Why Pennsylvania’s school funding formula is not fair
We should all be thankful that Pennsylvania lawmakers created a mechanism that uses relevant variables to determine the commonwealth’s financial commitment to each school district.
The General Assembly overwhelmingly passed Act 35 of 2016, formalizing a fair funding formula based largely on student population and students’ needs. The formula was designed to drive funding to school districts in the form of basic education funding, more commonly known as BEF.
By passing Act 35, Pennsylvania lawmakers embarked on a journey, finally, to equi- tably address funding for the commonwealth’s schools. However, the executive and legislative branches of the commonwealth have all but ignored the provisions of Act 35 over the last five fiscal years, running only a small portion of the BEF through the fair funding formula.
It is now time to implement the fair funding formula with fidelity.
Failure to do so shortchanges some districts while others receive larger sums than the formula would dictate. Per pupil funding for the 2019-20 school year — the most recent statewide data available — ranges from $14,830 per student (Duquesne City School District) to $470 per student (Lower Merion School District).
Reasonably, you would expect that a distressed district like Duquesne would receive a greater per pupil allocation than a mainline Philadelphia district, but you may not expect it to be 31 times greater per student.
What causes such a disparity in per pupil funding?
The culprit is something referred to as hold harmless, which is a long-held practice of ensuring that no district receives less funding than it had the prior year, even if enrollment declines.
When viewed through a one-year lens, the practice makes sense; however, when hold harmless permeates decades of funding, disparities grow and promote a system that is anything but fair.
Declining enrollment is rewarded and growing enrollment is not compensated.
The 2019-20 data shows that of the 500 districts in the commonwealth, 385 (77%) have experienced a declining enrollment since 2011. Those declines range from -.26% to -57.33%, and those shrinking districts received an average of $4,772 per pupil.
The 250 districts with the highest per pupil allotments received $3,900
per student, on average; all but 23 of them saw declining enrollment.
Statistically, the most well-funded school districts in Pennsylvania have fewer students now than they did a decade ago. How can that be? How does that make sense?
Hold harmless is the culprit. We can see the impact hold harmless has on districts with declining enrollments. But what does it do to the remaining 115 (23%) districts that are growing?
The data shows that districts with growing student populations did not fare as well. They received, on average, $2,489 per pupil; worse yet, the 28 (5.6%) districts with the lowest per pupil allocation received less than
$1,000 per student. That’s even though two-thirds of those districts experienced increasing enrollments — one of them grew by nearly 20%.
What has been the impact of not applying the fair funding formula with fidelity?
Growing districts have been forced to place a greater burden on their property owners, to consider curtailing programs, or both. Managing growth while simultaneously receiving unfair funding allocations presents boards and district leaders with challenges not faced by many districts with declining enrollments.
Smaller per-pupil allocations from the commonwealth translate into higher percentages of revenue coming from the districts’ property owners. Districts with growing enrollments may see their basic education funding account for a very small percentage of total revenue, often in the single digits.
Conversely, districts with declining enrollments may see their state funds comprise 30% or more of their total revenue.
Blame hold harmless and the unwillingness of the executive and legislative branches of state government to implement the fair funding formula with fidelity.
This year, the executive branch proposed a state budget that attempts to implement the funding formula with fidelity while trying to honor the spirit of hold harmless. That is, the proposed budget applies school funding fairly while infusing additional funding to make sure that no district receives less than it did last year.
The proposal tries to fix the problem in one year.
Realistically, there will be little appetite for this solution in the Legislature, as it would require a hike in the personal income tax. I am not foolish enough to believe that the governor’s proposed budget will survive intact.
I also hope the Legislature is not so foolish to believe the current funding distribution process is adequate. If it fails to address the issue now, the disparity will only grow; districts will be forced to lean more heavily on local property taxpayers.
The current trend is unsustainable and must stop.
The solution lies in implementing the funding formula, even if it takes several years to do so. Doing anything else would be legislative malpractice where the figurative patients — taxpayers in growing districts — quietly suffer.