Pittsburgh’s three Jewish day schools are making progress in correcting a cumulative budget shortfall for scholarships. Among their strategy is to take advantage of a recent law that allows individuals to participate in the Educational Improvement Tax Credit Program (EITC), which permits business entities to direct tax dollars to private schools.
Through a newly formed legal entity here called Pittsburgh Jewish Scholarship, an LLC, individuals can now use the EITC program to help support Yeshiva Schools of Pittsburgh, Hillel Academy and Community Day School.
Pennsylvania recently expanded its definition of a business to include a Special Purpose Entity (SPE) — set up as an LLC — which is created for the specific purpose of allowing individuals who meet a minimum income and asset test to participate in the EITC program.
Since 2001, the three day schools have been sharing funds that businesses contribute to the Pittsburgh Jewish Educational Improvement Foundation, a qualified charitable organization that is registered with the Department of Community and Economic Development and administered by the Jewish Federation of Greater Pittsburgh. The day schools count on these funds, which for the 2014-2015 school year peaked at about $4.4 million. In 2015-2016, the funds totaled about $3.4 million.
Last year, the funds available to the schools through EITC decreased dramatically as the contributions of two major contributors fell off.
“With the decreased funds coming through the corporate EITC program, all three day schools are looking at significant revenue reductions, and the hunt is on for new sources of revenue,” Avi Baran Munro, the head of school at Community Day School, said in an email. “We learned about this program [for individuals] that was successful for Philadelphia schools, and we took it upon ourselves to apply to participate.”
Last July, Pittsburgh Jewish Scholarship was formed to address the budget gap, according to Dan Kraut, CEO of Hillel Academy. The SPE was accepted into the EITC program by the state through a type of lottery mechanism in early December, then had just 60 days to solicit donors and arrange for them to add their funds to the SPE.
“It’s a program that exists in Philadelphia and has been done through their Federation,” Kraut said. “We came to it through them.” Through the SPE, the Pittsburgh day schools have garnered additional EITC contributions totaling about $680,000 this year and $680,000 for next year, according to Kraut.
“But for this, we would have been in really bad shape,” he said. “Anytime you bring in $680,000, you are helping Jewish education in a serous way.”
Kraut “spearheaded the effort” to create the SPE, said Rabbi Chezky Rosenfeld, a spokesperson for Yeshiva Schools. “It took a lot of research and time, but we saw it as an opportunity that we couldn’t afford not to do.”
While Kraut is “grateful” for the additional funds, he said, the schools are still struggling to meet their respective budgets. At Hillel, administrators are “trying to increase our tuition revenues and increase enrollment,” he said. Last year, tuition increased by two-and-a-half percent.
While the money raised so far through the SPE is significant, it still “does not cover our budget shortfall” at Yeshiva, Rosenfeld said. “It helps, and I do think that this program is a big part of the future of our fundraising through EITC.”
Yeshiva has not raised tuition to increase revenue, Rosenfeld said, because most of its students are dependent on scholarships. Instead, the school “has had to make some difficult cuts,” and implore their donors to increase their gifts.
CDS has also been working hard to close its budget gap.
“We are aggressive about pursuing grant opportunities from individuals and foundations to fund our work,” said Munro. “And of course, we continue to seek opportunities to reduce expenses, while doing everything we can to innovate and maintain the standards of educational excellence that our students and families and our mission demand.”
Each school is tasked with soliciting participants in the SPE who will direct their dollars to that institution.
“Many of our board members, parents and staff members recruited participants for the SPE,” Munro said. “Every dollar we raised allows us to continue making our highly valued program affordable to as many Pittsburgh Jewish families as possible.”
Elliot Holtz, chair of the Foundation for Jewish Day Schools in Philadelphia, helped start the program in his community in 2015. Since then, he said, “we’ve raised millions of dollars, because people who were not eligible before could now participate [in the EITC program] by becoming a member of one of our SPEs.”
Because each business entity is limited to designating $750,000 to the program, in Philadelphia there are several separate SPEs to maximize the amount of contributions its several Jewish day schools can receive, according to Holtz.
“The SPEs allow us to give more money for scholarships to recruit more kids to our schools,” he said.
Pittsburgh’s Federation is continuing to lend a hand in helping solicit funds for the EITC program.
“The Jewish Federation of Greater Pittsburgh and the day schools have always jointly solicited EITC contributions,” said Adam Hertzman, the Federation’s director of marketing. “That hasn’t changed. What has changed is that Roi Mezare, [the Federation’s senior manager of financial resource development], has organized a group of volunteer leaders who met with the internal staff, who are working on soliciting EITC contributions.”
The Federation has “looked more systematically at potential business whom we could speak in order to expand the number of contacts and awareness of this program,” Hertzman continued. “It’s not a change in approach, but a renewed focus.”
Sally Stein, manager of corporate and government relations at the Federation, serves as a resource for businesses to help explain the program to them and to assist in filling in the EITC application, Hertzman noted.
Toby Tabachnick can be reached at email@example.com.