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WHAT’S WRONG WITH PENNSYLVANIA’S K-12 EDUCATION FUNDING SYSTEM

WHAT’S WRONG WITH PENNSYLVANIA’S K-12 EDUCATION FUNDING SYSTEM. EDUCATION FINANCE SYMPOSIUM November 16, 2006 Presented by: Ronald Cowell The Education Policy and Leadership Center. FRAMEWORK FOR EDUCATION POLICY. Governance Standards (Expectations ) Assessment (How are we doing)

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WHAT’S WRONG WITH PENNSYLVANIA’S K-12 EDUCATION FUNDING SYSTEM

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  1. WHAT’S WRONG WITH PENNSYLVANIA’S K-12 EDUCATION FUNDING SYSTEM EDUCATION FINANCE SYMPOSIUM November 16, 2006 Presented by: Ronald Cowell The Education Policy and Leadership Center

  2. FRAMEWORK FOR EDUCATION POLICY • Governance • Standards (Expectations) • Assessment (How are we doing) • Consequences • Educational Capacity • Education Finance • Alignment

  3. 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

  4. PENNSYLVANIA HISTORY • 1983: Equalized Subsidy for Basic Education (ESBE) enacted; includes “Factor for Educational Expense” (FEE); removes 50% funding requirement • 1991: Special Education funding changed • 1992: ESBE abandoned – No “finance system” since then • 1997: Charter School Law Enacted • Development of Academic Standards

  5. INCREASING CONSEQUENCESfor STUDENTS • Required to Demonstrate Proficiency for Graduation beginning 2004 • Alternative Assessments for Graduation Allowed • Higher education admission? Employment? • Forthcoming recommendations from Governor’s Commission on College and Career Success? • Future Statewide Graduation Requirements

  6. 2006-07 EDUCATION BUDGET • Basic Ed Subsidy - $4.784 billion • Accountability Block Grants - $250 million • Transportation - $507 million • Special Education - $980 million • Social Security - $474 million • School Employees’ Retire - $368 million • Higher Education - $1.562 billion • PHEAA - $451 million

  7. PUBLIC K-12 SPENDING 2003-04 1991-92 Amount RankAmount Rank Per Pupil Amounts for Current Spending US $8,287 --- $5,001 --- PA $9,979 8th $6,050 6th Source: US Census Bureau

  8. KEY ELEMENTS OF ESBE FORMULA WADMs(Number of Students) X Aid Ratio (Relative Wealth of District) X FEE (Cost Factor) = Basic Subsidy to the District + Other Factors (poverty, density, etc.)

  9. 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 2001-02, $881 million non-reimbursed cost to districts In 2004-05, more than $1 billion non-reimbursed

  10. 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

  11. WHAT IS WRONG WITH THE CURRENT PA FUNDING SYSTEM • A “Non-System” - No PREDICTABILITY • State Government has no sense of obligation to students or to honor a commitment to a funding formula • Annual K-12 Funding is based on political considerations rather than educational

  12. PRINCIPLES OF A SOUND STATE EDUCATION FINANCE SYSTEM • Equity • Adequacy • Accountability • Predictability

  13. ADEQUATE FOR WHAT? The Expectations for Student Performance Established by PA’s Academic Standards The Expectations of No Child Left Behind Law and Related Policies

  14. WHAT IS WRONG WITH THE CURRENT PA FUNDING SYSTEM • PA honors none of the four principles • State Share in bottom five in nation • State AppropriationsPer Student below national average • Therefore, districts too dependent on Local Wealth & Property Taxes • Therefore, great Inequity and Inadequacy among 501 school districts

  15. STATE/LOCAL SHARESfor Elementary/Secondary Public Education State Share Local Share PA National PA National 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

  16. PUBLIC K-12 REVENUEPER $1,000 PERSONAL INCOME 2003-041991-92 Amount RankAmount Rank US - Total $50.53 --- $48.87 --- PA - Total $51.09 21 $49.98 27 US Local $22.20 --- $23.25 --- PA Local- $28.65 7 $27.24 13 US State $23.82 --- $22.43 --- PA State- $18.33 42 $20.25 36 Differences to 100% come from federal sources. Source: US Census Bureau.

  17. STATE FUNDING APPROPRIATED PER STUDENT

  18. RESULT: 2003-04 BURDEN ON LOCAL PROPERTY TAXES Total K-12 State- Local K-12 % from wide RevenuesProperty Taxes Prop T US $462,686,152 $132,831,505 28.7% PA $20,053,897 $8,846,747 44.1% in ooo’s Source: US Census Bureau 15.4% Difference = more than $3 billion/year

  19. RESULT: INEQUITY FOR STUDENTS ACROSS PA Great Inequity for Students Among 501 Districts In 2003-04, instructional spending per pupil in Pennsylvania school districts ranged from $4,690 to $14,527 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

  20. RESULT: INEQUITY FOR TAXPAYERS ACROSS PA Great Discrepancies in Local Effort and Resultant Burden on Local Taxpayers

  21. 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)

  22. ANY PROGRESS? • Funding for Pre-School • Larger Basic Subsidy (Impact of retirement system contributions) • Accountability Block Grants • Charter School Reimbursement at 27% • No development of a “system” • Re-negotiating basic elements such as growth every year • No legacy for Governor Rendell so far

  23. ANY PROGRESS? • Action on Costing-Out Study • Discussion about Independent Statewide Education Finance Reform Commission • Discussion about TABOR and limits on state spending/taxes

  24. Key Issues Should all children in PA have a “fundamental right” to a quality public education?

  25. Key Issues What is “student success”

  26. Key Issues Does Money Matter?

  27. Key Issues SBE Costing-Out Study What are the costs of providing the educational capacity necessary to achieve expectations of NCLB and Pennsylvania’s academic standards/graduation requirements?

  28. Key Issues Who should pay for the implementation of No Child Left Behind?

  29. Key Issues How can state funding be used most effectively to level the “playing field” and ensure that adequate/sufficient resources are available to provide the educational capacity needed for every student to have an opportunity to be successful?

  30. Key Issues State Mandates? Who Should Pay?

  31. Key Issues Tension of Local Control of Funding vs. State Requirements/Conditions attached to some/all of the Funding

  32. Key Issues 501 School Districts Structural Consolidation? Functional Consolidation?

  33. WHAT IS PROGRESSon STATE FUNDING • Larger share of costs paid by state • Increase in State Funding/Student • Reduce dependency on property taxes • Close the equity gap • Ensure level of funding is adequate • Investing in “what works” • Stable and predictable Funding System • Does this improve the system for students?

  34. FOR MORE INFORMATION Ronald Cowell The Education Policy and Leadership Center 717-260-9900 cowell@eplc.org www.eplc.org

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