1. 2009 Education Finance Symposium1 Education Finance Symposium Introduction to Pennsylvania K-12 Education Finance Issues Presented by Ron Cowell Harrisburg November 12, 2009

2. 2009 Education Finance Symposium2 Framework for State Education Policy Governance Standards Assessments Consequence Educational Capacity Finances Alignment

3. 2009 Education Finance Symposium3  PENNSYLVANIA HISTORY 1776 State Constitution: “A school or schools shall be established in each county by the legislature, for the convenient instruction of youth….” 1790 State Constitution: “The legislature shall, as soon as conveniently may be, provide, by law, for the establishment of schools throughout the State, in such manner that the poor may be taught gratis.” 1831: Common School Fund established with $100,000 per year available

4. 2009 Education Finance Symposium4  PENNSYLVANIA HISTORY 1834: Free School Act required each municipality to establish an elected school board; state funding if matched at least 2:1 by county dollars 1835-1897: State school funding to counties based on number of taxable inhabitants in county Attempt in 1863 to base funding on number of children failed because of difficulty in counting children in attendance

5. 2009 Education Finance Symposium5  PENNSYLVANIA HISTORY 1874 PA Constitution: “The General Assembly shall provide for the maintenance and support of a thorough and efficient system of public schools, wherein all the children of this Commonwealth above the age of six years may be educated, and shall appropriate at least one million dollars each year for that purpose.” 1895: PA’s first compulsory attendance law 1897: Number of children ages 6-16 added to state funding formula

6. 2009 Education Finance Symposium6  PENNSYLVANIA HISTORY 1923: First effort to use state funding for equalization 1930 to 1950: State aid increases from 17% to 40% of costs 1947: General Assembly creates State Tax Equalization Board to determine true market values of real property in each school district 1949: New School Code - State aid based upon “district teaching units” X fixed dollar figure established by Legislature X district’s standard reimbursement fraction

7. 2009 Education Finance Symposium7  PENNSYLVANIA HISTORY 1957: State aid formula begins to consider “actual instructional expense (AIE)” Mid 60’s-1983: Statutory goal that the state pay 50% of the statewide district instructional costs 1968: For 1966-67 school year and thereafter, State began to pay on basis of “weighted” pupils and local wealth; state also began to make additional payments for children in poverty, density, sparsity, and homebound instruction

8. 2009 Education Finance Symposium8  PENNSYLVANIA HISTORY 1971: State income tax established 1974-75: State reimbursement at 54% 1977: Personal income valuation becomes a factor in determining district aid ratio (40%) 1977-1980: State reimbursement averages 46% per year 1982: All districts held harmless plus $72 million supplement for “Equalized Supplement for Student Learning (ESSL)

9. 2009 Education Finance Symposium9  PENNSYLVANIA HISTORY 1983: Equalized Subsidy for Basic Education (ESBE) enacted; includes “Factor for Educational Expense” (FEE); removes 50% funding requirement 1991: PARSS Equity Suit filed 1991: Special Education funding changed 1992: ESBE abandoned 1993 and 1994: Modest “foundation” funding guarantee included in state funding

10. 2009 Education Finance Symposium10  PENNSYLVANIA HISTORY 1995-2002: Ridge/Schweiker Administration  Vouchers & Charter School Funding  Link to Learn; Read to Succeed 1998- Commonwealth Court decides that PARSS v. Ridge is not justiciable 2002 Rendell Campaign/Election 2003-04 Budget Debate until 12/03  Increased ed funding committed for 2004-05

11. 2009 Education Finance Symposium11  PENNSYLVANIA HISTORY 2006: Legislature mandates a Costing-Out Study November 2007: Costing-Out Study is reported February 2008: Governor proposes 6-Year Plan July 2008: Legislature approves 6-Year Plan October 2009: 2 nd Year of Plan funded with $300 million increase

12. 2009 Education Finance Symposium12  PUBLIC K-12 SPENDING CURRENT EXPENDITURES PER STUDENT - 2006-07 2006-07 1991-92 Amount Rank Amount Rank Per Pupil Amounts for Current Spending US $ 9,666 ---$5,001 --- PA $11,098 13 th $6,050 6 th Source: US Census Bureau - 2009

13. 2009 Education Finance Symposium13  PUBLIC K-12 SPENDING CURRENT EXPENDITURES PER STUDENT - 2006-07 Compared to contiguous states, spending in Pennsylvania was far below average and ranked 5th in a group of seven states, exceeding only Ohio and West Virginia, but trailing Delaware, Maryland, New Jersey and New York. Pennsylvania$11,098 National 9,666 Delaware 11,829 Maryland 11,724 New Jersey 15,691 New York 15,981 Ohio 9,799 West Virginia 9,611 Source: US Census Bureau - 2009

14. 2009 Education Finance Symposium14 SO WHAT’S THE PROBLEM?

