Unions Bankroll Candidates on the Backs of Taxpayers

OCTOBER 20, 2014  | by BOB DICK

Government unions have not been reluctant to use their exclusive political privilege to finance candidates this election cycle.

According to an AP analysis, four of the top ten contributors to Tom Wolf's gubernatorial campaign are government unions, combining for nearly $2.5 million in donations to Wolf. To be clear, there’s nothing wrong with supporting a candidate for office. In fact, it’s a right protected by the First Amendment.

The issue here is not candidates receiving union money, but that union leaders use taxpayers resources to collect their political money.

It's unfair to force taxpayers to subsidize the collection of money for political causes they find antithetical to their own values and beliefs.

It’s not fair that government unions are the only entities that have their political action committee (PAC) money and union dues, which can also be used for political purposes, collected at taxpayers' expense.

Despite the Senate's recent vote against paycheck protection, the fight to restore fairness and level the political playing field will continue.

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Audio: PFT Fails Students, Teachers & the Poor

OCTOBER 17, 2014  | by JOHN BOUDER

Matt Brouillette and other members of Commonwealth Foundation were on the ground at the Philadelphia Federation of Teachers (PFT) protest yesterday, handing out fliers and letting teachers know how PFT leaders are failing them, students, and Philadelphia's poor.

WPHT's Dom Giordano interviewed Matt Friday morning to find out why he waded into the midst of a union protest to advocate for the teachers, students, and the poor left behind by Philadelphia Federations of Teachers' policies.

Matt, a former high school teacher, said:

The Philadelphia Federations of Teachers is failing the kids, the teachers, and the poor in the city and it is their policies that block millions of dollars from going into the classroom . . . [PFT leaders] are harming the very teachers they are there to protect and they are preventing the kinds of reforms that are needed that I believe will make it better for the good teachers in the district.

In response to figures like former Gov. Rendell, Philadelphia's Mayor Nutter, and others coming out against PFT's actions, Matt said, “What you are seeing is a union that is out of touch with the public… even with those who are on their traditional side."

Listen here or below for more of the interview:

The Dom Giordano Show airs daily on WPHT in Philadelphia.

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

And for mobile listening, get the SoundCloud iPhone and Android apps

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Audio: Healthcare Solutions Week—What Comes After Obamacare?


Four years after the passage of the Affordable Care Act, few think healthcare is more affordable.

Premiums and out-of-pocket costs are rising, a new wave of Pennsylvanians are losing their health insurance plans, and we're expanding Medicaid. The broken Medicaid program is notorious for high costs and poor healthcare outcomes. But real healthcare solutions exist.

During Healthcare Solutions Week, dozens of organizations around the country are highlighting commonsense reforms that can reduce the cost of care and improve access for those who can't afford insurance.

Elizabeth Stelle discusses the state of healthcare and real solutions for Pennsylvania on WSBA’s The Gary Sutton Show. Listen here or below:

The Gary Sutton Show airs daily on WSBA 910AM in the York area.

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

And for mobile listening, get the SoundCloud iPhone and Android apps

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How the PFT Fails Philadelphia

OCTOBER 16, 2014  | by JAMES PAUL

By standing in the way of tens of millions of new dollars for Philadelphia classrooms, the Philadelphia Federation of Teachers (PFT) has revealed its true identity—a self-interested, self-serving interest group that fails teachers, fails students, and fails the poor.

Today, the Commonwealth Foundation launched PFTfails.com to inform the city of Philadelphia—as well as all Pennsylvanians across the state—about the failed track record of PFT leadership. Instead of working to improve the broken status quo, PFT executives use children and teachers as pawns to protect their political influence.

And make no mistake: the status quo has demonstrably failed in Philadelphia public schools. More than 80 percent of students did not achieve proficiency in both reading and math in 2013, according to the Nation’s Report Card. Violence remains a major problem in city schools, with 2,485 violent incidents reported during 2013-14. Despite the abysmal performance and violent conditions, PFT leaders oppose charter schools and tax credit scholarship programs for low-income families seeking better, safer education opportunities.

