Funding debate comes to North Penn
LANSDALE >> The fight for fair schools funding in Pennsylvania has made its way to North Penn.
Dozens of local residents got a thorough lesson in several key terms, like “fair funding,” “hold harmless”, and a series of bills working their way through the state legislature at an online issue forum hosted April 13 by the Lansdale branch of the American Association of University Women.
“While we would all like to think we can fund more money into education, we’re now pushing against a balloon. Without increasing taxes, where do we find additional revenue? That becomes a real push-pull,” said state Sen. Bob Mensch, R-24th Dist.
Education funding has been in the news across Pennsylvania, as school districts plan 2021-22 budgets in the wake of the COVID-19 pandemic. Mensch, along with state Representatives Liz Hanbidge, D-61st Dist., and Steve Malagari, D-53rd Dist., were joined by North Penn School District Superintendent Curt Dietrich, addressing aspects of that debate.
“All four of them care tremendously about the communities they serve. All four are advocates for public education, and all four have direct involvement with the fair funding formula legislation,” said AAUW co-president Suzan
Leonard.
Dietrich outlined the various sources of state funding for the school district, most notably the basic education funding allocation projected to be about $11 million for 2021-22, out of a roughly $288 million budget. That funding has traditionally been allocated per a formula based on district property values and personal income calculations, until state lawmakers opted to simply increase the prior allocation each year.
“Eventually, we hit a place where, what simply was done was, the previous year’s numbers were used, and an across-the-board increase was applied to that,” Dietrich said.
“Everybody got a two percent increase, or three, or four or five percent increase.
That was across the board, and that became a habit. Over time, we started to stray more from the actual factors that went into the funding formula,” he said.
In the early 2010s, Dietrich said, the state legislature created a bipartisan commission on recalculating the formula: “I testified at one of those hearings, to talk about the need for change to the funding formula,” he said.
The problem encountered then, Dietrich said, was that districts with declining enrolment in central, upstate and western Pennsylvania stood to lose funding, so now only about 11 percent of basic education funding is allocated through the new formula — the “hold harmless” provision keeps the rest of the funding under the prior formula.
“Those districts that were seeing declining enrollment, they continue to get at least what they got before, and were held harmless,” Dietrich said.
If the formula were applied in full, North Penn would get about $8.4 million more from the state in basic education subsidies, bringing the total up to about $19.4 million, an amount Dietrich called “a significant difference,” and which board President Tina Stoll said afterward “would be enough to clear the structural deficit in the budget.”
Hanbidge explained how the “hold harmless” formula has been in place since 1992-93, and how it helps school districts in the western part of the state, where enrollments are falling, but conversely hurts those in the southeast with growing numbers.
“About 320 of Pennsylvania’s 500 school districts, at the time the commission met, would lose about $1 billion,” a drop that prompted lawmakers to slowly phase in the change in formula, which she called “simply not sufficient.” North Penn would receive about 40 percent more funding, and the Wissahickon School District in her territory would similarly receive about 40 percent more funding, about $1.9 million more than they currently do, she said.
“Overall, we really need to work out how to fund the education of children, in a
fair and equitable manner,” she said.
Malagari touched on another topic that’s been debated: reforming the funding of charter schools, private organizations that receive public funds from the districts where their students reside.
“Pennsylvania desperately needs to revisit its charter school law, because the last time we reviewed the last was in 2002, nearly 20 years ago. Education has changed a lot since then,” he said.
Last year roughly $2.1 billion in taxpayer funds went to charter schools, roughly 20 cents of every dollar paid in property taxes, Malagari told the audience, largely because tuition rates have steadily increased over the past two decades. House Bill 272, a reform proposal currently in the works, would set a single standardized tuition rate statewide, would outline criteria the charter schools must meet, and would reward those that perform the best with more funding.
“Higher performing charter schools should absolutely be highlighted. This is not a partisan issue: This issue is about providing a quality education, with a fair value for the taxpayers,” he said.
Mensch elaborated on the “hold harmless” calculation, noting that his senatorial district contains 11 school districts, nine of which do not benefit from hold harmless.
