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Ed Rendell appears more interested in defending his tenure as governor than actually discussing the facts about Philadelphia. The Commonwealth Foundation’s analysis of school spending, enrollment, and staffing trends spanned several administrations. We present the facts—most notably that spending has dramatically increased—regardless of who resides in the governor’s mansion.
Despite that increased investment—more than $1 billion since 2002—Philadelphia public schools continue to leave children unprepared. Four in five students failed to meet proficiency in reading and math in 2013, according to the Nation’s Report Card.
These results shouldn’t be surprising, however. A study conducted by the 21st Century Partnership for STEM Education found “either no or very weak association between levels of education expenditures and student achievement” in Pennsylvania.
Rendell goes on to blame Republicans for slashing state education funding. This claim is false. The loss of funding was due to the expiration of temporary federal stimulus money Rendell used to balance the state budget. Today, state education funding in Pennsylvania is at a record high.
The reality facing Philadelphia, though, is that pension costs are consuming more and more of the increase in spending—the result of legislation signed by Rendell and backed by teachers’ union lobbyists to underfund pensions and delay those cost increases until after he left office.
In Philadelphia alone, contributions to the Public School Employees Retirement System (PSERS) increased by $133 million over the last 5 years, which is equivalent to the salary of 2,000 school teachers.
The pension crisis is real, and its impact is handcuffing Philadelphia and school districts across the state.
Yesterday, we released a new poll showing just how confused voters are about state education spending levels and the results that money is buying.
When 54% of voters say they would not be personally willing to pay higher taxes to increase education funding, other solutions like pension reform and school choice must be considered.
To discuss the poll details and what can be done to improve our public education system—without raising taxes—CF's Matt Brouillette joined WSBA's The Gary Sutton Show.
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.
Despite the rhetoric of "billions of dollars" in cuts from education, school districts across Pennsylvania have been able to increase their reserve funds. School districts had a combined reserve fund balance of nearly $4 billion as of July 2013, a $445 million increase from the prior year.
Jan Murphy of the Patriot-News reports that several districts have fund balances equaling almost a third of their annual budgets. One district—Valley Grove School District—even has a fund reserve of more than 99 percent of its total budget.
As part of the story, the Patriot-News created a database for readers to look up school districts' annual budget and reserve fund balances.
One school superintendent suggested that school fund balances be considered as a factor in state funding—that is, school districts with excessive reserve funds would receive fewer state dollars.
At the Commonwealth Foundation, we've pointed to the growth in school funding reserves, but also outlined a commonsense way to put those funds to use immediately.
Many school districts have built up funding reserves in anticipation of the coming pension crisis—and yes, there is a crisis, and it is getting worse for school districts. Putting money aside for future pension costs makes a lot of sense.
But it would be better to pay off pension obligations now and earn investment income on those fund reserves. If a school district turned their reserves over to the pension system now, however, it would simply be pooled with other funds, and that district would still have to pay the same contribution rate as other districts next year.
To help alleviate our looming pension crisis, lawmakers should look to change state law to allow districts to use reserves to prepay their pension obligations and receive a credit for doing so.
Philadelphia-based Research for Action (RFA) took issue with CF’s Policy Points on spending, enrollment, and staffing trends in the School District of Philadelphia. The RFA rebuttal intended to provide “a more complete grasp of the situation.” Yet they don’t dispute any of the facts we provided in the Policy Points, which offer broader perspective on what has happened in Philadelphia over the past decade. Instead of “informing this important dialogue,” RFA only has spin to contribute.
The following will respond to their criticism, point by point.
Why did CF examine the ten year window between 2002-2003 and 2012-2013?
By not including statistics from the 2013-2014 school year, RFA accuses CF of using “selective data points to build a case.” Our Policy Points relied on data from the Pennsylvania Department of Education (PDE) Annual Financial Reports, Public School Enrollment Reports, and Professional Personnel Reports. For each set of reports, the most recent year of available data is 2012-2013, so naturally, this is where we concluded our analysis. PDE statistics from 2013-2014 were not available. Far from using “selective data points,” the CF analysis draws on the most recent available information on the preceding decade.
Given the high levels of poverty in Philadelphia, shouldn’t low test scores be expected?
