Education Spending

Tax Shifts and Education Spending

NOVEMBER 18, 2015

As proposals to reduce, reform, or (mostly) eliminate school property taxes continue to be debated in Harrisburg, many readers have asked about our position on a dollar-for-dollar tax shift, which would redistribute the school tax burden in Pennsylvania.

We remain concerned that proposals to shift the tax burden without addressing spending levels will result in little relief to Pennsylvania families.

Pennsylvania spends significantly more per student on public schools than the national average. Moreover, increased spending has not resulted in improvement in academic performance. The "state share," on a per-student basis, is close to the national average. Calls for increased education spending tend to ignore these basic facts. 

To be clear, CF opposes tax shifting schemes that result in net tax hikes, such as those found in Gov. Wolf's original budget, or the proposed "budget framework."

Revenue neutral, or dollar-for-dollar tax shifting proposals typically ask the state to contribute more, or all, public school funding in exchange for property tax reduction or elimination.Tax shifting—even of the dollar-for-dollar variety—will not solve structural problems with school spending. Here are our primary concerns: 

  1. Tax shifting does not address overspending in public schools, which is driven by pensions, mandates, union contracts and lobbying, and a government monopoly over the school system.
  2. Tax shifting creates winners and losers. This is true among individuals who would be forced to pay higher sales or income tax rates (and in the case of expansion, some families would face exorbitant increases on nursing care, day care, or other items). Indeed, while the property tax is highly unpopular, it is less detrimental toward state economic growth than the income tax, which affects workers and small business owners.
  3. Winners and losers will also emerge at the school district level. Tax shifting effectively forces residents in District A to pay more in state taxes, while District B would get more in “relief.” Districts with high property taxes will get more relief than districts that have responsibly kept taxes low. 
  4. Current tax shifting plans fail to provide a student-based funding formula.
  5. Tax shifting does not necessarily prevent property taxes from coming back, and it can become a vehicle for increasing our overall tax burden on families and businesses.

Tax shifting alone will not resolve the larger problem of overspending and unaffordable taxes. As I pointed out in my testimony on property tax reform, there are other solutions that address the spending problem in education. High property taxes are simply a symptom of poorly structured education spending. Here are five recommendations:

Weighted Student Funding

While Pennsylvania spends more per student than the rest of the country, and provides about the national average in state funding per student, that support isn’t driven out to schools that need it the most. A broken funding formula, in which school districts have been “held harmless” regardless of changes in enrollment for more than 20 years, fails our students.

Moving to a student-based funding system would ensure state dollars go to the schools that need it most—based on student enrollment and student need. We should fund children, not buildings. This reform would better allocate the $26 billion we already spend.

Collective Bargaining Reform

Employee benefit cost growth has greatly exceeded salary growth in public schools. These costs are driven by unaffordable union contracts.

Reforming the collective bargaining process—providing taxpayers and voters with more information about the terms and costs of contracts—could result in major savings for public schools, money that could go back into the classroom.

Mandate relief, including prevailing wage reform and seniority reform

School districts across the state have complained about unfunded and unaffordable mandates. Among the largest of these is the prevailing wage mandate, which requires school districts to pay more for construction projects than the private sector pays for the same work. Prevailing wage mandates increase the cost of construction by 10 to 30 percent, which for Pennsylvania school districts results in $160 to $480 million in additional annual costs.

Likewise, state law that limits when school districts furlough employees, and requires furloughs be done solely on the basis of seniority, deny schools the flexibility to manage costs. Reform that values teacher performance above seniority would improve the quality of education across Pennsylvania, while giving schools the tools they need.

Pension reform

Over the past six years, pension payments from school districts have increased by $2 billion. This amounts to a $600 tax increase per Pennsylvania homeowner, or the salary of 20,000 teachers. Rising pension costs were the justification for 98% of school districts recently seeking exemptions to raise property taxes above inflation.  

