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Legislative Corner
FUNDING EDUCATION IN PENNSYLVANIA Pennsylvania adopted a 2003-2004 budget last among all states, forcing some school districts to address cash flow shortfalls with increased taxes and tax anticipation loans. As political groups resume discussions in 2004 on education funding and sources of revenue, it is important to understand that our state public school funding law, Act 48 of 2003 (the �Act�), has addressed some current district level budgetary issues, implemented some important programs and framed the debate over tax reform and alternate sources of revenue. The Act can be understood as (1) addressing school district funding, (2) authorizing new programs, (3) creating tax credits for business, (4) creating a school district accountability program and (5) fostering teacher recruitment through loan forgiveness. The Act addresses school funding by: (1) providing basic, reimbursement and special funding to public school districts, (2) authorizing school boards to take specific actions, (3) implementing Federal �No Child Left Behind� funding mechanisms and (4) allowing school districts with a history of financial distress to be placed on an educational empowerment list by July 1, 2004. These items do not necessarily have an impact on Commonwealth funds, as reported in Republican and Democratic analyses. The Act, however, does affect funds at the local level. First, the Act allows school boards to set district fiscal years and adopt budgets within the variable time frame that the Commonwealth adopts its budget. This addresses some issues that arise from the Commonwealth adopting its budget so late in the year instead of by the June 30th deadline previously required of school board budgets. Per capita tax exemptions may be increased from annual incomes of $5,000 to $10,000. School boards may also reopen their 2003-2004 budgets to reflect the money that the legislature finally allocated to districts. Boards are limited, however, starting in the 2005-2006 school year from increasing property taxes unless there is a specific estimated ending unreserved undesignated fund balance applicable to the total of budgeted expenditures. These last two items frame personal tax increases and real property tax reforms expected to be subject of 2004 political negotiations. The Act authorizes new programs at many levels of education. School districts may now offer firefighter and emergency training services as credit-earning courses for students at least 16 years old. This addresses a shrinking pool of volunteer and compensated emergency personnel in Pennsylvania. Tutors may get federal funding through the Department of Education for remedial teaching to students identified under the No Child Left Behind Program and the PSSA testing. The Head Start Supplemental Assistance Program is expanded for additional children and extended day services. Campus police at schools in the State System of Higher Education such as Kutztown University are granted the same law enforcement powers as campus police at state-aided schools such as Penn State. Primary jurisdiction is on-campus with emergency and specially authorized powers extending off campus. Only by executing a mutual aid agreement with municipalities which the school overlies or abuts can the campus police execute their general law enforcement powers in those municipalities without emergency or special authorization. This provides Kutztown University, the Berks-Lehigh Regional Police and Kutztown Borough police with opportunities for cooperation and mutual aid. Further, while the Act has been said to have no impact on Commonwealth funds, it could diminish direct state control over $45,000,000 and authorize locally determined programs to be funded by private dollars. The legislature has expanded its school choice program by incenting businesses to contribute more money per year to scholarship organizations or educational improvement organizations. The Educational Improvement Tax Credit (�EITC�) program now offers an increased state tax credit from $100,000 to $200,000 annually. Further, Pennsylvania offers a $100,000 state tax credit for contributions to pre-kindergarten scholarship organizations. The total tax credit (money given up by the Commonwealth) is $45,000,000 per fiscal year beginning 2004-2005. The first EITC tax credit of $40,000,000 will provide $26,666,666 to scholarships (likely outside public schools) and $13,333,333 for innovative educational programs in public schools with associated educational improvement organizations such as the Kutztown Area School District Education Foundation, Inc. According to Dr. Brenda Winkler, Superintendent of the Kutztown Area School District, �the EITC program for educational improvement organizations is a good first step toward implementing innovative programs.� The Brookings Institution Center on Urban and Metropolitan Policy notes on page 62 of its publication, �Back to Prosperity-A Competitive Agenda for Renewing Pennsylvania,� that because educational decline in older communities is attributable to suburban growth and because areas of �decay can undercut the attractiveness of entire regions and states,� it should be a state policy to remediate educational system decay in older communities. The legislature, whether in response to �Back to Prosperity� or another expression of the same policy, has adopted in the Act a Pennsylvania Accountability Grants Program (�Program�) by which grants are issued to school districts to meet or maintain academic performance targets. This is funding based on PSSA test results during 2002-2003 in the state-wide amount of $131,250,000 for addressing deficiencies and $13,750,000 for maintaining proficiencies. The Program was adopted with Keystone Educational Accountability, a governance program to implement best financial practices. Each school district that succeeds is certified as a �Keystone District;� those that fail must establish a local financial management advisory team selected from the business community and school district. Financial management standards shall be adopted by the Department of Education (�Department�). The Department reviews each school district on a 6 year cycle with public meetings and will publish the results of those reviews on its website. The Department shall supply a list of experts and can supply technical advisors on a school board�s request. Finally, the Act establishes a teacher recruitment program for designated rural and academic improvement school districts (�Districts�). The Pennsylvania Higher Education Assistance Agency (�PHEAA�) will implement college loan forgiveness for award recipients with PHEAA guaranteed Stafford or consolidation loans. A teacher can receive loan forgiveness of up to $2,500 per year of teaching in a District for a total of $10,000 per recipient. The debate regarding education funding will resume soon in Harrisburg. The Act identifies some of the issues: statewide support for urban schools, private school finding, school district accountability, minimum student proficiencies and limits on real property tax. Whether or not Governor Rendell and legislative leaders succeed in their various proposed funding mechanisms, it is clear that our Governor and legislature have entered a debate on how to renew Pennsylvania by funding and improving the education of its students. � 2004 Robert J. Hobaugh, Jr. |
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