Education Spending

School Spending Update, 2014-15

Jun 8, 2016 | Commentary by James Paul

Pennsylvania school districts spent approximately $27.4 billion in 2014-15. This represents a $1.3 billion increase from 2013-14, despite a 12,000 student decrease in average daily membership.

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Crucial School Choice Expansion Passes Committee

In a bipartisan vote, the House Education Committee advanced legislation to boost Pennsylvania’s crucial private school scholarship programs, the Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC). HB 250, sponsored by Speaker Mike Turzai, increases the EITC by $50 million and the OSTC by $25 million.

The legislation paves the way for more success stories like Hudson, whose OSTC scholarship allows him to attend and excel at Philadelphia Classical School, and Kaiden Myers, who attended the Westwood School in Philadelphia with the help of the EITC. 

The EITC and OSTC serve more than 50,000 students—larger than the school district of Pittsburgh—with scholarships of roughly $2,000 per student. A recent study by EdChoice estimates the EITC saved Pennsylvania taxpayers more than $1 billion from 2002 to 2014. Private scholarship programs are truly a win-win proposition.

Why are scholarship tax credits different from other state tax credits, such as those for filmmakers? In short, because scholarship tax credits are not corporate welfare.

  1. EITC & OSTC do not pick winners through loosely-defined “economic development." Hundreds of scholarship organizations may receive donations, and hundreds of thousands of students are eligible to benefit from a scholarship.
  2. EITC & OSTC provide a high quality education for students, while saving taxpayer funds, since the variable costs of students who withdraw from public schools greatly exceeds the cost of tax credits awarded to participating businesses.
  3. Businesses who give via the EITC and OSTC are still contributing to education of Pennsylvania children—but these funds are available for private schools, private pre-k, and various educational improvement organizations.

HB 250 deserves the support of lawmakers who believe in high quality educational options for all Pennsylvania children.

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posted by James Paul | 11:00 AM

Details Emerge on Philly Union Negotiations

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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posted by James Paul | 11:00 AM

Children Benefit From School Choice, And So Do You

The moral argument for school choice is irrefutable: Every child deserves access to a first-rate education. Families should not be limited by the supply of public schools within artificially-drawn district boundaries. This is why Pennsylvania’s private scholarship programs, the Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC), are so important. They empower thousands of children each year to break free of the education-by-zip code injustice and instead attend a school that best fits their unique needs.

It is not just scholarship recipients, however, who benefit from tax credit programs. Taxpayers, too, realize massive savings thanks to school choice. This according to The Tax-Credit Scholarship Audit, an essential new report from the team at EdChoice.

Author Marty Lueken’s analysis of Pennsylvania’s EITC program finds roughly $1.3 billion in taxpayer savings between 2002 and 2014. The report, which does not examine the OSTC, compares the cost of an EITC scholarship with the variable costs of each student enrolled in traditional public schools.

Crucially, Lueken estimates and accounts for students who switch from public to private schools as a result of the scholarship program. These are the students who generate the highest savings to taxpayers. The report estimates between 26 and 45 percent of scholarship recipients must have switched from public schools in order for the program to be fiscally neutral—certainly a reasonable and achievable projection.

What’s the bottom line? Say you’re pleased with your local public school. Perhaps you never thought twice about the state’s scholarship program, and you don’t have strong feelings about school choice one way or another. If you’re a Pennsylvania taxpayer, you have still benefited from the EITC.

All the more reason to increase the program and provide more scholarships to families.

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posted by James Paul | 11:00 AM

House Speaker Seeks Boost for Vital Scholarship Programs

Pennsylvania’s private school scholarship programs account for less than 2 percent of the $11 billion in state funds allocated for public schools. Yet it is impossible to overstate the significance of these programs for children and families.

Kevin McCorry of Newsworks tells the story of Thomas Short, a parent in South Philadelphia, who can send his sons to private school thanks to the Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs:

The only way he's able to afford Catholic school tuition is because he takes advantage of a scholarship program that's funded by state tax credits. Tuition for two children normally runs north of $9,000 per year.