15. 2009 Education Finance Symposium15  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”

16. 2009 Education Finance Symposium16  GOAL OF 50% STATE SHARE ABANDONED (1983)  STATEWIDE ED FUNDING FORMULA ABANDONED (1991)

17. 2009 Education Finance Symposium17  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 2006-07, more than $1 billion of school district expenditures non-reimbursed

18. 2009 Education Finance Symposium18  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 More than half-billion annual cost to districts Since 2002-03, state will pay up to 30% Cyber charter schools

19. 2009 Education Finance Symposium19  OTHER COST DRIVERS Retirement Costs Health Care Costs Construction Task Force on School Cost Reduction

20. 2009 Education Finance Symposium20  STATE/LOCAL SHARES for Elementary/Secondary Public Education State Share Local Share PA National PA National 2006-07 35.5% (47.6)57.0% (44.1) 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) Source: US Census Bureau - 2009

21. 2009 Education Finance Symposium21  STATE/LOCAL SHARES for Elementary/Secondary Public Education 2006-2007 State Share %Local Share % Pennsylvania35.557.0 National47.644.1 Delaware65.228.6 Maryland40.254.2 New Jersey41.254.7 New York45.248.4 Ohio 43.150.2 West Virginia 57.929.9 Source: US Census Bureau - 2009 1% in PA in 2006-2007 = approximately $240 million $2.9 billion increase needed in 2006-2007 to get PA to national average

22. 2009 Education Finance Symposium22  PUBLIC K-12 REVENUE PER $1,000 PERSONAL INCOME Source: US Census Bureau 2009 2006-07 1991-92 Amount Rank US - Total$50.72--- $48.87 --- PA - Total$53.09 17th $49.98 27th US Local $22.37 --- $23.25 --- PA Local- $30.25 3rd $27.24 13th US State $24.12 --- $22.43 --- PA State- $18.8541st $20.25 36th Differences to 100% come from federal sources.

23. 2009 Education Finance Symposium23  STATE FUNDING APPROPRIATED PER STUDENT Source: US Census Bureau April 2008 2006-071997-981991-92 State $ per pupil RankState $ per pupil RankState $ per pupil Rank US PA DE MD NJ NY OH WV 5,466 4,755 9,348 5,501 7,358 8,293 5,312 5,962 --- 32 3 22 8 5 25 16 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

24. 2009 Education Finance Symposium24  RESULT: 2006-07 BURDEN ON LOCAL PROPERTY TAXES Total K-12 State-Local K-12% from wide RevenuesProperty Taxes Prop Taxes US$556,860,590$155,329,981 27.89% PA $24,203,543 $ 10,558,344 43.62% in ooo’s Source: US Census Bureau - 2009 15.7% Difference = more than $3.8 billion/year

25. 2009 Education Finance Symposium25  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

26. 2009 Education Finance Symposium26  RESULT: INEQUITY FOR TAXPAYERS ACROSS PA Great Discrepancies in Local Effort and Resultant Burden on Local Taxpayers

27. 2009 Education Finance Symposium27  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

28. 2009 Education Finance Symposium28  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)

29. 2009 Education Finance Symposium29  ACKNOWLEDGE 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

30. 2009 Education Finance Symposium30 BUT….. State share and state appropriations per student remained far below the national average Dependency on property taxes remained, with resultant inequity and inadequacy No development of a “system” Re-negotiating basic elements such as growth every year

31. 2009 Education Finance Symposium31  OTHER RELEVANT ACTIVITY 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 School District Consolidation

32. 2009 Education Finance Symposium32  WHAT HAS BEEN WRONG WITH THE PA 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

33. 2009 Education Finance Symposium33  POLITICAL CHALLENGES TO OVERCOME No relief from state courts Many think schools already spend too much Many think Pennsylvania taxes are high Pennsylvania’s difficult fiscal condition Many PA legislators oppose any tax increase Political support for tax cuts/caps

34. 2009 Education Finance Symposium34  POLITICAL CHALLENGES TO OVERCOME “Bring home the bacon” expectations “Printout” focus of lawmakers Tension of “what works” vs “local control” No accountability for state lawmakers on this issue Funding advocates ineffective in delivering a compelling message

35. 2009 Education Finance Symposium35 NCSL Report on School Finance An ADEQUATE School Funding System will provide and ensure the use of sufficient funding to establish and maintain the effective and necessary educational capacity to provide every student in every school a meaningful opportunity to accomplish the academic proficiencies for which he or she will be held accountable.

