1 PENNSYLVANIA’S K-12 EDUCATION FUNDING SYSTEM presented to Education Finance Symposium November 15, 2007 by Ronald Cowell, President The Education Policy and Leadership Center
Dec 31, 2015
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PENNSYLVANIA’S K-12 EDUCATION FUNDING SYSTEM
presented to
Education Finance Symposium
November 15, 2007 by
Ronald Cowell, President
The Education Policy and Leadership Center
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FRAMEWORK FOR EDUCATION POLICY
• Governance• Standards (Expectations)• Assessment (How are we doing)• Consequences• Educational Capacity• Education Finance• Alignment
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WHY STATE FUNDING FOR EDUCATION
• State Constitutional Mandate for General Assembly to Provide for System of Schools
• State Incentive for local government to fund schools
• State funding to reduce local taxes
• Need for Equity
• Need for Adequacy
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PENNSYLVANIA HISTORY
• 1776 State Constitution: “A school or schools shall be established in each county by the legislature, for the convenient instruction of youth….”
• 1790 State Constitution: “The legislature shall, as soon as conveniently may be, provide, by law, for the establishment of schools throughout the State, in such manner that the poor may be taught gratis.”
• 1831: Common School Fund established with $100,000 per year available
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PENNSYLVANIA HISTORY
• 1834: Free School Act required each municipality to establish an elected school board; state funding if matched at least 2:1 by county dollars
• 1835-1897: State school funding to counties based on number of taxable inhabitants in county
• Attempt in 1863 to base funding on number of children failed because of difficulty in counting children in attendance
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PENNSYLVANIA HISTORY
• 1874 PA Constitution: “The General Assembly shall provide for the maintenance and support of a thorough and efficient system of public schools, wherein all the children of this Commonwealth above the age of six years may be educated, and shall appropriate at least one million dollars each year for that purpose.”
• 1895: PA’s first compulsory attendance law• 1897: Number of children ages 6-16 added
to state funding formula
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PENNSYLVANIA HISTORY• 1923: First effort to use state funding for
equalization • 1930 to 1950: State aid increases from 17% to
40% of costs• 1947: General Assembly creates State Tax
Equalization Board to determine true market values of real property in each school district
• 1949: New School Code - State aid based upon “district teaching units” X fixed dollar figure established by Legislature X district’s standard reimbursement fraction
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PENNSYLVANIA HISTORY• 1957: State aid formula begins to consider
“actual instructional expense (AIE)”• Mid 60’s-1983: Statutory goal that the state
pay 50% of the statewide district instructional costs
• 1968: For 1966-67 school year and thereafter, State began to pay on basis of “weighted” pupils and local wealth; state also began to make additional payments for children in poverty, density, sparsity, and homebound instruction
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PENNSYLVANIA HISTORY
• 1971: State income tax established• 1974-75: State reimbursement at 54%• 1977: Personal income valuation becomes a
factor in determining district aid ratio (40%)• 1977-1980: State reimbursement averages
46% per year• 1982: All districts held harmless plus $72
million supplement for “Equalized Supplement for Student Learning (ESSL)
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PENNSYLVANIA HISTORY
• 1983: Equalized Subsidy for Basic Education (ESBE) enacted; includes “Factor for Educational Expense” (FEE); removes 50% funding requirement
• 1991: Special Education funding changed• 1992: ESBE abandoned• 1993 and 1994: Modest “foundation”
funding guarantee included in state funding• Ridge/Schweiker Administration
Vouchers & Charter School Funding
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PENNSYLVANIA HISTORY
• 2002 Rendell Campaign• 2003-04 Budget Debate• Accountability Block Grants in 2003-04• Act 72 of 2004• Special Session Act 1 of 2006 on Property
Tax Relief• Current efforts to cap state spending• 2007 Context: Requirements of State
Standards and NCLB
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KEY ELEMENTS OF 80’S ESBE FORMULA
WADMs (Number of Students)X
Aid Ratio (Relative Wealth of District)X
FEE (Cost Factor)=
Basic Subsidy to the District+
Other Factors (poverty, density, etc.)
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SUBSIDY PLUS “ADD-ONS”
• Poverty
• Density, Low-density
• Sparsity
• “Hold Harmless”
• Transportation
• Special education
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2007-08 EDUCATION BUDGET
• Basic Ed Subsidy - $4.951 billion (+617 million)
• Accountability Block Grants - $275 million• Transportation - $507 million (even)
• Special Education - $1.010 billion (+27 million)
• Social Security - $494 million (+20 million)
• School Employees’ Ret - $451million (+68 m)
• Higher Education - $1.604 billion (+41 million)
• PHEAA - $451 million (even)
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2007-08 EDUCATION BUDGET
• Pre-K Counts - $75 million (all new)
• Classrooms for the Future – $90 Million (+70 m)
• TOTAL BASIC & LIBRARIES - $9.384 billion
(Increase of $542 million)
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PUBLIC K-12 SPENDING
2004-05 1991-92 Amount Rank Amount Rank
Per Pupil Amounts for Current Spending
US $8,701 --- $5,001 ---PA 10,552 8th $6,050 6th
Source: US Census Bureau April 2007
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SO WHAT’S THE PROBLEM?
