Overcoming the Philadelphia School Crisis

Note: This commentary was published in The Philadelphia Inquirer.

Think there’s a problem with Philadelphia’s schools? You’re not alone.

More than half of Philadelphia voters said their schools deserved a D or an F grade in a poll released last month. Voters across the state reflected that view about their own local school districts, but only after hearing about dismal statewide performance results. Parents in Philadelphia were already deeply dissatisfied with the education of their children – and for good reason.

More than four in five students in Philadelphia failed to achieve proficiency in both reading and math in 2013, according to the Nation’s Report Card. Compared with similar cities, Philadelphia had twice the number of students performing at “below basic” level.

Sadly, there are few signs that academic achievement is heading in the right direction. And these problems won’t be solved simply with increased funding – that remedy has already been tried.

From 2003 to 2013, the district received an additional $1 billion in revenue. Spending per student increased by 21 percent. And while the district has laid off staff in recent years, district enrollment dropped by one-quarter – in large part due to students fleeing to charter schools.

Even more bad news looms on the horizon.

As in the rest of the state, a tsunami of pension debt is flooding Philadelphia. More and more educational dollars are going to pay pension costs, leaving less money for schools to spend on hiring additional teachers and support staff.

According to state data, Philadelphia’s contributions to the Public School Employees’ Retirement System (PSERS) increased from $42 million in 2009 to more than $101 million in 2013. Pension costs will reach $175 million this coming school year and continue rising thereafter.

To put that increase in perspective, consider how it compares with average teacher salaries. The $133 million spike in pension costs equals the salary of more than 2,000 public school teachers. That represents roughly one out of every four teachers in the district.

A school system already struggling to educate its children will be overwhelmed by mandated pension costs. These costs will force even deeper program cuts, widespread staff reductions, or exorbitant tax increases at the state and local level.

To address the mounting crisis – both in the classroom and on the balance sheet – legislators should have two objectives.

First, the pension predicament must be confronted and resolved, once and for all.

Benefits already earned must be protected, but unearned benefits should be adjusted through a new formula, higher retirement age, and increased employee contributions. New government employees should be shifted to a defined-contribution, 401(k)-style plan to make future costs more predictable. A 401(k) plan offers portability and ownership, while empowering public employees with more control over their retirement.

At the same time, steps must be taken to actually enhance the quality of educational options – not by simply increasing spending, but through greater school choice and protecting excellent teachers.

Expanding school choice would empower Philadelphia parents – not zip codes – to determine where children are educated. This means embracing charter schools, which outperformed district schools on the 2012-2013 School Performance Profile. Charters are already a popular option for parents in Philadelphia, as evidenced by the thousands on waiting lists and the boom in charter enrollment across Pennsylvania, up 300 percent since 2002.

Greater school choice also means expanding the Educational Improvement Tax Credit (EITC), which provides lifelines to low- and middle-income families seeking alternatives to district schools. Currently capped at $100 million per year, the EITC should be increased to serve more students with scholarships – as the tax credit program has successfully done for more than a decade at a fraction of the cost of traditional public schools.

Another critical step is to overhaul inflexible seniority rules that cause layoffs for many terrific, young public school teachers. Believe it or not, Pennsylvania is one of six states that forces districts to rely exclusively on seniority when determining which teachers should be retained during layoffs. Teaching performance is not considered. This must change.

The situation in Philadelphia is daunting but not hopeless. Responsible pension reform, combined with fundamental changes to education policy, can free districts from the crushing weight of unfunded liabilities – all while opening new doors to families and children trapped in a failing system.

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James Paul is a senior policy analyst for the Commonwealth Foundation (CommonwealthFoundation.org), Pennsylvania’s free market think tank.