tax-credit scholarships and Democrats favoring greater investment in public schools.

House Bill 2632, sponsored by Rep. Nikki Rivera, D-Lancaster, was passed with a 105-97 vote. The bill would overhaul the state’s EITC by redirecting funding to target students in low-income areas and underperforming schools, expanding eligible uses to include childcare and strengthening data collection and reporting requirements.

“This bill helps kids and it helps taxpayers. It shows the public how these tax diverted dollars are being spent,” Rivera said. “I hope we can all agree that a program that costs the taxpayers $680 million a year should have transparency and accountability.”

Starting in 2027, EITC and its accompanying Opportunity Scholarship Tax Credit Program would be eliminated in their current forms and replaced with a new program, the “Education Options Tax Credit Program.”

Rep. Peter Schweyer, D-Lehigh, the majority chairman of the Education Committee, said that the bill does not reduce funding for scholarship programs, but instead maintains current funding levels while improving structure and oversight.

“We kept in mind kids like me, students across the Commonwealth of Pennsylvania who could not afford to go to school, which is why this legislation expands access for the poorest families throughout the Commonwealth of Pennsylvania,” Schweyer said. “This bill makes it easier for those kids … to be able to graduate with their class by lifting and eliminating the per pupil cap on scholarships.”

Republicans emphasized the success of the school choice tax credit programs, and said HB 2632 would restrict access to a successful school-choice program by narrowing who can receive scholarships, even if it does not reduce overall funding.

“We cannot have kids falling through the cracks, and (the EITC and OSTC programs) have been highly successful models for the nation, and HB 2632 would undermine that,” said House Republican Leader Rep. Jesse Topper, R-Bedford. “The only thing that we need to do is add more money to (EITC and OSTC programs). We do not need to take a step backwards in terms of school choice in Pennsylvania.”

School choice advocates also expressed their opposition to the bill, saying the legislation targets Pennsylvania’s scholarship programs with “unreasonable taxes, mandates and bureaucratic burdens that threaten educational opportunity for thousands of students,” according to a statement from the Commonwealth Foundation, a conservative nonprofit that has promoted school choice initiatives in Pennsylvania for more than two decades.

“It’s disheartening to see House Democrats, led by Gov. Josh Shapiro, cater to anti-school choice special interests, rather than the needs of Pennsylvania students across the state,” Andrew Lewis, Commonwealth Foundation President and CEO, said in the statement. “We anticipate the state Senate will reject these devastating reductions and protect scholarship programs, which have provided life-changing opportunities for more than 1 million Pennsylvania students, but families need more educational options.”

Shapiro 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 Pennsylvania State Education Association, the state’s largest teachers’ union, and other public education funding groups, have criticized the tax credit program, saying it diverts taxpayer dollars away from public schools.

The debate has also expanded to the federal level, where a new tax credit scholarship initiative allows states to opt in. The governor has not yet opted into the program, saying he is “awaiting federal guidance to address key questions” surrounding the Trump-backed measure, passed last summer as part of the One Big Beautiful Bill. Several other Democratic governors across the country have shared similar concerns.

With the deadline to join the federal program set for the end of the calendar year, several Republican legislators, including U.S. Sen. Dave McCormick, have put the pressure on Shapiro to act. More than half of the 50 states have already opted into the program.

The debate over HB 2632 emerges just weeks before the June 30 budget deadline, adding an 11th hour wrinkle that could complicate budget negotiations. The measure also arrives ahead of a competitive election cycle for several Pennsylvania lawmakers, increasing the political stakes surrounding the issue.

HB 2632 has moved swiftly through the legislature, with the bill being introduced to the House Education Committee less than two weeks ago and passing with a 14-12 party-line vote.

HB 2632 will now head to the Senate for further consideration.