An Inconvenient Truth: School Spending & Revenue at All-Time Highs

For Immediate Release
Commonwealth Foundation
Contact: 717-671-1901

Contrary to Cries of Desperation, District Revenue & Spending are at All-Time Highs

Spending on Salaries Dwarfed by Pension Costs

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.

Busting the Myth

  • Pennsylvania school district revenues exceeded $26 billion in 2012-13, which is $974 million more than the previous year and $800 million more than the previous high.
  • School districts are also spending at record-high levels, with a total last year of more than $25 billion. That’s $803 million more than the prior year and $467 million more than the previous record high.
  • Despite the fact that many complain of budget shortfalls, school district reserves grew by $445 million in 2013 to nearly $4 billion.
  • Property tax growth has slowed, growing just 1.9 percent last school year.  That contrasts that to the average annual growth of 5.6 percent over the past 30 years.

“Despite a union-driven narrative of education funding ‘cuts,’ in reality, public schools are receiving and spending more than ever before,” said Nathan Benefield, vice president of policy analysis at the Commonwealth Foundation. “Further, legislation that tightened loopholes by which school districts could raise taxes without voter approval seems to be working to restrain property tax growth.”

Where Does All the Money Go?

Employee benefits continue to outpace other categories, more than doubling in cost over the last 10 years. While salaries for staff and teachers grew by 22 percent, employee benefits, driven by escalating pension costs, grew by 108 percent. Public school pension contributions are scheduled to continue to rise in the coming year.

Benefield commented:

“While increases in school districts’ reserve funds call into question the idea that education spending has been excessively cut, these reserve funds indicate school districts are preparing for the coming spike in contributions to teachers’ pensions.Taxpayers would be better served if public schools invested these funds in the pension system now, earned investment returns, and paid off part of our more than $50 billion unfunded pension liability.”

Nathan Benefield is available for comment on the facts of education funding in Pennsylvania.

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The Commonwealth Foundation, founded in 1988, crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.