Convergence of two recent Commonwealth Court rulings
Two different but very important court rulings were presented within the past month in Pennsylvania. One ruling was from Commonwealth Court Judge Renee Cohn Jubelirer finding that the educational funding system in Pennsylvania violates the state Constitution’s education clause as well as the equal protection right of students in financially impoverished school districts. This causes great discrepancies between needy and wealthy districts.
The bulk of school funding in Pennsylvania comes from local property taxes. If you live in a wealthy community, the value of the homes and businesses are higher providing more property taxes to fund the schools. If you live in a poor community, the value of the homes and businesses are lower providing less money for the schools. Judge Jubelirer’s ruling is 786 pages long and goes in depth as to why the funding system of Pennsylvania public schools is extremely unjust. This case was filed in 2014 but did not go to trial until Nov. 12, 2021.
The other ruling from Commonwealth Court was issued by a seven-judge panel and authorized by Commonwealth Court Judge Christine Fizzano Cannon and was against four nonprofit Tower Health Hospitals: Pottstown Hospital in Montgomery County, Phoenixville Hospital in Chester County, Brandywine Hospital in Chester County (which closed last year), and Jennersville Hospital in Chester County, (which was sold to ChristianaCare last year).
These hospitals were sued by Pottstown School District, Phoenixville School District, Avon Grove School District, and Coatesville School District. Each district filed its own lawsuit against Tower Health. This case has been in litigation since 2021. The districts were suing over the loss of property taxes when for-profit Community Health Systems in Tennessee, which had paid taxes to all four of these districts, sold the hospitals in October 2017 to nonprofit Tower Health which did not pay property taxes because of its nonprofit status. This ruling stated that these hospitals are not eligible for property tax exemptions, and must pay taxes even though they are IRS-recognized nonprofit hospitals.
This ruling could have a major impact on all of Pennsylvania’s nonprofit hospitals, and could actually sweep across the entire nation if the ruling stands after an appeal, should one be made. A hospital such as Pottstown loses millions of dollars each year by caring for those who are unable to pay. A town like Pottstown needs its hospital to provide essential services for the community and surrounding
townships and region.
Nonprofit hospitals also offer many free programs and opportunities for the community. Pottstown Hospital — Tower Health offers free programs and initiatives (see sidebar).
These two legal cases are very different and involve different plaintiffs and defendants, but have much in common. They both involve the clear fact that Pennsylvania school districts are not being properly funded by the government of the state of Pennsylvania, which relies very heavily on local property taxes from both homeowners and businesses to fund schools. Pennsylvania ranks near the bottom of all 50 states in its funding of public education. School districts are desperate to find additional monies to educate their students from any available source, and these hospitals seem like the perfect answer to a very small portion of their financial woes.
I am in a very unique position. I have been a public school educator serving as a teacher, principal, director of curriculum, assistant superintendent, superintendent, and executive director of an education foundation for four distinctly different school districts over the years, serving 18 of those years in Pottstown School District. I am also chairperson of the board of trustees at Pottstown Hospital — Tower Health.
For many years, I have spoken on the issue of the lack of funding from the state for impoverished school districts, and have written many editorials on this topic which were published in various county newspapers and online within the past three years. I have joined advocacy groups such as Pennsylvanians for Fair Funding, Power Interfaith, and Draw the Lines, all of which support changes in funding for PA’s educational system through numerous and diverse methods. I am a devoted advocate of changing the way schools are funded so that each child has the same educational opportunities as the next child. This should be the case no matter the students’ economic situation, race, sex, athletic, musical, artistic or intellectual skills, or any other divisive characterization one might find among students.
However, because I have been involved with education and the healthcare systems for a number of years, I can see both sides of this story. I desperately want more money given to lowwealth school districts that have been left in the dust by the state and have not had the ability to offer the educational opportunities and offerings of their wealthy counterparts.
However, healthcare has taken a huge hit since the beginning of the COVID-19 pandemic, and hospital systems are in dire need of help, many having lost countless employees as well as untold millions of dollars over the past few years. Nonprofit systems such as Penn Medicine, Lehigh Valley Health System, Mainline Health, Jefferson Health, as well as Tower Health, have lost a great deal of money during the past few years. These nonprofit hospitals, or hospital systems, are in no shape to pay millions of dollars in taxes. They are already in debt, and paying property taxes would put some of them over the edge.
I ask you this question: Would you rather have a local nonprofit hospital to rely upon to take care of your health care or the taxes they might pay?
You most likely cannot have both right now. If a hospital, already in debt as a nonprofit serving the needs of the community, many times without any reimbursement, needs to pay taxes and to do so would put them out of business, would you still want them to pay taxes to the local school district? This might take away the health system you rely upon and also the many jobs the hospital provides for community members.
If the state government of Pennsylvania does what it should and creates a new system of funding that would lower property taxes, and use taxes from other areas other than property taxes to fund education, this problem would go away. Pennsylvania is very near the bottom of all states in the United States of America in its system of taxation and funding of education, leaving the bulk of school funding to the local school districts.
Last year the members of the state Senate, House of Representatives and the governor made significant strides in funding underfunded schools, which was a help to these school districts. However, a great deal more must be done to make this a Commonwealth of equal opportunity for all children. Let us hope that our new governor and all of our elected representatives do what they have been called to do and change Pennsylvania’s unfair and archaic system of school funding during the upcoming budget season.