Harmed by “Hold Harmless”

DECEMBER 15, 2014  | by JAMES PAUL

There are few more egregious examples of political doublespeak than Pennsylvania’s “hold harmless” provision for state education funding.

Hold harmless guarantees each school district receives no fewer state education dollars than it received the previous year—regardless of changes in district enrollment. This may sound appealing in theory, but it is actually quite problematic in practice. While the policy ostensibly exists to prevent school districts from being harmed by reduced funding, it has, in fact, brought real harm and inequity to hundreds of districts across the commonwealth.

Consider that during the 2012-13 school year, state revenue per student in Pennsylvania's 20 fastest-growing districts was slightly more than $3,000. In contrast, state revenue per student among those districts with the largest decreases in enrollment was nearly $10,000. Put another way, school districts with declining enrollment received more than three times the state funding per student than growing districts.

20 Fastest Growing PA Districts 1996-2013

District

County

Growth

2013 State
Revenue Per Student

Garnet Valley

Delaware

119%

$2,877.47

Perkiomen Valley

Montgomery

89%

$2,826.65

South Fayette Township

Allegheny

86%

$2,698.31

Spring-Ford Area

Montgomery

83%

$2,764.82

Pine-Richland

Allegheny

74%

$2,686.28

New Hope-Solebury

Bucks

61%

$2,777.26

Central York

York

60%

$2,555.85

Oxford Area

Chester

56%

$4,538.11

Avon Grove

Chester

53%

$4,340.74

Daniel Boone Area

Berks

53%

$4,282.96

Mars Area

Butler

52%

$3,217.76

Lower Moreland Twn

Montgomery

48%

$2,888.73

Kennett Consolidated

Chester

47%

$2,842.80

Jim Thorpe Area

Carbon

45%

$2,885.29

Central Bucks

Bucks

45%

$2,401.97

Tredyffrin-Easttown

Chester

44%

$2,211.83

Owen J Roberts

Chester

41%

$3,120.39

Peters Township

Washington

40%

$2,608.30

Wilson

Berks

39%

$2,784.51

Northeastern York

York

38%

$4,602.52

Average Top 20

59%

$3,095.63

20 Fastest Shrinking PA Districts 1996-2013

District

County

Growth

2013 State
Revenue Per Student

McGuffey

Washington

-30%

$7,979.42

Sullivan County

Sullivan

-30%

$6,208.08

Southeastern Greene

Greene

-31%

$11,399.85

Warren County

Warren

-31%

$7,881.19

Jeannette City

Westmoreland

-32%

$9,242.87

Ligonier Valley

Westmoreland

-32%

$5,611.11

Susquehanna Community

Susquehanna

-32%

$10,778.41

Union

Clarion

-32%

$11,529.47

Punxsutawney Area

Jefferson

-32%

$9,524.06

Austin Area

Potter

-32%

$11,885.68

Galeton Area

Potter

-33%

$7,903.20

Cranberry Area

Venango

-33%

$8,525.50

Farrell Area

Mercer

-33%

$12,197.76

Marion Center Area

Indiana

-34%

$10,288.15

Northern Potter

Potter

-35%

$10,904.21

Allegheny-Clarion Valley

Clarion

-35%

$11,479.26

Purchase Line

Indiana

-35%

$12,383.83

Johnsonburg Area

Elk

-36%

$11,175.29

Salisbury-Elk Lick

Somerset

-39%

$9,555.59

Cameron County

Cameron

-39%

$10,600.96

Average Bottom 20

-33%

$9,852.69

A new policy brief from Temple University's Center on Regional Politics finds that Pennsylvania’s education funding system is out of sync with the rest of the nation.

While 11 other states provide a hold harmless guarantee to school districts, no other state in the nation also guarantees districts with declining enrollment a share of new education revenues.

Not only do Pennsylvania school districts retain baseline funding levels—regardless of student enrollment and student need—but declining enrollment districts are guaranteed a portion of new education revenues. The authors describe this practice as “hold harmless plus.”

Hold Harmless

My colleague Nate Benefield and I recently offered testimony to the Basic Education Funding Commission, where a large portion of our remarks focused on transitioning away from hold harmless in favor a weighted student funding (WSF) model.

Currently, if a Pennsylvania student moves from one district to another, state funding does not follow the child to her new school.

Above all else, a weighted model would distribute funds that truly follow each child. WSF also accounts for individual student need by providing additional dollars for low-income and English language learners.

The Funding Commission presents an important opportunity to establish a funding formula that is equitable, rational, and transparent. The first step for lawmakers should be to phase out hold harmless, once and for all.


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Mary's Law: Protecting Teachers and Taxpayers

DECEMBER 12, 2014  | by NATHAN BENEFIELD

"Mary's Law," new legislation that will soon be introduced by State Senators John Eichelberger and Gene Yaw—along with 10 other senators—would end the taxpayer-funded collection of political money.

