Super Six: Important 'Wins' for Taxpayers, Kids this Year

DECEMBER 30, 2014  | by ELIZABETH STELLE

Policymakers made significant strides over the past legislative session to increase school choice, save taxpayers from waste and abuse in unemployment compensation, and protect students. While critical reforms remain, it's worth celebrating these policy victories from the past legislative session.

Six Policy Victories in the 2013-2014 Legislative Session

1. Banned the practice of "passing the trash." Act 168 of 2014 prevents teachers accused of abuse from quietly resigning and relocating to a new school without having to inform that new school of their alleged misconduct. The law also strengthens the background check process and prohibits school districts from entering into "confidentiality agreements" that suppress abuse allegations. Commonwealth Foundation supported ending this disturbing practice while government unions took a neutral position.

2. Reduced the state debt ceiling. In 2013, lawmakers reduced the total amount of debt allowed under RACP (Redevelopment Assistance Capital Program) by $600 million. Act 77 of 2013 also provides greater accountability, oversight and transparency regarding how RACP grants are awarded.

RACP uses borrowed money—paid back by taxpayers with interest—for "economic development" projects, or corporate welfare. We’ve regularly exposed the most controversial uses of RACP funds, such as the Arlen Specter Library, Tastykake's corporate headquarters, numerous sports stadiums, and a $3 million grant to the Second Mile, the charity founded by convicted child molester Jerry Sandusky. An effort to further reduce the RACP debt limit to $2.95 billion passed the state House in 2014, but stalled in the Senate.

3. Strengthened school choice for children and their parents. Lawmakers consolidated the Education Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) into one statute, while simplifying and streamlining the application process. This also allows unused credits to be shifted from one scholarship program to another. Thanks to Act 194 of 2014, more credits will be utilized and thousands more scholarships can serve as a lifeline to students trapped in failing schools. Commonwealth Foundation has consistently pushed for greater school choice options, including the creation of the OSTC.

4. Reformed taxes for small businesses and more. Lawmakers enacted some tax reform last session with Act 52 of 2013. Lawmakers increased the Net Operating Loss (NOL) Cap, created a new deduction for small start-up businesses, and exempted family-owned businesses from the inheritance tax. While Commonwealth Foundation has advocated for broad-based tax reform, these measures are a step in the right direction towards lessening the tax burden on job creators.

5. Protected jobs for Pennsylvanians in the energy field. New EPA regulations require expensive, unproven technologies that would kill jobs and bankrupt companies. Commonwealth Foundation has documented how destructive these new regulations are to existing PA jobs. Act 175 of 2014 preserves state control of the energy industry by allowing the state legislature to publicly reject a state carbon emissions plan.

6. Ended "triple-dipping" for government employees. Act 75 of 2013 stops former state employees from receiving both retirement and unemployment benefits. The law ends "triple-dipping," where an individual retires and collects a public pension or private retirement benefit and then temporarily returns to work, only to collect unemployment compensation when leaving the job. This one change will reap an estimated million dollars in savings this fiscal year.

Milestones of Note

Liquor Privatization Progress. Three Pennsylvania governors have attempted to privatize the liquor store system. In 2013, for the first time in state history, the PA House passed a bill that would end the government liquor store monopoly. Commonwealth Foundation has pushed for full liquor privatization by exposing the contradictory mission and gross carelessness of the PLCB. Lawmakers can build upon this historic accomplishment in the new session.

Awareness and Advocacy for Paycheck Protection. In 2014, thanks to lawmakers and teachers speaking out through CF's Free to Teach project, a version of paycheck protection passed committees in both the House and Senate. In the new session, lawmakers have a golden opportunity to finish what they started and pass paycheck protection, now known as Mary’s law.

Pension Reform Progress. Legislation to put new state employees and school teachers into a defined-contribution retirement plan (like a 401k) passed committees in both the state House and Senate. Government union leaders, defending the status quo, prevented these bills from coming up for a vote. For years the Commonwealth Foundation touted the merits of defined contribution retirement plans and warned about the impending crisis in public pensions—that crisis is now reality.


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PSEA Admits Using Dues for Politics

DECEMBER 29, 2014  | by NATHAN BENEFIELD

The Pennsylvania State Education Association admitted using union members' dues, via a "SuperPAC," to fund an election mailer supporting Governor-Elect Wolf, following a public apology last month for the mailer's content. The PSEA also admitted to using its dues-funded magazine to support candidates for office.

