Education Spending

Recent Issues

Truth Lacking on 'Schools That Teach' Tour

AUGUST 3, 2015 | Commentary by NATHAN BENEFIELD

Gov. Wolf’s 'Schools That Teach' public relations tour and statewide ad campaigns supporting him aren’t telling voters the truth about the budget impasse or the governor's tax proposal.

Education Commission Proposes Smarter, Student-Based Spending

JUNE 18, 2015 | News Availability by COMMONWEALTH FOUNDATION

The Commonwealth Foundation has long advocated for an education funding formula based on student enrollment and student need. This afternoon, the Basic Education Funding Commission released a report that aligns with those objectives.

School Spending Update, 2013-14

JUNE 12, 2015 | Policy Memo by JAMES PAUL

The Pennsylvania Department of Education recently released new expenditure and revenue figures for the 2013-14 school year. This memo presents trends in school spending, revenue, pension contributions, district fund balances, and property tax increases. 

Recent Blog Posts

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