Will Lower Standards Help Pa. School Performance?

DECEMBER 9, 2016  | by JAMES PAUL

Pennsylvania’s primary tool for grading schools—the School Performance Profile (SPP)—is being overhauled. The current SPP is not particularly straightforward, but it’s based mainly on test scores and academic growth. At the direction of Gov. Tom Wolf, the revised SPP will become more complicated, less reliant on tests, and more reliant on “holistic” measures of school success.

According to the Department of Education, here’s what we can expect from a more holistic SPP:

  • Increasing the weighting of value-added measures
  • Measuring English language acquisition among non-native speakers, not simply performance on a test of grade level standards
  • Incentivizing career awareness instruction beginning at the elementary level
  • Increasing the weighting of rigorous course offerings such as AP, IB, and “dual enrollment”
  • Allowing districts to include locally-selected reading assessments and math as additional snapshots of student progress
  • Awarding extra credit to schools graduating students with at least one industry recognized credential

It’s too early to know exactly how this will change the SPP’s 0-100 scale used to compare performance in buildings across the state. While some of these items may be worthwhile, the overall trend is to de-emphasize test scores, lower standards, and award credit for course offerings and credentials (to say nothing of their impact on achievement).

Wolf’s administration is following through on an earlier promise to weaken the SPP. While this may result in higher scores for Pennsylvania schools, it will do little to boost performance in the classroom.

Standardized testing is a contentious topic among parents and educators. Are tests useful? Which test should we use? How often should we test? These questions are fair game for debate and deserve thoughtful consideration. But it’s hard to imagine eliminating testing as the solution to Pennsylvania’s educational problems.

Tests provide a valuable benchmark to measure student proficiency. They provide parents with important information, and they underscore gaps in achievement between different groups of children. [Of course, to the maximum extent possible: the form, frequency, and style of testing should be determined by schools and localities—not Harrisburg or Washington.]

A better approach than Wolf’s would move Pennsylvania to an A-F school grading system. This would be easier to understand than a convoluted SPP. Already employed by over a dozen states, A-F ratings would deliver transparency and accountability—inspiring all public schools in the commonwealth to make the grade.  


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No Doubt About it: PA has a Severance Tax

DECEMBER 8, 2016  | by ELIZABETH STELLE

tax

What do Christmas festivities, a new office building, and a Ford Explorer have in common? They were all paid for with impact fees on natural gas, raising doubts about the necessity of imposing higher taxes on the industry.

A recent audit of local government spending revealed some officials aren't prioritizing the costs related to natural gas drilling or, worse, the expenses associated with drilling were exaggerated from the beginning.

Back in 2012, when the impact fee was being implemented, we questioned the need for more revenue to offset the local costs of natural gas drilling:

Much of the revenue generated through Act 13 isn't used to address drilling impact—Marcellus Shale isn't responsible for deteriorating bridges and parks in midstate counties where drilling doesn't even occur. Act 13 sustains unrelated programs such as Growing Greener and is littered with corporate welfare like subsidizing rail freight assistance and natural gas vehicles.

The Auditor General's report is proof that such questions were well warranted. It's now clearer than ever that the impact fee is addressing far more than drilling impacts. It is clearly a tax.

Instead of debating the wisdom of the current impact fee (tax), Governor Wolf and others continue to push for an additional natural gas tax. Yet, the IFO estimates the current impact fee is equivalent to a 6.9% severance taxhigher than severance taxes in Louisiana, Wyoming, and West Virginia.

With natural gas prices still climbing from record lows and the industry shedding a third of its jobs in 2016, this audit should put a final nail in the severance tax coffin. Any further effort to raise energy taxes would be a transparent attempt to balance the budget on the backs of working people.

As we've seen, raising niche taxes to fill budget holes is a losing strategy. Only six months ago lawmakers passed new taxes on digital downloads, vape shops, and cigarettes. The result? A estimated $524 million budget shortfall.