The PSEA responded to the charge filed with the Pennsylvania Labor Relations Board in November by PSEA member Mary Trometter and the Fairness Center, confirming that the union used members' dues money to fund the election mailer that Trometter found offensive and demeaning.

The PSEA attempts to justify its action by citing the case of Citizens United v. FEC. Their hypocrisy is rich, though, as union leaders from both the NEA and PSEA often criticize this case.

This again reiterates why public resources should never be used for politics.

New legislation named "Mary’s Law" will soon will soon be introduced in the Pennsylvania House and Senate.  This bill, also known as paycheck protection, would end the taxpayer-funded collection of political money. Mary's law would require union leaders to collect political money directly from members, and be more accountable to teachers like Mary.

Click here to send an email to your lawmakers to support Mary's Law.

For more information about this topic, visit our Paycheck Protection toolkit


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Top 5 Blog Posts of 2014

DECEMBER 29, 2014  | by DAWN MELING

Which blog posts were the most popular in 2014? We count them down, as chosen by you, the reader.

5.) Video: Government Unions' Political Power Cycle

How do government union leaders use their unfair political advantage to promote bad policies? Our short video explains.

4.) Fact: Taxpayer Resources Are Being Used for Politics

One of the biggest myths used to oppose paycheck protection is the claim "union dues money can't be used for politics." We provide the union's own evidence to the contrary.

3.) Union Members Support Paycheck Protection

Alternate title: The Survey No Union Leader Wanted to Read. But the truth is that union members themselves support an end to taxpayer-funded collection of union dues and campaign contributions.

2.) 7 Little-Known Facts on Pennsylvania Public School Spending

For years, teachers unions claimed Gov. Corbett cut $1 billion from schools. But the real story is more complicated. We shine a light on the facts about PA public school spending.

1.) The $1 Billion Lie Exposed

Union leaders should know that it's wrong to lie about education funding. But they did it anyway, using teachers' dues for newspaper ads across the state. We corrected the lie in our own ad—and it's 2014's most popular blog post.


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SAT Scores by State 2014

DECEMBER 22, 2014  | by LINDSEY WANNER

Every year, the College Board releases its SAT Report on College & Career Readiness, which includes SAT data for individual states. We've organized this data into one convenient spreadsheet (embedded below), ranking the states by their mean composite SAT scores.

How does Pennsylvania rank?

Pennsylvania ranks 37th in the nation with a composite score of 1481, lagging behind the national average. You can view Pennsylvania's full profile here.

A fifty state comparison is less meaningful, though, than looking at the narrower category of high participation states.

States with high participation rates, including Pennsylvania, tend to have lower average scores because most high school seniors—not just the highest performers—take the SAT. In other states, most students take the ACT. We have also included below a ranking of states with high participation rates in order to better rank Pennsylvania among states with comparable participation.

To improve the performance of Pennsylvania students, Pennsylvania parents need greater school choice to select the best school for their children.


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The Self-Fulfilling Prophecy of Low Expectations

DECEMBER 19, 2014  | by JAMES PAUL, LINDSEY WANNER

Is it true that schools with high concentrations of low-income students face unique challenges? Yes. Should poverty, along with several other social problems, be understood as a factor that influences academic achievement? Of course. Should we thus expect students from low-income families to persistently underperform on state tests and be forever relegated to a second-rate education? Absolutely not.

A fine line exists between recognizing poverty as a factor in academic performance and using it as crutch to excuse dismally performing schools. Nowhere is this more apparent than the York City school district.

A recent article on York’s potential conversion to charter schools explains that none of the district’s eight schools are meeting state testing goals. The piece quotes Wythe Keever, assistant communications director for the Pennsylvania State Education Association (PSEA), who is undeterred by the test scores:

Wythe said York performs just as well as schools that have similar populations of disadvantaged and special needs children. “The school district is right about where you’d expect it to be when you have an urban school district serving an impoverished population that’s already been decimated by Corbett’s budget cuts," Wythe said.

The comment (emphasis mine) is noteworthy for several reasons. Not only is Keever factually inaccurate about the district’s performance and finances—more on that in a moment—but he also seems to subscribe to the view that urban, low-income students are condemned to bad test scores and substandard learning gains.