Construct a broken system, defend a broken system, and trap low-income families in the broken system. That’s the PFT playbook. 

But it’s not just students and low-income families who are failed by union executives. PFT fails hard-working, high-performing Philadelphia teachers by clinging to rigid seniority mandates that can result in the best teachers being fired. What’s more, PFT refuses to embrace merit pay.

Why does PFT leadership stand in the way of higher salaries for excellent educators? Instead of encouraging and developing their best talent, PFT leaders oppose common sense reforms that would reward the most effective teachers and keep them in the classroom.

To make matters worse, the same teachers hurt by the PFT are forced to subsidize the PFT’s political agenda—whether the teachers agree with it or not. Philadelphia teachers are required to pay union dues or fair share fees—with an average annual cost exceeding $800—to various union affiliates just to keep their jobs.

Union executives take full advantage of their unique political privilege by spending dues at the astounding rate of $70,000 per minute on political television advertisements. The American Federation of Teachers (AFT)—the Washington D.C. based mothership of PFT—is primed to spend more on elections than ever before. This includes a recent gift of $500,000  financed by teachers' dues, and used for political attack ads via a ‘SuperPAC.’

All told, the PFT fails the entire city of Philadelphia by refusing to agree to health care concessions that would distribute an additional $54 million for classroom instruction in the current school year. Former Governor Rendell, Philadelphia Mayor Nutter, and the Philadelphia Inquirer editorial board all agree that this money belongs in the classrooms.

But the PFT refuses to compromise. Add it to the list of PFT failures. They fail us all when they put personal political scores ahead of what’s best for teachers, students, and the poor. 

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Yesterday's Paycheck Protection Vote


Thanks to your voices, yesterday afternoon the state Senate suddenly voted on an aspect of "paycheck protection." Senator Scott Wagner proposed an amendment yesterday that would end the taxpayer-funded collection of union political money in school districts.

This was the first full floor vote in the movement for paycheck protection and 20 bold senators stood up to powerful special interests to proclaim that taxpayer resources should never be used for politics.

Richard Alloway John Gordner Elder Vogel
David Argall Scott Hutchinson Randy Vulakovich
Lisa Baker Dominic Pileggi Scott Wagner
Mike Brubaker Robert Robbins Kim Ward
Jake Corman Joseph Scarnati Donald White
John Eichelberger Lloyd Smucker Gene Yaw
Mike Folmer Patricia Vance

Thank you, senators!

While the amendment fell short, this is just a disappointment—not a setback—for the movement for ending the taxpayer-funded collection of union political money. Today was the last voting day before the election, but legislators can return to the Capitol until November 30 to take care of unfinished business. 

Clearly, work remains to convince some lawmakers to support a position held by 79 percent of voters—and 72% of union members—that union leaders, not government, should collect political money and campaign contributions, so continue to make your voice heard to your lawmakers. 

The full vote count is below.

