1. Task Force on School Cost Reduction Prepared for the EPLC Finance Symposium Friday, November 16, 2007

2. Task Force Background  Special Session Act 1 of 2006 to: Evaluate spending trends Budgetary pressures driven by external mandates and cost factors  Composed of members of School Boards Teachers’ unions School Business Officials Other Experts

3. School Cost Categories, Trends and Mandates  School spending during 2004-05 reached $20.8 billion

4. Cost Drivers  Instructional Expenditures – responsible for 54% of total cost growth since 1995-96 Special and Gifted education – 97% increase Regular education – 35% increase Employee Benefits – 132% increase Charter School - $364 million statewide annually

5. Cost Drivers (continued)  Support Services – responsible for 30% of total cost growth since 1995-96 Student Transportation – 58% increase Administrative Services – 42% increase Tax Collection - $78.8 million statewide  Facilities and Financing – responsible for 14% of total cost growth since 1995-96 Debt Services - 90% increase  Non-instructional Services – responsible for 2% of total cost growth since 1995-96 Increased by 48% increase Largely driven by student activities  Federal and State Mandates NCLB IDEA

6. Task Force Focus  Tax Collection  Health Care  School Construction and Green Building  Special Education  Transportation  Charter and Cyber Charter Schools  Shared Services  Mandate Waivers

7. Tax Collection  Currently 560 tax collectors DCED estimates $237 million earned income taxes never collected; $127 million would be available for schools

8. Tax Collection Recommendations  Consolidate collection of Earned Income Tax, employing fewer tax collectors and clarifying withholding rules for employers. Consolidate to 66 countywide tax collectors Uniform rules, regulations, forms and codes All EIT would be withheld by the employer Businesses would only need to remit to the county in which their payroll operation is located. Estimated Savings - $127 million

9. Health Care  PASBO estimated that health care premiums rose by 24% between 2003 and 2005.  PEBTF’s premium increases averaged 5.6% between 2003 and 2006.

10. Health Care Recommendations  Establish a statewide system for all school districts to jointly purchase health care benefits When school districts maximize their purchasing power, the commonwealth will use tax dollars more efficiently while protecting the health care benefits that teachers and other school district employees receive. Estimated Savings – believed to reach hundreds of millions of dollars according to some analysts.

11. School Construction  In 2006 – 53 school construction projects  Approximately 80% are alterations and additions

12. School Construction (continued)  PDE provides reimbursement through the Plan Con process  Act 34 of 1973  20-year rule  Contracting Thresholds  Prevailing Wage  Multiple Prime Contracting

13. School Construction Recommendations  Increase and index limiting thresholds for construction-related expenses in line with their original intent. Work done by school personnel from $4,000 to $25,000 Projects done by school personnel and costing between $10,000 and $25,000 would require three quotes Projects of $25,000 or more require schools to advertise and solicit bids  Provide school districts with flexibility related to prime contracting

14. School Construction Recommendations (continued)  Increase assistance to school districts to more strongly encourage green building  Increase PDE technical assistance to districts throughout the many phases of the construction process, including releasing information on actual school construction costs

15. Special Education  Represent 15% of the 1.8 million children enrolled  4% classified as gifted  Spending grew by 83.4% since 1996-97

16. Special Education (continued)  State Special Education Funding Base Supplement Inflation Index Supplement Minimum 2% increase  Additional Funding Contingency Funds Core Services Institutionalized Children’s Program

17. Special Education Recommendations  Alter the state special education formula to provide funding on a tiered system based on the services a student receives  Provide increased state funding for high quality early childhood education in the elementary grades  Develop best practices in moving students out of special education programs  Redo the charter school special education formula to enable the resident school district to better align funding with charter school special education costs.

18. Transportation  Approximately $1 billion annually (5% of the total statewide expenditures)  Increased by 58% Average Transportation Expenditures Per Student Transported Year Public Transportation* Non-Public Transportation Average Per Student** Non-Public as % of Average 1995-96$485.21$566.56$495.64117% 1996-97$501.20$535.13$505.58107% 1997-98$516.52$533.69$518.72103% 1998-99$533.72$523.66$532.4498% 1999-00$548.16$549.03$548.27100% 2000-01$578.50$566.70$576.9998% 2001-02$625.84$612.65$624.1698% 2002-03$653.74$647.37$652.9599% 2003-04$688.25$827.02$704.85120% 2004-05$728.01$971.49$756.04133%

19. Transportation Recommendations  Eliminate the requirement to bus students outside district boundaries and only require districts to transport on days when public school is in session.  Optimize fuel cost management to slow long term growth costs  Encourage district to adopt transportation best practices

20. Charter and Cyber Charter  Currently 117 charter and cyber charter schools in PA  $364 million in 2004-05

21. Charter and Cyber Charter (continued)  Traditional student tuition for charter and cyber charter students  Special Education student tuition for charter and cyber charter students

22. Charter and Cyber Charter (continued)  Additional concerns Truancy Competitive Grants

23. Charter and Cyber Charter Recommendations  Primarily Brick and Mortar Change charter school law to include grants in the list of items exempt in calculations of charter school tuition rate. Permit school districts to weigh fiscal impact as a criterion when considering new and expanded charter schools. Align the budgeting process of school districts with enrollment planning for charter schools

24. Charter and Cyber Charter Recommendations (continued)  Primarily Brick and Mortar Provide best practices and guidance to school districts that will support them in creating effective truancy monitoring partnerships with their charter schools Increase guidance to school districts throughout the charter drafting process to ensure a high-quality charter agreement

25. Charter and Cyber Charter Recommendations (continued)  Cyber Charter Establish a single, statewide tuition rate to be applied to all cyber charter schools. Continue to collect and analyze data on the cost of cyber education

26. Shared Services  Approximately $314 per student on administrative costs  50% increase  $210 million statewide on central services

27. Shared Services Recommendation  Expand the approach of shared services to include a variety of entities including districts, intermediate units, counties and other local governments  Draft a report of best practices that shows districts how cost savings can occur through consortia.

28. Mandate Waivers  Education Empowerment Act, Act 16 of 2000  Effective for three years  Districts must submit an evaluation  Annual report from PDE to the chairmen and minority chairmen of the House and Senate Education Committees

29. Mandate Waivers (continued)  Decreasing number of requests  Construction changes

30. Mandate Waiver Recommendation  Increase the quality of the Pennsylvania Department of Education’s communication regarding Mandate Waivers, to include strategic information about the experiences of school districts in achieving cost savings.

31. Next Steps  Tax Collection  Health Care  School Construction and Green Building  Special Education  Transportation  Charter and Cyber Charter Schools  Shared Services  Mandate Waivers