A recent CF Policy Points explains that even when compared to other economically disadvantaged students in Pennsylvania, York City students lag behind state averages.

York City PSSA Results 2012 (Percentage)
York City SD Statewide Economically Disadvantaged, State
Advanced or Proficient, Math 53.1 75.6 61.6
Advanced or Proficient, Reading 41.5 72.0 55.4
Below Basic, Math 25.7 11.1 19.0
Below Basic, Reading 35.8 13.7 24.3

Keever is also off base when he claims the district was decimated by state level budget cuts. State revenue per student was steady throughout the previous five years, including a substantial increase in 2012-13. Overall revenue levels did modestly fall in the 2011-12 budget, but the chart below clearly demonstrates that this was due to a sharp decline in federal revenue (read: stimulus dollars).

YorkCitySpending

Additionally, out of the 500 school districts in Pennsylvania, York is consistently within the top quintile of state revenue per student:

York City Revenue Rank, by Source

State Local

Federal

2008-2009 74 398 8
2009-2010 59 422 7
2010-2011 49 401 6
2011-2012 105 416 49
2012-2013 62 405 49

Factual errors aside, the most disheartening component of Keever’s remarks is that low-income students should be expected to lag behind their peers in academic performance. Setting such low standards does not serve the best interests of students and parents in York City.

It is not entirely surprising, however, that a spokesman from the largest teachers' union in the state has succumbed to the self-fulfilling prophecy of low expectations. After all, the PSEA is a consistent opponent to many reforms—expanded school choice, seniority reform, merit pay—that would improve the quality of education in the commonwealth.

Each student has unique circumstances, needs and abilities—but no student should be resigned to failure.


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Harmed by "Hold Harmless"

DECEMBER 15, 2014  | by JAMES PAUL

There are few more egregious examples of political doublespeak than Pennsylvania’s “hold harmless” provision for state education funding.

Hold harmless guarantees each school district receives no fewer state education dollars than it received the previous year—regardless of changes in district enrollment. This may sound appealing in theory, but it is actually quite problematic in practice. While the policy ostensibly exists to prevent school districts from being harmed by reduced funding, it has, in fact, brought real harm and inequity to hundreds of districts across the commonwealth.

Consider that during the 2012-13 school year, state revenue per student in Pennsylvania's 20 fastest-growing districts was slightly more than $3,000. In contrast, state revenue per student among those districts with the largest decreases in enrollment was nearly $10,000. Put another way, school districts with declining enrollment received more than three times the state funding per student than growing districts.