Alloway, Richard L. (R)  Yes Gordner, John R. (R)  Yes Stack, Michael J. (D)  No
Argall, David G. (R)  Yes Greenleaf, Stewart (R) No Tartaglione, Christine (D) No
Baker, Lisa (R)  Yes Hughes, Vincent J. (D) No Teplitz, Rob (D)  No
Blake, John P. (D)  No Hutchinson, Scott (R) Yes Tomlinson, Robert (R) No
Boscola, Lisa M. (D)  No Kasunic, Richard A (D) No Vance, Patricia H. (R) Yes
Brewster, James R. (D)  No Kitchen, Shirley (D) No Vogel, Elder A. (R)  Yes
Browne, Patrick M. (R)  No Leach, Daylin (D)  No Vulakovich, Randy (R)  Yes
Brubaker, Mike (R)  Yes McIlhinney, Charles (R) Absent Wagner, Scott (R)  Yes
Corman, Jake (R)  Yes Mensch, Bob (R) No Ward, Kim L. (R)  Yes
Costa, Jay (D)  No Pileggi, Dominic (R)  Yes Washington, LeAnna (D) Absent
Dinniman, Andrew (D) No Rafferty, John C. (R)  No White, Donald C. (R)  Yes
Eichelberger, John (R) Yes Robbins, Robert (R) Yes Wiley, Sean (D)  No
Erickson, Edwin B. (R)  No Scarnati, Joseph (R) Yes Williams, Anthony (D) No
Farnese, Lawrence (D) No Schwank, Judith (D) No Wozniak, John N. (D)  No
Ferlo, Jim (D)  No Smith, Matt (D)  No Yaw, Gene (R)  Yes
Folmer, Mike (R)  Yes Smucker, Lloyd K. (R)  Yes Yudichak, John T. (D) No
Fontana, Wayne D. (D)  No Solobay, Timothy J. (D)  No    

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York Schools Can Send a Lifeline to Kids


School Choice Pennsylvania

The York City school board is considering an intriguing proposal to turn over some of its schools to a charter operator to compete with the remaining city schools (if the district can come to a new collective bargaining agreement). Why is this transformation needed?

York City schools are among the worst performing schools in Pennsylvania. On the state's "School Performance Profile," the district ranked 499th out of 500 districts.  And preliminary results show that most schools in the district declined in 2013-14.

Interstingly, commenters on a Fox 43 story about our analysis claim the district can't be expected to do better—that its performance is driven by bad parents and poor students. Certainly, poverty does play a role in academic performance, but high performing schools across Pennsylvania and the nation succeed even with low-income students.

We can, and must, do a better job to help our poorest students. And it is clear that despite the challenges, York can do better.

Not only do York schools score worse than the state average, but they perform worse than the average among all low-income students in Pennsylvania. That is, the dreadful test scores aren't driven by poverty alone. Nor is the problem in underfunding. York City schools saw a 33 percent increase—adjusted for inflation—in spending per student over the past decade. The $15,256 the district spends per student exceeds the statewide average.

Consider this: New Hope Academy Charter School was shut down after 2013 for a poor performance record—yet it performed better than most of the schools in the district.

The status quo simply isn't good enough. To send a lifeline to York children, major change is needed. Choice and competition, along with accountability measures via a performance contract, would better serve students and families.

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How Would Tom Wolf's Tax Plan Impact You?

OCTOBER 9, 2014  | by BOB DICK

Yesterday, we released an analysis of the impact of Tom Wolf’s education spending and tax proposals, finding Pennsylvania’s income tax rate would have to increase by more than 121 percent to pay for just two of Tom Wolf’s major education proposals. But the increase could actually be much higher. A story in Capitolwire (paywall) yesterday quotes Wolf's answer to a question about the ambiguity surrounding his tax proposal:

"If you're in the 70,000-90,000 dollar range as an individual - and you could double that if you're married - you should not pay any more in taxes. And people making below that would get a break. That's my goal."

Wolf’s proposal would certainly violate the uniformity clause (Article VIII, Section 1) of Pennsylvania’s Constitution because it would necessitate two types of tax exemptions: one for those filing singly and one for those filing jointly in order to ensure couples who make $180,000 or less don’t get hit with a higher rate.

But if Wolf were to propose a tax structure that lowered taxes for those making less than “$70,000 to $90,000” and generated the nearly $4.6 billion needed to pay for his education spending, what would that require?

Using $80,000, the middle point of Tom Wolf's suggested dollar range, as our “break-even point”—the point where taxpayers would begin to see their tax bills rise, we have outlined what a Wolf tax structure might look like.

To achieve the goals stated above, there would need to be a “universal exemption” of $52,200, requiring the tax rate to increase from 3.07 percent to 8.85 percent.

