1. EPLC Education Finance Symposium - November 2008 1 Pennsylvania Education Finance Symposium The Education Policy and Leadership Center Harrisburg November 20, 2008

2. EPLC Education Finance Symposium - November 2008 2 Framework for State Education Policy Governance Standards Assessments Consequence Educational Capacity Finances Alignment

3. EPLC Education Finance Symposium - November 2008 3 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

4. EPLC Education Finance Symposium - November 2008 4 PUBLIC K-12 SPENDING 2005-06 1991-92 Amount Rank Amount Rank Per Pupil Amounts for Current Spending US $9,138 ---$5,001--- PA $11,028 11 th $6,050 6 th Source: US Census Bureau April 2008

5. EPLC Education Finance Symposium - November 2008 5 SO WHAT’S THE PROBLEM?

6. EPLC Education Finance Symposium - November 2008 6 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”

7. EPLC Education Finance Symposium - November 2008 7 GOAL OF 50% STATE SHARE ABANDONED (1983) STATEWIDE ED FUNDING FORMULA ABANDONED (1991)

8. EPLC Education Finance Symposium - November 2008 8 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 of school district expenditures non-reimbursed

9. EPLC Education Finance Symposium - November 2008 9 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

10. EPLC Education Finance Symposium - November 2008 10 COST DRIVERS Retirement Costs Health Care Costs Construction Task Force on School Cost Reduction

11. EPLC Education Finance Symposium - November 2008 11 STATE/LOCAL SHARES for Elementary/Secondary Public Education State Share Local Share PA National PA National 2005-06 35.0% (46.6) 57.1% (44.4) 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)

12. EPLC Education Finance Symposium - November 2008 12 PUBLIC K-12 REVENUE PER $1,000 PERSONAL INCOME Source: US Census Bureau April 2008 2005-06 1991-92 Amount Rank US - Total$50.67--- $48.87 --- PA - Total$52.73 20th $49.98 27th US Local $22.48 --- $23.25 --- PA Local- $30.11 4th $27.24 13th US State $23.61 --- $22.43 --- PA State- $18.4640th $20.25 36th Differences to 100% come from federal sources. Source: US Census Bureau.

13. EPLC Education Finance Symposium - November 2008 13 STATE FUNDING APPROPRIATED PER STUDENT Source: US Census Bureau April 2008 2005-061997-981991-92 State $ per pupil RankState $ per pupil RankState $ per pupil Rank US PA DE MD NJ NY OH WV 5,018 4,532 8,480 4,871 6,913 7,241 4,915 5,896 --- 30 3 26 7 5 25 13 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

14. EPLC Education Finance Symposium - November 2008 14 RESULT: 2005-06 BURDEN ON LOCAL PROPERTY TAXES Total K-12 State-Local K-12% from wide RevenuesProperty Taxes Prop T US$521,116,397$147,249,385 28.25% PA $22,772,190 $10,009,710 43.95% in ooo’s Source: US Census Bureau April 2008 15.5% Difference = more than $3.575 billion/year

15. EPLC Education Finance Symposium - November 2008 15 RESULT: INEQUITY FOR STUDENTS ACROSS PA Great Inequity for Students Among 501 Districts In 2005-06, instructional spending per pupil in Pennsylvania school districts ranged from $4,469 to $14,045 This means, in an average classroom of 25 students, a gap of almost $250,000 per classroom per year. Inequitable and Inadequate Resources in a NCLB and Standards-Based Environment with Equal Expectations for All Students

16. EPLC Education Finance Symposium - November 2008 16 RESULT: INEQUITY FOR TAXPAYERS ACROSS PA Great Discrepancies in Local Effort and Resultant Burden on Local Taxpayers

17. EPLC Education Finance Symposium - November 2008 17 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

18. EPLC Education Finance Symposium - November 2008 18 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)

19. EPLC Education Finance Symposium - November 2008 19 SOME PROGRESS in 2003-2007 State Funding for Pre-School started Basic Subsidy line item increased Attention to “Foundation” funding Accountability Block Grants initiated School districts reimbursed 27% for charter school payments

