Yesterday's Paycheck Protection Vote


Thanks to your voices, yesterday afternoon the state Senate suddenly voted on an aspect of "paycheck protection." Senator Scott Wagner proposed an amendment yesterday that would end the taxpayer-funded collection of union political money in school districts.

This was the first full floor vote in the movement for paycheck protection and 20 bold senators stood up to powerful special interests to proclaim that taxpayer resources should never be used for politics.

Richard Alloway John Gordner Elder Vogel
David Argall Scott Hutchinson Randy Vulakovich
Lisa Baker Dominic Pileggi Scott Wagner
Mike Brubaker Robert Robbins Kim Ward
Jake Corman Joseph Scarnati Donald White
John Eichelberger Lloyd Smucker Gene Yaw
Mike Folmer Patricia Vance

Thank you, senators!

While the amendment fell short, this is just a disappointment—not a setback—for the movement for ending the taxpayer-funded collection of union political money. Today was the last voting day before the election, but legislators can return to the Capitol until November 30 to take care of unfinished business. 

Clearly, work remains to convince some lawmakers to support a position held by 79 percent of voters—and 72% of union members—that union leaders, not government, should collect political money and campaign contributions, so continue to make your voice heard to your lawmakers. 

The full vote count is below.

Alloway, Richard L. (R)  Yes Gordner, John R. (R)  Yes Stack, Michael J. (D)  No
Argall, David G. (R)  Yes Greenleaf, Stewart (R) No Tartaglione, Christine (D) No
Baker, Lisa (R)  Yes Hughes, Vincent J. (D) No Teplitz, Rob (D)  No
Blake, John P. (D)  No Hutchinson, Scott (R) Yes Tomlinson, Robert (R) No
Boscola, Lisa M. (D)  No Kasunic, Richard A (D) No Vance, Patricia H. (R) Yes
Brewster, James R. (D)  No Kitchen, Shirley (D) No Vogel, Elder A. (R)  Yes
Browne, Patrick M. (R)  No Leach, Daylin (D)  No Vulakovich, Randy (R)  Yes
Brubaker, Mike (R)  Yes McIlhinney, Charles (R) Absent Wagner, Scott (R)  Yes
Corman, Jake (R)  Yes Mensch, Bob (R) No Ward, Kim L. (R)  Yes
Costa, Jay (D)  No Pileggi, Dominic (R)  Yes Washington, LeAnna (D) Absent
Dinniman, Andrew (D) No Rafferty, John C. (R)  No White, Donald C. (R)  Yes
Eichelberger, John (R) Yes Robbins, Robert (R) Yes Wiley, Sean (D)  No
Erickson, Edwin B. (R)  No Scarnati, Joseph (R) Yes Williams, Anthony (D) No
Farnese, Lawrence (D) No Schwank, Judith (D) No Wozniak, John N. (D)  No
Ferlo, Jim (D)  No Smith, Matt (D)  No Yaw, Gene (R)  Yes
Folmer, Mike (R)  Yes Smucker, Lloyd K. (R)  Yes Yudichak, John T. (D) No
Fontana, Wayne D. (D)  No Solobay, Timothy J. (D)  No    

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York Schools Can Send a Lifeline to Kids


School Choice Pennsylvania

The York City school board is considering an intriguing proposal to turn over some of its schools to a charter operator to compete with the remaining city schools (if the district can come to a new collective bargaining agreement). Why is this transformation needed?

York City schools are among the worst performing schools in Pennsylvania. On the state's "School Performance Profile," the district ranked 499th out of 500 districts.  And preliminary results show that most schools in the district declined in 2013-14.

Interstingly, commenters on a Fox 43 story about our analysis claim the district can't be expected to do better—that its performance is driven by bad parents and poor students. Certainly, poverty does play a role in academic performance, but high performing schools across Pennsylvania and the nation succeed even with low-income students.

We can, and must, do a better job to help our poorest students. And it is clear that despite the challenges, York can do better.

Not only do York schools score worse than the state average, but they perform worse than the average among all low-income students in Pennsylvania. That is, the dreadful test scores aren't driven by poverty alone. Nor is the problem in underfunding. York City schools saw a 33 percent increase—adjusted for inflation—in spending per student over the past decade. The $15,256 the district spends per student exceeds the statewide average.

