Nearly three-quarters of Pennsylvania voters underestimate the amount the state spends on education. And when informed of the facts, support for boosting education funding by hiking taxes dropped significantly.
August 26, 2014, HARRISBURG, Pa.—Nearly three-quarters of Pennsylvania voters underestimate the amount the state spends on education, according to a poll released today by the Commonwealth Foundation. And, in a stinging rebuke to the status quo, 53 percent of those polled grade Pennsylvania’s public school system a D or F overall when informed of student achievement levels.
With 80 percent of students failing to make proficiency in reading and math despite a $1 billion revenue increase over ten years, Philadelphia’s public education crisis is at a peak. Today’s funding advance will allow schools to open on time in September, but it doesn’t address the School District of Philadelphia’s decade-long trend of higher costs and dismal performance that has brought it to the brink of failure.
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Despite the rhetoric of "billions of dollars" in cuts from education, school districts across Pennsylvania have been able to increase their reserve funds. School districts had a combined reserve fund balance of nearly $4 billion as of July 2013, a $445 million increase from the prior year.
Jan Murphy of the Patriot-News reports that several districts have fund balances equaling almost a third of their annual budgets. One district—Valley Grove School District—even has a fund reserve of more than 99 percent of its total budget.
As part of the story, the Patriot-News created a database for readers to look up school districts' annual budget and reserve fund balances.
One school superintendent suggested that school fund balances be considered as a factor in state funding—that is, school districts with excessive reserve funds would receive fewer state dollars.
At the Commonwealth Foundation, we've pointed to the growth in school funding reserves, but also outlined a commonsense way to put those funds to use immediately.
Many school districts have built up funding reserves in anticipation of the coming pension crisis—and yes, there is a crisis, and it is getting worse for school districts. Putting money aside for future pension costs makes a lot of sense.
But it would be better to pay off pension obligations now and earn investment income on those fund reserves. If a school district turned their reserves over to the pension system now, however, it would simply be pooled with other funds, and that district would still have to pay the same contribution rate as other districts next year.
To help alleviate our looming pension crisis, lawmakers should look to change state law to allow districts to use reserves to prepay their pension obligations and receive a credit for doing so.
Philadelphia-based Research for Action (RFA) took issue with CF’s Policy Points on spending, enrollment, and staffing trends in the School District of Philadelphia. The RFA rebuttal intended to provide “a more complete grasp of the situation.” Yet they don’t dispute any of the facts we provided in the Policy Points, which offer broader perspective on what has happened in Philadelphia over the past decade. Instead of “informing this important dialogue,” RFA only has spin to contribute.
The following will respond to their criticism, point by point.
Why did CF examine the ten year window between 2002-2003 and 2012-2013?
By not including statistics from the 2013-2014 school year, RFA accuses CF of using “selective data points to build a case.” Our Policy Points relied on data from the Pennsylvania Department of Education (PDE) Annual Financial Reports, Public School Enrollment Reports, and Professional Personnel Reports. For each set of reports, the most recent year of available data is 2012-2013, so naturally, this is where we concluded our analysis. PDE statistics from 2013-2014 were not available. Far from using “selective data points,” the CF analysis draws on the most recent available information on the preceding decade.
Given the high levels of poverty in Philadelphia, shouldn’t low test scores be expected?
RFA notes that “nobody should satisfied with academic performance among city students.” The authors then qualify this statement by adding that Philadelphia’s poverty rate is one of the highest in the nation and “its [National Assessment of Educational Progress] scores on most categories are comparable to cities such as Los Angeles or Chicago with significantly lower poverty rates.” In other words: Philadelphia scores are lousy, but they are similar to the scores of other cities with high levels of poverty. RFA provides the chart below, which does very little to support their claims.
Philadelphia may have a slightly higher poverty rate than Los Angeles, but it also has lower test scores in three of the four categories. Compared to Chicago, Philadelphia scores are lower in all four categories. RFA is thus being rather liberal with the word “comparable.” Also of note: the only listed district with a higher poverty rate—Dallas—has higher average test scores than Philadelphia in all four categories. In this case, even the “selective data points” chosen by RFA do not support their arguments.
RFA claims the CF analysis of academic achievement “rests solely…on the National Assessment of Educational Progress (NAEP).” This is false, as the CF report also compares how charter schools stack up against district schools on the Pennsylvania School Performance Profiles (SPP). Charters significantly outperform district schools in Philadelphia on this metric, which is noteworthy, since they both operate in similar environments of poverty.
When it comes to SPP scores, we agree with RFA that cyber charters have been underwhelming. Of course, cyber schools have the ultimate incentives to succeed and improve: they will be shut down if they persistently fail, and they only receive funding when parents choose these schools as the best place to educate their children.
