1. Public Education Funding Proposal 2008-2009 January 2008

2. Consistent with the costing-out study of 2007 – Develop comprehensive, systemic, sustainable proposal – Based on the principles of equity, adequacy efficiency, accountability, & predictability – Enact statutory changes Goals

3. – Annually adjust all data – In 2008-09, significant start toward full implementation – Fully fund by 2013 Goals

4. Principles – Use the results of the costing-out study – Increase adequacy and equity – Reduce over-reliance on local property taxes – Improve fairness in the tax efforts – Provide adequate resources.

5. Principles Build the capacity to achieve state and federal accountability requirements: – State – for financial resources and technical support. – School district – for student outcomes, local financial resources.

6. Principles Promote efficiency by: – Providing incentives for money to be spent wisely to achieve state academic standards – Insuring that state and district decision-makers have shared responsibility to raise revenue to fund their decisions – Providing predictable funding for school districts

7. Methodology – Costing-out study’s adequacy level is the basis for each school district’s allocation. – The state allocation shall be a market value/personal income aid ratio multiplied by the costing-out study’s adequacy level, plus whatever amount is necessary to fund the Educational Adequacy Cost after application of a local tax effort cap. – The state allocation to a district for the expenses covered by the costing-out study shall be in no case less than it was in 2007-08.

8. Methodology – The local share shall be the remainder after the federal and state allocations are subtracted from the adequacy level. – No district will be required to exceed a state set Local Tax Effort Cap in order to meet the Educational Adequacy Cost level. – The Local Tax Effort Cap shall be set in terms of the percentage of personal income the district collects from residents of the district in the form of residential property taxes and non-property taxes.

9. Methodology – Local support in excess of the costing-out study may continue. – A state supported contingency fund of.5% of the new appropriation is established to provide additional support for unusual circumstances. – Combine the 27 current appropriations covered by the costing-out study into a single new appropriation for basic education; the remaining 26 appropriations would continue to separately fund existing programs.

10. Methodology The programs and expenses covered by the costing-out study and no longer requiring separate state support are: Basic Education7110Other Programs7299 Charter Schools7140Health Services7330 Tuition for Orphans7160Safe School7360 School Improv Grant7170Acct Block Grants7501 Staff & Program Dev7180Dual Enrollment7502 Homebound Instruction7210Project 7207503 Alternative Education7230Other State7599 Driver Education7240Soc Sec/Medicare7810 Migrant Children7250Retirement7820 Special Education7271Technology7900 Ed Assistance Programs7291

11. Methodology The programs and expenses NOT covered by the costing-out study and requiring continued separate state and local support are: – Pre-K/Early Childhood – Transportation – Adult Education/Literacy – Vocational/Technical – Capital Outlay – Debt Service – Food Service

12. Data – Subsequent years’ funding will continue to use the costing-out methodology. – Adequacy base amount ($8,003) will be increased annually by using the Act 1 base index. – Student counts (ADMs) and student counts for poverty, special education, gifted education and English language learners will be updated annually based on the most current school year data available.

13. Data The following data items will be updated annually: – Market value / personal income aid ratios – Geographic cost of living index – Local tax effort for each school district – District size adjustment

14. Data – Annually report the breakdown of each district’s adequacy amount into the base and adjustments for students with disabilities, English language learners, students in poverty, gifted students – In 2014 a new costing-out study should be undertaken to determine the status of education funding and student achievement in Pennsylvania

15. Simplify and Reform – The Basic Education Budget for 2008-09 would contain one major appropriation to support Basic Education and 26 additional appropriations to support educational costs not included in the costing-out study. – The new Basic Education Appropriation for Adequacy in School Spending and Equity in Taxation (ASSET) would replace 27 appropriations.

16. Hypothetical School District Factors: Adequacy Level from Costing Out Study:$ 6,000,000 Non Residential Tax Revenue:$ 800,000 Other Non Tax Local Revenue:$ 200,000 Federal Revenue:$ 100,000 Personal Income:$ 40,000,000 MV/PI Aid Ratio:.6000 Statewide School Tax Ratio Cap:3%

17. Step #1: Contingency Fund 0.5% (.005) of the appropriation is set aside

18. Step #2: Determine State & Local Support for Adequacy Adequacy Level $6,000,000 Multiply by Aid Ratio x.6000 ------------- State Support$3,600,000 Adequacy Level $6,000,000 Multiply by (1-Aid Ratio)x.4000 -------------- Local Support $2,400,000

19. Step #3: Determine Residential Property Tax Support Calculated Local Support$2,400,000 Subtract Non Residential Taxes- $800,000 Subtract Other Non Tax Local Rev- $200,000 Subtract Federal Revenue - $100,000 --------------- Results in Adjusted Local Share $1,300,000

20. Step #4: Determine Cap on Residential Property Tax Support Adjusted Local Support, $1,300,000 Personal Income, $40,000,000 = School Tax Ratio =.0325 (or 3.25%) Local Support Capped at 3% of Personal Income District’s Personal Income $40,000,000 Multiplied by Statewide Cap x.03 --------------- District’s Local Support Limit $ 1,200,000

21. Step #5: Determine Additional State Support for Property Tax Reduction Property Tax Revenue Reduction Adjusted Local Share $1,300,000 Local Support Limit- $1,200,000 -------------- Additional State Support $ 100,000

22. Step #6: Determine Total State Support State Support by Aid Ratio$ 3,600,000 Plus State Support due to Local Cap + 100,000 Total State Support$ 3,700,000

23. Conclusion District’s Adequacy Level $6,000,000 Local Residential Tax Revenue $1,200,000 Non-residential Tax Revenue$ 800,000 Other Local Non-Tax Revenue $ 200,000 Federal Revenue $ 100,000 Total State Support to District$3,700,000 -------------- TOTAL FOR DISTRICT $6,000,000