Pennsylvania school districts spent $27.4 billion in 2014-15, an all-time high, according to the latest data from the Pennsylvania Department of Education. This represents a $1.3 billion increase from 2013-14.
Districts spent nearly $16,000 per student in 2014-15, up from $15,019 in 2013-14. Total education spending steadily increased over the last five years, save for 2011-12 upon the expiration of temporary federal stimulus dollars.
School district reserves total $4.3 billion statewide. When cries for more school funding—and property tax increases—are constant, how much is too much to hold in reserve?
Contradicting the claim that Pennsylvania underfunds its school system, public school spending hit an all-time high in the 2014-15 school year, approaching $27.4 billion—or $15,854 per student—according to the latest state Department of Education data.
Pennsylvania school districts spent approximately $27.4 billion in 2014-15. This represents a $1.3 billion increase from 2013-14, despite a 12,000 student decrease in average daily membership.
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Auditor General Eugene DePasquale recently uncovered $2.5 million improperly paid to nine public charter schools. At issue is whether buildings owned by charter schools are eligible for the state's lease reimbursement program.
But in the scrutiny rightly given to these payments, are we missing an even bigger issue?
According to DePasquale:
The Pennsylvania Department of Education’s [PDE] own guidelines for the lease reimbursement are clear that buildings owned by the charter school are not eligible. The problem is that PDE makes no effort to verify ownership of the buildings or look for conflicts of interest between the school and related parties. They simply write a check for whatever amount the charter school submits. That is a disservice to Pennsylvania students and taxpayers.
Jan Murphy of PennLive adds:
Robert Fayfich, executive director of the Pennsylvania Coalition of Public Charter Schools, said he believes this dispute comes down to a difference of interpretation of the state's lease reimbursement guidelines.
"The auditor general takes the position if the building is owned by a charter school then it's not reimbursable and PDE says ownership is irrelevant to reimbursement," he said. "I'm sure charters are working based on the recommendation from their legal counsel plus direction from PDE."
DePasquale acknowledged that charter schools were not at fault for applying for reimbursement but he said the education department was wrong in making those payments.
To correct the mistake, the Department of Education could claw-back improper payments. State lawmakers could also pass legislation clarifying the state’s reimbursement guidelines.
But DePasquale’s audit should raise a more important question: Is state government doing everything it can to maximize the value of each dollar spent on public education?
After all, this is not the first time the Auditor General has uncovered examples of wasteful education spending. In May, for example, DePasquale estimated districts could save nearly $55 million if they made use of competitive bidding for transportation services.
There are numerous other ways for districts to save money. CF has long championed prevailing wage reform (and other mandate relief), pension reform, and collective bargaining transparency to ensure taxpayer funds are directed to the classroom, where they belong.
These, too, must be top priorities for lawmakers and public officials who seek to maximize the value of each education dollar.
Let’s talk for a moment about rainy days—specifically, the need to save funds to spend on one. Several school board administrators and lobbyists have taken issue with CF’s searchable, sortable database of school district fund balances, showing public schools are sitting on over $4 billion in "rainy day funds." Meanwhile, 85 percent of school districts plan to raise property taxes.
A Temple University report, authored by a former Pennsylvania School Boards Association employee, argues:
Just as an individual or family should maintain a savings account for unforeseen expenses or emergencies, school districts should also have funds in reserve to pay for emergency repairs or cover unexpected interruptions in revenues – such as a layoff at a major factory which suddenly affects tax collections.
If an individual or family could impose real estate taxes on their friends and neighbors, this analogy might pass muster. But an obvious difference exists between families socking away their own hard-earned money in a savings account and a school board severely over-taxing its district. The CF database shows 21 districts with over 50 percent (!) of their total expenditures squirreled away in reserve.
Every dollar held in excess by a school board is money earned by taxpayers that could otherwise be saved, invested, or spent by taxpayers. While some school districts stock up reserve funds, thousands of Pennsylvanians struggle to balance their family budgets.
Typically, the school board lobby defends excessive reserves by drawing an ironclad distinction between unassigned funds and assigned or committed funds. As CF explained in an earlier blog:
A district’s fund balance—what it owns minus it what it owes—is comprised of assigned, committed, and unassigned funds. Assigned and committed reserves are available funds designated for a specific purpose, while unassigned funds are available for any purpose.
School board directors argue the public should only scrutinize unassigned funds, since assigned and committed funds have already been earmarked. [For example, the Temple University report focuses solely on unassigned funds. Other funds are largely ignored.] They fail to mention, however, how easily money can be shifted among the three funds—often with a mere majority vote at the next board meeting.
The CF database anticipates this line of argument—and provides both total and unassigned reserve funds as a percent of expenditures. You’ll notice many districts keep their unassigned funds stocked to the legally mandated maximum amount at which they can still raise taxes, between 8 and 12 percent of total expenses, depending on district size.
Whether school boards should be judged on all reserve funds or simply unassigned funds is ultimately for taxpayers to determine. But the fact remains that dozens of Pennsylvania districts amassed large rainy day funds while also seeking tax increases.
What’s more, the Temple University report makes no mention of school districts’ capital reserve funds—yet another pot of money districts use to plan for construction projects.
Drawing attention to reserve funds is critical in order to increase transparency and raise awareness for taxpayers. While few school districts are sitting on a “pot of gold,” Pennsylvanians have a right to know that almost all districts enjoy alternatives to higher taxes.
The SAT, or Scholastic Aptitude Test, is an important indicator of public education quality in Pennsylvania. Currently, the commonwealth ranks 36th out of the 50 states and 3 US territories (Washington DC, Puerto Rico, and US Virgin Islands). That's one place higher than last year.
A large percentage of Pennsylvania students take the SAT, which does contribute to low overall performance. Average SAT scores are higher in states with lower test participation, typically because only the highest performing students sit for the test. Among states with a participation rate of at least 70 percent, Pennsylvania ranks 6th.
Historical data shows SAT scores are largely unchanged since 1970. Meanwhile, state education spending per student has increased 63 percent. This long-term trend undermines constant calls for more education spending to improve public schools.
To increase student achievement, we must change focus from more spending to reforms that change how tax dollars are spent. One such reform is the creation of education savings accounts, which will give parents stronger control over how, and where, their son or daughter will best succeed.
Below is a table of all states scores and participation rates. Details on Pennsylvania’s statewide performance report can be found here.
Last year, nearly 42,000 Pennsylvanians left the state to pursue their dreams elsewhere—that's one person every 12 and a half minutes. Why is money walking out of Pennsylvania? That’s the topic of the second episode of Commonwealth Insight, our new, bi-weekly podcast featuring state ...