RFA notes that “nobody should satisfied with academic performance among city students.” The authors then qualify this statement by adding that Philadelphia’s poverty rate is one of the highest in the nation and “its [National Assessment of Educational Progress] scores on most categories are comparable to cities such as Los Angeles or Chicago with significantly lower poverty rates.” In other words: Philadelphia scores are lousy, but they are similar to the scores of other cities with high levels of poverty. RFA provides the chart below, which does very little to support their claims.
Philadelphia may have a slightly higher poverty rate than Los Angeles, but it also has lower test scores in three of the four categories. Compared to Chicago, Philadelphia scores are lower in all four categories. RFA is thus being rather liberal with the word “comparable.” Also of note: the only listed district with a higher poverty rate—Dallas—has higher average test scores than Philadelphia in all four categories. In this case, even the “selective data points” chosen by RFA do not support their arguments.
RFA claims the CF analysis of academic achievement “rests solely…on the National Assessment of Educational Progress (NAEP).” This is false, as the CF report also compares how charter schools stack up against district schools on the Pennsylvania School Performance Profiles (SPP). Charters significantly outperform district schools in Philadelphia on this metric, which is noteworthy, since they both operate in similar environments of poverty.
When it comes to SPP scores, we agree with RFA that cyber charters have been underwhelming. Of course, cyber schools have the ultimate incentives to succeed and improve: they will be shut down if they persistently fail, and they only receive funding when parents choose these schools as the best place to educate their children.
Throughout their rebuttal, RFA insists on singling out poverty as an explanation of poor academic performance. It is dangerous to get caught up in this “myth of helplessness”—a phrase coined by education policy expert Dr. Jay P. Green. Although many students face serious social problems outside the control of local school districts, is this reason enough to oppose school reforms that expand choice, opportunity, and accountability? Poverty must not become an excuse that prevents schools from improving their services to children and families.
Are charter schools contributing to growing costs for the district?
RFA claims that because “charters assume 30 percent of the district’s budget” they “undeniably contribute to the district’s rising costs.” This represents a fundamental misunderstanding of charter school financing.
For each student attending a charter, the child's home school district sends a payment to the charter equaling the district’s per-student spending, excluding all expenditures for adult education programs, community/junior college programs, student transportation, facilities acquisition, construction and improvement services, debt payments, and federal funds received.
The bottom line? Charters schools spend and receive less funding per student than district schools. In Pennsylvania, this discrepancy amounts to an average $1500 per student, money that school districts retain for students they no longer educate. Accordingly, it is wrong to argue that charter schools add additional costs beyond those of traditional public schools.
Charters should not be criticized or punished for attracting new students. It is incumbent on district schools to compete, innovate, and improve in order to win back the lost enrollment, as well as the payments that are sent to charter schools.
What is happening with district enrollment? What implications does it have for spending trends?
Over the last decade, district schools have seen a 25 percent decline in enrollment, while charter schools have seen a three-fold increase. This is where spending per Average Daily Membership (ADM) is helpful, because it includes charter enrollment and provides a complete look at district-wide trends.
Curiously, the RFA report did not address CF’s analysis of spending per ADM—which has unquestionably increased in Philadelphia. This is true over both the 5 year and 10 year snapshot, with an inflation-adjusted 8 percent increase since 2008-2009, and a 21 percent increase since 2002-2003.
Keep in mind, these figures actually underestimate spending in district-run schools, because they include charter enrollment. As mentioned above, charters spend and receive less funding than traditional public schools.
The RFA authors also claim that “districts cannot pare personnel, building, and services costs proportionately” to offset enrollment declines. This fixed costs argument is a classic red herring in the case against school choice.
What about the bond sale?
RFA seems to view a recent Philadelphia bond issue as a smoking gun in the case for increased state and federal funding for district schools. Of course, borrowing the revenue is not a policy supported by CF either then or now. It will amount to more costs over the long term, and it is yet another temporary solution to a long-term problem. If anything, this type of action underscores the urgent need for better financial management. The bond issue does not change the fact that district spending has increased substantially, which is a key finding of CF’s decade-long analysis.
What is happening to class sizes?