20. EPLC Education Finance Symposium - November 2008 20 OTHER RELEVANT ACTIVITY 2007 Report on District Consolidation 2007 Report on Cost Reduction 2007 Costing-Out Study Statewide Health Benefits Program Education Finance Reform Commission Discussion about TABOR, limits on state spending/taxes, tax cuts More Property Tax Relief/Elimination

21. EPLC Education Finance Symposium - November 2008 21 WHAT IS WRONG WITH THE CURRENT PA FUNDING SYSTEM 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

22. EPLC Education Finance Symposium - November 2008 22 WHAT HAS BEEN WRONG WITH PA K-12 FUNDING SYSTEM? We have had a “Non-System” and there has been no attention to development of a statewide “system” of education funding State Government has had no sense of obligation to students or to honor a commitment to a funding formula Annual K-12 Funding had been based on political considerations rather than educational Advocates had to re-negotiate basic funding elements such as growth in enrollments every year

23. EPLC Education Finance Symposium - November 2008 23 2007 COSTING-OUT STUDY Mandated by General Assembly in 2006 Commissioned by State Board of Education Conducted by Augenblick & Palaisch Reported in November 2007 Cost of all students accomplishing proficiency in all areas of standards Considered special ed, poverty, ELL, regional costs Identified district-by-district a total spending gap of $4.6 billion

24. EPLC Education Finance Symposium - November 2008 24 FACTORS IN 2008 EDUCATION BUDGET PROCESS Very Bad, Unfair, Non-system Costing Out Study Information Governor’s Leadership PA School Funding Campaign

25. EPLC Education Finance Symposium - November 2008 25 Pennsylvania School Funding Campaign Successful Schools… Successful Children… Successful Communities

26. EPLC Education Finance Symposium - November 2008 26 PA SCHOOL FUNDING CAMPAIGN Last Year’s Budget Goals In 2008, enact legislation to implement and fully fund a new school funding system within 5 years based on Costing-Out Study and supporting principles of equity, adequacy, efficiency, accountability and predictability. Make a down-payment of at least $1 billion as part of 08-09 state budget.

27. EPLC Education Finance Symposium - November 2008 27 PA SCHOOL FUNDING CAMPAIGN Proposed a specific formula and a first- year phase-in for 5-year plan Announced PASSET Proposal and the Campaign on January 23, 2008 Steering Committee Members Campaign Partners/Supporters See www.paschoolfunding.org

28. EPLC Education Finance Symposium - November 2008 28 The 2008-09 STATE EDUCATION BUDGET REPRESENTS IMPORTANT PROGRESS!

29. EPLC Education Finance Symposium - November 2008 29 2008-09 State Budget Summary $28.3 billion General Fund Budget $1.1 billion or 4.2% increase over 07-08 Federal Funds - $18 billion Motor License Fund - $2.9 billion Lottery Fund - $1.7 billion Total Operating Budget – $61.3 billion

30. EPLC Education Finance Symposium - November 2008 30 2008-09 PA EDUCATION BUDGET Basic Ed Subsidy - $5.226 billion Special Education - $1.026.8 billion Accountability Block Grants - $271.4 million Transportation - $516.6 million Social Security - $505.6 million School Employees’ Retire - $360.5 million Charter Reimbursement - $226.9 million

31. EPLC Education Finance Symposium - November 2008 31 2008-09 EDUCATION BUDGET PA Assessment – $54.4 million Pre-K Counts – $86.4 million Teach Prof Dev – $42.5 million Dual Enrollment – $10 million Science: It’s Elementary – $14.5 million Classrooms for Future – $45 million Education Assistance – $65.2 million High School Reform – $10.85 million

32. EPLC Education Finance Symposium - November 2008 32 2008-09 EDUCATION BUDGET Head Start Assistance – $39.48 million Safe & Alternative Sch – $23.02 million Intermediate Units –$6.3 million Science & Math Ed – $2.7 million Urban & Minority Teach – $0.5 million Non-Pub/Chart Trans – $78.8 million Rx for PA – Food Services – $4.0 million School Entity Dem Proj – $11.0 million Gov Schools of Excellence– $3.2 million