We need pension reform that moves the state out of the defined benefit business. Establishing a defined contribution retirement plan for new hires provides costs that are predictable and affordable. Responsible pension reform removes politics from pension management and prevent future crises from threatening our public schools.

School Choice

Lawmakers should expand school choice programs, such as the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC). These programs allow low and middle income families to attend better, safer schools. 

Moreover, the EITC and OSTC save Pennsylvania taxpayers money. The average EITC scholarship is less than $2,000, while the average OSTC scholarship is approximately $4,000. These scholarships are significantly less than the average per-pupil spending in traditional public schools.

posted by NATHAN BENEFIELD | 10:31 AM | Comments

For Property Tax Relief, Give Voters Control

NOVEMBER 13, 2015

Should voters have the right to approve property tax increases? This is a central point of contention within a rumored budget framework that purports to provide Pennsylvanians with property tax relief.

In exchange for increasing the state sales tax to 7.25 percent—with higher amounts in in Allegheny County (8.25 percent) and Philadelphia (9.25 percent)—Pennsylvanians are promised significant property tax reductions, to tune of $1.5 billion.

Unless taxpayers are given proper control over property tax rates, however, nothing would stop school boards from large tax increases in future years. This could completely negate any tax relief doled out by the rumored budget agreement.

Thankfully, Sen. Don White's SB 909 would protect taxpayers from this scenario by requiring voter referenda when a school board requests higher taxes. This commonsense legislation makes school boards accountable to the residents in their districts. Could property taxes increase under SB 909? Yes, but school boards would have to make a compelling case to raise taxes—and voters would be given the opportunity to vote yes or no.

Act 1 in 2006 promised Pennsylvania voters access to tax hike referenda. However, Gov. Rendell pushed for nearly a dozen exceptions which excused school boards from actually facing voter approval. Since then, the Department of Education has approved 1,428 school districts for waivers from referenda, including 172 in 2015-16. It is common, too, for districts to receive multiple exceptions in the same year (pension obligations and special education costs are the most common).


Number of Districts Approved for Exceptions

2007-08 210
2008-09 102
 2009-10  61
2010-11 133
2011-12 228
2012-13 197
2013-14 171
2014-15 164
2015-16 172


SB 909 eliminates these exceptions and empowers taxpayers with control over local taxes. Currently, 34 other states require a school district to hold a referendum vote in order to approve the levy of school taxes or an increase in the tax rate.

Predictably, the requirement for voter referenda has been met with fierce resistance the Pennsylvania School Board Association (PSBA) and other staunch defenders of the educational status quo. PSBA executive direction Nathan Mains recently penned this piece, foreshadowing the dystopian world in which SB 909 passes and taxpayers are given a voice:

Scenario 1: In five years or less, school facilities will start to see the effects of no investment in their upkeep. Roofs start leaking because there is no money to fix them, buildings are overrun with weeds because maintenance staff were let go. Students are injured as ceiling tiles and drywall start to crumble.

Scenario 2: Pennsylvania student achievement rates over the next decade are compared to the results of Third World countries because the state has opted not to meet its financial obligation of funding public education and has instead left each community to its own devices.

Needless to say, the hysteria is reaching fever pitch. The central claim from the PSBA is that voters will always reject potential tax increases, forcing school districts to make draconian cuts. However, this flies in the face of the experience of other states which employ voter referenda.

Consider Ohio, where voters approved 85 of 101 potential increases to school taxes in 2015. Older data from New York, New Jersey, and Michigan tells the same story: Taxpayers approved more than half of all school budgets, tax increases, or bond issues.

Here’s the bottom line: Taxpayers are willing to raise their own taxes when districts demonstrate the need for additional revenue and a plan for responsible spending.

A budget agreement that shifts taxes without providing local control is a bad deal for taxpayers, who deserve a voice—especially given the astounding growth in property taxes since 2004. Even including the "relief" from slot machine revenue, passed in 2004, property taxes have grown by 34 percent.



posted by JAMES PAUL | 05:23 PM | Comments

Another Education Spending Record?