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INCREASING EXPECTATIONS AND CONSEQUENCES
for STUDENT ACHIEVEMENT• State Academic Standards Adopted• NCLB (All proficient by 2014)• State Requirement to Show Proficiency
for Graduation beginning in 2004• Implications for Higher Ed/Employment• Governor’s Commission on College and
Career Success Recommendations• Future State Graduation Requirements• Globalization and “Flat World”
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GOAL OF 50% STATE SHARE ABANDONED (1983)
STATEWIDE ED FUNDING FORMULA ABANDONED
(1991)
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SPECIAL EDUCATION FUNDING
• State paid 100% excess cost until 1991
• New formula as of 1991-92• Assumes 1% and 15% incidence rates• No consideration of district costs or wealth• In 2005-06, more than $1 billion non-reimbursed
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CHARTER SCHOOLS
* Approved by district or state appeal board• No limit on number in state
• Cost borne by local districts• Law assumes some savings to districts
• Almost half-billion annual cost to districts• Since 2002-03, state will pay up to 30%
• Cyber charter schools
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COST DRIVERS
Retirement CostsHealth Care Costs
Construction
Task Force on School Cost Reduction
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STATE/LOCAL SHARES for Elementary/Secondary Public Education
State Share Local Share PA National PA National
2004-05 35.6% (47.0) 56.2% (43.9)2003-04 35.9% (47.1) 56.1% (43.9)2002-03 36.7% (49.0) 55.8% (42.7)2001-02 37.4% (49.4) 55.3% (42.8)2000-01 37.3% (49.9) 56.3% (43.0)1999-00 37.9% (49.8) 55.8% (43.1)1998-99 38.3% (49.5) 55.8% (43.6)1997-98 38.7% (49.0) 55.5% (44.4)1996-97 39.2% (48.8) 55.4% (44.8)1995-96 39.8% (48.1) 54.8% (45.5)1994-95 40.0% (47.5) 54.8% (46.0)1993-94 40.1% (45.9) 54.5% (47.6)1992-93 39.9% (46.4) 54.2% (47.0)1991-92 41.0% (47.3) 53.3% (46.2)
Source: US Census Bureau April 2007
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PUBLIC K-12 REVENUEPER $1,000 PERSONAL INCOME
Source: US Census Bureau April 2007
2004-05 1991-92Amount Rank Amount Rank
US - Total $50.27 --- $48.87 ---PA - Total $52.03 19th $49.98 27th
US Local $22.08 --- $23.25 --- PA Local- $29.26 5th $27.24 13th
US State $23.62 --- $22.43 ---PA State- $18.54 40th $20.25 36th
Differences to 100% come from federal sources. Source: US Census Bureau.
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STATE FUNDING APPROPRIATED PER STUDENT
Source: US Census Bureau April 2007
2004-05 1997-98 1991-92
State $
per pupil
Rank State $ per pupil
Rank State $ per pupil
Rank
US
PA
DE
MD
NJ
NY
OH
WV
4,774
4,350
7,947
4,320
6,790
6,930
4,674
5,752
---
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3
30
7
6
23
12
3,473
3,186
5,311
3,026
4,196
3,855
2,999
4,485
---
32
4
34
8
16
35
6
2,661
2,775
4,137
2,516
4,060
3,290
2,228
3,603
---
18
4
22
5
9
33
6
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RESULT: 2004-05 BURDEN ON LOCAL PROPERTY TAXES
Total K-12 State- Local K-12 % fromwide Revenues Property Taxes Prop T
US $488,452,878 $138,562,170 28.36%
PA $21,519,566 $9,442,884 43.88%
in ooo’s
Source: US Census Bureau April 2007
15.5% Difference = more than $3.335 billion/year
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RESULT: INEQUITY FOR STUDENTS ACROSS PA
Great Inequity for StudentsAmong 501 Districts
In 2005-06, “current expenditures” spending per pupil in Pennsylvania school districts ranged
from $7,420 to $18,445
This means, in an average classroom of 25 students, a gap of almost $275,000 per classroom per year.