20 Fastest Growing PA Districts 1996-2013

District

County

Growth

2013 State
Revenue Per Student

Garnet Valley

Delaware

119%

$2,877.47

Perkiomen Valley

Montgomery

89%

$2,826.65

South Fayette Township

Allegheny

86%

$2,698.31

Spring-Ford Area

Montgomery

83%

$2,764.82

Pine-Richland

Allegheny

74%

$2,686.28

New Hope-Solebury

Bucks

61%

$2,777.26

Central York

York

60%

$2,555.85

Oxford Area

Chester

56%

$4,538.11

Avon Grove

Chester

53%

$4,340.74

Daniel Boone Area

Berks

53%

$4,282.96

Mars Area

Butler

52%

$3,217.76

Lower Moreland Twn

Montgomery

48%

$2,888.73

Kennett Consolidated

Chester

47%

$2,842.80

Jim Thorpe Area

Carbon

45%

$2,885.29

Central Bucks

Bucks

45%

$2,401.97

Tredyffrin-Easttown

Chester

44%

$2,211.83

Owen J Roberts

Chester

41%

$3,120.39

Peters Township

Washington

40%

$2,608.30

Wilson

Berks

39%

$2,784.51

Northeastern York

York

38%

$4,602.52

Average Top 20

59%

$3,095.63

20 Fastest Shrinking PA Districts 1996-2013

District

County

Growth

2013 State
Revenue Per Student

McGuffey

Washington

-30%

$7,979.42

Sullivan County

Sullivan

-30%

$6,208.08

Southeastern Greene

Greene

-31%

$11,399.85

Warren County

Warren

-31%

$7,881.19

Jeannette City

Westmoreland

-32%

$9,242.87

Ligonier Valley

Westmoreland

-32%

$5,611.11

Susquehanna Community

Susquehanna

-32%

$10,778.41

Union

Clarion

-32%

$11,529.47

Punxsutawney Area

Jefferson

-32%

$9,524.06

Austin Area

Potter

-32%

$11,885.68

Galeton Area

Potter

-33%

$7,903.20

Cranberry Area

Venango

-33%

$8,525.50

Farrell Area

Mercer

-33%

$12,197.76

Marion Center Area

Indiana

-34%

$10,288.15

Northern Potter

Potter

-35%

$10,904.21

Allegheny-Clarion Valley

Clarion

-35%

$11,479.26

Purchase Line

Indiana

-35%

$12,383.83

Johnsonburg Area

Elk

-36%

$11,175.29

Salisbury-Elk Lick

Somerset

-39%

$9,555.59

Cameron County

Cameron

-39%

$10,600.96

Average Bottom 20

-33%

$9,852.69

A new policy brief from Temple University's Center on Regional Politics finds that Pennsylvania’s education funding system is out of sync with the rest of the nation.

While 11 other states provide a hold harmless guarantee to school districts, no other state in the nation also guarantees districts with declining enrollment a share of new education revenues.

Not only do Pennsylvania school districts retain baseline funding levels—regardless of student enrollment and student need—but declining enrollment districts are guaranteed a portion of new education revenues. The authors describe this practice as “hold harmless plus.”

Hold Harmless

My colleague Nate Benefield and I recently offered testimony to the Basic Education Funding Commission, where a large portion of our remarks focused on transitioning away from hold harmless in favor a weighted student funding (WSF) model.

Currently, if a Pennsylvania student moves from one district to another, state funding does not follow the child to her new school.

Above all else, a weighted model would distribute funds that truly follow each child. WSF also accounts for individual student need by providing additional dollars for low-income and English language learners.

The Funding Commission presents an important opportunity to establish a funding formula that is equitable, rational, and transparent. The first step for lawmakers should be to phase out hold harmless, once and for all.


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Mary's Law: Protecting Teachers and Taxpayers

DECEMBER 12, 2014  | by NATHAN BENEFIELD

"Mary's Law," new legislation that will soon be introduced by State Senators John Eichelberger and Gene Yaw—along with 10 other senators—would end the taxpayer-funded collection of political money.

Update: A similar cosponorship memo has been introduced in the PA House, sponsored by Representatives Cutler and Emrick, along with Evankovich and Knowles.

Mary's Law is named after a PSEA member from Williamsport who saw the union use not only her dues, but her name in endorsing a candidate she didn't support. You can watch Mary's story here:

Mary's Law, also referred to as "paycheck protection," would prohibit public collection of all political money for government unions. Currently, state and local governments in Pennsylvania collect explicitly political funds (both campaign contributions and dues that can be used on politics) on behalf of government unions. This mix of politics and public resources is illegal in any other context.

Mary's experience powerfully demonstrates why we need paycheck protection, both for workers, and to remove the unfair political privilege government unions have.

Our updated analysis of union political spending in the 2014 election showed government unions spent $7.7 million in direct contributions to candidates during the election cycle. Additionally, government unions spent millions more in support of candidates from union dues—both in contributions to "SuperPACs" which run TV and radio ads endorsing candidates, and in direct union action, including mailers and commercials, supporting candidates.

Public resources should never be used for politics. We need lawmakers to enact Mary's Law to protect teachers like Mary and taxpayers across across Pennsylvania from being exploited for political gain. Click here to write your lawmakers about this critical issue.


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Government Falls Short in Subsidizing Job Creation

DECEMBER 12, 2014  | by BOB DICK

"Incomplete, misleading, and unreliable"—that is how an Auditor General report described Department of Community and Economic Development (DCED) efforts to ensure transparency and accountability in the use of your tax dollars.

The criticisms did not end there.

The report, released on Wednesday, analyzed five "job creation" programs under the purview of DCED. Here are the five major findings:

  • DCED did not set any performance goals or measurements of success for its programs.
  • DCED penalized businesses that didn't create the promised jobs.
  • The DCED did not verify if businesses that were awarded taxpayer-financed loans actually created or retained jobs.
  • DCED's annual reports on these programs proved to be inaccurate, misleading and unreliable.
  • While the DCED has improved its monitoring in some areas, it does not have adequate monitoring procedures for all of its programs.