Let's avoid repeating our mistake and acknowledge the truth: imposing an additional tax on one industry will do nothing to help solve the state's budget problems. 


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What Pennsylvania's Budget Trends Mean for You

DECEMBER 8, 2016  | by BOB DICK

State government is growing at a startling rate. Since 1970, spending has risen by $4,010 per person—an inflation-adjusted increase of 189 percent. This is one of many findings in our latest publication, Tracking State Budget Trends.

The explosion in spending may come as a surprise to some, given the repeated claims about austerity in government—particularly in education, where cuts to programs are purportedly the norm. The facts reveal just the opposite. Education spending is at its highest level ever. What have Pennsylvanians received in return? No noticeable improvement in academic achievement and higher property taxes.

Education is one of the four major spending categories making it increasingly difficult for the legislature to enact sound budgets. The other three—corrections, debt service, and human services—have all grown tremendously over the last decade. Spending in all four categories increased by $11.8 billion, while spending in the remaining categories declined by $512 million.

That’s not to say spending outside the “Big Four” should be ignored. On the contrary, Pennsylvania’s corporate welfare programs need to be done away with to create a fair economic playing field where hard work and entrepreneurship—not political savvy—determine the makeup of the marketplace.

Still, eliminating corporate welfare is not enough to fix what ails Pennsylvania’s fiscal health. Significant reforms to the Big Four are a financial and moral imperative. Left unchecked, these categories will not only drive up spending but will trap more Pennsylvanians in our broken education, corrections, and welfare systems.

Even the people living outside these systems have a stake in their improvement. Their costs have contributed to the state’s high tax burden, which reduces the take home pay of working people and diminishes their prospects for better economic opportunities. In 1991, Pennsylvania’s tax burden was the 24th highest in the country. Since then, the burden has risen to 15th highest—a direct result of spending left on autopilot.

Pennsylvania’s trends—whether they be economic or fiscal—are worrisome. But they are reversible. If policymakers adopt innovative approaches to complex policy problems, they can clear the way for people to achieve their potential, which is the key to unleashing prosperity in Pennsylvania.

In the coming weeks, we’ll be releasing a new report to unlock this potential and help put Pennsylvania back on solid fiscal ground. Stay tuned.


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Magnum, P.I. Comes to Bethlehem

DECEMBER 7, 2016  | by JAMES PAUL

Bethlehem School District employs private investigators to track down students with fraudulent home addresses. According to The Morning Call, DBM Investigations and Consulting has identified 35 students fraudulently enrolled in Bethlehem schools who will now be expelled:

Superintendent Joseph Roy told the board that DBM used multiple methods to determine whether students and their families actually live in the district, such as looking at public records and knocking on doors. In some cases, an investigator staked out houses to see who came and went, Roy said.

"For people who are purposefully misleading us and lying about their address, that requires more intensive investigation," Roy said. "But we're very, very pleased with the result at a really small cost to the district."

Roy said the district is not pursuing any financial compensation or criminal penalties against the offending families, though it legally could have.

Why is this happening? Two reasons.

First: Nearby Allentown School District limits the number of Allentown students permitted to enroll in charter schools. In so doing, Allentown owes less money to charters and forces the charters to enroll students from other districts. 

This doesn’t change the fact that parents in Allentown are desperate for charter schools. So they submit paperwork with phony Bethlehem residences—thereby requiring the charter school to bill Bethlehem instead of Allentown.

Secondly, The Morning Call explains that some of the fraudulent addresses are from parents who want to enroll in Bethlehem public schools but do not live within district boundaries.

What a sad state of affairs. Unfortunately this nothing new in Pennsylvania—or elsewhere in the country—where districts are increasingly cracking down on “education thieves.”

To be clear: families should not be celebrated for knowingly submitting false paperwork. But stories such as these demonstrate the lengths parents will go when they are denied educational choice.

