PENNSYLVANIAS K12 EDUCATION FUNDING SYSTEM

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PENNSYLVANIAS K-12 EDUCATION FUNDING SYSTEM

• presented to
• House Democratic Policy Committee
• April 7, 2009
• Ronald Cowell, President
• The Education Policy and Leadership Center
• for the
• Pennsylvania School Funding Campaign

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The Education Policy and Leadership Center

• Independent, not-for-profit, non-partisan
• Focus on state-level education policy
• Improve development and implementation
• Based in Harrisburg Programs throughout PA
• Information --- Leadership --- Advocacy
• An information resource for policymakers and the
  public

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• Pennsylvania
• School Funding Campaign
• Successful Schools
• Successful Children
• Successful Communities
• www.paschoolfunding.org
• See Attached List of Steering Committee
  Organizations

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• DISCUSSION OF EDUCATION POLICY DOES NOT BEGIN
  WITH DISCUSSION OF MONEY Instead, funding
  discussion should flow out of a broader set of
  education policies.
• CONSIDER THIS FRAMEWORK FOR DISCUSSION OF
  EDUCATION POLICY
• Governance
• Standards (Expectations Student Achievement)
• Assessment (How are we doing)
• Consequences (Get everyone to take seriously)
• Educational Capacity (What works)
• EDUCATION FINANCE
• Alignment

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• WHY STATE FUNDING FOR EDUCATION
• State Constitutional Mandate for General
  Assembly to provide for System of Schools
• State Incentive for local government to fund
  schools
• State funding to reduce local taxes
• Need for Equity
• Need for Adequacy

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PENNSYLVANIA HISTORY

• 1776 State Constitution A school or schools
  shall be established in each county by the
  legislature, for the convenient instruction of
  youth.
• 1790 State Constitution The legislature shall,
  as soon as conveniently may be, provide, by law,
  for the establishment of schools throughout the
  State, in such manner that the poor may be taught
  gratis.
• 1831 Common School Fund established with
  100,000 per year available

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PENNSYLVANIA HISTORY

• 1834 Free School Act required each municipality
  to establish an elected school board state
  funding if matched at least 21 by county dollars
  
• 1835-1897 State school funding to counties
  based on number of taxable inhabitants in county
• Attempt in 1863 to base funding on number of
  children failed because of difficulty in counting
  children in attendance

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PENNSYLVANIA HISTORY

• 1874 PA Constitution The General Assembly
  shall provide for the maintenance and support of
  a thorough and efficient system of public
  schools, wherein all the children of this
  Commonwealth above the age of six years may be
  educated, and shall appropriate at least one
  million dollars each year for that purpose.
• 1895 PAs first compulsory attendance law
• 1897 Number of children ages 6-16 added to
  state funding formula

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PENNSYLVANIA HISTORY

• 1923 First effort to use state funding for
  equalization
• 1930 to 1950 State aid increases from 17 to
  40 of costs
• 1947 General Assembly creates State Tax
  Equalization Board to determine true market
  values of real property in each school district
• 1949 New School Code - State aid based upon
  district teaching units X fixed dollar figure
  established by Legislature X districts standard
  reimbursement fraction

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PENNSYLVANIA HISTORY

• 1957 State aid formula begins to consider
  actual instructional expense (AIE)
• Mid 60s-1983 Statutory goal that the state pay
  50 of the statewide district instructional costs
• 1968 For 1966-67 school year and thereafter,
  State began to pay on basis of weighted pupils
  and local wealth state also began to make
  additional payments for children in poverty,
  density, sparsity, and homebound instruction

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PENNSYLVANIA HISTORY

• 1971 State income tax established
• 1974-75 State reimbursement at 54
• 1977 Personal income valuation becomes a factor
  in determining district aid ratio (40)
• 1977-1980 State reimbursement averages 46 per
  year
• 1982 All districts held harmless plus 72
  million supplement for Equalized Supplement for
  Student Learning (ESSL)

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PENNSYLVANIA HISTORY

• 1983 Equalized Subsidy for Basic Education
  (ESBE) enacted includes Factor for Educational
  Expense (FEE) removes 50 funding goal
• 1991 PARSS Equity Suit filed
• 1991 Special Education funding changed
• 1992 ESBE abandoned
• 1993 and 1994 Modest foundation funding
  guarantee included in state funding

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PENNSYLVANIA HISTORY

• 1995-2002 Ridge/Schweiker Administration
• Vouchers Charter School Funding
• Link to Learn Read to Succeed
• 1998- Commonwealth Court rejects PARSS v. Ridge
  funding is not for courts to decide
• 2002 Gubernatorial Campaign/Election
• 2003-04 Budget Debate until 12/03
• Accountability Block Grants in 2004-05

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PENNSYLVANIA HISTORY

• 2006 Legislature mandates a Costing-Out Study
• November 2007 Costing-Out Study is reported
• February 2008 Governor proposes 6-Year Plan
• July 2008 Legislature approves 6-Year Plan

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KEY ELEMENTS OF 1980s ESBE FORMULA

• WADMs (Number of Students)
• X
• Aid Ratio (Relative Wealth of District)
• X
• FEE (Cost Factor)
• Basic Subsidy to the District
• Other Factors (poverty, density, etc.)

