Education Spending

Pennsylvania school districts spent $27.4 billion in 2014-15, an all-time high, according to the latest data from the Pennsylvania Department of Education. This represents a $1.3 billion increase from 2013-14.

Districts spent nearly $16,000 per student in 2014-15, up from $15,019 in 2013-14. Total education spending steadily increased over the last five years, save for 2011-12 upon the expiration of temporary federal stimulus dollars.

<<Get the full Education Spending Trends Policy Memo>>




Flawed Arguments Drive School Funding Suit

SEPTEMBER 22, 2016

As I pointed out earlier this week, Pennsylvania public school spending is at an all-time high. In fact, the state's per student spending is significantly above the national average.

James’ analysis adds that the latest state budget represents yet another increase in state funding for public schools, building on the all-time high established during the 2015-16 fiscal year.

Even the Secretary of Education recognized the commonwealth's education spending is highrelative to other statesand represents increases rather than cuts to funding levels. Detractors normally concede this point, but they respond with “it’s not the amount of funding, it is the inequality.”

They cite data showing a large gap in spending between wealthy (low-poverty) and poor (high-poverty) districts. Here’s the rub: That data shows Pennsylvania spends more per student in every category of districts. That is, even Pennsylvania’s high-poverty districts spend more than high-poverty districts nationally.

What does this mean? If greater “equality” is the goal, we could cut spending by wealthy districts (caps on local school property taxes would be a way to do this) and spend at the national average. These two changes would produce greater equality between districts.

 

 

Ironically, government unions, the school boards association, and their allies have lobbied against efforts to control property tax increases.

These statistics aren't meant to downplay or ignore the equity in education funding. As we've made clear in the past, Pennsylvania’s practice of “hold harmless” has created a vast disparity in state funding per student. Hold harmless is the practice of guaranteeing each school district at least the amount of state funding they received in the prior year—regardless of enrollment changes.

The result—over decades—is that districts with declining enrollments receive far more aid per student. Meanwhile, areas with growing student populations have not gotten increases to match their enrollment.

Phasing out the “hold harmless” formula so all state aid is distributed using the new student-based funding formula would fix this problem—without requiring a multibillion dollar tax increase.

posted by NATHAN BENEFIELD | 00:08 PM | Comments

Podcast: Why Charter Schools - and School Choice - Matter

SEPTEMBER 21, 2016

In Pennsylvania, 130,000 kids attend public charter schools—about 5 percent of the state’s schoolchildren.

For many of these kids and parents, charter schools are a lifeline to a safer, better education. Unfortunately, demand for charters continues to far exceed supply, resulting in thousands of students languishing on waiting lists—subject to the whims of a lottery to determine their future.

In this week's episode of Commonwealth Insight, we talk with Nina Rees, president & CEO of the National Alliance for Public Charter Schools, about why charter schools matter, what to do about failing charter schools, and the elements that bring success to a charter school.

Regarding charter school oversight, Nina says charters are, “given a degree of autonomy and freedom in exchange for accountability.” What level of accountability? “A charter can be closed if it doesn’t live up to expectations in its contract or attract enough students.”

The truth is, no one is forced to attend a charter school—they truly are schools of choice. The fact that thousands are lining up to choose them speaks volumes about the value parents see in these alternatives to local school districts.

Later in the podcast, James Paul, CF’s senior policy analyst and education expert, joins to discuss school choice in Pennsylvania—and addresses claims that choice drains resources from school districts.

“If you believe, as I do, that these funds belong to children and families, then any objections to draining funding simply don’t pass muster,” James says.

Indeed, the first goal of public education funding should be to serve the next generation of Pennsylvanians, not to simply maintain the status quo in an educational system or institution. When funds follow families, everyone wins.

Click here or listen below, and stay tuned for more by subscribing on iTunes, SoundCloudGoogle PlayStitcher, or via RSS.

posted by DOUGLAS BAKER | 11:03 AM | Comments

Thorough and Efficient System of Public Education

SEPTEMBER 21, 2016

"The General Assembly shall provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth." So reads the Constitution of Pennsylvania under its section on Education.

