Marcellus Shale Natural Gas Development and the Implications for Pennsylvania Schools Kai A. Schafft Department of Education Policy Studies Center on Rural Education and Communities Penn State University Potential Impacts of Hydro-Fracking: What School Districts Need to Know January 9, 2013 Alfred University, Alfred, NY
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Marcellus Shale Natural Gas Development and the Implications
for Pennsylvania SchoolsKai A. Schafft
Department of Education Policy StudiesCenter on Rural Education and Communities
Penn State University
Potential Impacts of Hydro-Fracking: What School Districts Need to Know
January 9, 2013Alfred University, Alfred, NY
Why is Marcellus Shale natural gas development an issue for schools?
Rapid pace and scale of development;
Alfred, NY
By June, 2012, over 5,500 wells were drilled Total projected: 60,000-100,000.
Alfred, NY
By June, 2012, over 5,500 wells were drilled Total projected: 60,000-100,000.
Bradford County
By June, 2012, over 5,500 wells were drilled Total projected: 60,000-100,000.
Tioga County
Why is Marcellus Shale natural gas development an issue for schools?
Rapid pace and scale of development;Uncertainties regarding school impacts (e.g., costs, funding, curricula, student demographics, staffing);
Why is Marcellus Shale natural gas development an issue for schools?
Rapid pace and scale of development;Uncertainties regarding school impacts (e.g., costs, funding, curricula, student demographics, staffing);The role of schools in helping to effectively manage change.
Framing of Marcellus Development: Massive Opportunity or Massive Risk?
“Although there is some economic development from the Marcellus gas industry I am not seeing how the school districts can benefit from this.”
- Survey respondent
What About Act 13?
What About Act 13?The Impact Fee
unfortunately has no fiscal “impact” for school
districts
What About Act 13?The Impact Fee
unfortunately has no fiscal “impact” for school
districts
IMPACT FEE
local-level – counties and municipalities hosting wells
various state agencies
60%
40%
What About Local Tax Revenues?
What About Local Tax Revenues?
Heavy reliance on local funding for schools in Pennsylvania –
Pennsylvania relies more on local property taxes to fund public schools than all but 4 other states; a total 57% of school funding
comes from local sources.*
* See PA Budget and Policy Center (2009), “Pennsylvania Relies Heavily on Local Taxes to Fund Education”
What About Local Tax Revenues?
98% of total SD tax
revenues
Real estate tax
Earned income tax
What About Local Tax Revenues?
98% of total SD tax
revenues
Real estate tax
Earned income tax
• Oil & gas reserves exempt from property tax;
• Potential devaluation of property values?
What About Local Tax Revenues?
98% of total SD tax
revenues
Real estate tax
Earned income tax
• Oil & gas reserves exempt from property tax;
• Potential devaluation of property values?
• Levied on wages and salaries, but non-residents will not be taxed locally;
• Royalties and lease payments constitute UNearned income and are not taxable
What About Local Tax Revenues?
• Royalties and lease payments DO however contribute towards the wealth measure used by the state to distribute state aid to school districts
What About Local Tax Revenues?
• Royalties and lease payments DO however contribute towards the wealth measure used by the state to distribute state aid to school districts…
…Increases in unearned income (e.g. from leasing and royalties) within a district can increase the measured wealth of a district and consequently result in potentially LESS state aid (even though this new wealth will not increase a district’s tax base).
As SD wealth increases…
…decreases in state aid are likely
Amount of Marcellus Shale Drilling Activity, 2007-2008 to 2010-11 (Number of Wells)
“The biggest thing we want to do is work with these truck companies ... work with the gas companies, work with everybody that’s hauling — to educate them, to let them know when we’re out there, look out for the kids”
- BEASD Business Office staff person
Opportunities and Challenges
Note that road surface is flush with bottom of guard rail!
Curricular Change and Workforce Development
School District Respondents CTCs
% agreeing or strongly agreeing:
High Drilling Activity Districts
High Drilling Activity Districts
Lack sufficient info about workforce needs to make curricular changes
61.4 76.8 41.6Investing in workforce development is risky given uncertain time horizon of Marcellus jobs 47.1 47.5 30.4
“What happens after the shale is depleted of natural gas? Does the industry leave us high and dry like the coal barons did?”
- survey respondent
Three Phases of Natural Gas DevelopmentDevelopment Phase (Short Lived/Labor Intensive)
• Well-pad and Access Road Construction• Local collection pipeline Construction• Drilling of the Well• Fracturing of the Well• Reclaiming some Disturbance
Production Phase (Long lived/Small & Steady Labor Force)•Trucking Water and condensate from Well Site• Monitoring Production • Occasional Well Work-Overs (partially re-drill/re-frac)
Reclamation Phase•Dismantle and Reclaim well-sites
Source: Jacquet
Jonah/Anticline Fields Direct Workforce Through The Three Phases:
Graph: Ecosystem Research Group/Jacquet
Summing Up
Housing Impacts & Residential Displacement;
New Issues in Recruiting and Retaining Staff;
Unevenness of Impacts depending on location and drilling activity;
economically, politically – make outcomes highly unpredictable;
• How can Marcellus development be part of a longer term strategy for economic (and environmental) sustainability in PA communities?
• How can schools as educational institutions (and not simply providers of workforce development) help to manage the challenges and opportunities associated with rapid gas development?