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SUBSIDY PLUS OTHER

• Poverty
• Density
• Sparsity
• Hold Harmless for Basic Subsidy
• Transportation
• Special education
• Charter Schools

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PUBLIC K-12 SPENDING

• 2006-07 1991-92
• Amount Rank Amount Rank
• Per Pupil Amounts for Current Spending
• US 9,683 --- 5,001 ---
• PA 10,905 14th 6,050 6th
• Source US Department of Education - March 2009

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PUBLIC K-12 SPENDING

• CURRENT EXPENDITURES PER STUDENT - 2006-07
• Compared to contiguous states, spending in
  Pennsylvania was far below average and ranked 5th
  in a group of seven states, exceeding only Ohio
  and West Virginia, but trailing Delaware,
  Maryland, New Jersey and New York.
• Pennsylvania 10,905
• National 9,663
• Delaware 15,511
• Maryland 11,975
• New Jersey 16,163
• New York 15,546
• Ohio 9,940
• West Virginia 9,727
• Source US Department of Education - March 2009

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SO WHATS THE PROBLEM?
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WHAT HAS BEEN WRONG WITH THE PA FUNDING SYSTEM

• State Share in bottom five in nation
• State Appropriations Per Student below national
  average
• Disproportionate share of state funds are
  withheld from poorer districts
• Therefore, districts too dependent on Local
  Wealth Property Taxes
• Therefore, great Inequity and Inadequacy among
  501 school districts

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GOAL OF 50 STATE SHARE ABANDONED
(1983)STATEWIDE ED FUNDING FORMULA ABANDONED
(1991)
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SPECIAL EDUCATION FUNDING

• State paid 100 excess cost until 1991
• New formula as of 1991-92
• Assumes 1 and 15 incidence rates
• No consideration of district costs or wealth
• In 2005-06, more than 1 billion non-reimbursed

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CHARTER SCHOOL FUNDING

• Approved by district or state appeal board
• No limit on number in state
• Cost borne by local districts
• Law assumes some savings to districts
• More than half-billion/year cost to districts
• Since 2002-03, state will pay up to 30
• Cyber charter schools

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• OTHER COST DRIVERS
• Retirement Costs
• Health Care Costs
• Construction
• Task Force on School Cost Reduction

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STATE/LOCAL SHARES for
Elementary/Secondary Public Education

• State Share
  Local Share
• PA National
  PA National
• 2006-07 36.2 (47.6) 56.5 (43.9)
• 2005-06 35.0 (46.6) 57.1 (44.4)
• 2004-05 35.6 (47.0)
  56.2 (43.9)
• 2003-04 35.9 (47.1) 56.1 (43.9)
• 2002-03 36.7 (49.0) 55.8 (42.7)
• 2001-02 37.4 (49.4) 55.3 (42.8)
• 2000-01 37.3 (49.9) 56.3 (43.0)
• 1999-00 37.9 (49.8) 55.8 (43.1)
• 1998-99 38.3 (49.5) 55.8 (43.6)
• 1997-98 38.7 (49.0)
  55.5 (44.4)
• 1996-97 39.2 (48.8) 55.4 (44.8)
• 1995-96 39.8 (48.1) 54.8 (45.5)
• 1994-95 40.0 (47.5) 54.8 (46.0)
• 1993-94 40.1 (45.9) 54.5 (47.6)
• 1992-93 39.9 (46.4) 54.2 (47.0)
• 1991-92 41.0 (47.3) 53.3 (46.2)

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STATE/LOCAL SHARES for
Elementary/Secondary Public Education2006-2007

• State Share Local Share
• Pennsylvania 36.2 56.5
• National 47.6 43.9
• Delaware 63.1 29.4
• Maryland 40.3 53.8
• New Jersey 42.1 53.5
• New York 43.5 49.8
• Ohio 44.5 48.4
• West Virginia 59.5 28.8
• Source US Department of Education - March 2009
• 1 in PA in 2006-2007 approximately 230
  million

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PUBLIC K-12 REVENUEPER 1,000 PERSONAL INCOME

• 2005-06 1991-92
• Amount Rank Amount
  Rank
• US - Total 50.67 --- 48.87 ---
• PA - Total 52.73 20th 49.98
  27th
• US Local 22.48 ---
  23.25 ---
• PA Local- 30.11 4th 27.24
  13th
• US State 23.61 --- 22.43
  ---
• PA State- 18.46 40th 20.25
  36th
• Differences to 100 come from federal sources.
  Source US Census Bureau. 2008