As Nate mentioned earlier this week, a recent lawsuit seeks the Supreme Court to force the legislature to increase school funding by billions of dollars primarily on the grounds that Pennsylvania is failing to honor its constitutional mandate. Is it true that the commonwealth is failing to provide a "thorough and efficient system" of public education?

Hardly.

State support of public schools is at an all-time high in Pennsylvania, recently eclipsing $11 billion. Claims of "cuts" from state taxpayers are simply without merit. And remember: average per-student funding in the commonwealth exceeds the national average by more than $3,000. 

posted by JAMES PAUL | 08:30 AM | Comments

Facts about the State Share of School Funding

SEPTEMBER 19, 2016

Should the Pennsylvania Supreme Court order the Legislature to give billions more dollars to school districts? That's what a recent lawsuit demands. But to make their case to the public, the lawsuit's advocates are repeating the widely discredited myth that the state once—but no longer—funded 50 percent of public school spending.

In reality, the state share of education spending never reached 50 percent. Records from the Pennsylvania Department of Education show that it peaked at  44.7 percent in 1974-75.

While the state share declined from 45 percent to 36 percent of total school district revenue, this was not due to a reduction in state subsidies for education. State aid—adjusted for inflation—increased by 41 percent since 1974. The state “share” only declined because local tax revenue—also adjusted for inflation—increased 98 percent over that time frame.

Pennsylvania actually provides more state funding than the national average on a per-student basis. The “state share” as a percentage only appears low because Pennsylvania schools receive about $3,000 more per student from local revenue, and in total revenue, than the national average.

That is, if Pennsylvania reduced local public school taxes to the national average, the “state share” would reach this mythical 50 percent.

(Note: The charts below are interactive. Touch or click on the tabs at the top or the bars to see more information.)

posted by NATHAN BENEFIELD | 04:16 PM | Comments

Judge: District Exaggerated Shortfall, Improperly Raised Taxes

AUGUST 31, 2016

Lower Merion School District must revoke a portion of its most recent tax hike, according to a Montgomery County court. In his ruling, Judge Joseph A. Smyth said the district misled taxpayers by projecting large budget shortfalls despite squirreling away millions of dollars in reserve.

Kathy Boccella of Philly.com has the full report:

Between 2010 and 2015, the 8,300-student Lower Merion district - which, with a $259 million spending plan, is one of the wealthiest public school systems in the Philadelphia area - predicted large annual budget deficits, yet had millions stashed away in its reserves, Smyth said in his ruling.

For instance, in 2009-10, the district projected a $4.7 million budget hole but ended the year with a $9.5 million overage. In 2011-12, it anticipated a $5.1 million gap but wound up with $15.5 million to the plus side.

How did the school district manage to continually raise taxes above the Act 1 index? By overstating special education and pension costs:

According to the judge's findings, the district got away with raising taxes above the Act 1 index of 2.4 percent by telling state officials the money was needed to cover soaring special-education and employee pension costs, two of the biggest expenses for most public school districts.

However, audits of Lower Merion's budgets show it had year-end surpluses ranging from hundreds of thousands to millions of dollars for special education. The district also had $15.3 million tucked away in a retirement fund that was never used for pensions; instead, those benefits were paid from the general fund, according to the findings.

Because the Pennsylvania School Code does not permit a district of Lower Merion's size to store more than 8 percent of its money in reserve funds, the district transferred its surpluses to other accounts, the court found.

The last paragraph, above, is crucial—and has implications for all Pennsylvania school districts. If school board directors can so easily shift funding between various reserve funds (assigned, committed, and unassigned) then there is essentially no distinction between them. This undercuts the argument made by many school directors, as well as the Pennsylvania School Boards Association, that districts should only be judged on their unassigned fund balances.

By law, districts can only raise taxes if their unassigned funds are less than 8-12 percent of total expenses. From the CF fund balance database, you’ll notice many districts keep their unassigned funds stocked to the maximum legal amount, while holding millions earmarked as assigned or committed.