According to the Auditor General's analysis, 44 percent of businesses that were awarded taxpayer funds did not reach their goal in new job creation. As Pennsylvania Independent points out, this cost taxpayers more than $93 million.

These disappointing findings should spark a debate about "job creation" policies. Government should not pick winners and losers in the economy and decide what businesses receive direct taxpayer support. This is neither an equitable nor an effective way to create job growth.

By eliminating corporate welfare and lowering the overall tax burden on all businesses, Pennsylvania can become more competitive.

It's also one way to solve our state's budget woes. As lawmakers look to balance a deficit of nearly $2 billion this upcoming fiscal year, eliminating the more than $440 million in grant and loan programs is a great place to start.

Corporate Welfare Grant & Loan Programs 2014-15 Budget (Thousands)
General Fund
Agricultural Research $787
Agricultural Promotion, Education and Exports $250
Ben Franklin Tech Development Authority Transfer $14,500
Commonwealth Financing Authority Transfer $77,755
Council on the Arts $898
Discovered in PA Developed in PA $5,000
Food and Marketing Research $494
Grants to the Arts $8,590
Hardwoods Research and Promotion $350
Industry Partnerships $1,813
Infrastructure and Facilities Improvement Grants $19,000
Keystone Communities $6,150
Keystone Works $100
Livestock Show $177
Marketing to Attract Business $2,008
Marketing to Attract Tourists $7,264
Municipalities Financial Recovery Revolving Fund Transfer $4,000
New Choices/New Options $500
Open Dairy Show $177
Partnerships for Regional Economic Performance $11,880
Pennsylvania First $20,000
Pennsylvania Race Horse Development Fund $252,583
Tourism-Accredited Zoos $550
World Trade PA $5,824
Youth Shows $140
Total $440,790

Previously, we calculated that by eliminating economic development subsidies, including targeted tax breaks, Pennsylvania could lower the Corporate Income Tax rate from 9.99 to 7.08 percent.

Instead of having the second-highest rate in the nation, we would suddenly be lower than 21 other states, which would certainly make the Keystone State a more attractive place to move or expand a business—and be a more effective way to create jobs.


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Audio: Could Charter Conversion be in York City's Future?

DECEMBER 10, 2014  | by JOHN BOUDER

York City School District—financially distressed and second-to-last in the state in student achievement—may be in for some much-needed change in the coming weeks. After two years of obstruction from the local school board and teachers’ union on more modest measures, the state has finally petitioned for receivership of the troubled district.

Tomorrow, there will be a hearing in York to help inform a judge’s decision to grant the state’s receivership petition. If granted, all of York's district schools will be converted into to charters—one of only a few districts in the country to take such a step.

Today, CF's James Paul joined The Gary Sutton Show on WSBA 910 to provide background on how we got here, who has been blocking other attempts at reform, and what this all could mean for York city students and families.

Listen to a portion of the show below and read James’ recent op-ed “Is Second Worst Good Enough for York Students?” for more.

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.

And for mobile listening, get the SoundCloud iPhone and Android apps.


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They're Complaining Because We're Convincing

DECEMBER 9, 2014  | by CHARLES MITCHELL

This morning’s Harrisburg Patriot-News includes an item that gives unfortunate credence to tired and lame allegations made by critics who are upset with CF’s effectiveness about our research on Governor-elect Wolf’s tax proposals.

My colleague Cindy Hamill does an excellent job in the piece explaining the lengths to which CF goes to obey all applicable laws and regulations. Since this is my responsibility, I take it especially seriously. I could not be prouder of the job our colleagues do in this regard.

Not only that, the primary critic quoted in the Patriot, Jan Jarrett, ought to know better than to make such reckless allegations. In 2012, she left the leadership of a formerly influential advocacy group after admitting to misreporting her group’s activities to the IRS and improperly spending taxpayer money.

Finally, it simply isn’t true that the Wolf campaign “refuted [CF’s] number” (as the article says) regarding the Governor-elect’s plans. As Nate Benefield recently explained on this blog, CF’s research is the most accurate information out there to make sense of the vague promises we heard during the campaign. That’s our role—not to take sides in elections, but to figure out the truth and how it will affect Pennsylvanians’ pocketbooks.

We will continue to provide valuable, timely, and accurate policy analysis (consistent with our guarantee of quality scholarship) proudly and in full compliance with the law.


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The Commonwealth Foundation is Pennsylvania's free-market think tank.  The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.