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March 21, 2003 South Pointe Hilton

$ chool Finance Reform in Pennsylvania: Out of the Briar Patch in ’03 ? Robert P. Strauss Carnegie-Mellon. March 21, 2003 South Pointe Hilton. Introduction & Disclosures. Educated k-12 in Suburbs of Cleveland, Ohio, BA Michigan, Phd Wisconsin

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March 21, 2003 South Pointe Hilton

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  1. $chool Finance Reform in Pennsylvania: Out of the Briar Patch in ’03 ?Robert P. StraussCarnegie-Mellon March 21, 2003South Pointe Hilton

  2. Introduction & Disclosures • Educated k-12 in Suburbs of Cleveland, Ohio, BA Michigan, Phd Wisconsin • Parent of 3, refugee from Franklin Regional SD in Westmoreland County • Self-confessed fiscal social worker and scholar • “Dangerous”, in the words of Jerry Boyer, talk show host, “Bob…you know what you’re talking about…”

  3. Goals of Remarks • Provide Context for Governor’s action yesterday • Identify Pa’s local tax reform briar patch • Provoke thought & discussion about the “Price for school finance reform” • Identify major ingredients of accountability and fiscal reforms for schools • Speculate about what can be done locally that makes a difference and as Harrisburg completely implodes

  4. School Finance Nirvana and the Briar Patch of Local Tax Reform • Nirvana I: equalizing state $ for k-12; 50% or better; greater reliance on income tax than local real estate tax • Nirvana II: all students learning, going to college and taking great jobs in home town • Nirvana III: all parents and grandparents happy • Nirvana IV: all teachers better paid and come to work every day • Real Estate Tax is Loved by All

  5. Context for New Food Fight in Capitol:1991 vs. 2003 Pa. Budget Crisis • Political wisdom is that to raise taxes, legislators need to be “compensated” for taking risk • Compensation is bacon to bring home to voters • In 1991, every $1 of new taxes to close deficit required additional $2 of spending/new taxes • From 2.1 to 3.1 to 2.8% PIT is what happened • Governor won’t do that this time, wants to focus on his priorities: cutting real estate, schools, development, will trade within

  6. The Local Tax Reform Briar Patch • Briar Patch 1: state aid per pupil is declining in real and % terms • Briar Patch 2: Pa. learning results not terrific; Philadelphia SD is imploding • Briar Patch 3: Taxpayers hate the local real estate tax • Briar Patch 4: Fixing assessments viewed as political suicide

  7. Briar Patch Issue:The Real Estate Tax Trap • Explanation 1: increasingly residential; decline of manufacturing • Explanation 2: local budget pressures due to very aggressive collective bargaining have pushed school real estate tax growth rate up faster than growth in personal income • Explanation 3: assessments highly uneven (

  8. Fixing the Real Estate Tax: Promises Made and Kept? • Act 50: band aid to trick people into believing help was just around the corner • Last year 60 local tax reform bills in General Assembly touted to be what voters needed • 2002 Special Session: called, ended, nothing accomplished, and nobody noticed • March 27 promises may be hard to keep • New problem of Teacher Retirement Fund-- $1 billion of additional new real estate taxes by 06-07

  9. More Briar Patch Issues: Philadelphia, The City of Brotherly Love • Philadelphia Issues and SE Pa. Votes in Capitol • 3.96% on commuters from suburbs, no credit back at place of residence • $350+ million commuter revenues at issue • Suburbanites & city politicians hang together to forestall action until this is fixed with statewide $ • Philadelphia SD borrowed $ ¼ billion for operations, time bomb in Harrisburg in next few years • 210,000 kids * $2,000/kid increase=$420 million/year

  10. More Briar Patch Issues: Should Business Property Tax be Cut? • Pa. Uniformity Clause Problem: all taxpayers in a jurisdiction have to be treated the same • Moving to personal income tax at state and local level means business property taxes will go down a lot; recrimination likely • Pittsburgh, SD: 40% is non-residential

  11. Another Briar Patch Issue: Anemic State Revenues& Divided Government • Deficit FY 2002-3 at least $.6 billion • Deficit FY 2003-4 at least $2.5 billion • Getting to 50% at least $1.5 billion, ignores Philadelphia SD deficit, Pittsburgh’s emerging bankruptcy • Getting Serious Foundation Grant another $5-7 billion, very unlikely

  12. When should we spend another $5-7 billion on School Finances? • Squishy economy not best time to raise taxes • Public pessimism that more money won’t change much except the cars in the teacher’s parking lot • More money without changes first in accountability? • Allowance before or after chores are done?

  13. Pennsylvania’s Dilemma:Local control vs. accountability? • Local tax transparency vs. 3’rd world view of taxpayers as suckers to be exploited • Assessment reform and state oversight • Fixing the grandma problem [if real]: revolving fund at state level for reverse equity lien • Meanings of Accountability • Punishing kids because their teachers don’t know the curriculum to make sure no child gets left behind? • 03-04 Budget guts teacher testing, don’t ask don’t say? • Hiring only the most academically talented teachers?

  14. Bob’s Dream Accountability System: I • Labor Day testing of each kid, results back to kid, parents, teachers, and principals; reports to Board by first board meeting • June testing of each kid, results back to kid, parents, teachers, and principals; reports to Board by first board meeting • Oath of office for Board Members and Superintendent Agreeing to Allocate Resources only for enhancement of student learning • Mandatory educational plan passed in June with budget that addresses issues identified during year

  15. Bob’s Dream Accountability System: II • Monthly statistical and oral reports to Board on progress of educational plan in June budget • Elimination of any conflict of interest on part of school employee or Board member by prohibiting direct and indirect conflicts • Pay each director $12,000/year with state funds • Parental choice of teachers in August of each year • Considerably revamped Pa. Dept of Education: • Testing, Oversight

  16. Accountability Yourself Reform Ideas • Get Washington County’s assessments fixed, Rank of 39, CD=35 is bad, should be 15 • Local ordinances can raise ethical standards impose stronger oaths of office • Local ordinance can fix superintendent-board relations, require educational plan/reports & budget • Local ordinance can create parental choice of teachers • Local boards can not directly pay themselves • Hiring can be on merit, not nepotism • Testing is relatively cheap, can be done twice/year • County wide collective bargaining?

  17. More own source money and no accountability reform? • Worst case scenario: property taxes go up, no tax assessment reform • Status quo in board-superintendent relations • Status quo in hiring practices • Status quo in haphazard state testing • Status quo in escalating teacher costs Result? Continued out-migration of capital, young people from Pa.

  18. Our 21st Century Reality The battle to improve our standard of living will be won or lost in our school and college classrooms

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