At the end of the 2014-15 school year, roughly 100 school districts had larger total reserve balances (as a percentage of spending) than did Lower Merion. Could this suggest administrators in other districts also mischaracterize their financial hardships?

Back to Lower Merion, whose school board wasted no time sensationalizing the judge’s ruling:  

The ruling could eliminate $4 million targeted for special education and retirement benefits in the coming year, according to the board, which added, "If the court's decision stands, the financial health of LMSD and districts across the state is in jeopardy.

In a separate letter to parents, the board said the decision "could significantly impact the quality of school programs," and warned it might have to impose personal income taxes to make up for shortfalls.

Of course, money is fungible. If the directors at Lower Merion decide to cut funding for disabled students and elderly teachers, that will be by choice. Much like they chose to systematically mislead the very taxpayers financing their schools.

posted by JAMES PAUL | 00:00 PM | Comments

Public Remains Supportive of School Choice

AUGUST 30, 2016

That’s the upshot of the 10th annual public opinion survey from Education Next, which covers a range of topics including school choice, school spending, personnel policy, testing, and accountability. The entire poll results are worth reading—check out the interactive results from 2016, as well as trends over the last decade—but here are a few key findings.

On the topic of school choice:

  • Tax credit scholarships are favored 53-29 by the general public, 64-17 by African Americans, and 60-25 by parents. Tax credit scholarships, including Pennsylvania’s Educational Improvement and Opportunity Scholarship Tax Credits, are the most popular school choice mechanism.
  • The general public supports charter schools by a 51-28 margin, including 45-33 among Democrats.
  • Support for both means-tested and universal vouchers is slightly greater among Democrats than Republicans. Hispanics support universal vouchers 57-24.

Regarding school spending:

  • The general public underestimates the average amount spent on children in public schools, which mirrors the experience in Pennsylvania. When asked to estimate the per-pupil cost, respondents guessed $8,500. The actual average is more than $12,000.
  • The general public estimates the average yearly teacher salary is roughly $40,000, which is 30 percent below the actual average teacher salary ($58,000) reported by the National Education Association. Even teacher respondents underestimate average teacher salaries—they guessed $46,000.

Finally, on personnel policy:

  • 62 percent of the public supports “basing part of the salaries of teachers on how much their students learn,” also known as merit pay. Only 20 percent of teachers are supportive of merit pay.
  • Support for teacher tenure has declined by 10 percentage points since 2013, with the general public opposing teacher tenure 54-28.
  • By a margin of 44-35, the public opposes agency fees—which require non-union members to nonetheless pay roughly 80 percent of full-member dues to the union.
  • The public is split, 33-32, on whether unions have a negative effect on public schools.

posted by JAMES PAUL | 02:30 PM | Comments

Making the Most of Education Dollars

AUGUST 11, 2016

Auditor General Eugene DePasquale recently uncovered $2.5 million improperly paid to nine public charter schools. At issue is whether buildings owned by charter schools are eligible for the state's lease reimbursement program. 

But in the scrutiny rightly given to these payments, are we missing an even bigger issue?

According to DePasquale:

The Pennsylvania Department of Education’s [PDE] own guidelines for the lease reimbursement are clear that buildings owned by the charter school are not eligible. The problem is that PDE makes no effort to verify ownership of the buildings or look for conflicts of interest between the school and related parties. They simply write a check for whatever amount the charter school submits. That is a disservice to Pennsylvania students and taxpayers.

Jan Murphy of PennLive adds:

Robert Fayfich, executive director of the Pennsylvania Coalition of Public Charter Schools, said he believes this dispute comes down to a difference of interpretation of the state's lease reimbursement guidelines.

"The auditor general takes the position if the building is owned by a charter school then it's not reimbursable and PDE says ownership is irrelevant to reimbursement," he said. "I'm sure charters are working based on the recommendation from their legal counsel plus direction from PDE."

DePasquale acknowledged that charter schools were not at fault for applying for reimbursement but he said the education department was wrong in making those payments.

