Task Force on School Cost Reduction

1
Task Force on School Cost Reduction

• PASBO Annual Conference
• Thursday, March 6, 2008

2
Task Force Background

• Established by Special Session Act 1 of 2006 to
• Examine spending trends
• Evaluate budgetary pressures driven by external
  mandates and cost factors
• Identify options and recommend change
• Composed of
• School Board leaders
• Teachers union leaders
• School Business officials
• Other experts and professionals
• Appointed by Governor and General Assembly

3
School Costs

• School spending during 2004-05 reached 20.8
  billion

4
Cost Drivers

• Costs have outpaced the CPI across all major
  categories

5
Cost Drivers

• Instructional Expenditures responsible for 54
  of total cost growth since 1995-96
• Special and Gifted education 97 increase
• Regular education 35 increase
• Employee Benefits 132 increase
• Charter Schools - 364 million statewide annually

6
Cost Drivers

• Support Services responsible for 30 of total
  cost growth since 1995-96
• Student Transportation 58 increase
• Administrative Services 42 increase
• Tax Collection - 78.8 million statewide
• Facilities and Financing responsible for 14 of
  total cost growth since 1995-96
• Debt Services - 90 increase
• Non-instructional Services responsible for 2
  of total cost growth since 1995-96
• Increased by 48 increase
• Largely driven by student activities
• Federal and State Mandates
• NCLB
• IDEA

7
Task Force Focus

• Tax Collection
• Health Care
• School Construction and Green Building
• Special Education
• Transportation
• Charter and Cyber Charter Schools
• Shared Services
• Mandate Waivers

8
Tax Collection

• Currently...
• 560 tax collectors
• DCED estimates 237 million earned income taxes
  never collected 127 million would be available
  for schools

9
Tax CollectionRecommendations

• Consolidate collection of Earned Income Tax,
  employing fewer tax collectors and clarifying
  withholding rules for employers
• Consolidate to 66 countywide tax collectors
• Uniform rules, regulations, forms and codes
• All EIT would be withheld by the employer
• Businesses would only need to remit to the county
  in which their payroll operation is located
• Estimated Impact - 127 million

10
Health Care

• PASBO estimated that health care premiums rose by
  24 between 2003 and 2005
• PEBTF premium increases averaged 5.6 between
  2003 and 2006

11
Health CareRecommendations

• Establish a statewide system for all school
  districts to jointly purchase health care
  benefits
• When school districts maximize their purchasing
  power, the commonwealth will use tax dollars more
  efficiently while protecting the health care
  benefits that teachers and other school district
  employees receive
• Estimated Savings believed to reach hundreds of
  millions of dollars according to some analysts

12
School Construction

• In 2006 53 school construction projects
• Approx. 80 alterations and additions

13
School Construction

• PDE provides reimbursement through the Plan Con
  process
• Act 34 of 1973
• 20-year rule
• Contracting Thresholds
• Prevailing Wage
• Multiple Prime Contracting

14
School ConstructionRecommendations

• Increase and index limiting thresholds for
  construction-related expenses in line with
  original intent
• Work done by school personnel from 5,000 to
  25,000
• Projects not done by school personnel and costing
  between 10,000 and 25,000 would require three
  quotes (n0w ,000-10,000)
• Projects of 25,000 or more require schools to
  advertise and solicit bids (now 10,000)
• Provide school districts with flexibility related
  to prime contracting

15
School Construction Recommendations

• Increase assistance to school districts to more
  strongly encourage green building
• Increase PDE technical assistance to districts
  throughout the many phases of the construction
  process, including releasing information on
  actual school construction costs

16
Special Education

• Represents 15 of the 1.8 million children
  enrolled
• 4 classified as gifted
• Spending has grown by 83.4 since 1996-97

17
Special Education

• State Special Education Funding
• Base Supplement
• Inflation Index Supplement
• Minimum 2 increase
• Additional Funding
• Contingency Funds
• Core Services
• Institutionalized Childrens Program