Further, they underscore the need to free children from arbitrary school district boundaries. Whether that means expanding access to charter schools, increasing the caps on Pennsylvania’s private scholarship programs, or enacting education savings accounts—all families deserve multiple educational options.

Be thankful if you live in a district with a high quality public school—or have the means to afford private or homeschooling alternatives. Beyond that? Think about supporting school choice for all children in Pennsylvania. Where you live should never determine the quality of your education.


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PA's Conflicted Relationship with Natural Gas

DECEMBER 6, 2016  | by GORDON TOMB

The government giveth, and the government taketh away. Nowhere is this more apparent than in Pennsylvania’s relationship with the natural gas industry.

On the one hand, Gov. Wolf offers a Pipeline Investment Program that would provide $24 million in matching grants to businesses, schools and hospitals for connections to gas pipelines.

On the other, the Pennsylvania Department of Environmental Protection (DEP) proposes new rules on already highly regulated production activities. The gas industry filed a legal challenge to some of the rules. They claim the regulations will cost $2 billion a year “without providing meaningful environmental benefits.” Excluding initial start-up costs, DEP estimates the maximum annual cost of the regulations to be $31 million, or about $24,000 a well.

Meanwhile, Braskem America, a plastics manufacturer, chooses Texas over Marcus Hook, Pa., for the location of a $500 million plant because of Pennsylvania’s lack of pipeline capacity to deliver feedstock.

At the same time, pipeline projects are missing in-service targets due to regulatory delays.

Delayed by about 18 months is the start-up of Sunoco Logistics’ $2.5 billion Mariner East 2 project, which will transport natural gas liquids from western Pennsylvania to Marcus Hook. The company is responding to requests from the DEP for additional information on permit applications.

In New York, the Constitution Pipeline, has languished since April when New York regulators denied the project a water-quality permit. The denial came four months after New York Gov. Cuomo had approved $2 billion in economic-development grants that included an extension from the pipeline to a manufacturing plant.

Pennsylvania should learn from these missed opportunities and stop efforts to finance pipeline extensions to private businesses with tax dollars. After all, Governor Wolf just lamented policies that put well-connected businesses before taxpayers:

" . . . too often, special interests and the well-connected are put before Pennsylvania families and the middle class."

So why not return to citizens the $24 million being transferred from an “underutilized” fund for alternative energy projects? Instead of doling out politically-selected grants, the Governor should focus on ways to balance safety with enhancing the competitiveness of one of the state’s most promising enterprises.

In general, state government is too focused on doling out taxpayer cash and promulgating regulation than on fostering an environment for good-paying jobs and economic growth.


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Hits and Misses from the 2015-16 Legislative Session

DECEMBER 5, 2016  | by ELIZABETH STELLE

That's a wrap.

The 2015-16 legislative session is officially in the history books. Despite a $650 million tax hike, Pennsylvanians have a lot to celebrate from the past two years. From elimination of the Capital Stock and Franchise Tax to wine modernization, recent events signal Pennsylvania’s political leaders may be ready to start tackling the broken systems that are driving state spending far faster than Pennsylvania’s economy.

Here are the top seven taxpayer victories from the 2015-16 legislative session:

  1. Five tax hike proposals defeated in 2015. During his first year in office, Gov. Wolf proposed five different broad-based tax hike plans, including higher personal income, sales, and tobacco taxes; a natural gas severance tax; and more. The first proposal would have increased a family of four's tax burden by $1,450. Ultimately, the governor allowed a no-tax-hike 2015-16 budget to become law.
  2. Capital Stock and Franchise Tax elimination. Originally set to expire in 2011, this business tax, combined with the 2nd-highest corporate net income tax rate in the nation, discouraged job creation and contributed to PA’s poorly ranked business climate.
  3. No broad based tax hikes in 2016. The legislature refused to entertain sales or income tax increases. Unfortunately, lawmakers implemented $650 million in narrow-based tax hikes.
  4. Increased labor union accountability. Until last year, union leaders and members could legally stalk, harass, and threaten to use weapons of mass destruction when involved in a “labor dispute.” Act 59 of 2015 closed this loophole. In early 2016, Act 15 of 2016 gave taxpayers the ability to see the costs of government union contracts before they go into effect.
  5. Funding students, not systems. The 2016-17 budget increased the Educational Improvement Tax Credit by $25 million, giving more students the opportunity to escape violent and failing schools. The budget also includes a student-based funding formula, directing any funds above 2014-15 levels to schools based on current enrollment.
  6. Liquor modernization. In a small step forward, restaurants and grocery stores can now sell wine, and beer distributors gained additional freedoms, like the ability to sell six-packs.
  7. Honorary mention: Uber and Lyft legalization. Despite a contentious relationship with the Public Utility Commission, lawmakers finally made the ridesharing services Uber and Lyft permanently legal in Philadelphia and across the commonwealth.

The last two years also saw some missed opportunities:

  1. An unbalanced 2016-17 budget. Lawmakers passed—and Gov. Wolf let become law—a spending bill without revenue to pay for it. Despite $650 million in tax hikes, spending will still exceed revenue projections, according to the Independent Fiscal Office.
  2. Pension reform. In June 2015, lawmakers passed landmark legislation to place new state employees and public schoolteachers in a defined-contribution retirement plan, similar to a 401(k). Gov. Wolf vetoed the legislation.
  3. Liquor privatization. Both chambers passed complete liquor privatization, which Gov. Wolf promptly vetoed.  
  4. Paycheck protection. In October of 2015, the state Senate passed SB 501 to ban the use of public resources to collect political union dues and campaign contributions. The legislation stalled in the House.
  5. Medicaid expansion. Despite opposition from the legislature in 2014, Gov. Wolf rewrote a federal waiver to expand Medicaid under the Affordable Care Act with little opposition in 2015. At the time, officials predicted about 500,000 new enrollees and an infusion of federal cash that would stimulate the economy. To date, rolls have grown by more than 670,000, while the commonwealth spent $500 million last year and $240 million this fiscal year.
  6. Seniority reform. Gov. Wolf vetoed legislation to protect great teachers by ensuring that during furloughs, teachers are retained based on effectiveness, not simply seniority.
  7. Corporate welfare reductions. Pennsylvania spends more than $800 million per year on myriad tax credits, grants, and special loans to private corporations. Yet, we continually rank near the bottom in economic growth. While a few bills to reduce these loans made progress, the legislature has, by and large, failed to recognize these programs don't work.

The commonwealth's financial troubles are serious and systematic. In the new year, lawmakers will have another chance to tackle the broken systems that harm Pennsylvanians by pursuing true pension reform, welfare reform and expanded educational choice for families.


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Pennsylvania Deficit Watch: December 2016

DECEMBER 2, 2016  | by BOB DICK

State revenue collections came in at $79.5 million below the official estimate for November, according to the Pennsylvania Deparment of Revenue. Lackluster collections wiped away the little progress made during October when revenue collections slightly exceeded expectations.

Overall, Pennsylvania collected approximately $2 billion last month, which was 3.8 percent less than anticipated. To date, revenue collections are $261.8 million below estimate.

In July, the legislature passed and Gov. Wolf signed a $1.3 billion revenue package, which includes $650 million in higher taxes, to help pay for a $1.6 billion increase in government spending. The revenue assumptions built into the billion dollar package are proving unrealistic.

The chart below shows revenue collections lagging official estimates in the first five months of the fiscal year.