To correct the mistake, the Department of Education could claw-back improper payments. State lawmakers could also pass legislation clarifying the state’s reimbursement guidelines.

But DePasquale’s audit should raise a more important question: Is state government doing everything it can to maximize the value of each dollar spent on public education?

After all, this is not the first time the Auditor General has uncovered examples of wasteful education spending. In May, for example, DePasquale estimated districts could save nearly $55 million if they made use of competitive bidding for transportation services.

There are numerous other ways for districts to save money. CF has long championed prevailing wage reform (and other mandate relief), pension reform, and collective bargaining transparency to ensure taxpayer funds are directed to the classroom, where they belong.

These, too, must be top priorities for lawmakers and public officials who seek to maximize the value of each education dollar.

posted by JAMES PAUL | 09:31 AM | Comments

Saving for a Rainy Day – But Whose Money?

JULY 25, 2016

Let’s talk for a moment about rainy days—specifically, the need to save funds to spend on one. Several school board administrators and lobbyists have taken issue with CF’s searchable, sortable database of school district fund balances, showing public schools are sitting on over $4 billion in "rainy day funds." Meanwhile, 85 percent of school districts plan to raise property taxes.

A Temple University report, authored by a former Pennsylvania School Boards Association employee, argues:

Just as an individual or family should maintain a savings account for unforeseen expenses or emergencies, school districts should also have funds in reserve to pay for emergency repairs or cover unexpected interruptions in revenues – such as a layoff at a major factory which suddenly affects tax collections.

If an individual or family could impose real estate taxes on their friends and neighbors, this analogy might pass muster. But an obvious difference exists between families socking away their own hard-earned money in a savings account and a school board severely over-taxing its district. The CF database shows 21 districts with over 50 percent (!) of their total expenditures squirreled away in reserve.

Every dollar held in excess by a school board is money earned by taxpayers that could otherwise be saved, invested, or spent by taxpayers. While some school districts stock up reserve funds, thousands of Pennsylvanians struggle to balance their family budgets.

Typically, the school board lobby defends excessive reserves by drawing an ironclad distinction between unassigned funds and assigned or committed funds. As CF explained in an earlier blog:

A district’s fund balance—what it owns minus it what it owes—is comprised of assigned, committed, and unassigned funds. Assigned and committed reserves are available funds designated for a specific purpose, while unassigned funds are available for any purpose.

School board directors argue the public should only scrutinize unassigned funds, since assigned and committed funds have already been earmarked. [For example, the Temple University report focuses solely on unassigned funds. Other funds are largely ignored.] They fail to mention, however, how easily money can be shifted among the three funds—often with a mere majority vote at the next board meeting.

The CF database anticipates this line of argument—and provides both total and unassigned reserve funds as a percent of expenditures. You’ll notice many districts keep their unassigned funds stocked to the legally mandated maximum amount at which they can still raise taxes, between 8 and 12 percent of total expenses, depending on district size.

Whether school boards should be judged on all reserve funds or simply unassigned funds is ultimately for taxpayers to determine. But the fact remains that dozens of Pennsylvania districts amassed large rainy day funds while also seeking tax increases.

What’s more, the Temple University report makes no mention of school districts’ capital reserve funds—yet another pot of money districts use to plan for construction projects.

Drawing attention to reserve funds is critical in order to increase transparency and raise awareness for taxpayers. While few school districts are sitting on a “pot of gold,” Pennsylvanians have a right to know that almost all districts enjoy alternatives to higher taxes.

posted by JAMES PAUL | 11:50 AM | Comments

2015 SAT Scores

JUNE 29, 2016

The SAT, or Scholastic Aptitude Test, is an important indicator of public education quality in Pennsylvania. Currently, the commonwealth ranks 36th out of the 50 states and 3 US territories (Washington DC, Puerto Rico, and US Virgin Islands). That's one place higher than last year.