NOVEMBER 11, 2015

The conventional wisdom in Harrisburg suggests Gov. Wolf is nearing an agreement with the legislature on a state budget. The specific details remain largely unclear, although it appears the deal would increase Pennsylvania’s sales tax to the second highest rate in the nation—amounting to a net tax increase of $190 per family of four.

Central to the budget framework is a substantial increase in state education spending. Wolf has reportedly agreed with legislative leaders to increase the Basic Education line item by $350 million and the Special Education line item by $50 million

How do these figures—touted by Wolf's office as a "record increase" in school funding—compare to earlier stages of the budget negotiations? See the chart below.

The first columns illustrate the funding Wolf requested in March during his budget address. The middle columns represent the additional funding provided by the House and Senate in the no-tax, on-time budget, which was ultimately vetoed by the governor. The third columns represents the “budget framework” agreement.

If reports are accurate, Gov. Wolf will emerge with most of the new spending he requested in March—including more than 87 percent of the Basic Education funding. 

This is notable, given the broader context of education spending in Pennsylvania. The commonwealth currently spends more than $15,000 per public school student, which ranks 11th in the nation. What’s more, funding for public schools is already at an all-time high, both at the state level and overall.

Pennsylvania may be on the verge of a record-high increase to an already record-high level of education spending. Of course, most evidence suggest a tenuous relationship between spending and educational outcomes.

posted by JAMES PAUL | 04:12 PM | Comments

Holding All Schools Hostage

OCTOBER 29, 2015

Fell Charter Elementary School near Scranton will stop paying teachers next month and the school is considering a four-day week thanks to the state budget stalemate.

Fell's announcement is just the latest reminder of Governor Wolf's strategy to leverage schools for tax hikes. First the governor withheld EITC and OSTC scholarship funds, which allow thousands of Pennsylvania kids to escape failing schools—even though these scholarships are part of the tax code which is still in effect.

Next, a handful of district schools stopped sending tuition payments to charter schools, which serve more than 100,000 kids in Pennsylvania. When the state began to pay charters by redirecting gaming revenue, districts vehmently protested, leading the Treasury to stop payments at the request of Senate Democrats.

It's not just students at charter schools that are pawns in Gov. Wolf's political game. District schools desperate for funding were told they could not seek loans from the state Treasury. This is in spite of the comparisons they made to a loan floated to House Democrats from the Treasury.

In short, all types of schools and students across the commonwealth are held hostage.

Yesterday, Auditor General Eugene DePasquale announced at least 27 school districts and two intermediate units are now borrowing money to stay open. That puts total borrowing at $431 million, plus an estimated $14 million in interest costs. DePasquale expects the number of borrowing districts to jump to 54 by Thanksgiving

Hours later, the state Senate tried once again to provide relief to schools by attempting a veto override of a stop-gap budget that would release four months of funding to schools and social service agencies. The move fell short by 3 votes.

As rumors of a new deal circulate one thing should be clear: No one wins by holding schools hostage for historic tax increases.

posted by ELIZABETH STELLE | 09:43 AM | Comments

Audio: Wolf's Budget Tactics Harm Students

OCTOBER 21, 2015

Pennsylvania is home to several innovative education programs, including the Educational Improvement Tax Credit (EITC) program, which provides a path to a great education for low income students.

CF’s James Paul spoke with WSBA’s Gary Sutton to explain how Gov. Wolf’s hostage-taking budget tactics are hurting students dependent on the EITC. By essentially putting the the program on hold, Gov. Wolf is severing a lifeline that many low income families use to escape failing schools.

[EITC] gets better results for families, lets them go to a school that best fits their needs, and also results in a great savings to the taxpayer. But instead of letting this program go forward and letting students be educated and teachers teach, it seems the Wolf administration is content to spread the pain around.

Despite claiming that his “hands are tied,” freezing the funding process for these educational programs demonstrates how Gov. Wolf prioritizes politics over school children and teachers. 

Click here or listen below to hear more.  

The Gary Sutton Show airs daily on WSBA 910AM in the York area.