Update: A companion piece will soon be introduce in the PA House, sponsored by Representative Cutler and Emrick, along with Evankovich and Knowles.

Mary's Law is named after a PSEA member from Williamsport who saw the union use not only her dues, but her name in endorsing a candidate she didn't support. You can watch Mary's story here:

Mary's Law, also referred to as "paycheck protection," would prohibit public collection of all political money for government unions. Currently, state and local governments in Pennsylvania collect explicitly political funds (both campaign contributions and dues that can be used on politics) on behalf of government unions. This mix of politics and public resources is illegal in any other context.

Mary's experience powerfully demonstrates why we need paycheck protection, both for workers, and to remove the unfair political privilege government unions have.

Our updated analysis of union political spending in the 2014 election showed government unions spent $7.7 million in direct contributions to candidates during the election cycle. Additionally, government unions spent millions more in support of candidates from union dues—both in contributions to "SuperPACs" which run TV and radio ads endorsing candidates, and in direct union action, including mailers and commercials, supporting candidates.

Public resources should never be used for politics. We need lawmakers to enact Mary's Law to protect teachers like Mary and taxpayers across across Pennsylvania from being exploited for political gain. Click here to write your lawmakers about this critical issue.


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Government Falls Short in Subsidizing Job Creation

DECEMBER 12, 2014  | by BOB DICK

"Incomplete, misleading, and unreliable"—that is how an Auditor General report described Department of Community and Economic Development (DCED) efforts to ensure transparency and accountability in the use of your tax dollars.

The criticisms did not end there.

The report, released on Wednesday, analyzed five "job creation" programs under the purview of DCED. Here are the five major findings:

  • DCED did not set any performance goals or measurements of success for its programs.
  • DCED penalized businesses that didn't create the promised jobs.
  • The DCED did not verify if businesses that were awarded taxpayer-financed loans actually created or retained jobs.
  • DCED's annual reports on these programs proved to be inaccurate, misleading and unreliable.
  • While the DCED has improved its monitoring in some areas, it does not have adequate monitoring procedures for all of its programs.

According to the Auditor General's analysis, 44 percent of businesses that were awarded taxpayer funds did not reach their goal in new job creation. As Pennsylvania Independent points out, this cost taxpayers more than $93 million.

These disappointing findings should spark a debate about "job creation" policies. Government should not pick winners and losers in the economy and decide what businesses receive direct taxpayer support. This is neither an equitable nor an effective way to create job growth.

By eliminating corporate welfare and lowering the overall tax burden on all businesses, Pennsylvania can become more competitive.

It's also one way to solve our state's budget woes. As lawmakers look to balance a deficit of nearly $2 billion this upcoming fiscal year, eliminating the more than $440 million in grant and loan programs is a great place to start.

Corporate Welfare Grant & Loan Programs 2014-15 Budget (Thousands)
General Fund
Agricultural Research $787
Agricultural Promotion, Education and Exports $250
Ben Franklin Tech Development Authority Transfer $14,500
Commonwealth Financing Authority Transfer $77,755
Council on the Arts $898
Discovered in PA Developed in PA $5,000
Food and Marketing Research $494
Grants to the Arts $8,590
Hardwoods Research and Promotion $350
Industry Partnerships $1,813
Infrastructure and Facilities Improvement Grants $19,000
Keystone Communities $6,150
Keystone Works $100
Livestock Show $177
Marketing to Attract Business $2,008
Marketing to Attract Tourists $7,264
Municipalities Financial Recovery Revolving Fund Transfer $4,000
New Choices/New Options $500
Open Dairy Show $177
Partnerships for Regional Economic Performance $11,880
Pennsylvania First $20,000
Pennsylvania Race Horse Development Fund $252,583
Tourism-Accredited Zoos $550
World Trade PA $5,824
Youth Shows $140
Total $440,790

Previously, we calculated that by eliminating economic development subsidies, including targeted tax breaks, Pennsylvania could lower the Corporate Income Tax rate from 9.99 to 7.08 percent.

Instead of having the second-highest rate in the nation, we would suddenly be lower than 21 other states, which would certainly make the Keystone State a more attractive place to move or expand a business—and be a more effective way to create jobs.


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Audio: Could Charter Conversion be in York City's Future?

DECEMBER 10, 2014  | by JOHN BOUDER

York City School District—financially distressed and second-to-last in the state in student achievement—may be in for some much-needed change in the coming weeks. After two years of obstruction from the local school board and teachers’ union on more modest measures, the state has finally petitioned for receivership of the troubled district.

Tomorrow, there will be a hearing in York to help inform a judge’s decision to grant the state’s receivership petition. If granted, all of York's district schools will be converted into to charters—one of only a few districts in the country to take such a step.