A large percentage of Pennsylvania students take the SAT, which does contribute to low overall performance. Average SAT scores are higher in states with lower test participation, typically because only the highest performing students sit for the test. Among states with a participation rate of at least 70 percent, Pennsylvania ranks 6th.

Historical data shows SAT scores are largely unchanged since 1970. Meanwhile, state education spending per student has increased 63 percent. This long-term trend undermines constant calls for more education spending to improve public schools.

To increase student achievement, we must change focus from more spending to reforms that change how tax dollars are spent. One such reform is the creation of education savings accounts, which will give parents stronger control over how, and where, their son or daughter will best succeed.

Below is a table of all states scores and participation rates. Details on Pennsylvania’s statewide performance report can be found here.

posted by HUNTER AHRENS, ELIZABETH STELLE | 11:45 AM | Comments

School Districts Amass Record Reserve Funds

JUNE 15, 2016

Is your local school board planning to raise property taxes despite holding millions in reserve funds? For many Pennsylvania school districts, the answer may be “yes.”  

Check out CF's sortable, searchable database of fund balances for Pennsylvania’s 500 school districts in the 2014-15 school year. It is important to note these figures predate the 9 month budget impasse, during which Gov. Wolf held school districts hostage in an attempt to extract record-high tax hikes from families and businesses.

Many districts were forced to dip into their reserves last year, as a result of Gov. Wolf's actions. (Next summer's financial reports will reveal how much districts were forced to "spend down"). But the sheer size of reserve funding in certain school districts is staggering—especially given the constant drumbeat that Pennslyvania schools are "underfunded." 

A district’s fund balance—what it owns minus it what it owes—is comprised of assigned, committed, and unassigned funds. Assigned and committed reserves are available funds designated for a specific purpose, while unassigned funds are available for any purpose.

State law requires that districts seeking tax hikes limit their unassigned fund balances to 8 to 12 percent of total spending. Our sortable database includes the total fund balance for each district, as well as each district’s total expenditures in 2014-15. It also includes each district’s fund balance as a percentage of total expenditures.

Auditor General Eugene DePasquale, speaking to Jan Murphy of Pennlive, says it is excessive to maintain a fund balance greater than 20 percent of total expenditures:

More than 300 of the 747 districts, charter schools and career and technical centers included in the department's data had fund balances topping 20 percent of their total expenditures, which is where state Auditor General Eugene DePasquale said he believes the line should be drawn.

"It is a judgment call as to what is too high," DePasquale said. "Certainly anything that is above 20 percent, clearly that's where you start to question it."

In fact, there are 21 districts who have socked away over 50 percent (!) of their total expenditures in reserve. When looking only at unassigned fund balances, 36 districts have over 20 percent of total expenditures squirreled away.

These figures should be eye-opening to anyone who believes Pennsylvania schools are unfunded—and they should be a wakeup call for school board officials who instinctively seek higher taxes from state or local taxpayers.

Check out CF's sortable, searchable database.

 

 

 

Largest Fund Balances
As % of Expenditures

District

County

%

Southern Fulton

Fulton

84.93%

Northwestern

Erie

78.07%

Union

Clarion

76.26%

Brockway Area

Jefferson

75.64%

Salisbury-Elk Lick

Somerset

73.26%

West Jefferson Hills

Allegheny

71.67%

Commodore Perry

Mercer

70.94%

Forbes Road

Fulton

65.60%

Iroquois

Erie

63.70%

Central Cambria

Cambria

60.61%

 

Largest Fund Balances

District

County

$

Pittsburgh

Allegheny

 $   198,989,522

Lower Merion

Montgomery

 $      55,974,232

Altoona Area

Blair

 $      53,772,084

East Stroudsburg Area

Monroe

 $      47,573,171

Pocono Mountain

Monroe

 $      45,944,586

Neshaminy

Bucks

 $      41,351,622

Abington

Montgomery

 $      39,627,474

Reading

Berks

 $      36,985,138

Allentown City

Lehigh

 $      36,444,773

North Penn

Montgomery 

 $      36,343,484

 
 

posted by JAMES PAUL | 04:30 PM | Comments

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