2016-17 Education Investment N - PSBA€¦ · expenditures from raising property taxes. MYTH:School districts can do a better job of controlling their expenses. FACT: Schools are

Pennsylvania School Boards Association (800) 932-0588 www.psba.org

Negotiations for the 2016-17 budget are at a critical point. School districts are facing dire financial consequences as a re-

sult of the nine-month state budget impasse along with huge increases in mandated costs. They have cut their budgets, and many dis-tricts have been operating this school year by drawing on reserves, borrowing, making cuts and holding off on purchases and payments. The lack of state funding has profound im-pact: a lessening of the ability of school dis-tricts to provide for the instructional and phys-ical needs of their students. It’s time to fund education at a higher level. School districts need a state education budget for 2016-17 that enables them to meet mandated costs and includes the following:

• An increased investment of $200 million for the basic education subsidy. Under Act 35 of 2016, Penn-sylvania now has a new school funding formula that is fair to ALL school districts. But the new formula alone does not fix our broken school funding system – we need to fund it now.

• A minimum $100 million increase to help school districts cover pension increases. The single largest cost driver in school district budgets is mandated pen-sion costs. Each year the costs continue to climb, tak-ing larger portions of local budgets. In 2014-15, school districts paid $2.33 billion in pension obligations which accounted for 8.49% of ALL school district expendi-tures. In fact, rising pension costs have outpaced in-creases in total state funding leaving local taxpayers to fill the void. Pension costs continue to rise and remain high for the next several years. This investment plus long-term significant reform can help correct the finan-cial disaster that the state pension system is heading toward.

2016-17 Education Investment

Pennsylvania School Boards Association (800) 932-0588 www.psba.org

Separating Myth from FactMYTH: School districts are already sitting on large reserve funds they are not using at the same time they are asking for more money or raising local taxes.

FACT: Most of the money in school district fund balances has been restricted for specific types of expenses such as rising pension costs and school construction projects – those are the committed and assigned fund balances which totaled $2.6 billion in 2014-15. Unassigned fund balances act as the sav-ings accounts that allow districts to maintain ade-quate resources to cope with contingencies – like a nine-month budget impasse or emergency building repairs. Unassigned fund balances totaled $1.7 billion in 2014-15, which represents only 6.32% of the $27.38 billion in education expenses that year, well within financial industry recommen-dations for unassigned fund balances of between 5% and 10% of total expenditures. State law also prohibits school districts with unassigned fund balances above a certain percentage of budgeted expenditures from raising property taxes.

MYTH:School districts can do a better job of controlling their expenses.

FACT: Schools are controlling the expenses to the extent they can. Aside from increases in mandatory retirement contributions and payments to charter schools, school districts have controlled increases in other expenses. In fact, mandated em-ployee retirement and charter school tuition costs alone have increased $2.2 billion since the 2010-11 school year while all other expenses, such as sala-ries, supplies and facilities maintenance have only increased $87.2 million or .37% during that time. When shown graphically, the difference in growth is even more astounding.

Pension Increases Total State Revenue Increases Difference

$600

$500

$400

$300

$200

$100

$0

$-100

$-200

2011-12 2012-13 2013-14 2014-15

$288.76$247.36

$393.58

$234.54

$485.54$430.28

$507.25

$439.73

-$67.52-$55.26

-$159.04

-$41.40

Mill

ions

Pension Increases Exeeding State Revenue Increases

MYTH: Student performance is low, proving that school districts are failing by not successfully preparing students for future success.

FACT: School districts are doing a great job educating students as they reach to meet a much higher bar for proficiency. The state’s graduation rate is 86%, or 4% above the national average. New academic standards, PSSA assess-ments and Keystone Exams have students working on different benchmarks from previous years. The more rigorous requirements of the new standards and tests, along with new cut scores applied in 2015 to the results, resulted in fewer students scor-ing “proficient” or “advanced.” Comparing 2015 test results to scores from previous years is invalid because both the content measured and the test instruments are not the same. Other states have experienced similar results when making the tran-sition to more rigorous standards and instruction.

Further, student success should be considered as more than just standardized test scores. Pennsylva-nia’s school districts are working hard to prepare students for success beyond the K-12 classroom.

MYTH:The state is not underfunding school districts.

FACT: Over a span of several decades, the state’s share of education spending, as a percentage of total education revenue, has declined from more than 50% during the mid-1970s, to just 37% today. This ranks Pennsylvania 46th in the nation. From a national perspective, states contribute 47% of all education revenue. As Pennsylvania’s share of edu-cation funding has decreased, more local resouces are needed to fund and operate local schools.

Pennsylvania School Boards Association (800) 932-0588 www.psba.org

Growth in Pension & Charter Costs VS Growth in All Other Expenses%

Gro

wth

Sin

ce 2

010-

11

0.37%

Total136.69%

Charter Increases Retirement Increases All Other Expenditure Increases

0% 20% 40% 60% 80% 100% 120% 140%

Education Revenue Sources – U.S. Total

Education Revenue Sources – Pennsylvania

StateLocal Federal

47%45%

8%

37%56%

7%