Pennsylvania’s Under-Funded Public Schools and the Special Education Burden

Testimony of Matthew J. Brouillette, President, Commonwealth Foundation

Thank you members of the Committee for the invitation to testify this morning. My name is Matthew Brouillette and I am the president of The Commonwealth Foundation, a Harrisburg-based research and educational institute that focuses on Pennsylvania public policy issues.

In addition to the organization I represent, my testimony offers two additional perspectives. First, I am a former teacher who taught at the middle school, high school, and university levels for many years, and I also served as a public school board member. Second, and most recently, I served as the Director of Education Policy at the Michigan-based Mackinac Center for Public Policy and am intimately familiar with Michigan’s property-tax/school-funding shift of 1994. Later this week, The Commonwealth Foundation will be publishing a policy brief that outlines the success of the Michigan model and will include policy recommendations based on Michigan’s experience. I will be sure that each of you receives a copy of the publication once it is released, but it will also be available on our website at

In my brief testimony today, I would like to provide you with some facts that have been either overlooked or intentionally misrepresented in the current discussions about property-tax/school-funding reform. One of the underlying premises in these deliberations is that Pennsylvania’s public schools are under funded, and that they are under funded because the state has failed to pay its “fair share” of the cost of K-12 education.

Indeed, the notion that the state has been shortchanging its local public schools is an article of faith among Pennsylvania’s education establishment, particularly among school board members. The general argument is that the state has been financially negligent by allowing its share of education funding to decline from roughly 50 percent in the early 1970s to roughly 35 percent today.

While this argument has gone virtually unchallenged by the media and many policymakers, The Commonwealth Foundation decided to check the facts. In a recent policy brief, we analyzed more than three decades of data on school revenue in Pennsylvania and found that the taxpayers of this Commonwealth have been extremely generous when it comes to funding their schools. The data also show that state-level support has remained relatively constant for more than 30 years.

Here are the facts. Total school district revenues increased by more than 80 percent in inflation-adjusted dollars from $8.25 billion in 1968 to more than $15 billion in 2000. As this chart demonstrates, revenues to the public schools—particularly since the early 1980s—have dramatically increased year after year, regardless of academic outcomes. (See attached.)

With regard to the state’s share of total district revenues, the state has contributed between 37.1 percent and 44.7 percent between 1968 and 2000—a fluctuation of a mere 7.6 percentage points over three decades. As this next chart demonstrates, and contrary to the claims of many special interest groups, the state has never funded local school districts at the 50-percent level. (See attached.) Nevertheless, this has not stopped them from accusing the state of negligence and demanding more taxpayer money.

These school officials are correct, however, when they claim that the percentage of the state’s share has declined, albeit minimally. But this is only because the tax increases imposed by school boards have far outpaced the state’s 67-percent increase in real dollars between 1968 and 2000. During this same time period, school boards increased local property taxes in real dollars by more than 98 percent from $3.3 billion to $6.5 billion. It is clear that the willingness of school boards to “tax out” local property owners and their unwillingness to control spending is the primary cause of Pennsylvania’s current property tax crisis.

School board members, of course, continue to claim that the annual funding increases from the state are still not enough. Their reason for double and triple the rate of inflation tax increases is attributed to ever-increasing special education costs. This is a widely shared and generally accepted defense. However, once again, under closer scrutiny, this special education burden appears to be more fiction than fact.

Enclosed with the materials I have provided you today is a hard copy of a soon-to-be-released Commonwealth Foundation Policy Brief from Dr. Jay Greene of the Manhattan Institute. Dr. Greene’s paper analyzed the growth in special education in schools since the passage of the Individuals with Disabilities in Education Act in the mid-1970s.

Dr. Greene found it true that the proportion of children in special education has increased significantly since the IDEA began. The percentage of K-12 students identified as needing special education rose from 8.3 percent in 1976-77 to 11.8 percent in 1998-99—an increase of 3.5 percentage points. However, Dr. Greene notes,

an increase in the percentage of students identified as needing special education does not necessarily mean that there has been an increase in the percentage of students with disabilities, any more than an increase in reports of domestic violence necessarily means there is more domestic violence. Trends in these statistics are sensitive to reporting biases and shifting definitions.

