Big money behind push for education tax credit program

Brian O'Neill (left), chairman of O'Neill Properties, greets Archbishop Charles J. Chaput at Center City news conference Feb. 24 at which Chaput announced that all four Philadelphia Archdiocese high schools targeted by a blue-ribbon commission for closure would stay open. At center is John J. Dougherty, business manager of IBEW Local 98. ALEJANDRO A. ALVAREZ / STAFF PHOTOGRAPHER
Brian O'Neill (left), chairman of O'Neill Properties, greets Archbishop Charles J. Chaput at Center City news conference Feb. 24 at which Chaput announced that all four Philadelphia Archdiocese high schools targeted by a blue-ribbon commission for closure would stay open. At center is John J. Dougherty, business manager of IBEW Local 98. ALEJANDRO A. ALVAREZ / STAFF PHOTOGRAPHER
Posted: June 27, 2012

A NEW, big-money political-action committee turned up on the Pennsylvania radar screen this spring — at exactly the same time that the Philadelphia Archdiocese launched a full-court press for legislation in Harrisburg that would pump millions of dollars of scholarship money into its struggling schools.

The new Fighting Chance PA PAC shares a name with a self-described grass-roots campaign launched in March by the Pennsylvania Catholic Coalition, and it shares office space with wealthy King of Prussia developer Brian O'Neill, who spearheaded a drive to raise $12 million from 10 anonymous donors earlier this year to keep open four endangered Catholic high schools.

In just a couple of months, the Fighting Chance PA PAC already has doled out $225,000 to pro-voucher state lawmakers and other political committees in Harrisburg. Its biggest donation to an individual lawmaker, $25,000, was handed to obscure GOP Rep. Jim Christiana of Beaver County on May 9 — one month before Christiana introduced a bill that would support scholarships for Catholic and other nonpublic schools but would cost the state as much as $75 million.

Ironically, the money that the PAC has raised hasn't come from any source traditionally tied to the Archdiocese: The entire $395,000 has come from three wealthy Bala Cynwyd-based hedge-fund founders — and their Students First PA PAC — who have spent millions since 2010 on Pennsylvania candidates who support vouchers and school choice.

Still, public-education advocates see the dovetailing of the PAC's mission and its generous political gift-giving with aggressive lobbying by Archdiocese officials and allied groups as another sign that Philadelphia's relatively new Archbishop Charles Chaput is living up to his reputation as one of America's most political Catholic leaders.

"This is an end run of the whole process," said Lawrence Feinberg, a Haverford Township school-board member who heads the Keystone State Education Coalition, which staunchly opposes vouchers and tax breaks for nonpublic-school scholarships.

Feinberg and other public-school advocates question how Pennsylvania can take a $75 million budget hit to pay for scholarships for kids to attend religious or private schools at the same time that the broke city of Harrisburg is considering axing kindergarten, when the nation's poorest city of Reading just laid off 110 teachers, and when the cash-strapped Philadelphia School District is weighing a plan to dramatically expand charter schools and private partnerships. That hasn't stopped the high-profile push for the scholarship tax credits from officials including Chaput, who penned an Inquirer op-ed piece supporting Christiana's bill just a few days after it was introduced.

"Without new scholarship tax credits and school vouchers to relieve costs, more archdiocesan schools will close soon, and more of the financial burden of educating young people will fall on the public," wrote Chaput. He called Christiana's proposal "the best bill" and argued that "this program would not take money away from public schools" — a statement at odds with the program's $75 million revenue hit at a time of shrinking state aid. The archbishop's piece was headlined: Pass voucher bill now — or else.

Kenneth Gavin, a spokesman for the Archdiocese, said in an email that the church "is not affiliated with" the Fighting Chance PA political-action committee. He acknowledged that the Archdiocese has worked with the independent Fighting Chance grass-roots group — as well as other religious organizations such as the Black Clergy and the Jewish Orthodox Union -- "to help drive advocacy, support and movement on this issue."

Meanwhile, Americans United for Separation of Church and State, in a letter last week to a key lawmaker, blasted the measure as not only "bad for students, bad for taxpayers, and [one that] harms religious liberty" but a violation of the state constitutional ban on public funds for sectarian schools.

But Chaput's "or-else" demands may be met. Last week, a tentative deal on a new state budget included the $75 million tax-credit expansion, which was debated Monday at a House Education Committee hearing. The measure's backing from top Republicans and some Philadelphia Democrats who've also received considerable campaign money from pro-voucher groups means that its chances of final passage are good.

Originally, Christiana had proposed a new tax credit called the EISC — for Educational Improvement Scholarship Credit — targeting the worst-performing schools. But a compromise reached last week calls instead for doubling the existing 11-year-old program called the EITC, or Educational Improvement Tax Credit, which costs Pennsylvania about $75 million. Some of Christiana's provisions targeting low-performing schools would be retained.

The way it works is that businesses make donations to specially created scholarship programs that then funnel the money to help kids from low- and middle-income families attend religious or private schools; the firms get as much as 90 percent of their investment back from the state tax credit.

Advocates of the school-choice movement find this indirect route an easier sell politically than vouchers, a form of direct state aid for nonpublic schooling. But the effect is practically the same — because tax credits otherwise would have been revenue to pay for state programs, including aid to its hard-hit public schools.

Pennsylvania lawmakers are pushing ahead with a tax-credit expansion despite a New York Times report last month that found the program here dripping with political influence. The Times cited scholarship programs such as the Bridge Educational Foundation — chaired by a prominent Harrisburg lobbyist and run by the wife of Gov. Corbett's 2010 campaign manager, which works with lawmakers to identify target schools, and receives money from firms seeking to curry favor with state government such as the gas-drilling XTO Energy, which gave $650,000 over three years.

Sponsor Christiana — who hails from Monaca, Pa., the Ohio River town also in the news this month as site of a large proposed Shell ethane-cracking plant — said in a telephone interview that it's critical to help kids in low-performing schools.

"The reality is that Harrisburg has to do something different to give these kids an opportunity," said Christiana, explaining why he introduced his measure.

Campaign records show that more than 38 percent of the campaign cash that the Republican has raised so far in 2012 has come from three pro-voucher groups — the political-action committee of pro-school-choice Wal-Mart, which gave $2,500; $25,000 from the Students First PAC linked to the hedge-fund partners of Bala's Susquehanna International Group, and $25,000 from the new Fighting Chance PA PAC.

Christiana laughed when he was asked if the donations had influenced his decision to push for the new tax credits.

"I've been a strong supporter of parental choice since my first election in 2008," he said, adding that pro-voucher groups are merely seeking to counteract the sway of opposing groups like the teachers' lobby that he called "the status quo."

Fighting Chance PA is also the name of a grass-roots lobbying campaign on behalf of vouchers or tax credits and which coordinated a weekend of Masses with the Philadelphia Archdiocese last month that included both advocacy for legislation in Harrisburg and giving out contact info for local lawmakers to parishioners.

O'Neill, whose development firm O'Neill Properties lists the same address as the Fighting Chance PA PAC, declined to be interviewed for this article.

Contact Will Bunch at 215-854-2957, bunchw@phillynews.com, or on Twitter @Will_Bunch. Read his blog at attytood.com.

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