That is, Pennsylvania’s income tax rate would increase by more than 188 percent

Tax Rate Needed to Pay for Wolf Education Proposals, $52,200 Exemption
Total Taxable Income With Exemption $170,419,261,600
Tax Rate 8.85%
Total Revenue Raised $15,082,104,652
Revenue Under Current Tax Structure $10,442,963,000
Additional Revenue Under Wolf Plan $4,639,141,652
Source: Pennsylvania Department of Revenue, Income Tax Statistics

While this model would reduce the tax bill for the vast majority of those making less than $80,000, it would result in dramatically higher taxes for families and small businesses earning more than that. The tax burden would rise by $1,160 for a household with $100,000 in income, and $3,472 for a household making more than $140,000. 

Income Level





Tax Bill at Current Rate





Tax Bill at New Rate (With exemption)





Increase in Tax Bill





What may be most astounding is the impact on Pennsylvania’s economic competitiveness.

Currently only the nine states with no income tax, or an income tax just on investment income, have a lower top rate than Pennsylvania.

But under this plan, with an 8.85 percent rate, Pennsylvania would jump 33 other states. As a result, we’d have the 8th highest state income tax rate in the country.

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Access to Care Still a Burden to Bear


Need to see a dermatologist in Philadelphia? If you are on Medicaid you'll have to wait a staggering 49 days, according to recent Merritt Hawkins survey. This is no anomaly: Medicaid has earned a terrible reputation when it comes to access to care. Patients find it diffcult to find doctors because Medicaid reimbursment rates are significantly lower than private insurance rates and sometimes lower than the cost of care itself.

Given these issues, it's of little surprise that insurance companies are having a hard time signing up medical providers for the new Healthy PA insurance plans. Alex Nixon at the Tribune Review explains:

Highmark Inc., the state's largest health insurer, said it won't participate in Corbett's Healthy PA program because it couldn't sign enough doctors to its network.

UPMC Health Plan is reducing the number of regions where it is participating from five to four, said John Lovelace, president of the health giant's Medicaid products unit.

The original Healthy PA waiver asked the federal government to place newly-eligible adults in private plans, with higher reimbursments, paid for by taxpayers. The federal government denied that request. In fact, they denied the vast majority of the administration's 24 requests to improve Medicaid. Now the state is overseeing the creation of new Medicaid managed care plans, and once again, the federal government is standing in the way of quality care.

Instead of expanding a broken system, Pennsylvania should help expand the supply of providers by incentiving more charity care and loosening licensing laws to allow highly trained providers, like nurse practitioners, open their own offices. This is how we can truly improve access to care for needy Pennsylvanians.

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Unions Leaders Put Politics Before Health Care


The recent decision by the Philadelphia School Reform Commission (SRC) to cancel the school district's contract with the Philadelphia Federation of Teachers (PFT)—and require teachers to pay up to 13 percent of their health care premium—has been met with stunning hyperbole from both state and national union leaders.

According to the SRC, this will save $54 million this school year alone—money that can go back into the schools—and upwards of $70 million each year thereafter. Yet PFT President Jerry Jordan compared the SRC action to treating teachers like "indentured servants."

With an average teacher salary of nearly $71,000, though, it would be hard to mistake a Philadelphia teacher for a forced laborer—especially when the average household income is $37,000 in the city. Indeed, average Philly teacher salaries are higher than their counterparts in Chester ($63,600) and Delaware ($68,600) counties, and are not far behind those in Montgomery ($76,600) and Bucks ($80,900).

Keep in mind that the only change the SRC is making is asking teachers to pay part of their health care costs. The decision to impose modest premium sharing comes after years of deadlocked negotiations with the PFT leaders, who refused to budge one inch when it comes to health care payments.

Philadelphia teachers currently do not pay for their health benefits, and even under the new plan would pay far less than the average working Pennsylvanian, who pays 20 percent for individual or 23 percent for family coverage.