The original CF Policy Points was careful not to make any specific claims about average class sizes in Philadelphia. Our report merely presents the facts: the student-to-teacher ratio has declined over the last ten years. In 2012-2013, this ratio was 15.6 to 1. Nowhere did we claim that the average class size is 15 or 16 students. Average class sizes tend to be somewhat larger than the student-to-teacher ratio. But the ratio remains useful information in the context of claims that classrooms are on the verge of skyrocketing to 40 children or more. In light of a declining student-to teacher trend, it’s fair to say such claims are exaggerated and misleading.
Are school districts struggling to meet their obligations for pensions and debt/construction costs?
Absolutely this is the case, and we agree with RFA on this point. There is no disputing that these obligated costs will force a greater percentage of funds to be spent in areas other than classroom instruction. The key question now, however, is how to deal with such fiscal challenges. Do expensive bills for pensions and debt provide carte blanche to raise taxes? This has certainly been the preferred approach over the last decade, and it appears to remain the preferred approach for those in favor of an increased cigarette tax in Philadelphia.
What would a different approach look like? It would include reforms to public employee pensions, an issue we’ve been concerned about for quite some time. Prevailing wage reform is another step that would significantly lower school construction costs.
CF is hopeful that RFA will join us in support of these policy objectives, which would result in important savings to taxpayers, as well as increased flexibility for local school districts feeling the wrath of poor policy decisions from several years prior.
Yesterday, radio talk show host Dom Giordano talked to CF’s Nathan Benefield about the proposed cigarette tax to fund Philadelphia schools.
Dom asked why we care so much about whether another tax is piled on Philadelphia residents. Nate responded, “It’s a very temporary solution … that doesn’t solve the long-term crisis in Philadelphia.” Indeed, another $80 million won’t solve the problems that still exist even after the School District of Philadelphia added more than $1 billion in revenue in the last ten years.
The real victims of this crisis—school kids and their families—won’t be helped by another year of stop-gap measures as costs continue to skyrocket and performance keeps plummeting.
Listen to the conversation here:
See our policy points Philadelphia School Trends, 2002-03 to 2012-13 for more details.
The Dom Giordano Show can be streamed live daily here.
Last week, we released a summary of spending, enrollment and staffing trends in the Philadelphia School District over the past decade.
After this release, school officials and advocates have claimed our data is misleading because total spending and revenue numbers include funding for charter schools, whereas enrollment figures represent only the district.
But our analysis is not comparing total spending to enrollment, which measures the number of students in a school district as of October every school year. Rather, we look at total spending per "Average Daily Membership," which measures instead the average number of students enrolled over the course of the year, in both district and charter schools.
The spending per ADM comes directly from the Pennsylvania Department of Education. As total spending is up, even as the ADM declined over the past decade, spending per ADM increased from $9,299 to $14,361. This is a 21 percent jump, even after adjusting for inflation.
And while ADM does include charter school students, charter schools actually get less per student than the district-run schools.
To illustrate this we can estimate how much we spend in Philadelphia's district schools alone. To do so, we can look at the "tuition schedule", which calculates payments to charter and other schools. Using this, we can approximate that the Philadelphia school district spent more than $15,300 per student in district schools in 2012-13.
School District of Philadelphia Spending Data
Average Daily Membership (ADM, includes charters)
Spending Per ADM
Payments to Charters and Others Schools
District Direct Spending
District Spending Per Student
Source: PA Department of Education
Unfortunately, the state data on "tuition payments" does not go back to 2002-03 as the rest of our analysis did. But the data from 2006-07 through last year also shows an increase in direct spending on district students, excluding charter school payment.
As the chart below illustrates, Philadelphia spending per district student has risen over the past 7 years, despite a dip in 2011-12, by almost $4,000 per student.
Readers of PolicyBlog already know that Pennsylvania education spending is at a record high, that state funding to school districts for pension costs is skyrocketing, and that school district spending, revenues and reserve funds are at all-time highs.
That should be enough to stop government union leaders from repeating the $1 billion cut lie...but they're still at it. In fact, a new lie to defend the original lie has emerged.
Talking to Capitolwire (paywall), PSEA spokesman Wythe Keever claims, "No previous administration cited pension funding in order to boost their claims about K-12 funding."
It is preposterous to think that the cost of teachers' pensions isn't part of the cost of education, or that state aid to school districts for pension costs isn't part of state aid to school districts.
Of course, this is far from the first lie Wythe Keever has been caught in.