A close examination of different categories of special education enrollments suggests that, while the identification of special education students has increased, the actual number of disabled youngsters has remained approximately steady. Almost the entire increase in special education enrollments since 1976 can be attributed to a rise in one category, called “specific learning disability,” which has more than tripled from 1.8 percent of the student population in 1976-77 to 6 percent in 1998-99. All other categories of special education combined, including mental retardation, serious emotional disturbance, deafness, blindness, autism, and head injury, have actually declined from 6.5 percent to 5.8 percent of the student population during the same period.

Whatever the causes of the increase in children diagnosed with “specific learning disabilities,” Dr. Greene says that it is extremely unlikely that non-school factors are producing more children afflicted with such disabilities while producing no increase in all other categories of disability combined. But this is not how defenders of the education status quo see it. They persist in arguing that schools are being drowned by a tidal wave of children with learning problems caused by forces outside the school system. The most common non-school factors being cited are improvements in medical technology, the de-institutionalization of children with serious difficulties, and increases in childhood poverty. Dr. Greene addresses each of these potential non-school phenomena in his paper, so I won’t go into the details here but instead encourage you to read the full report.

These are the facts: Pennsylvania’s schools are well funded; the state has consistently provided double the rate of inflation funding increases to local school districts; and the special education burden likely has more to do with educational malpractice at the local level than unfunded mandates from the state.

Therefore, it is my hope that these facts are considered as the General Assembly attempts to enact property-tax/school-funding reform. Obviously, simply shifting revenue sources from property taxes to some other state source will not rein in our schools’ profligate spending habits. The General Assembly must address the expenditure side of the equation as well as the revenue side.

How do we do this?

Obviously, there is no simple political answer. But we do know that Pennsylvania schools currently receive, on average, more than $10,400 per pupil. Is this adequate? Is it too much? Or it is just right? The problem is that we just don’t know. We don’t know because we lack the mechanism necessary to determine the cost of a quality education. While some schools provide a quality education for less than $3,500 per child, others can’t get the job done with more than $13,000 per student.

How then can we determine adequacy? The laws of economics tell us that competition between multiple providers is the only mechanism by which we can accurately determine the price of any good or service. It is competition that establishes adequacy. This means that the only way Pennsylvanians will ever know how much money is necessary to provide children with a quality education is through the competitive delivery of education by multiple providers.

Today, we have no idea how much a quality education actually costs because there is an utter lack of competition among schools. But we know all too well that monopolies consistently strap taxpayers with high costs and trap children in poor-performing schools.

While it is true that there are myriad factors contributing to a child’s success or failure in school, study after study makes clear that more dollars will not produce more scholars in a monopoly system. Yet that is precisely what those who benefit from the multi-billion system demand—more money; and that is exactly what the school boards and General Assembly provide year after year. But by almost any measure, Pennsylvanians can conclude that they are getting a poor return on their $17.4 billion annual investment in public education.

If Pennsylvania policymakers are serious about controlling costs in education, competition among schools will have to be introduced into the system. Although forcing schools to compete and empowering parents with choice are not panaceas, they will definitely drive continuous quality improvements in our classrooms and bring fiscal accountability to the front office.

These reforms are not politically easy, of course. The school employee labor unions and school boards will continue to vehemently oppose parental choice in education, and do so “for the children.” But I encourage you to challenge their defense of the status quo. And I will conclude my remarks today with a policy recommendation that will do just that.

Given all the complaints about the increasing costs of special education—for whatever reason—why don’t we allow every special education child to take his general education tax dollars to an alternative school? This would help relieve school boards of their special education financial burden. Of course the education establishment will oppose this idea with the myth that private schools refuse to take special education students. So why don’t we test their hypothesis? If they are correct, nothing will be lost. But if they are wrong, both children and taxpayers will benefit.

Thank you.

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Matthew J. Brouillette is president of the Commonwealth Foundation, a non-partisan, non-profit public policy research and educational institute based in Harrisburg, Pa. Dispelling the Myth of Pennsylvania’s Under-Funded Public Schools can be accessed here.