Today, CF's James Paul joined The Gary Sutton Show on WSBA 910 to provide background on how we got here, who has been blocking other attempts at reform, and what this all could mean for York city students and families.

Listen to a portion of the show below and read James’ recent op-ed “Is Second Worst Good Enough for York Students?” for more.

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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They're Complaining Because We're Convincing

DECEMBER 9, 2014  | by CHARLES MITCHELL

This morning’s Harrisburg Patriot-News includes an item that gives unfortunate credence to tired and lame allegations made by critics who are upset with CF’s effectiveness about our research on Governor-elect Wolf’s tax proposals.

My colleague Cindy Hamill does an excellent job in the piece explaining the lengths to which CF goes to obey all applicable laws and regulations. Since this is my responsibility, I take it especially seriously. I could not be prouder of the job our colleagues do in this regard.

Not only that, the primary critic quoted in the Patriot, Jan Jarrett, ought to know better than to make such reckless allegations. In 2012, she left the leadership of a formerly influential advocacy group after admitting to misreporting her group’s activities to the IRS and improperly spending taxpayer money.

Finally, it simply isn’t true that the Wolf campaign “refuted [CF’s] number” (as the article says) regarding the Governor-elect’s plans. As Nate Benefield recently explained on this blog, CF’s research is the most accurate information out there to make sense of the vague promises we heard during the campaign. That’s our role—not to take sides in elections, but to figure out the truth and how it will affect Pennsylvanians’ pocketbooks.

We will continue to provide valuable, timely, and accurate policy analysis (consistent with our guarantee of quality scholarship) proudly and in full compliance with the law.


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More Choice on the way to Philadelphia?

DECEMBER 9, 2014  | by JAMES PAUL

Tens of thousands of Philadelphia students languishing on charter waiting lists have reason to hope. For the first time in seven years, the School District of Philadelphia will consider applications from new charter schools.

This week the district is receiving presentations from 40 applicants who will make the case for additional educational options. A second set of hearings are scheduled in January where applicants will be reviewed and questioned by district officials. Ten of the 40 proposed schools have an explicit focus on the science, technology, engineering and math (STEM) fields.

What prompted Philadelphia to break its seven-year charter lock-out? Tucked away in the recent cigarette tax legislation was a provision requiring the district to accept annual applications from new charter schools.

Seemingly endless wait lists—combined with the 62,500 students currently enrolled in brick and mortar charter schools—are evidence of the sector’s popularity in Philadelphia. Enrollment in district-run schools has sharply declined over the last decade as more families opt for schools of choice.

On the whole, Philadelphia charter schools are performing well. The average city charter school outperformed the average city district school in 2012-13. What’s more, an analysis by Philadelphia School Partnership reveals that the charter sector is succeeding in serving low-income students: Of the 17 city schools with passing State Performance Profile scores and enrollment of least 80 percent economically disadvantaged students, 12 are run by charter operators.

Given their immense popularity, long waitlists, and encouraging performance, it’s a shame that new charter schools have been locked out of the application process for so long—but it's no surprise. Granting school districts the power to authorize a new charter school is like asking McDonalds to green-light the construction of a new Wendy’s next door. Establishing a high quality statewide authorizer in the commonwealth would be a marked improvement over the current policy. 

It remains to be seen whether any new charters will be approved, but at least there's a chance for more children to find better, safer schools.


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Spending Restraint, Reform Needed to Balance Budget

DECEMBER 5, 2014  | by ELIZABETH STELLE

Pennsylvania State Budget

With an estimated $2 billion "planning deficit" announced this week, one might believe crafting a balanced budget that doesn’t raise taxes is impossible. Yet earlier this year, we released a report identifying reforms that could save taxpayers billions of dollars.

There are many areas where state spending isn't helping Pennsylvanians. For example, over the last eight years, the commonwealth has spent more on so-called economic development than any state in the country, according to the Council for Community and Economic Research. However, such spending has been relatively ineffective. States that spent the most on economic development saw their economies grow at a slower rate than states spending the least on such initiatives.

The root of the commonwealth's budget woes are mandated programs with ballooning costs—costs first ignored by Governor Rendell. Chief among those are increases in pension payments—estimated to grow by $1.7 billion over five years—and the enormous Medicaid program (with $5.8 billion just in General Fund costs), which is set to grow by 3.5 percent next year.

Years of overspending, not "right-wing ideology," have resulted in our current fiscal predicament. 

PA Spending vs Revenue Chart 2014

Senate Republicans got it right when they noted,

The Governor's Mid-Year Budget Briefing shows that mandated spending cost drivers, such as pensions and Medicaid, must be addressed in order to repair the Commonwealth's fiscal balance.

Balancing the budget without tax increases won’t be easy, but it is possible if officials are willing to take on the spending drivers that have been squeezing taxpayers for decades.