Inequitable and Inadequate Resources in a NCLB and Standards-Based Environment with
Equal Expectations for All Students
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RESULT: INEQUITY FOR TAXPAYERS ACROSS PA
Great Discrepancies in Local Effort and Resultant Burden on Local
Taxpayers
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RESULT: INADEQUATE EDUCATIONAL RESOURCES
IN MANY DISTRICTS
• Qualified Teachers• Class Size• Early Ed/Kindergarten Programs• Curriculum• Books, Computers and Materials• Labs, Foreign Languages, Honors/AP
Courses• Facilities not conducive to learning
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TAX RELIEF EFFORTS
• Act 72 of 2004• Act 1 of 2006 Special Session on Property
Tax Relief• Nothing to do with improving education
funding system or meeting the needs of students
• Further limits ability of districts to raise local revenues (referendum)
• What Happens – Failed Referendum?
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ACKNOWLEDGE SOME PROGRESS
• State Funding for Pre-School started in recent years
• Basic Subsidy line item has grown
• Attention to “Foundation” funding
• Accountability Block Grants initiated
• School districts reimbursed 27% for charter school payments
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BUT…..
• State share and state appropriations per student remain far below the national average
• Dependency on property taxes remains, with resultant inequity and inadequacy
• No development of a “system”• Re-negotiating basic elements such as
growth every year• No legacy for Governor Rendell so far
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OTHER ACTIVITY
• Costing-Out Study
• Proposed Statewide Education Finance Reform Commission
• Discussion about TABOR and limits on state spending/taxes
• More Property Tax Relief/Elimination
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PRINCIPLES OF A SOUND STATE EDUCATION FINANCE SYSTEM
• Equity
• Adequacy
• Accountability
• Efficiency
• Predictability
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An ADEQUATE School Funding System will provide and ensure the use
of sufficient funding to establish and maintain
the effective and necessary educational capacity
to provide every student in every school a meaningful opportunity
to accomplish the academic proficiencies for which he or she will be held
accountable.
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ADEQUATE FOR WHAT?
Expectations for Student Performance Established by PA’s Academic Standards
The Expectations of No Child Left Behind Law and Related Policies
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WHAT IS WRONG WITH THE CURRENT PA FUNDING SYSTEM
• PA honors none of these principles• State Share in bottom five in nation• State Appropriations Per Student below
national average• Disproportionate share of state funds are
withheld from poorer districts• Therefore, districts too dependent on Local
Wealth & Property Taxes• Therefore, great Inequity and Inadequacy
among 501 school districts
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WHAT IS WRONG WITH THE CURRENT PA FUNDING SYSTEM
• We have a “Non-System” and there is no attention to development of a statewide “system” of education funding
• State Government has no sense of obligation to students or to honor a commitment to a funding formula
• Annual K-12 Funding is based on political considerations rather than educational
• Advocates must re-negotiate basic funding elements such as growth in enrollments every year
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Key Issues
Should all children in PA
have a “fundamental right”
to a quality public education?
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Key Issues
What is
“student success”
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Key Issues
Does Money Matter?
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Key Issues
Who should pay for the
implementation of
No Child Left Behind?
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Key Issues
State Mandates?
Who Should Pay?
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Key Issues
SBE Costing-Out Study
What are the costs of providing the educational capacity necessary to achieve expectations of NCLB and Pennsylvania’s
academic standards/graduation requirements?
What will be done with the Costing-Out Information?
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POLICY QUESTIONS FOR STATE POLICYMAKERS
• How much state funding?• By what formula will state funding be
distributed?• What conditions will be attached to the
state funds?• What taxing authority will be provided to
generate local revenues?• Targeted for some vs. general for all?• Categorical vs. basic subsidy?
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Key Issues
Tension of Local Control of Funding vs.
State Requirements/Conditions attached to some/all of the Funding
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Key Issues
501 School Districts
Structural Consolidation?
Functional Consolidation?
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Key Issues
How can state funding be used most effectively to level the “playing field” and ensure that adequate/sufficient resources are available to provide
the educational capacity needed for every student to have an opportunity
to be successful?
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Key Issues
How will communities and school boards make decisions that will ensure sufficient resources are
available, and effectively invested, to support the educational
capacity that is necessary and most effective to promote student
achievement consistent with state and local academic standards?
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OPTIONS
• Annual Budgets & Incremental Progress
• Costing-Out Study – Linking Student Success to Costs
• An Independent Statewide Education Finance Reform Commission
• Special Session called by Governor
• Litigation
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Key Issues
ACCOUNTABILITY
• For what?• How do we measure?
• Who is held accountable?• By Whom?
• What are the Consequences
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Key Issues
RESPONSIBILITY
Will Governor Rendell and the members of the General
Assembly accept responsibility to fix this problem?
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FOR MORE INFORMATION
Ronald CowellThe Education Policy and Leadership Center
717-260-9900
www.eplc.org