June 10, 2014, Harrisburg, PA – Although it doesn’t fit the popular narrative of cash-starved school districts, spending and revenues are at all-time highs, reserves have increased, and property tax growth has slowed. The real trouble lies in every-growing pension costs, according to a new analysis by the Commonwealth Foundation.
The Pennsylvania Department of Education recently released its annual summary of public school finances for the 2012-13 school year. Here are some basic facts about school finances and spending, that you might not be aware of.
The major problems we need to address with charter school funding aren’t specific to charter schools but are inherent in our system of education funding and spending. I suggest that instead of singling out charter schools we reexamine our entire system of funding public education.
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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.
The recently passed Pennsylvania state budget sets a new record for state funding for public schools. The chart below illustrates this growth over the years.
The total budgeted for the 2014-15 fiscal year—$10.04 billion—is $290 million more than the prior year. Indeed, in represents an increase of nearly $1 billion since 2011-12 (Governor Corbett's first budget).
It is even higher than years when state tax dollars were supplemented with temporary federal stimulus funds—$400 million more than the combined total in 2010-11 (and $1.5 billion more when just looking at state tax dollars).
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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.