18
Special EducationRecommendations

• Alter the state special education formula to
  provide funding on a tiered system based on the
  services a student receives
• Provide increased state funding for high quality
  early childhood education in the elementary
  grades
• Develop best practices in transitioning students
  from special education programs
• Redo the charter school special education formula
  to enable the resident school district to better
  align funding with charter school special
  education costs

19
Transportation

• Approximately 1 billion annually (5 of the
  total statewide expenditures)
• Increased by 58

20
TransportationRecommendations

• Eliminate the requirement to bus students outside
  district boundaries and only require districts to
  transport on days when public school is in
  session
• Optimize fuel cost management to slow long term
  growth costs
• Encourage district to adopt transportation best
  practices

21
Charter and Cyber Charter

• Now 117 charter and cyber charter schools in PA
• 364 million in 2004-05

22
Charter and Cyber Charter

• Traditional student tuition for charter and cyber
  charter students
• Special Education student tuition for charter and
  cyber charter students

23
Charter and Cyber Charter

• Additional concerns
• Truancy
• Competitive Grants

24
Charter and Cyber Charter Recommendations

• Primarily Brick and Mortar
• Change charter school law to include grants in
  the list of items exempt in calculations of
  charter school tuition rate
• Permit school districts to weigh fiscal impact as
  a criterion when considering new and expanded
  charter schools
• Align the budgeting process of school districts
  with enrollment planning for charter schools

25
Charter and Cyber Charter Recommendations

• Primarily Brick and Mortar
• Provide best practices and guidance to school
  districts that will support them in creating
  effective truancy monitoring partnerships with
  their charter schools
• Increase guidance to school districts throughout
  the charter drafting process to ensure a
  high-quality charter agreement

26
Charter and Cyber Charter Recommendations

• Cyber Charter
• Establish a single, statewide tuition rate to be
  applied to all cyber charter schools.
• Continue to collect and analyze data on the cost
  of cyber education

27
Shared Services

• Approximately 314 per student on administrative
  costs
• 50 increase
• 210 million statewide on central services

28
Shared ServicesRecommendations

• Expand the approach of shared services to include
  a variety of entities including districts,
  intermediate units, counties and other local
  governments
• Draft a report of best practices that shows
  districts how cost savings can occur through
  consortia

29
Mandate Waivers

• Education Empowerment Act, Act 16 of 2000
• Effective for three years
• Districts must submit an evaluation
• Annual report from PDE to the chairmen and
  minority chairmen of the House and Senate
  Education Committees

30
Mandate Waivers

• Decreasing number of requests
• Construction changes

31
Mandate WaiverRecommendation

• Increase the quality of PDE communication
  regarding Mandate Waivers
• Include more strategic information about the
  experiences of school districts in achieving cost
  savings

32
For More Information

• www.pde.state.pa.us
• Pre K 12
• Finances
• Task Force on School Cost Reduction

33
The Rendell Administrations Strategy for Driving
Down the Local Burden

• A new school funding formula that will invest
  2.6 billion over the next six years to help
  school districts move towards their adequate
  funding targets.
• All homeowners will receive property tax relief
  in July an average of 185 for every household
  and total property tax relief will reach 854
  million in 2008-09. Older Pennsylvanians have
  already received nearly 115 million in the
  programs first year, and first-ever controls on
  local tax increases are keeping school property
  taxes in check.
• Legislation to create a statewide school health
  benefits system will bring down the cost of
  health care for school districts addressing a
  leading cost driver while preserving the quality
  of benefits for educators.
• The state is encouraging voluntary consolidation
  of school districts that choose to combine their
  efforts to boost achievement and save taxpayers
  money.
• Common Cents makes it easier for school
  districts to share services to improve efficiency
  and avoid costly duplication of back-office,
  instructional, transportation and other expenses.