Pittsburgh’s three Jewish day schools are expected to shoulder a cumulative budget deficit which could exceed $800,000 this school year as a result of a decrease in available funds as part of the state’s Educational Improvement Tax Credit Program (EITC), according to Sally Stein, manager of corporate and government relations at the Jewish Federation of Greater Pittsburgh.
Since 2001, students of Yeshiva Schools of Pittsburgh, Hillel Academy and Community Day School have benefited from the EITC program, which provides a tax break to Pennsylvania businesses that make a donation to a scholarship organization. The three Pittsburgh day schools have been sharing funds that businesses contribute to the Pittsburgh Jewish Educational Improvement Foundation (PJEIF), a qualified charitable organization that is registered with the Department of Community and Economic Development (DCED) and administered by the Federation. 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.
The complex nature of the EITC program makes it very difficult to forecast the funds that will be available each year. The anticipated shortfall of funds for 2016-2017 is largely the result of the reduced contributions of two major donors to the fund, according to Stein, who manages the PJEIF for the Federation.
“The program is so important to the community,” Stein said. “It’s grown and grown. But sometimes there are things we can’t control with our donors. That’s why we are constantly looking for additional donors.”
It has been the practice for the Federation and the day schools to “solicit together” for EITC funds, with the Federation taking the lead, said Jeff Finkelstein, president and CEO of the Federation.
Yisroel Rosenfeld, dean of Yeshiva Schools, Daniel Kraut, CEO of Hillel Academy, and Avi Baran Munro, head of school at CDS, said that more outreach is needed to local Jewish business owners, encouraging wider participation in the EITC program.
“Although the majority of the funds will always likely come from the larger companies, we feel we that we need to be reaching out more than ever before to smaller companies, so we don’t have to count just on the big companies,” Rosenfeld said.
Being dependent on just a few large donors, he added, is risky for the day schools, because if those few donors happen to have a year of low profitability — and thus a lower tax liability — those companies’ participation in the EITC program will likewise decrease.
The three day schools have worked together to determine a formula for dividing the funds donated to the PJEIF, Rosenfeld said.
Because over the last several years the funds in the PJEIF have increased annually, those funds “became a significant part of our budget,” said Munro.
Last year, she said, “we experienced a decrease that was unexpected.”
In April, Stein notified the schools that collectively there could be about $400,000 less than was projected in the EITC fund administered by the Federation. On Aug. 1, Stein told the schools there could be at least an additional $400,000 decrease in funds.
The effects of the monetary shortfalls on the schools will vary.
“We are looking to minimize it wherever we possibly can,” Rosenfeld said. “Raises [for staff] are almost out of the question.”
Other adjustments at Yeshiva Schools may include cutting back on support staff and extra supplies, according to Rabbi Chezky Rosenfeld, director of development at Yeshiva Schools.
Scholarships will remain available at Yeshiva Schools, and no child will be turned away from the school because of an inability to pay full tuition, Yisroel Rosenfeld said, although he is encouraging parents to dig a little deeper to come up with tuition contributions.
“But we’re at the beginning of this,” he acknowledged. “We may have to take further steps.”
At Hillel Academy, labor distribution has been adjusted, with “people just taking on more work,” Kraut said. “You’d be surprised how much money you can save when people are willing to do that.”
Hillel has also “tightened its scholarship policy,” according to Kraut, and raised tuition this year, although that increase had been planned prior to the administration’s becoming aware of the decrease in EITC funds.
Likewise, at CDS, the administration is “finding opportunities to reduce cost that won’t affect the child’s experience at school,” Munro said.
Noting widespread improvements overall in the three schools over the last several years, Yisroel Rosenfeld sees the EITC setback as “a bump in the road.”
“For the Jewish community to grow, we need strong day schools,” said Kraut.
In response to the shortfall, the Federation announced last week that it has formed a new team to solicit businesses to participate in the EITC program, said Finkelstein.
“We want to build out a team the way we run the [Federation’s annual] campaign,” he said. “For the last 11 or 12 years, we raised more money every year [through the EITC program]. We need to get very aggressive now to fill in the hole.”
The team will be staffed by Roi Mezare, the Federation’s senior manager of financial resource development, and will be headed by Billy Rudolph in a volunteer capacity.
“The key will be mobilizing and identifying potential companies to get the word out,” Finkelstein said.
The effort may prove to be more complex than a typical fundraising drive, Finkelstein acknowledged, because of EITC governmental rules and regulations. To be eligible, a company must be authorized to do business in Pennsylvania and subject to specific state taxes.
“It’s more technical,” Finkelstein said. “It may sometimes mean talking to accountants and CFOs.”
He stressed the importance of increasing momentum in soliciting donors to the program.
“This is about scholarships for families in need,” he said. “This is about making sure families that want a day school education for their children have scholarships. These dollars are critical. We take this very seriously.”
“The money is out there,” Yisroel Rosenfeld said. “Let’s reach out and get it.”
Methods of fundraising for EITC contributions differ in various communities in Pennsylvania.
In Philadelphia, Jewish day schools work “hand in hand” with the Jewish Federation of Greater Philadelphia to solicit contributors to its EITC fund, the Foundation for Jewish Day Schools, according to Ellen Horowitz Matz, who runs the EITC programs in that Jewish community.
“We have a very close relationship with our schools,” Matz said. “We encourage schools to do solicitations of their own donors. It’s a team effort. The Jewish Federation provides lots of support. It’s a true partnership.”
Donors to Philadelphia’s Foundation for Jewish Day Schools can designate which school or schools they wish to receive their contributions. If specific designations are not made, the Foundation distributes the funds based on need, Matz said.
The Foundation has contributions from both large and small businesses, Matz added.
To participate in the EITC program, businesses apply to the DCED for the tax credit. Tax credits are awarded on a first-come, first-served basis up to a cap mandated by the state. After approval, businesses must make their contributions within 60 days.
Toby Tabachnick can be reached at email@example.com.