Education Policy Leadership Center

1. Education Policy Leadership Center Property Tax Reform, Back-End Referendum and Education Funding Issues A Presentation by the Western Pennsylvania Forum For School Superintendents’ Adequate Funding for Public Education Committee May 25, 2006

2. Western Pennsylvania Forum for School SuperintendentsAdvocates for Children and Youth

3. Western Pennsylvania Forum for School SuperintendentsAdvocates for Children and Youth The Adequate Funding for Public Education Committee has the mission of engaging community leaders to recognize that good schools are a great investment – that adequate and equitable funding makes a difference for excellence in public education and has a positive impact on student achievement when spent wisely.

4. Our Focus We want our state elected officials to realize that adequate and equitable state funding for all schools still has not happened in Pennsylvania. We want the governor and general assembly to provide taxpayers with true property tax reform which creates an improved public education funding system. We want to be accountable for increased student achievement and improved school performance by doing what is in the best interests of students educationally and what is fiscally responsible to the taxpayer supporting public education.

5. Our Primary Goals • Partner with education associations to continue working for an improved public education funding system in Pennsylvania. • Request public hearings by the General Assembly to debate the strengths and weaknesses of House Bill 39. • Address House Bill 39 legislative components of School District Taxation, Backend Referendum, Installment Payment of Property Taxes, and Task Force on School Cost Reduction. • Inform the general public how the state financial system currently provides funding for schools and how schools raise local tax dollars to generate a budget that meets the needs of all students. • Educate the general public how back-end referendum will affect the public schools and partner with state education associations to influence the culture of future referendum issues through public awareness.

6. Belief Statement The Committee believes that the Commonwealth of Pennsylvania has a responsibility to provide adequate and equitable funding for equal educational opportunities in public education, regardless of where a student attends school, based on the Pennsylvania Constitution which requires “a thorough and efficient system of public education”.

7. Belief Statement Public schools are for the common good of society; therefore, we embrace higher expectations for student academic performance, so that students can be successful as life-long learners and be highly competitive in a global economy to meet the changing needs of business, industry, government and society.

8. Belief Statement We have a commitment to every student’s academic success. We believe that the stakeholders in public education -- the governor, general assembly, educators and community leaders – have a shared responsibility to hold students and the public education system accountable for meeting higher educational standards. Equally important, these stakeholders have a moral and ethical obligation to provide adequate and equitable education funding to support every student’s academic success.

9. Belief Statement Money does matter. Correctly focused, sufficient funding for quality educational programs and services will make a difference and impact student achievement positively. We believe every student deserves an equal opportunity to be successful in regards to high expectations, academic standards, a rigorous and challenging curriculum, and a career path of their choice.

10. Belief Statement We believe that the only long-term solution to high property taxes is improving the way Pennsylvania pays for public education and establishing a sound school funding formula. In 2004-05, the state share of school costs funded by the state budget amounted to 35.8%. Nationally, the average is closer to 50% paid by the state.

11. Some Basic Facts According to the National Center for Education Statistics, Pennsylvania ranks 36 of 50 states in financial support per student. State government spending per student in Pennsylvania averages $4,082, while the national average for annual state support for students is $4,553 per student. There is a $10,259 gap between what the highest- and lowest- spending school districts in Pennsylvania spend per pupil. The highest spending district spent $16,803 per student in 2003-2004; the lowest only $6,344 -- a $261,475 gap per classroom of 25 students.

12. Some Basic Facts Public education in Pennsylvania is more dependent on local taxes than most states; therefore, school district taxes are among the highest in the country. In Pennsylvania, 44% of public education funding comes from local property taxes, while nationally, 28% of public education funding comes from local property taxes. Pennsylvania has a great disparity in local school taxes, ranging from 10.8 mills to 42.5 mills. Many of the poorest school districts have the highest tax rates, yet do not have adequate levels of funding for quality education programs for all students.

13. Money Makes a Significant Difference • How much funding a school has depends on where that school is located. Money means whether a school district can offer AP classes, foreign languages or have resources such as computers, science labs, textbooks and equipment. • Without the funds to pay a competitive salary, attracting quality teachers and administrators is a problem. • The difference in annual spending between the wealthiest district and the poorest continues to grow. • There are typically much higher costs associated with educating low-income students: extra tutoring, special education, individual education plans.

14. Inequitable Funding Here’s a local look, courtesy of Good Schools Pennsylvania, which measured what some local school districts spend on pupils, minus transportation costs.

15. Program Spending Per Student – Allegheny County Schools Good Schools PA (2003-04)

16. Program Spending Per Student – Armstrong County Schools Good Schools PA (2003-04)

17. Program Spending Per Student – Westmoreland County Schools Good Schools PA (2003-04)

18. All mills are not created equal • One mill = $468,500 in the Armstrong School District • One mill = $119,761 in the New Kensington-Arnold • One mill = $2.4 million in the Fox Chapel Area School District. Courtesy Valley News Dispatch

19. Funding Issues • Equalized Subsidy for Basic Education has been eliminated for over ten years. • No relationship between special education funding and number and expense of special education students • Funding inequality causes problems for poor school districts and growing districts • Supplements to basic funding that address inequity increase opportunities for manipulation

20. Funding Issues • Poverty Supplement • 2005-06 at $17 million for 168 districts based on Personal Income per ADM less than $105,000 and aid ratio >= .6500 • 2006-07 Governor’s proposal at $55 million for 183 districts based on Personal Income per ADM less than $91,000 and no aid ratio component • One school district will receive $18.2 million while others lose the supplement.

