Property Tax Relief through School Choice

Pennsylvanians deserve property tax reform and relief—not a shift and a sham. But the only way to relieve all homeowners while not burdening other taxpayers is to reduce public school spending.

The Property Tax Relief Scholarship Act (PTRSA) will do just that while expanding educational opportunities for Pennsylvania children. If enacted, this innovative proposal would reduce public school spending, provide substantive property tax relief to all homeowners, and do it by giving parents the ability to transfer their children from high-cost public schools to lower-cost alternative schools with $3,000 scholarships.

By providing students with scholarships (funded by tax revenues from Act 71, the gambling law) for tuition at any state-recognized alternative school, district taxpayers must no longer educate those transferring children at an average cost of $10,900 per pupil in 2004-05. These savings would be returned to homeowners in the form of property tax relief.

The PTRSA utilizes two different models for property tax reduction: the Average Cost Per-Pupil model and the Marginal Cost Per-Pupil model. Lawmakers would choose which model to implement. The Average Cost model requires the entire per-pupil expenditure for the exiting child to be applied to property tax relief ($10,900 in 2004-05). The Marginal Cost model allows districts to retain funding for so-called “fixed costs,” such as transportation, debt payment, construction, and facilities. The statewide average Marginal Cost for charter schools is about 73% of total per-pupil spending ($7,957 of the $10,900). Thus, school districts would keep 27% ($2,943) of the per-pupil expenditure for each child they no longer have to educate, with the remainder going towards property tax relief.

Critics claim this Marginal Cost figure is too low, arguing that school district costs don’t vary as students come or go (and that charter schools receive too much funding). They argue that state mandates prevent districts from reducing costs, even if enrollment declines. These claims are disingenuous, however.

Those who argue that schools cannot reduce spending when students leave—primarily the school boards’ association and school employee labor unions—also argue that schools must increase spending when enrollment increases. They want a one-way street toward more tax money, claiming that a high level of spending is needed to provide basic instruction for each student. In other words, their estimated cost of educating one child changes based on which estimate allows school districts to get or keep more money.

If critics believe the Marginal Cost of the PTRSA is too high, they should work with supporters to establish a figure that reflects the true cost of educating one less or one more student. If they believe state mandates prevent spending reductions, they should fight those costly mandates. Unfortunately, they are not seeking solutions but continue burdening homeowners with higher and higher taxes.

Indeed, public school spending on non-instructional functions has skyrocketed over the years. From 1995 to 2004, non-classroom expenditures (excluding debt payments and construction costs) grew by 64%—almost three times the 24% rate of inflation. During those ten years, public school enrollment increased by 40,556, yet the number of adults employed in the public schools grew by 41,982. That represents 1,426 more new employees than new students—and over 60% of the employment growth was in support and administrative staff, not new teachers.

School districts can reduce spending on non-instructional services—without cutting teachers or harming educational quality. Although the Marginal Cost model would not provide homeowners with as much property tax relief as the Average Cost model, it would provide higher per-pupil expenditures for those students choosing to stay in the public schools as others migrate to alternative schools.

The benefits of the Property Tax Relief Scholarship Act are clear, even under the Marginal Cost model. It would (1) increase per-pupil spending in public schools while reducing the overall costs to taxpayers, (2) reduce public school class size and school overcrowding, (3) provide hundreds of thousands of parents the financial ability to choose alternative schools for their children, and (4) reduce property taxes by an average of nearly three times the relief promised under Gov. Ed Rendell’s Homeowner Tax Relief Act of 2004.

Pennsylvanians will not accept a shift or a sham when it comes to property taxes. They understand that relieving one taxpayer only to burden another fails to address the root cause of the problem and will only temporarily ease the pain. Only the Property Tax Relief Scholarship Act addresses the spending in public education and provides real relief while improving educational opportunities for Pennsylvania’s children.

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Nathan A. Benefield is a policy analyst with the Commonwealth Foundation (, an independent, nonprofit public policy research and educational institute based in Harrisburg.