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.
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.
Today, Commonwealth Foundation Vice President of Policy Analysis Nathan Benefield will testify before the Senate Environmental Resources Energy Committee and Senate Finance Committee on the impact of Gov. Wolf’s proposed natural gas severance tax.
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Much of the reaction to the Basic Education Funding Commission’s final report has been positive—and for good reason. The commission proposed a formula that finally distributes funds based on enrollment and student need.
But a new formula alone is not sufficient to rectify Pennslyvania’s irrational system of distributing state aid to public schools. CF has written and testified about the state’s “hold harmless” provision, which guarantees each school district the same level of state funding it received the previous year. While the policy ostensibly exists to prevent school districts from being harmed by reduced funding, it has, in fact, brought harm and inequity to hundreds of growing districts across the commonwealth.
In order to ensure the year-long funding commission's work produces meaningful policy reform, a sensible transition away from hold harmless is essential. If, for example, the new formula is only applied to new spending—and some $5 billion in education funding remains attached to hold harmless—the broken funding method will remain unscathed.
In its report, the funding commission offered only broad suggestions regarding hold harmless. During a press conference last Thursday, Sen. Pat Browne explained phasing out hold harmless is a “budget decision” that must be tackled by the entire General Assembly.
This morning, the Senate Education Committee advanced SB 910, legislation that will implement the new formula. Unfortunately, SB 910 retains hold harmless for Basic Education spending during the “base year” (which will mean either 2014-15 or 2015-16) and applies the new formula only to future spending.
This is a moderate improvement over the status quo, as explained by Kara Newhouse in Lancaster Online:
In the past, districts were guaranteed at least as much money as they got the year before, and then some. Then the next year, the district would be guaranteed that new amount. And so on.
Doing that every year allowed inequities to snowball.
The commission instead wants to freeze the amount that districts get (either this year or next year) as the guaranteed base.
In other words, SB 910 would put an end to the “snowball effect” of annually resetting hold harmless levels, but it falls considerably short of an ideal outcome. The commission’s formula is rational, equitable, and transparent, which is why applying the formula to the entire Basic Education line item is preferable.
If lawmakers are hesitant to make substantial reforms in a single budget year, they could distribute a portion of the Basic Education appropriation under the proposed formula over a set time period. The funding commission, in its report, suggested 10 percent over 10 years, but this could be adjusted as lawmakers see fit. The key is to begin phasing in the new formula to as much of the line item as possible, while giving school districts reasonable time to prepare for new funding levels.
The sooner we distribute the bulk of education funding by a student-based formula, the better for Pennsylvania’s public school children.
A piece of legislation recently passed the Senate Education Committee that would provide a new solution for underperforming public schools.
Schools in the bottom 5 percent of statewide performance would be identified as “intervention schools”. Their school boards would be given more capabilities, such as increased flexibility to employ better teachers and more authority to spend funds efficiently, to improve students’ education.
James also elaborates on the bill’s creation of an Achievement School District (ASD).
The ASD would absorb schools in the lowest 1 percent and provide them with a completely “new school board that has new incentives” rather than continuing with the destructive status quo.
Click here or listen below to hear more.
The Gary Sutton Show airs daily on WSBA 910AM in the York area.
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Pennsylvania's public sector pension crisis is undeniable.
Consider the burden it places on local school districts, whose pension contributions increased from $1.4 billion in 2012-13 to $1.9 billion in 2013-14. In 2008-09, districts spent $562 million on pension contributions; schools have thus seen more than a three-fold increase in only five years.
And these costs will continue rising in coming years.
Take a look at our most recent Policy Memo for more information on education spending trends.
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