Back in August, the Independent Fiscal Office (IFO) released a report identifying major problems with the revenue projections lawmakers used to create the appearance of a balanced budget. To present a more accurate picture of Pennsylvania's finances, the IFO made the following adjustments:

  • The IFO deducts $95 million to pay for the expenses of the Commonwealth Financing Authority (CFA) from sales tax revenue. The legislature moved this line-item out of the General Fund Budget and created a new fund via the fiscal code. Legislative leaders have expressed an interest in passing gambling expansion to generate $100 million to cover CFA spending, but no enabling legislation exists.
  • IFO assumes Act 39 (wine modernization) will raise $73 million in 2016-17. The legislature predicts an increase of $149 million—a $76 million difference.
  • IFO projections of tobacco tax revenue (includes taxes on cigarettes, e-cigarettes, loose & roll-your-own tobacco) are approximately $38 million less than the official projections.
  • $75 million from the Philadelphia casino is not included in the IFO’s official revenue estimate. They do not expect it will generate revenue for the current fiscal year.

In reality, the budget was unbalanced from the start, counting on $260 million in one-time revenue and transfers from other funds. It also includes a $200 million loan from the Pennsylvania Professional Liability Joint Underwriting Association.

Borrowing money to pay our bills is the very definition of unbalanced.

If current revenue trends continue, lawmakers and the governor will need to focus on reducing government spending to balance the budget. Ideas to consider include,

With seven months left in the fiscal year, revenue collections can improve. But lawmakers should start putting together a plan to balance the budget now in case revenues don't match expenditures come June. The last thing taxpayers need is another tax hike to cover last year's bills.


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Details Emerge on Philly Union Negotiations

NOVEMBER 29, 2016  | by JAMES PAUL

Intrepid reporter Kristen Graham of the Philadelphia Inquirer unearthed several details from contract negotiations between the school district of Philadelphia and the local teachers’ union, the Philadelphia Federation of Teachers (PFT). Currently, the district is operating under the most recent labor contract, which expired three years ago. Per Graham, the district proposed a $100 million offer—despite facing a $500 million shortfall by 2021:

The deal would include restoration of "step" increases, or pay bumps for years of experience. It would also include incentive bonuses over the life of the four-year pact for teachers in hard-to-staff schools, and it would give raises to teachers now at the top of the pay scale, according to sources familiar with the talks.

By way of background, 18 percent of Philadelphia students in grades 3-8 are proficient in math, with 32 percent proficient in English.

For union leaders, health care concessions have long been a sticking point:

The deal on the table would also require teachers to begin contributing toward their health-care costs. They do not currently pay toward those premiums.

That the district insists on teachers paying something toward health premiums is promising. These contributions are commonplace in the private sector and among public employees.

Notably, the district prefers to fill teacher vacancies with the best available candidates, not simply the teacher with the most seniority. This irks PFT President Jerry Jordan:

All future teacher vacancies would be filled by "site selection" rather than seniority, giving principals and school communities the power to hire candidates based on fit rather than be forced to accept them based just on experience.

Jordan called that proposal "very disrespectful to members." Now, principals can remove teachers from buildings not for performance, but for "compelling reasons," a practice he said sometimes results in unfair treatment.

Hite said that universal site selection has generated real improvements in schools and that it would be better to put processes in place to deal with potential unfair treatment than to scrap the system.

How strange that an organization billing itself as serving students’ best interests would defy reforms that staff classrooms with the most qualified candidates. Nevertheless, the union is not responding warmly to the district’s offer. Jordan says he will not even take it to his members for consideration. 

Where do negotiations go from here? It’s difficult to predict. Graham quotes a source who described the union’s counter-offer as “fiscally irresponsible and completely unworkable,” which doesn’t instill confidence in a quick resolution.

It would be illuminating to know more about the terms of each side’s proposal, but unfortunately these negotiations take place behind closed doors, without taxpayer input. All the more reason for enhanced contract transparency at the local level.


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Government Unions' Election Impact

NOVEMBER 22, 2016  | by ELIZABETH STELLE

One can't understate the scope of government unions' financial involvement in some of the key Pennsylvania races this fall. While final campaign finance numbers are still a few weeks away, total spending through the beginning of November shows government unions invested heavily in contentious races.