Consider this: New Hope Academy Charter School was shut down after 2013 for a poor performance record—yet it performed better than most of the schools in the district.

The status quo simply isn't good enough. To send a lifeline to York children, major change is needed. Choice and competition, along with accountability measures via a performance contract, would better serve students and families.

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How Would Tom Wolf's Tax Plan Impact You?

OCTOBER 9, 2014  | by BOB DICK

Yesterday, we released an analysis of the impact of Tom Wolf’s education spending and tax proposals, finding Pennsylvania’s income tax rate would have to increase by more than 121 percent to pay for just two of Tom Wolf’s major education proposals. But the increase could actually be much higher. A story in Capitolwire (paywall) yesterday quotes Wolf's answer to a question about the ambiguity surrounding his tax proposal:

"If you're in the 70,000-90,000 dollar range as an individual - and you could double that if you're married - you should not pay any more in taxes. And people making below that would get a break. That's my goal."

Wolf’s proposal would certainly violate the uniformity clause (Article VIII, Section 1) of Pennsylvania’s Constitution because it would necessitate two types of tax exemptions: one for those filing singly and one for those filing jointly in order to ensure couples who make $180,000 or less don’t get hit with a higher rate.

But if Wolf were to propose a tax structure that lowered taxes for those making less than “$70,000 to $90,000” and generated the nearly $4.6 billion needed to pay for his education spending, what would that require?

Using $80,000, the middle point of Tom Wolf's suggested dollar range, as our “break-even point”—the point where taxpayers would begin to see their tax bills rise, we have outlined what a Wolf tax structure might look like.

To achieve the goals stated above, there would need to be a “universal exemption” of $52,200, requiring the tax rate to increase from 3.07 percent to 8.85 percent.

That is, Pennsylvania’s income tax rate would increase by more than 188 percent

Tax Rate Needed to Pay for Wolf Education Proposals, $52,200 Exemption
Total Taxable Income With Exemption $170,419,261,600
Tax Rate 8.85%
Total Revenue Raised $15,082,104,652
Revenue Under Current Tax Structure $10,442,963,000
Additional Revenue Under Wolf Plan $4,639,141,652
Source: Pennsylvania Department of Revenue, Income Tax Statistics

While this model would reduce the tax bill for the vast majority of those making less than $80,000, it would result in dramatically higher taxes for families and small businesses earning more than that. The tax burden would rise by $1,160 for a household with $100,000 in income, and $3,472 for a household making more than $140,000. 

Income Level





Tax Bill at Current Rate





Tax Bill at New Rate (With exemption)





Increase in Tax Bill





What may be most astounding is the impact on Pennsylvania’s economic competitiveness.

Currently only the nine states with no income tax, or an income tax just on investment income, have a lower top rate than Pennsylvania.

But under this plan, with an 8.85 percent rate, Pennsylvania would jump 33 other states. As a result, we’d have the 8th highest state income tax rate in the country.

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Access to Care Still a Burden to Bear


Need to see a dermatologist in Philadelphia? If you are on Medicaid you'll have to wait a staggering 49 days, according to recent Merritt Hawkins survey. This is no anomaly: Medicaid has earned a terrible reputation when it comes to access to care. Patients find it diffcult to find doctors because Medicaid reimbursment rates are significantly lower than private insurance rates and sometimes lower than the cost of care itself.

Given these issues, it's of little surprise that insurance companies are having a hard time signing up medical providers for the new Healthy PA insurance plans. Alex Nixon at the Tribune Review explains:

Highmark Inc., the state's largest health insurer, said it won't participate in Corbett's Healthy PA program because it couldn't sign enough doctors to its network.

UPMC Health Plan is reducing the number of regions where it is participating from five to four, said John Lovelace, president of the health giant's Medicaid products unit.

The original Healthy PA waiver asked the federal government to place newly-eligible adults in private plans, with higher reimbursments, paid for by taxpayers. The federal government denied that request. In fact, they denied the vast majority of the administration's 24 requests to improve Medicaid. Now the state is overseeing the creation of new Medicaid managed care plans, and once again, the federal government is standing in the way of quality care.

Instead of expanding a broken system, Pennsylvania should help expand the supply of providers by incentiving more charity care and loosening licensing laws to allow highly trained providers, like nurse practitioners, open their own offices. This is how we can truly improve access to care for needy Pennsylvanians.