36. 2009 Education Finance Symposium36  2007 COSTING-OUT STUDY Mandated by General Assembly in 2006 Commissioned by State Board of Education Conducted 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

37. 2009 Education Finance Symposium37  NEW BASIC FORMULA IN 2008-2009 Linked to Costing-Out Study But does not include Special Ed Plan to increase State Funding by $2.6 billion over 6 years Gets state share to 44% in 6 years

38. 2009 Education Finance Symposium38  2009 Federal Stimulus Funds for Education Special Education Title I Stabilization Fund

39. 2009 Education Finance Symposium39  2009-10 Education Budget $300 million increase for Basic Ed Subsidy to school districts Cuts to other education and education- related line items Use of federal stimulus funds

40. 2009 Education Finance Symposium40 Pennsylvania School Funding Campaign Successful Schools… Successful Children… Successful Communities www.paschoolfunding.org

41. 2009 Education Finance Symposium41 Successful completion of the Pennsylvania Costing-Out Study. Mandated by the General Assembly, Received and publicly released by the State Board of Education on 10/14/07. Release was preceded by significant statewide media coverage building anticipation and demand for follow-up. Report provided important information for the first time about the costs related to achieving the objective of 100% of students accomplishing the proficiencies expected by the state’s academic standards. The reaction to the Report by state policymakers, the media and education organizations was generally positive.  PSFC MAJOR ACCOMPLISHMENTS

42. 2009 Education Finance Symposium42  PSFC MAJOR ACCOMPLISHMENTS The initiation and on-going work of the Pennsylvania School Funding Campaign. More than 20 statewide education and advocacy organizations resolved to work as a coalition to develop a funding proposal based on the anticipated Costing-Out Report in November 2007. Endorsed and presented to the PA Secretary of Education a specific school funding proposal in December 2007. The Pennsylvania School Funding Campaign and its school funding proposal were announced on 1/23/08. An unprecedented coalition of organizations working together on behalf of school funding reform.

43. 2009 Education Finance Symposium43  PSFC MAJOR ACCOMPLISHMENTS Major School Funding Proposal made by Governor Rendell in 2008. Governor included major school funding proposal as part of his Budget Message on 2/5/08. Proposal would establish ia new school funding system, and implement and fund it with an annual increase of state funding of $2.6 billion at the end of six years. In March 2008, PSFC endorsed the Governor’s proposal and suggested four recommendations to strengthen the proposal. The Campaign worked to build public and legislative support for enactment of the Governor’s proposal and suggested improvements throughout the budget process.

44. 2009 Education Finance Symposium44  PSFC MAJOR ACCOMPLISHMENTS Budget and Statutory Language Enacted in July 2008. Increased basic education funding by $275 million – the largest dollar increase in at least two decades; Used a new education funding formula based upon the 2007 Costing-Out Study; and Stated that “In furtherance of the General Assembly’s long- standing commitment to providing adequate funding that will ensure equitable state and local investments in public education and in order to enable students to attain applicable federal and state academic standards, it is the goal of this Commonwealth to review and meet state funding targets by fiscal year 2013-2014.”

45. 2009 Education Finance Symposium45  PSFC MAJOR ACCOMPLISHMENTS 2009-10 State Budget Continues Implementation of 6-Year Reform Plan The 2009-10 State Budget provided for a net increase of $300 million for the state’s Basic Education Subsidy to school districts, with distribution based upon the new formula approved in 2008. Formula was tweaked as requested by PSFC. PSFC continued to play a major advocacy role to accomplish the funding reform progress made with the most recent state budget.

46. 2009 Education Finance Symposium46  PSFC MAJOR ACCOMPLISHMENTS Looking Ahead PSFC is preparing its 2010-11 Budget “ask” requesting a funding level that will be consistent with the requirements of the 6-Year Reform Plan The Campaign is preparing education funding briefing materials for discussion with the 2010 gubernatorial candidates. Loss of federal stimulus funds a major challenge in 2011- 12

47. 2009 Education Finance Symposium47  BIG ISSUES Should every student have a fundamental right to a quality public education? What is student or school “success”? What do we value? How do we measure it? Does Money Matter? Consider both the amount and how it is used! Accountability for what? Inputs or Performance? With what consequences?

48. 2009 Education Finance Symposium48  BIG ISSUES Hold Harmless every year? Who should pay for state mandates? Tension of Local Control of Funding vs. State Requirements/Conditions attached to some/all of the Funding. How can state funding be used most effectively to level the “playing field” of opportunity?

49. 2009 Education Finance Symposium49 PENNSYLVANIA EDUCATION ADVOCACY NETWORK

50. 2009 Education Finance Symposium50 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