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posted by JONATHAN REGINELLA | 03:56 PM | Comments

Wolf Veto = $11 Million Bill for Taxpayers

SEPTEMBER 30, 2015

School districts have borrowed $346 million—and taxpayers will pay to pay up to $11 million in interest payments—as a result of Gov. Wolf’s budget vetoes, according to a report from Auditor General Eugene DePasquale.

DePasquale noted that this borrowing is due to the lack of tax dollars flowing out of Harrisburg—despite the fact the state is certainly still taking money from taxpayers.

At the press conference announcing these findings, Sen. Scott Wagner stood up to say he’s tired of taking blame for Gov. Wolf’s actions. That is, the House and Senate passed a budget—and subsequently passed a temporary funding plan—but Gov. Wolf’s vetoes denied funding for schools and social services.

Sen. Wagner is right. The only person to blame for schools having to borrow money is Gov. Tom Wolf, who vetoed the original budget in its entirety—rather than using the line-item veto as previous governors have done—and the temporary stop-gap measure.

Wolf says his vetoes are about education funding, but are they really?

Education spending is already at an all-time high, while Pennsylvania ranks among the highest spending states. The Republican-passed budget would have increased aid to public schools by another $350 million (and $1.4 billion more than four years ago).

Republicans even offered Gov. Wolf $300 million above that total.

Gov. Wolf thinks that’s not enough, and continues to cling to his demand for higher taxes on working families.

But there can be no doubt, Wolf is the only reason schools are struggling to make payroll.

posted by NATHAN BENEFIELD | 02:10 PM | Comments

Audio: Budget Impasse Debate

SEPTEMBER 10, 2015

With the state budget impasse in its third month, funding for critical things such as education and social services remains in question. 

CF’s Elizabeth Stelle spoke with WHYY’s Marty Moss-Coane and opposite Keystone Research Center’s Stephen Herzenberg regarding the impasse and why a compromise has not been reached in Harrisburg.

Among the key points at issue in the budget discussion have been education funding, Wolf's proposed severance tax, pension reform, and liquor privatization.  

While Gov. Wolf claims to have made concessions on everything, his “compromise” contains most of his original plans to hike taxes on hardworking Pennsylvanians. And despite the legislature's offer to meet in the middle, the governor continues to push for income and sales tax increases.  

Click here or listen below to hear Elizabeth explain what can be done to pass a taxpayer-friendly and fiscally responsible budget.    

Radio Times with Marty Moss-Coane airs weekdays 10-11 a.m. and 11-noon.

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

For mobile listening, get the SoundCloud iPhone and Android apps.

posted by JONATHAN REGINELLA | 10:12 AM | Comments

Will Wolf Take 'Yes' for an Answer?

AUGUST 25, 2015

On June 30, state lawmakers passed a budget that offers $10.4 billion in state support for public schools. This represents an all-time high—indeed, an increase from last year’s all-time high—and represents a $1 billion increase since 2010-11.

Recently, legislative leaders offered Gov. Wolf a deal that would increase education spending by another $300 million. At the time of this writing, Gov. Wolf is “still considering” this offer. The governor is struggling to take "yes" for an answer.

The chart below compares the budget passed by the General Assembly, the compromise offered by Republican leaders, and Governor Wolf's proposal (which comes with $8 billion annually in new taxes on working families).

Support of Public Education Veto

posted by NATHAN BENEFIELD | 04:25 PM | Comments

Wolf to Chester Families: ‘There is No Escape’

AUGUST 19, 2015

Tom Wolf’s record on public education is well documented. The governor is hostile to schools of choice, cozy to union interests, and wedded to the educational status quo.

Chester Upland School District is ground zero for the most recent example of this hyper-partisan, antiquated philosophy.

Yesterday, the Wolf administration went to court in Delaware County, filing an amended recovery plan for Chester Upland that would slash district payments to charter schools. Officials project $25 million in savings entirely through reduced payments for special education charter students and flat-funding cyber charter students at $5,950 per pupil.