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Unions Leaders Put Politics Before Health Care


The recent decision by the Philadelphia School Reform Commission (SRC) to cancel the school district's contract with the Philadelphia Federation of Teachers (PFT)—and require teachers to pay up to 13 percent of their health care premium—has been met with stunning hyperbole from both state and national union leaders.

According to the SRC, this will save $54 million this school year alone—money that can go back into the schools—and upwards of $70 million each year thereafter. Yet PFT President Jerry Jordan compared the SRC action to treating teachers like "indentured servants."

With an average teacher salary of nearly $71,000, though, it would be hard to mistake a Philadelphia teacher for a forced laborer—especially when the average household income is $37,000 in the city. Indeed, average Philly teacher salaries are higher than their counterparts in Chester ($63,600) and Delaware ($68,600) counties, and are not far behind those in Montgomery ($76,600) and Bucks ($80,900).

Keep in mind that the only change the SRC is making is asking teachers to pay part of their health care costs. The decision to impose modest premium sharing comes after years of deadlocked negotiations with the PFT leaders, who refused to budge one inch when it comes to health care payments.

Philadelphia teachers currently do not pay for their health benefits, and even under the new plan would pay far less than the average working Pennsylvanian, who pays 20 percent for individual or 23 percent for family coverage.

Is the PFT really concerned with protecting teachers, or maintaining its slush fund (the PFT "Health and Welfare Fund") which currently administers the health care plans?

Randi Weingarten, President of American Federation of Teachers (AFT)—the Washington, DC-based mother-ship of the PFT— had an equally alarmist response to the SRC, calling their decision "the most egregiously political action I’ve seen in a school district."

Weingarten would know. Given her union's heavy involvement in Pennsylvania politics, she is an experienced political activist.

Both the AFT and PFT have taken full advantage of their unique political privileges to spend massive sums of money canvassing and cheerleading for Democratic gubernatorial candidate Tom Wolf. In early September, the PFT spent $70,000 for one minute of television advertising attacking Gov. Tom Corbett during an Eagles football game.

Surely $70,000 per minute could go a long way toward health care premiums—if the PFT were more interested in promoting the interests of its members than using forced dues to influence elections.

Furthermore, the AFT gave $500,000—directly from union dues—to the PA Families First 'Super PAC,' which has been on the air further promoting the lie that Gov. Corbett cut state education funding. All told, AFT is poised to spend more in 2014 than in any other election cycle.

Years of mismanagement, lagging academic performance, and declining enrollment have left Philadelphia in the unenviable position of making difficult choices to keep its schools financially viable. Union leaders are pretending to defend teachers with their rhetoric, but their actions demonstrate how they are exploiting teachers for political gain.

High-performing educators—and the children they teach—deserve better from union leadership. Given the PFT's refusal to negotiate in good faith for nearly two years, the SRC's action is a reasonable, necessary step for the School District of Philadelphia—despite the loaded rhetoric from hyper-political union bosses.

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How Much are Pension Costs Affecting Schools?


My colleague Katrina has an op-ed in The Patriot-News today explaining the gravity of the state pension crisis and why action needs to happen now.

As Katrina points out, pension costs are the primary cause of property tax increases. Under Act 1, school districts must seek voter referendum to increase taxes above an index tied to inflation—unless they get an exemption from the state Department of Education. Those exemptions are limited, but over the past five years, 98 percent of school districts that received exemptions for tax increases cited pension costs.

Act 1 Property Tax Increase Exemptions
2010-11 2011-12 2012-13 2013-14 2014-15
Total School Districts with exemptions granted 133 228 197 171 164
Total with exemptions for pension contributions 128 221 194 169 163
Pension Percentage 96.2% 96.9% 98.5% 98.8% 99.4%
Source: PA Department of Education

Why are pension costs driving up school property taxes?

Pennsylvania's two pension systems have a combined $50 billion unfunded liability, or debt ($32 billion for the pension system covering school employees). This debt was created by a combination of factors: increasing benefits in 2001; delaying payments in 2001, 2003 and again in 2010; and stock market losses.

Under Act 120, lawmakers voted to delay (by phasing in) higher pension contributions. As a result, school districts have already seen a massive increase in costs, and the problem will continue to get worse.