21. Funding Issues • Funding inequity among school districts with similar aid ratios • Armstrong School District • 2006-07 Aid Ratio .6757, BEF per ADM $3,926, BEF increase 2.6% • Average of 20 school districts with similar aid ratio • BEF per ADM $4,151, BEF increase 5.6%

22. Funding Issues • Funding inequity within ARIN Intermediate Unit 28 • Armstrong SD • 2005-06 Aid Ratio .6814, BEF per ADM $3,926, BEF increase 2.60% • Marion Center Area SD • 2005-06 Aid Ratio .6890, BEF per ADM $5,299, BEF increase 2.70% • $1,373 more per ADM for Armstrong would equal $9.2 million or 19 mils (35% of levy)

23. Special Session House Bill 39 In May, the state senate passed House Bill 39 and the House debated it without bringing it to a vote. It would allow voters to decide if the would like to increase the Earned Income Tax to reduce property taxes

24. Special Session House Bill 39 • It would increase income eligibility requirements and payments for the Property Tax Rent Rebate program. This would add 422,000 seniors to the program and increase the payments by a maximum of $200.

25. Special Session House Bill 39 • It would provide up to a 50 percent property tax reduction of the homestead exclusion by using gaming funds and additional Earned Income Tax revenues.

26. Special Session House Bill 39 • And it would require school districts to receive voter approval for property tax increases beyond the rate of inflation. This is called referendum. It allows for some exceptions for construction projects and increased pension costs.

27. Some Thoughts About Referendum • All legislative property tax relief proposals include provisions for “back-end referendum”. • Legislators see this concept as a way to empower taxpayers and provide them some opportunity to reject future tax increases. • It provides the opportunity for voters to say “No” to taxes without regard to the educational needs of students. • Referendum has the potential to divide communities between those who value education and those who are apathetic towards education.

28. Some Thoughts About Referendum • If the real purpose is to control school district expenses, then give school districts more control of their spending decisions • Include legislation eliminating state mandates • Include legislation permitting professional staff furlough for economic reasons • Include legislation changing collective bargaining process

29. Some Thoughts About Referendum • Increased taxpayer control on school spending sounds good but … • Increased class sizes • More frequent labor strikes • Outsourcing of support staff functions • Decreased opportunities for students (academic and extra-curricular) • Quality of school system’s impact on property values

30. Some Thoughts About Referendum • Higher index for poor school districts • Necessary for years when increases in state funding are low • Increasing taxes at a higher rate on those who are less able to pay • Will this result in more pressure on state government for adequate and equitable funding?

31. Some Thoughts About Referendum • Index applies to real estate tax millage, not expenditures • Armstrong School District 2006-07 budget • 2.6% Basic and Special Education increase equals $773,000 • Adjusted index of 5.56% due to high aid ratio equals $1,487,000 • Allowable increase for 2006-07 budget of $2,260,000 or 2.9%

32. Next Steps • Sponsor a Fall Symposium on Public Education Funding, sponsored by the Western Pennsylvania Forum for Superintendents, the Education Policy Leadership Center and the University of Pittsburgh to better inform the general public about property tax reform, backend referendum and education funding issues.

33. Next Steps • Conduct stakeholder meetings in respective school districts to inform the public about the need for a comprehensive public education funding system.

34. Next Steps • Promote a Business-Education-Community Luncheon in respective school districts during American Education Week in November, 2006, to highlight student achievements and school performance and to promote the message for fair, adequate and equitable funding for public education.

35. Next Steps • Partner with statewide education associations that are working to build a unified voice for a quality public education for all children in Pennsylvania, supported by sufficient state funding.

36. Western PA Forum for School Superintendents Adequate Funding for Public Education Committee • Dr. Edgar Holtz, Executive Director Emeritus, AIU • Dr. Jim Manley, Pine-Richland • Dr. Sue Goodwin, University of Pittsburgh • Dr. Nick Bayat, Canon McMillan • Dr. Jerry Longo, Quaker Valley • Dr. Anne Stephens, Fox Chapel • Dr. Thomas Knight, Bethel Park • Dr. Roberta DiLorenzo, Washington • Dr. Wayne Doyle, Hempfield • Dr. Linda Hippert, South Fayette • Dr. William Kerr, Armstrong

37. References • Western PA Forum for School Superintendents Adequate Funding for Public Education Committee Meeting Notes • Pennsylvania School Boards Association • Good Schools Pennsylvania • Pennsylvania Department of Education • National Center for Education Statistics • Education Policy Leadership Center • Valley News Dispatch