Although Wolf admits that district finances have been “mismanaged for over 25 years,” his solution is to effectively block families from a escaping a school system that has, in the words of Wolf, “failed its students.”

What does failure look in Chester Upland? Two percent of students are proficient in math at Chester High School. Sixteen percent are proficient in reading. The average SAT score for Chester High students is 725 (out of 1600), and the School Performance Profile (SPP) score is 33.5.

In contrast, the three brick and mortar charter schools that receive Chester Upland students have SPP scores of 71.7, 61.5, and 51.3. Parents and students have been fleeing to better-performing schools.

Persistently low academic performance spurred almost 54 percent of Chester students to enroll in charters. Naturally, charter payments assume a significant chunk of the district budget—46 percent in 2014-15.

Although charter students account for more than half of the district’s enrollment, they comprise less than half of the district’s cost. 

Chester Upland certainly faces financial challenges, but charters are not the culprit. Amazingly, the revised recovery plan includes no other cost saving measures aside from the punitive action taken against charters.  

The illogical Wolf Doctrine on public education is perfectly encapsulated, here, by Education Secretary Pedro Rivera:

For too long the quality of education a student receives has been dictated by their zip code, and in some cases a child’s education has suffered due to the missteps of adults. Reducing the structural deficit is essential in order to secure financial stability for the district and make the improvements needed to provide Chester Upland students with the opportunities they deserve.”

These remarks are detached from reality, as it is the Wolf administration perpetuating the “education-by-zip code” travesty that has dominated public education for decades. Trapping families in a failed district and arbitrarily punishing students seeking alternative educational options will not produce “Schools that Teach.”  

posted by JAMES PAUL | 10:27 AM | Comments

Discouraging Signs in York City

AUGUST 5, 2015

The consequences of Gov. Tom Wolf’s lock-step fealty to public sector union interests are being felt across the state and particularly in York City—where one of Wolf’s first major decisions as governor is generating renewed skepticism among those seeking improvement for the failing school district.

In March, the Wolf administration forced out York City recovery officer David Meckley and withdrew the state’s petition to introduce transformative change to a school system known for financial distress, abysmal academic performance, and astounding rates of violence. Meckley, who sought to implement a charter school model, realized Wolf was wedded to the status quo and would not accept a solution that prioritized students and families over government unions.

In April, Wolf replaced Meckley with Carol Saylor, who opposes charter schools and hinted that her recovery plan could take up to ten years.

What has been happening in York City since the new recovery officer assumed her position?

If a recent editorial from the York Daily Record is any indication, not much. Saylor hired an outside firm to study the school district and provide recommendations. Highlights from the report include the following:

  • Teacher attendance dropped to 88 percent in 2014-15 (which is actually lower than student attendance, according to Saylor).
  • Barely half of district personnel believe the quality of education delivered by the district is good or excellent. Four percent of teachers believe that education quality is excellent.
  • 86 percent of school and central office personnel report that the district does not reward or retain excellent staff.
  • 75 percent of school staff do not believe individual schools have sufficient decision making authority over their budgets.

The report also noted that York City’s per pupil funding is on par with the state average. Accordingly, the district may need to “revisit its spending strategy to ensure practices are centered on student learning needs.” However, in June, the teacher’s union voted to accept a new collective bargaining contract that increases pay over the next two years.

And just this week, York City announced it has hired a new “information specialist’’ to create “positive publicity with the outside community.” Editors at the Daily Record describe the hire as unnecessary and an unwise use of limited resources:

Ms. Saylor and other district officials ought to be able to speak for themselves to the media and the community. And they certainly ought to be able to perform effective internal communications—or perhaps they shouldn't be in their current positions.

While he may not be involved the district’s day to day operations, the governor’s fingerprints are all over the situation in York City. The decision to force out Meckley—and, in so doing, jettison meaningful education reform—will have lasting repercussions for families who deserve better than a ten year plan and an information specialist.

posted by JAMES PAUL | 03:30 PM | Comments

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