Pennsylvania schools Pension Contributions

School districts' pension contributions rose from $515 million in 2008-09 to an estimated $2.4 billion this school year, a $1.9 billion increase. To put that in perspective, the increase comes to more than $600 per homeowner in Pennsylvania. Or put another way, the increase represents the salary (using the state average of $63,000) of more than 30,000 teachers.

In the next five years, the projected increase will be just as painful. School districts will have to pay an additional $1.7 billion annually to pay off our pension debt. That increase is another $550 per homeowner, or the salaries of 27,000 teachers.

And that is merely the impact on school districts. Meanwhile, pension costs for state workers are going up by almost the same rate, and local governments face their own pension crises.

Those costs will be borne by some combination of higher taxes, cuts in other programs, and layoffs. But it is hard to understate just how significant this crisis is to homeowners, teachers, students, and taxpayers.

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When the Poorest Fall Through


On a Friday near noon, on the top floor of Christ Lutheran Church, John Kiessling has patients occupying both chairs at his charity dental clinic.  He buzzes from one to the other, trying to care for both before the free clinic—which caters to one of Harrisburg’s poorest neighborhoods—closes for the day.

Kiessling earns his living as a dentist in private practice, but three days a month he volunteers, treating patients who can’t afford their own dental care. It’s a passion for the salt-and-pepper haired dentist, who has spent the last few years inspiring another 20 colleagues from the Harrisburg Area Dental Society to volunteer with him. 

The free clinic fills an important gap for the poor. Most dentists don’t take Medicaid patients, because the reimbursement they get from the government health program for the poor is so low. That means the clinics that do accept Medicaid often have long waiting lines. And for those who can’t afford even the small Medicaid co-pay, many go without dental care for years, allowing cavities and other problems to fester until crisis point. 

“I look at us as the safety net under the safety net,” Kiessling says. He adds that most people don’t know the government safety net has holes when it comes to health care. Take the case of Maryland boy Deamonte Driver, who despite having access to Medicaid, died when the infection of a mouth abscess spread to his brain.

Kiessling says the dental health of most of his patients—many of them poor immigrants—is often terrible. The charity clinic doesn’t do root canals or appointments, so much of the care Kiessling and his fellow dentists perform involves damage control: Treating infections, relieving pain and filling teeth.

As Dr. Kiessling examines patients, dental assistants sterilize instruments and prepare others on expensive equipment. When you factor in the time the dentists donate, the clinic distributes about $100,000 of services for free. To get it started, the church raised tens of thousands of dollars, and it relies on community grants to get and maintain supplies.

The charity dental clinic is a model Kiessling would like to see mushroom around the city and state. He notes that much of the problem is reaching troubled communities before their residents become difficult patients with years of bad habits to overcome.

Kiessling would like to see legislators craft health policy for the poor that incentivizes his kind of charity work, to encourage more dentists and doctors to pitch in with their time and skills. He doesn’t think such a charity model could cover all the health needs for the poor.  But knowing the wait times, long lines and patchy service Medicaid offers, he’s convinced that simply expanding the government program won’t do the trick either.

Rather, Kiessling thinks a combination of government programs and expanding charity care will help more people. As he writes patient notes at his desk after Friday clinic, he muses on his motivation for coming at all. He’s blessed with a wife and three children and a good income, and his faith drives him. “How could you not?” Kiessling asks.

Dr. Kiessling is right, government too often overlooks private charity, and at the same time it’s often blind to short-comings in the current safety net. Government should encourage charity care, while allowing patients to have a larger stake in their care. That means more patient choice when it comes to insurers and services, such as dental care. It also means more patient responsibility, allowing patients to be rewarded for cost-effective care and discouraged from unnecessarily expensive care, like getting x-rays at a hospital instead of an out-patient facility.

It’s time for Harrisburg to take a serious look at reforming the safety net, continuing and now expanding the status quo will only ensure more Pennsylvanians fall through the safety net.

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Union-Backed Report Rife with Hypocrisy

OCTOBER 3, 2014  | by JAMES PAUL

Charter schools

Three union-affiliated groups released a report alleging that Pennsylvania charter schools defrauded taxpayers to the tune of $30 million since 1997. Predictably, this story has been greeted with glee from defenders of the education status-quo and those who oppose school choice. The union-backed report ultimately calls for a moratorium on new charter schools.