Is the PFT really concerned with protecting teachers, or maintaining its slush fund (the PFT "Health and Welfare Fund") which currently administers the health care plans?

Randi Weingarten, President of American Federation of Teachers (AFT)—the Washington, DC-based mother-ship of the PFT— had an equally alarmist response to the SRC, calling their decision "the most egregiously political action I’ve seen in a school district."

Weingarten would know. Given her union's heavy involvement in Pennsylvania politics, she is an experienced political activist.

Both the AFT and PFT have taken full advantage of their unique political privileges to spend massive sums of money canvassing and cheerleading for Democratic gubernatorial candidate Tom Wolf. In early September, the PFT spent $70,000 for one minute of television advertising attacking Gov. Tom Corbett during an Eagles football game.

Surely $70,000 per minute could go a long way toward health care premiums—if the PFT were more interested in promoting the interests of its members than using forced dues to influence elections.

Furthermore, the AFT gave $500,000—directly from union dues—to the PA Families First 'Super PAC,' which has been on the air further promoting the lie that Gov. Corbett cut state education funding. All told, AFT is poised to spend more in 2014 than in any other election cycle.

Years of mismanagement, lagging academic performance, and declining enrollment have left Philadelphia in the unenviable position of making difficult choices to keep its schools financially viable. Union leaders are pretending to defend teachers with their rhetoric, but their actions demonstrate how they are exploiting teachers for political gain.

High-performing educators—and the children they teach—deserve better from union leadership. Given the PFT's refusal to negotiate in good faith for nearly two years, the SRC's action is a reasonable, necessary step for the School District of Philadelphia—despite the loaded rhetoric from hyper-political union bosses.

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How Much are Pension Costs Affecting Schools?


My colleague Katrina has an op-ed in The Patriot-News today explaining the gravity of the state pension crisis and why action needs to happen now.

As Katrina points out, pension costs are the primary cause of property tax increases. Under Act 1, school districts must seek voter referendum to increase taxes above an index tied to inflation—unless they get an exemption from the state Department of Education. Those exemptions are limited, but over the past five years, 98 percent of school districts that received exemptions for tax increases cited pension costs.

Act 1 Property Tax Increase Exemptions
2010-11 2011-12 2012-13 2013-14 2014-15
Total School Districts with exemptions granted 133 228 197 171 164
Total with exemptions for pension contributions 128 221 194 169 163
Pension Percentage 96.2% 96.9% 98.5% 98.8% 99.4%
Source: PA Department of Education

Why are pension costs driving up school property taxes?

Pennsylvania's two pension systems have a combined $50 billion unfunded liability, or debt ($32 billion for the pension system covering school employees). This debt was created by a combination of factors: increasing benefits in 2001; delaying payments in 2001, 2003 and again in 2010; and stock market losses.

Under Act 120, lawmakers voted to delay (by phasing in) higher pension contributions. As a result, school districts have already seen a massive increase in costs, and the problem will continue to get worse.

Pennsylvania schools Pension Contributions

School districts' pension contributions rose from $515 million in 2008-09 to an estimated $2.4 billion this school year, a $1.9 billion increase. To put that in perspective, the increase comes to more than $600 per homeowner in Pennsylvania. Or put another way, the increase represents the salary (using the state average of $63,000) of more than 30,000 teachers.

In the next five years, the projected increase will be just as painful. School districts will have to pay an additional $1.7 billion annually to pay off our pension debt. That increase is another $550 per homeowner, or the salaries of 27,000 teachers.

And that is merely the impact on school districts. Meanwhile, pension costs for state workers are going up by almost the same rate, and local governments face their own pension crises.

Those costs will be borne by some combination of higher taxes, cuts in other programs, and layoffs. But it is hard to understate just how significant this crisis is to homeowners, teachers, students, and taxpayers.

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The Commonwealth Foundation is Pennsylvania's free-market think tank.  The Commonwealth Foundation crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.