33. EPLC Education Finance Symposium - November 2008 33 2008-09 HIGHER ED FUNDING Community Colleges  Operating - $236.2 million  Capital - $44.5 million PASHHE - $519.23 million State Related Universities - $699.10 million State-Related Privates (IAG) – $42.00 million PHEAA Grants – $407.41 million Technical Colleges - $1.00 million

34. EPLC Education Finance Symposium - November 2008 34 NEW BASIC FORMULA IN 2008-2009 Linked to Costing-Out Study But does not include Special Ed Increase State Funding by $2.6 billion over 6 years Gets state share to 44% in 6 years

35. EPLC Education Finance Symposium - November 2008 35 NEW BASIC FORMULA IN 2008-2009 $275 million in 1 st year Intended to close Adequacy Gap Achieve Adequacy over 6 years

36. EPLC Education Finance Symposium - November 2008 36 NEW BASIC FORMULA Calculate adequacy target for district: $8,355 + poverty, ELL, regional costs Minus actual spending = adequacy gap Determine state share of adequacy gap based upon aid ratio and district’s existing tax burden With 3.0% Hold Harmless in 2008-09

37. EPLC Education Finance Symposium - November 2008 37 ACCOUNTABILITY Districts receiving basic ed increase above Act 1 inflation index must spend portion above index on “proven school improvement strategies” Districts identified as Warning, Improvement or Corrective Action & districts with a school identified for improvement or Corrective Action must have PDE approval for use of resources above inflation index

38. EPLC Education Finance Symposium - November 2008 38 2009 BUDGET GOALS of SCHOOL FUNDING CAMPAPIGN The Campaign urges Governor to propose a FY2009-2010 budget that will invest at least the $430 million for basic education needed to meet the commitment to his initial 6-year basic education funding proposal. These dollars for FY2009-2010 should be distributed in accordance with the Act 61 funding formula but with some minor enhancements to ensure a more equitable distribution of the new funds.

39. EPLC Education Finance Symposium - November 2008 39 2009 BUDGET GOALS of PSFC Establish minimum location cost metric at 1.00; Establish at least a 2 percent minimum increase in funding for all school districts; Modify the phase-in percentages for “high” and “low” tax effort school districts from the originally proposed 15-45 % to approximately 25-35%; Permit school districts to use new funds to maintain the Act 61 accountability programs rather than having to create new ones if that is not appropriate for increasing student achievement.

40. EPLC Education Finance Symposium - November 2008 40 In addition, the Campaign continues to advocate both in the short- and long-term for other improvements to Pennsylvania’s school funding system such as:  providing each district a state share of its adequacy gap that is equal to the district’s aid ratio; and  Funding special education on an adequacy basis as proposed in the Costing-Out Study. These improvements are critically important to ensure the greatest possible fairness for all Pennsylvania students.

41. EPLC Education Finance Symposium - November 2008 41 SOME 2009 CHALLENGES State’s Fiscal Condition (Recession) Legislature’s Commitment?  School Code Language  Willingness to rely on Costing-Out Study  Big numbers  Tendency to focus on one year only Special Ed funding Front-end vs. back-end loading/funding Hold-harmless forever?

42. EPLC Education Finance Symposium - November 2008 42 Key Issues Should all children in PA have a “fundamental right” to a quality public education?

43. EPLC Education Finance Symposium - November 2008 43 Key Issues How Does Money Matter?

44. EPLC Education Finance Symposium - November 2008 44 Key Issues Tension of Local Control of Funding vs. State Requirements/Conditions attached to some/all of the Funding

45. EPLC Education Finance Symposium - November 2008 45 Key Issues Accountability for Inputs vs. Accountability for Performance

46. EPLC Education Finance Symposium - November 2008 46 Contact Information Ron Cowell 717-260-9900 cowell@eplc.org The Education Policy and Leadership Center 800 North Third Street, Suite 408 Harrisburg, PA 17102 www.eplc.org Education Policy Information Clearinghouse www.eplc.org/clearinghouse.html