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STATE FUNDING APPROPRIATED PER STUDENTSource
US Census Bureau April 2008
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RESULT 2005-06 BURDEN ON LOCAL PROPERTY TAXES

• Total K-12 State- Local K-12 from
• wide Revenues Property Taxes Prop Taxes
• US 521,116,397 147,249,385 28.25
• PA 22,772,190 10,009,710 43.95
• in ooos
• Source US Census Bureau April 2008
• 15.5 Difference more than 3.575 billion/year

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RESULT INEQUITY FOR
STUDENTS ACROSS PA

• Great Inequity for Students
• Among 501 Districts
• In 2005-06, instructional spending per pupil in
  Pennsylvania school districts ranged
  from 4,469 to 14,045
• This means, in an average classroom of 25
  students, a gap of almost 250,000 per classroom
  per year.

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RESULT INEQUITY FOR TAXPAYERS ACROSS PA

• Great Discrepancies in Local Effort and Resultant
  Burden on Local Taxpayers

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RESULT INADEQUATE EDUCATIONAL RESOURCES IN
MANY DISTRICTS

• Qualified Teachers
• Class Size
• Early Ed/Kindergarten Programs
• Curriculum
• Books, Computers and Materials
• Labs, Foreign Languages, Honors/AP Courses
• Facilities not conducive to learning

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ADEQUATE FOR WHAT?

• The Expectations for Student Performance
  Established by PAs Academic Standards
• The Expectations of No Child Left Behind Law and
  Related Policies

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NCSL Report on School FinanceAn ADEQUATE
School Funding System will provide and ensure the
use of sufficient funding to establish and
maintain the effective and necessary
educational capacity to provide every student
in every school a meaningful opportunity to
accomplish the academic proficiencies for which
he or she will be held accountable.
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PA TAX RELIEF EFFORTS

• Act 72 of 2004
• Act 1 of 2006 Special Session on Property Tax
  Relief Legalize slots
• Nothing to do with improving education funding
  system or meeting the needs of students
• Intentionally limits ability of districts to
  raise local revenues (referendum)

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ACKNOWLEDGE SOME PROGRESS in 2003-2007

• State Funding for Pre-School started
• Basic Subsidy line item increased
• Attention to Foundation funding
• Accountability Block Grants initiated
• School districts reimbursed 27 for charter
  school payments
• Legislature mandates a Costing-Out Study linked
  to states academic standards

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OTHER RELEVANT ACTIVITY

• 2007 Report on Cost Reduction
• Statewide Health Benefits Program
• Education Finance Reform Commission
• Discussion about TABOR, limits on state
  spending/taxes, tax cuts
• More Property Tax Relief/Elimination
• School District Consolidation

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• Principles of a Sound Statewide Education
  Finance System
• Equity
• Adequacy
• Accountability
• Efficiency
• Predictability

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QUESTIONS FOR STATE POLICYMAKERS

• How much state funding? Appropriate share?
• By what formula will state funding be
  distributed?
• What conditions will be attached to the state
  funds?
• What taxing authority will be provided to
  generate local revenues?
• Should state funds be targeted for some
  students/districts or generally available for
  all?
• Should state funds be distributed via categorical
  purposes vs. basic subsidy?

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BIG ISSUES

• Should every student have a fundamental right to
  a quality public education?
• What is student or school success? What do we
  value? How do we measure it?
• Does Money Matter? Consider both the amount and
  how it is used!
• Accountability for what? Inputs or Performance?
  With what consequences?

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BIG ISSUES

• Hold Harmless every year?
• Who should pay for state mandates?
• Tension of Local Control of Funding vs.
• State Requirements/Conditions attached to
  some/all of the Funding.
• How can state funding be used most effectively to
  level the playing field of opportunity?

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2007 COSTING-OUT STUDY

• Mandated by General Assembly in 2006
• Commissioned by State Board of Education
• Conducted Augenblick Palaisch
• Reported in November 2007
• Cost of all students accomplishing proficiency in
  all areas of standards
• Considered special ed, poverty, ELL, regional
  costs
• Identified district-by-district a total spending
  gap of 4.6 billion

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NEW BASIC FORMULA IN 2008-2009

• Linked to Costing-Out Study
• Increase State Funding by 2.6 billion over 6
  years
• Gets state share to 44 in 6 years

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ACCOUNTABILITY

• Districts receiving basic ed increase above Act 1
  inflation index must spend portion above index on
  proven school improvement strategies
• Districts identified as Warning, Improvement or
  Corrective Action districts with a school
  identified for Improvement or Corrective Action
  must have PDE approval for use of resources above
  inflation index

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FOR MORE INFORMATION

• Ronald Cowell
• The Education Policy and Leadership Center
• 717-260-9900
• cowell_at_eplc.org
• www.eplc.org