Throughout their rebuttal, RFA insists on singling out poverty as an explanation of poor academic performance. It is dangerous to get caught up in this “myth of helplessness”—a phrase coined by education policy expert Dr. Jay P. Green. Although many students face serious social problems outside the control of local school districts, is this reason enough to oppose school reforms that expand choice, opportunity, and accountability? Poverty must not become an excuse that prevents schools from improving their services to children and families.
Are charter schools contributing to growing costs for the district?
RFA claims that because “charters assume 30 percent of the district’s budget” they “undeniably contribute to the district’s rising costs.” This represents a fundamental misunderstanding of charter school financing.
For each student attending a charter, the child's home school district sends a payment to the charter equaling the district’s per-student spending, excluding all expenditures for adult education programs, community/junior college programs, student transportation, facilities acquisition, construction and improvement services, debt payments, and federal funds received.
The bottom line? Charters schools spend and receive less funding per student than district schools. In Pennsylvania, this discrepancy amounts to an average $1500 per student, money that school districts retain for students they no longer educate. Accordingly, it is wrong to argue that charter schools add additional costs beyond those of traditional public schools.
Charters should not be criticized or punished for attracting new students. It is incumbent on district schools to compete, innovate, and improve in order to win back the lost enrollment, as well as the payments that are sent to charter schools.
What is happening with district enrollment? What implications does it have for spending trends?
Over the last decade, district schools have seen a 25 percent decline in enrollment, while charter schools have seen a three-fold increase. This is where spending per Average Daily Membership (ADM) is helpful, because it includes charter enrollment and provides a complete look at district-wide trends.
Curiously, the RFA report did not address CF’s analysis of spending per ADM—which has unquestionably increased in Philadelphia. This is true over both the 5 year and 10 year snapshot, with an inflation-adjusted 8 percent increase since 2008-2009, and a 21 percent increase since 2002-2003.
Keep in mind, these figures actually underestimate spending in district-run schools, because they include charter enrollment. As mentioned above, charters spend and receive less funding than traditional public schools.
The RFA authors also claim that “districts cannot pare personnel, building, and services costs proportionately” to offset enrollment declines. This fixed costs argument is a classic red herring in the case against school choice.
What about the bond sale?
RFA seems to view a recent Philadelphia bond issue as a smoking gun in the case for increased state and federal funding for district schools. Of course, borrowing the revenue is not a policy supported by CF either then or now. It will amount to more costs over the long term, and it is yet another temporary solution to a long-term problem. If anything, this type of action underscores the urgent need for better financial management. The bond issue does not change the fact that district spending has increased substantially, which is a key finding of CF’s decade-long analysis.
What is happening to class sizes?
The original CF Policy Points was careful not to make any specific claims about average class sizes in Philadelphia. Our report merely presents the facts: the student-to-teacher ratio has declined over the last ten years. In 2012-2013, this ratio was 15.6 to 1. Nowhere did we claim that the average class size is 15 or 16 students. Average class sizes tend to be somewhat larger than the student-to-teacher ratio. But the ratio remains useful information in the context of claims that classrooms are on the verge of skyrocketing to 40 children or more. In light of a declining student-to teacher trend, it’s fair to say such claims are exaggerated and misleading.
Are school districts struggling to meet their obligations for pensions and debt/construction costs?
Absolutely this is the case, and we agree with RFA on this point. There is no disputing that these obligated costs will force a greater percentage of funds to be spent in areas other than classroom instruction. The key question now, however, is how to deal with such fiscal challenges. Do expensive bills for pensions and debt provide carte blanche to raise taxes? This has certainly been the preferred approach over the last decade, and it appears to remain the preferred approach for those in favor of an increased cigarette tax in Philadelphia.
What would a different approach look like? It would include reforms to public employee pensions, an issue we’ve been concerned about for quite some time. Prevailing wage reform is another step that would significantly lower school construction costs.
CF is hopeful that RFA will join us in support of these policy objectives, which would result in important savings to taxpayers, as well as increased flexibility for local school districts feeling the wrath of poor policy decisions from several years prior.
Yesterday, radio talk show host Dom Giordano talked to CF’s Nathan Benefield about the proposed cigarette tax to fund Philadelphia schools.
Dom asked why we care so much about whether another tax is piled on Philadelphia residents. Nate responded, “It’s a very temporary solution … that doesn’t solve the long-term crisis in Philadelphia.” Indeed, another $80 million won’t solve the problems that still exist even after the School District of Philadelphia added more than $1 billion in revenue in the last ten years.
The real victims of this crisis—school kids and their families—won’t be helped by another year of stop-gap measures as costs continue to skyrocket and performance keeps plummeting.
Listen to the conversation here:
See our policy points Philadelphia School Trends, 2002-03 to 2012-13 for more details.
The Dom Giordano Show can be streamed live daily here.
Who are We?
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.