As we recently wrote, Mr. Keever has denied that union dues are used for any sort of political activity—even as his employer, the PSEA, told its members (as required by law) that 12 percent of their dues go to politics.
Wythe Keever also once denied to a reporter that the PSEA was behind mysterious ads claiming school choice would require a tax hike. We later uncovered that the PSEA spent $575,000 from union dues to fund those ads.
That a spokeman for PSEA consistently resorts to outright, provable lies is a telling commentary on how far government union executives are willing to go to advance their policy agenda.
It is impossible to do more with less, they say; you cannot expect schools to achieve better results without increasing spending.
Yet an essential new report from the University of Arkansas dispels this myth by measuring the cost effectiveness and return on investment (ROI) of charter schools compared to traditional public schools (TPS). The authors find significant advantages for charters in their study of 28 states.
When it comes to cost effectiveness, or bang-for-your-buck, the authors measure National Assessment of Educational Progress (NAEP) scores per $1,000 of per-pupil revenue.
In this category, charter students achieved an average of 17 more NAEP points in math and 16 more NAEP points in reading than TPS students. In other words, charters were 40% more cost effective—while receiving less funding per student than their traditional counterparts.
Consider this most recent study another piece of the ever-mounting evidence that school choice is a win for students, a win for parents, and a win for taxpayers.
PolicyBlog readers will be well-familiar with the fact that Pennsyvlania state funding for public schools is at a record high.
So why do government union leaders and some politicians still repeat a lie about multiple-billion dollars being cut from public education? Simply put, in some cases they refuse to count state funding to school districts for teachers' pension costs as part of education funding.
As the chart below shows, state aid to public schools for pensions has increased more than $1 billion since 2010-11 (this includes a $225 million transfer from the Tobacco Settlement Fund, not counted in the General Fund total).
Note that this $1 billion increase in state pension aid only covers about half of school employees' pension costs. School districts have had to match this increase with a billion dollar increase in payments from local property taxes.
It makes it easier to say that "there isn't a pension crisis" when you completely ignore a dramatic increase of more than $2 billion in public school pension costs.
Unfortunately, that pension crisis is only going to get worse. Costs will continue to rise over the next few years. The required increases under Act 120 of 2010 are equal to about $900 per household. The costs increase for school districts for required pension payments would be the equivalent of laying off one out of every three teachers in the state.
The fact is this: We are spending more on public education than ever before (see chart below as a reminder of that), but more and more education dollars are going to pay off pension debt created by past political decisions.
Philadelphia is in the midst of a crisis. According to the National Center for Education Statistics, more than 80 percent of 4th and 8th grade students did not reach proficiency in math and reading in 2013.
For years, the School District of Philadelphia has been plagued by poor performance and budget challenges. And to address the most recent challenges, some have suggested higher cigarette taxes and more funding as the solution. But raising cigarette taxes, which would disproportionately affect the poor, is not real reform.
Just as a funding mechanism, increasing cigarette taxes proves to be inadequate, as it encourages smuggling, which would mean a loss of sales for businesses and decline in tax revenue for governments.
There's also the issue of fairness. For example, say a family in Philadelphia is already sacrificing to put their son through private school. And because both parents are smokers, they would feel the painful effects of the proposed tax increase. Is it fair that they bear an even bigger tax burden due to years of bad public policy decisions?
Still, don't Philadelphia schools need more funding? It has to come from somewhere, right?
The School District of Philadelphia already spends about $14,000 per student, which is also around the state’s average for per-pupil spending. At approximately $25 billion, overall spending on Pennsylvania public schools is at an all-time high.
Yet, we haven’t seen the results expected from such an enormous investment. In Pennsylvania, nearly three out of five 8th graders are not proficient in math and reading, and according to a Cato Institute analysis, since 1972, SAT scores have slipped, despite a 120 percent increase (adjusted for inflation) in education spending.
Education is the key to a better future for students. This is why it’s critical to push for meaningful education reforms that put parents and students in charge of education.
In Philadelphia, as students languish in violent and failing schools, their quest for a better life becomes much harder. As each year passes without a quality education, they fall further and further behind their peers.
Instead of unfairly taxing individuals to spend more on education, public officials should strongly consider a proven solution to the state’s education woes: school choice. In the end, Philadelphia's school crisis isn't about money. It's about allowing failed policies to continue—with kids paying the price.
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The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.