With the help of taxpayer funded-resources, government unions were able to direct $7.5 million to US senate candidate Katie McGinty and $253,465 to Attorney General-elect Josh Shapiro. In contrast, government unions spent zero dollars in favor of US Senator Toomey and $72,750 in favor of State Senator John Rafferty.

 

In fact, about $7,000 to support Katie McGinty came directly from union dues, not voluntary contributions from union members.

In the Attorney General race, government unions were responsible for $253,465 of the $6,401,746 spent in favor of Josh Shapiro. That's about three and half times the $72,750 government unions contributed to support John Rafferty. In total, $1,834,902 was raised to support Rafferty's bid.

Unlike any other private group in Harrisburg, government unions enjoy the special privilege of funneling PAC and election education spending through the taxpayer-funded payroll systems. In other words, they use taxpayer resources to collect purely political funds. That's a double standard that must end with the passage of paycheck protection.


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The Rust Belt's Labor Reform Wave

NOVEMBER 18, 2016  | by ELIZABETH STELLE

Lagging job growth, rising taxes and coercive union tactics created an appetite for labor reform throughout Rust Belt states.

Transforming Labor, our latest policy report, ranks states on their progress towards reforms that can produce budget savings, shield taxpayers from overspending, and guarantee greater protections of individual workers’ freedom of association.

The report also recounts recent reforms. Nowhere did labor reform make a bigger impact than Wisconsin.

Wisconsin’s Act 10 of 2011 made sweeping changes by limiting collective bargaining for public sector workers to base wages and requiring employees to contribute more toward their health and pension benefits. According to the MacIver Institute, state retirement savings alone amounted to $3.36 billion from 2011 to 2016, and Milwaukee Public Schools alone saved $1.3 billion in long-term pension liabilities. That’s a big win for taxpayers.

In 2012, Michigan, the historical home of unionization, passed a right-to-work law.

The Michigan Education Association (MEA) quickly moved to enforce its “maintenance of membership” or opt-out clause for public school teachers who wanted to leave the union: The teachers could do so only in August. Many teachers were unaware of the obscure union resignation window and missed the opening. With the help of the Mackinac Center Legal Foundation, frustrated educators filed an unfair labor practice charge asserting that the MEA’s opt-out window violated the state’s right-to-work protections against forced union association.

In September 2015, the Michigan Employment Relations Commission ruled in favor of the teachers (a decision later upheld by the Michigan Court of Appeals), forcing the MEA to change its rules and bylaws. Michigan teachers may now leave the union whenever they please, a major victory for educator freedom across the state.

This week the Detroit Free Press wrote:

Workers must be willing — even in the face of intimidation and fear — to withdraw their union membership and stop funding their union’s political prejudices. It is the only tool they have to protect themselves from the political bias of the people who claim to have their best interest at heart

The same discontent is now creating momentum for labor reform in Pennsylvania. This session, Governor Wolf signed contract transparency legislation, Pennsylvania finally outlawed stalking and harassment during labor disputes and paycheck protection cleared the state Senate.

Pennsylvania still has a long way to go. Transforming Labor gives Pennsylvania’s public sector labor laws a D. In comparison, Wisconsin earned an A, and Michigan a B.

Labor reform isn't just critical for economic resurgence, it has election consequences too.

Michigan, Wisconsin, and Pennsylvania all turned out to be a critical factor in the presidential election. Politico noted organized labor’s historically low support for the Democrat nominee. The Fairness Center's Right on Labor blog documents the historic shift in voting patterns.

However, the gap between union leaders and their members shouldn't come as a surprise. Pennsylvania union households overwhelmingly favor reforms, like paycheck protection, that their leaders vehemently oppose.

The wave of union reform moving through the states shows taxpayers, union members and non-union members alike, understand worker freedom is a key ingredient to restoring prosperity.


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