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Economic Freedom Key to a Prosperous Pennsylvania

DECEMBER 2, 2014  | by ELIZABETH STELLE

Pennsylvania Economy

Pennsylvania is the 27th freest state in America according to the Fraser Institute's annual Economic Freedom of North America report, which is hardly news to be celebrating.

States were ranked based on their size of government, level of taxation and labor market restrictions. Texas and South Dakota topped the US list, while Maine ranked last.

Why is economic freedom important? Higher levels of economic freedom directly correspond with more job opportunities and a higher standard of living.

According to the study, the most-free states averaged $55,000 per-capita in 2012 gross domestic product compared to roughly $48,000 for the least-free states. In other words, more economic freedom translated to a $7,000 boost in income per person.

When you consider the entire continent, Pennsylvania ties for the 30th freest state or province. Texas is the only US state to make the top five (the rest are Canadian provinces). Over the past decade, economic freedom has declined in both the United States and Canada, but the decline has been more gradual in Canada.

If Governor-elect Wolf and the new state legislature truly seek a fresh start for the commonwealth, they must take steps to restore economic freedom.


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Teacher Pays for Politics She Never Supported

DECEMBER 1, 2014  | by PRIYA ABRAHAM

Just four days before the November mid-term elections, college professor Mary Trometter got a letter from her teachers union, the Pennsylvania State Education Association. Well, to be precise—Trometter's husband got a letter from the PSEA.

Puzzled as to why the union would send anything to her spouse, who isn't a member, Trometter opened the letter. What she saw infuriated her.

The letter was an election mailer, telling Trometter's husband to "join Mary in voting for Tom Wolf for governor on November 4.” Trometter had never given permission for her name to be used in such electioneering, nor given any sign as to how she would vote. After years of watching the PSEA's member magazine, the Voice, grow more political and less professional, the mailer was the last straw.

Because the mailer was funded by the National Education Association's Super PAC, which can receive an unlimited amount of union dues to support candidates, Trometter's union dues likely helped to fund the letter.

Without doubt, Mary's union dues have for years funded political activites—$3.6 million alone by the PSEA in 2013-14. Government unions, not corporations or gas drillers, are the major spenders in elections. This year alone, the seven largest poured $7.3 million directly into electing candidates, with $2.7 million of that going to Governor-Elect Tom Wolf.

Undeterred by such political muscle, Trometter is standing up for her individual rights. She has filed a charge with the Pennsylvania Labor Relations Board, on the grounds that such use of union dues contravenes state law. And many media outlets, from the Pittsburgh Tribune-Review, to the Pennsylvania Independent, to the Associated Press, are telling Trometter's story.

Trometter's experience demonstrates powerfully why we need paycheck protection, both for workers, and to remove the unfair political privilege government unions have. You can read Mary's full testimonial on why she opposes such union politics at Free to Teach, and watch her explain why she's fighting in the video below.


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EPA Rule Would Increase PA Energy Bills by $1,000

NOVEMBER 26, 2014  | by GORDON TOMB

The war on coal will be a catastrophe for consumers, according to a new analysis of energy prices under new U.S. Environmental Protection Agency (EPA) regulations.

According to an Energy Ventures Analysis report, combined annual gas and electricity bills in Pennsylvania will increase by more than $1,000, or 46 percent by 2020 compared to 2012.  Industrial power rates alone will increase by 62 percent.

The November report—"Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector"—says that Pennsylvania is among five states that "would bear the greatest increases in annual residential power bills." The others are Texas, Mississippi, Maryland and Rhode Island.

Commissioned by Peabody Energy, a St. Louis-based coal company, the report calculates state-by-state effects of a number of EPA regulations, including the Clean Power Plan to reduce carbon dioxide emissions.

Nationally, gas and electricity costs for all customers will increase by $284 billion, or 60 percent, says Energy Ventures.

The increase will result "in large part due to an almost 135 percent increase in the wholesale price of natural gas" as EPA regulations force coal out of use and drive up the demand for gas, says the report.

Numerous business groups and politicians are objecting to the Clean Power Plan, including Pennsylvania’s Democratic senator, Bob Casey, who says that the proposed rule for CO2 emissions, "imposes a disproportionate and unfair burden on Pennsylvania." And the Supreme Court recently announced it will review the regulations in the spring.

Energy Ventures also takes into account the economic effect of rules recently implemented to regulate ozone and particulate matter, the interstate transport of air pollution, mercury, and haze in public parks.

"Our analysis is the first to fully examine the combined economic impacts of the EPA's long list of proposed and finalized regulations on the electric power industry," says Seth Schwartz, Energy Ventures president. The Clean Power Plan is based on flawed assumptions, he says.

From skyrocketing energy bills to killing green jobs to raising manufacturers' cost, the EPA’s actions are harming all Pennsylvanians.


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