Education Week - January 7, 2015 - 25

Pa. Economy, Politics
Frame Looming Fight
Over School Funding
CONTINUED FROM PAGE 1
K-12 finance reform.
"What are the potential sources of
revenue if you have an aging population,
slow job growth, and a highly
volatile economy based on [natural]
gas exploration?" asked Maureen
McClure, an associate professor of
administrative and policy studies
at the University of Pittsburgh's
School of Education.
John Callahan, the chief lobbyist
for the Pennsylvania School Boards
Association, said, "There's a whole
lot of things that would probably
give schools relief. They're all on the
table. The question is: Which ones
are we going to get done? That's a
tough question."
The Keystone State has a discomfiting
variety of challenges that affect
K-12 aid.
Pennsylvania is facing a nearly
$2 billion revenue shortfall heading
into fiscal 2016, and in November,
officials announced that the state
had almost exhausted a $1.5 billion
line of credit being used to fund operating
expenses. Two investmentratings
agencies have downgraded
the state's bond rating since July,
and Pennsylvania ranked dead last
in job growth among states from
January 2011 to October 2014.
Challenges Ahead
On another front, Pennsylvania
faces a $50 billion unfunded liability
in public-worker pension funds
that include retirement benefits for
K-12 employees, according to a presentation
last year from the state
budget office.
Fulfilling Mr. Wolf's pledge to increase
the state's share of basic perpupil
K-12 spending-from roughly
32 percent to 50 percent-will be
a challenge. Jonathan Cetel, the
executive director of PennCAN, a
Philadelphia-based advocacy group
that supports charters, suggested
that the incoming governor and gop
lawmakers could fashion a spending
compromise in the mold of the
recent deal in Philadelphia. That
city's district successfully lobbied
for an increase in the cigarette tax
in exchange for allowing new charter
schools to open.
"The only way a final deal will get
done is if it's packaged with other
reforms. And that's because Republicans
have a ton of leverage in this
debate," Mr. Cetel said.
In addition to political and fiscal
uncertainty, there's external pressure
on legislators to act on a new
funding formula.
A lawsuit filed six days after the
election by a coalition of parents,
districts, and others has challenged
the state's education finance system
as "irrational and inequitable."
Pennsylvania is often highlighted
as the only state that doesn't use a
codified funding formula. A key feature
of K-12 spending is the state's
"hold harmless" provision that guarantees
districts at least their previous
year's per-pupil funding, regardless
of enrollment changes or their
demographic profiles. The state
approved a new funding formula in
2008, but has not used it over the
past several years amid economic
turmoil. Districts largely rely on
local property taxes to fund schools.
Basic state aid for K-12 in fiscal
2015 is about $5.5 billion, and
each district is receiving the same
amount as it did in fiscal 2014.
However, the state is officially on
course to enact some sort of new
funding formula this year. The Basic
Education Funding Commission, established
by a law passed in 2014, is
required to submit a proposal for a
new formula by mid-June and has
been holding hearings about K-12
spending since August.
Momentum is building to scrap the
"
There's a whole lot of things that would probably give schools relief.
They're all on the table. ... Which ones are we going to get done?"
JOHN CALLAHAN
Pennsylvania School Boards Association
hold-harmless method and to create
a formula that will likely use various
funding weights for different groups
of students, such as low-income students
and English-language learners.
James Paul, a senior policy analyst
at the Commonwealth Foundation
in Harrisburg, which favors
conservative fiscal policies, said that
the state's current funding method
is irrational, and not just because
of how it rewards districts with
shrinking populations.
Without any weighting for needy
students in the current system, Mr.
Paul said in an interview, "It actually
harms districts that might have a really
high number of low-income students.
For every district that is being
protected by this, there's another district
that is not being held harmless."
The state's funding allocations
also pose problems for districts
with rising enrollments. An analysis
produced by Mr. Paul and a colleague
last month showed that the
20 fastest-growing districts in the
state from 1996 to 2013 saw their
state aid increase by 57 percent (or
$1,110), while the 20 fastest-shrinking
districts saw their state aid increase
by 146 percent (or $5,800).
Thorny Questions
But concerns about winners and
losers in any new formula could
hamstring several ideas about
spending changes. "If you take
away hold-harmless and you flick
that switch, then half the school dising
debate over how much to fund
schools, aside from how that aid will
be distributed.
Mr. Wolf campaigned on a platform
of more-robust education
spending, but it isn't a one-party
issue, said David Broderic, a spokesman
for the 180,000-member Pennsylvania
State Education Association,
which strongly backed Mr.
Wolf. "A large number of legislators,
both Republicans and Democrats,
have said that it's important to reShale
in the northern and western
sections of the state, in order to
boost the state budget.
But Sen. Dominic Pileggi-a Republican
from suburban Philadelphia
who served as majority leader for the
past nine years until Republican colleagues
voted to replace him late last
year-cited estimates that such a tax
would only yield $500 million annually.
That would fall far short of the
state's budget deficit, let alone any
new funding for schools. Beyond that
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Newly elected Pennsylvania Gov. Tom Wolf, a Democrat, has pledged to boost K-12 spending as the state looks to
overhaul its education-funding formula. Republicans boosted their majority in the state legislature in November.
tricts are bankrupt, unable to function.
So you can't do that," said Mr.
Callahan of the school boards association.
"The million-dollar question
is: What do you do about holdharmless?
And if you really want a
formula, you have to deal with that.
We haven't found a solution yet."
The state is also facing a bruisstore
public school funding," he said.
Finding specific revenue sources
to support a dramatic K-12 spending
increase could prove difficult,
however.
As an example of one potential
approach, Mr. Broderic pointed to
Mr. Wolf's proposal to tax natural
gas extraction from the Marcellus
proposal, he said, no firm ideas have
been put forward or gained significant
support.
"I haven't seen any evidence that
the people of Pennsylvania support
an increase in the personal income
tax, or the sales tax," Mr. Pileggi said.
The funding issue could become
entangled with other prominent
education policy topics, Mr. Pileggi
noted.
For example, the state's charter
school laws and cyber-charter laws
have not been significantly altered
since 1997 and 2002, respectively.
Lawmakers have tried and failed
repeatedly in recent years to change
them in a variety of ways, from creating
a new system that differentiates
between cyber and brick-andmortar
charters to allowing new
charter authorizers. Mr. Pileggi indicated
that any overhaul to K-12
spending would likely address at
least some aspects of how charters,
including cyber schools, are funded.
The same holds true, he said, of
the relationship between action on
education spending and changes to
the state's pension system.
"I'm certain that those issues will
be considered side by side. Whether
or not they're resolved together is to
be determined," he said.
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