With the scholarship, he pays just $1,500.

"Without this, [they're] not going here," he said.

According to Mr. Short, St. Thomas Aquinas Elementary is a better option than the traditional district school:

Short's perception of the nearby neighborhood public schools is low.

"They're not trying to develop the person as much as just trying to get them through to the next grade," he said. "I don't know why I'm saying that. It's just my opinion. Maybe that's how the public schools used to be back in the day when I went."

If House Speaker Mike Turzai has his way, the EITC and OSTC will see a sizable boost during the next fiscal year. Speaker Turzai recently released a co-sponsorship memo for legislation increasing the caps on how much businesses may donate to both programs—up from $175 million to $250 million.

This, on the heels of a $25 million EITC increase last July, would be welcome news for families and schoolchildren across the commonwealth.

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posted by James Paul | 11:00 AM

Is Your District Hiking Taxes While Piling Up Large Reserves?

In June, CF published a searchable database showing fund balance data for each of Pennsylvania’s 500 school districts as of 2015.

Given the recent Lower Merion School District lawsuit—in which a judge found Lower Merion’s school board improperly raised taxes despite flush fund balances—we have taken the database a step further and examined which districts have accumulated large fund balances while also requesting tax hikes.

This new database shows total fund balance along with requested tax increases, per student, for each school district.

Here’s why this is important:

The Taxpayer Relief Act of 2006 (Act 1) was intended to limit property taxes and empower Pennsylvanians with referenda on real estate tax hikes. Each September, the Pennsylvania Department of Education (PDE) calculates the base Act 1 index for the following fiscal year. This index is the maximum allowable school district tax increase, usually between 2 and 4 percent.

After the index is announced, districts must do one of two things: pass a resolution promising not to raise taxes above the index, or pass a preliminary budget identifying proposed tax increases above the index. Districts adopting a preliminary budget must either initiate a voter referendum on the tax hike or apply for referendum exceptions from PDE.

In practice, virtually all districts seeking to raise taxes above the index apply for, and receive, exceptions. Since 2006, there have been seldom few property tax referenda, and property taxes have continued to rise.

Our new database displays how much each school district requested to raise taxes (above the index) in its preliminary budget. A blank cell means the district did not request tax increases above the index. It does not necessarily mean the district avoided tax hikes altogether.

Further, see this list of 8 school districts with fund balance percentages larger than Lower Merion’s that also requested tax increases above the Act 1 Index in 8 or more of the last 10 years.

Unlike residents in the majority of other states, where school districts must hold a referendum vote in order to approve new taxes, residents of the commonwealth have little control over real estate tax hikes. All the more reason to pass SB 909, which would require both voter referenda for any school district tax increase, as well as public sector pension reform, which is each district’s largest cost driver.

 

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posted by James Paul | 06:30 AM

How Does Pennsylvania Stack up in School Revenue?

The National Center for Education Statistics recently released 2013-14 figures on revenues and expenditures for U.S. public schools. How does Pennsylvania stack up when it comes to funding?

On a per-pupil basis, Pennsylvania exceeds the national average in revenue from local, state, and federal sources. Overall, public schools in the commonwealth are funded 9th highest in the country and $3,500 more than the national average. 

Note that these figures are for the 2013-14 school year and thus pre-date Tom Wolf's tenure as governor.

 

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posted by James Paul | 04:45 PM

Flawed Arguments Drive School Funding Suit

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.

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posted by Nathan Benefield | 00:08 PM

Podcast: Why Charter Schools - and School Choice - Matter

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.

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posted by Douglas Baker | 11:03 AM

Thorough and Efficient System of Public Education

"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. 

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posted by James Paul | 08:30 AM

Facts about the State Share of School Funding

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.)

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posted by Nathan Benefield | 04:16 PM

Total Records: 225