Try making that argument to the thousands of Pennsylvania families currently on charter waiting lists

Increased transparency and accountability for all public schools—both charters and traditional district schools—should be welcomed with open arms. But the findings from this particular report must be met with a healthy dose of skepticism. 

Government unions consistently fight tooth and nail to prevent the authorization of new charter schools—if for no other reason than to maximize the number of dues-paying teachers. They would rather maintain their political influence than let children find a better or safer school via school choice, and they cannot be trusted to provide impartial research on charters.

Of course, government unions are welcome to commission studies and engage in the political arena. We at the Commonwealth Foundation simply prefer they do so without forced dues collected at taxpayer expense.

Charters are already asked to do more with less, as they receive less money per student than traditional public schools. Now government union-funded research organizations are demanding that charters be held to significantly higher standards as well. Charter schools that fail to perform academically or suffer from financial mismanagement can be shut down, whereas school districts are never held accountable.

Where are the calls for a moratorium on district schools when one of their financial scandals makes the news? How about in the event of sexual abuse in a public school? Demanding charter schools be effectively shut down, while ignoring fraud and abuse in traditional public schools, fails to put the needs of students first. 

Charter reforms, like those in SB 1085, would make them more accountable and transparent while also expanding choice across the commonwealth. 

A moratorium on new charters, though, would only punish thousands of families seeking a better academic future. 

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Unpopular Attempt to Undo Uber


Last week two Pennsylvania Utility Commission (PUC) administrative law judges recommended against legalizing the popular transportation service Uber in Allegheny County. The reason? The company, "is not committed to operating safely and legally."

Why do they claim Uber is putting public safety at risk? The company refused to provide numbers on how many trips it provided while under a July cease-and-desist order. 

It's no surprise ride-sharing companies like Uber and Lyft are in a tussle with the state bureaucracy. Entrenched special interests, in this case taxicab companies, regularly use government to exclude new competitors. Think about state Certificate of Need laws that require doctors to seek government permission to purchase a new MRI scanner. Or professional licensing laws that require hair braiders to accrue 300 hours of training.

In this case, it's clear the opposition consists mainly of Uber's competitors. Support for ride-share companies is bipartisan. Both Governor Tom Corbett and Pittsburgh Mayor Bill Peduto have expressed their support for ride-sharing companies.

The media agrees the PUC’s position is unreasonable. A Pittsburgh Post-Gazette editorial describes Uber as "a highly innovative ride-share service that people in the Pittsburgh area are clamoring for after years of shabby and sometimes non-existent taxi service."

It’s time for the PUC to stop obstructing consumers' wishes and let ride-sharing flourish. Given the PUC's outdated regulations, there are several pieces of legislation to change the law to let ride-sharing companies like Uber, Lyft and others continue to meet the needs of consumers.

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School Funding Doublespeak


How can school funding be "slashed" yet "technically rise"?

Take a look at this excerpt from a recent article in the Philadelphia Inquirer, (emphasis mine):

Education funding to public schools has been slashed by more than $1 billion on the current governor's watch, noted Stephanie Robinson, a teacher at Barry Elementary in West Philadelphia. (Corbett, who has repeatedly publicly blasted PFT members for not contributing toward their health insurance, maintains that he has granted record amounts of aid to city schools. But, PFT and other opponents contend that although technically school aid under Corbett has risen above Rendell-era levels, the rise is minimal...)

Unfortunately mass confusion about education spending in Pennsylvania abounds, thanks to a well-funded campaign of deception from government union executives. 

The Inquirer piece notes, for instance, that the political action committee of Pennsylvania Federation of Teachers gave $100,000 to Tom Wolf between May 6 and June 9 alone. According to the most recent campaign finance reports, the Pennsylvania State Education Assocation gave him another $200,000.

Unions have invested heavily in commercials and newspaper ads promulgating the myth that Gov. Tom Corbett cut a billion dollars in education funding. In fact, the PA Families First "SuperPAC", which we highlighted before, has been running election-related TV ads spreading the "$1 billion cut" lie. Not coincidently, the American Federation of Teachers and National Education Assocation recently gave $1 million to PA Families First, directly from union dues.

Of course, education funding cannot be "slashed" and "technically rise" at the same time. Only one can be true. And the truth is that state education spending is at an all-time high.

But as long as union leaders are willing to cut million dollar checks promoting their billion dollar myth, it’s no surprise a teacher from West Philadelphia is unclear about the facts.  

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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.