“They probably receive, on average, 18 percent of their total school funding from the state, through the basic education formula — which translates to 82 percent they need from property taxes,” Mensch said.
“The school districts that are west of the Susquehanna (River), and north of I-80, are benefitting from hold harmless — they’re probably 82 percent funded through the state, and relatively small impacts from property taxes,” he said.
Last week Mensch introduced legislation that would address that hold harmless provision, but the lawmaker called it “a hard sell, because I have 25 percent of the legislature that would want to support it, and 75 percent of the legislature that probably does not want to see hold harmless changed.”
State budget allocations have followed a relatively simple allocation in recent years, Mensch added — roughly 40 percent of the state’s $37 billion budget goes to education, 40 percent to human services, seven percent to corrections, and four percent to debt service, leaving about nine percent for all other state departments.
“Do you want to pay more in taxes? My argument would be that we probably can’t afford more taxes, particularly right now” in the wake of COVID-19, he said.
“If we don’t fix hold harmless, and we continue to shift into the basic education formula, what you will see is that we will exacerbate that problem,” he said.
Throughout the panel, audience members submitted questions via Zoom chat, moderated by AAUW member Connie Whitson, and the officials took turns answering; example: How can funding be increased overall?
“Well, the only way we can provide more money is if the revenues to the state increase,” Mensch said.
“It comes down to, how much money do we have, and how much money can we spend on education? When 40 percent of the budget already goes to education, it becomes a real issue — where do we find additional dollars?” he said.
Whitson asked if funding allocations take into account the numbers of students who do not speak English as their first language. Dietrich said they do, and audits each year ensure funds allocated for that purpose, which he estimated at $3 million to $4 million, go to those programs only.
Did the district get any additional funding from various COVID relief bills? Dietrich explained the roughly $17 million already allocated to the district, largely with specific instructions.
“Some of that is very clearly earmarked for what they call ‘learning loss’ — 20 percent of it must be spent for students that didn’t learn as much as they normally would learn, because of all of the things having to do with COVID,” he said.
Leonard asked about the funding allocation Mensch mentioned, of 40 percent of state funding being allocated to education, and if and how it could be raised to 50 percent.
“Pennsylvania ranks 44th in the country on state spending on education. So my question is, what are we doing wrong?” Leonard said.
“We all recognize that the basic job of a state is to educate their children. So if we’re not spending, if we’re one of the lowest in spending, then we must be doing something wrong,” she said.
Malagari answered that he thought more funding could come from a variety of sources, including higher federal subsidies and charter reform.
“Taxing our way through it is not sustainable either. We can’t just continue to raise taxes all the time. We have to find areas of other revenues,” Malagari said.
Whitson asked if higher corporate taxes for education could be “a reasonable ask,” since companies would benefit from an educated workforce. Hanbidge said her answer requires a wider look.
“As we’re looking at our state in the long term, whenever we see drops in math, science, education funding, we see a recession 20 years later,” she said.
“Typically, Pennsylvania has a structural budgeting issue, and it’s creating a lot of stress on homeowners in the form of property taxes,” Hanbidge said.
In the early 2000s, lawmakers did not address pension liabilities that are now an increasing portion of the budget, and various other budget tactics have been “kicking the can down the road” since, she said.
“We budget with funny money. We don’t actually look at what our revenues are going to be, in an adequate fashion, and what our costs are going to be. We need to look at the global picture,” Hanbidge said.
Mensch added that the state tax structure plays into the economic climate, as has the economic downturn in 2008 and the COVIDrelated business closures in 2020, and those pension liabilities already make up a growing share of every tax dollar.
“Out of every property tax dollar, and every personal income tax dollar you pay to the state, out of both of those sources 38 cents goes to pensions. When we talk about school funding, you take 38 cents right off the top,” he said.
AAUW member Eileen Fields took issue with that description: “I don’t like the implication that somehow my pension is what’s costing education its proper funding. Because I paid into that pension, I didn’t borrow from that fund.”
Mensch answered: “I didn’t mean to infer that teachers are creating that,” and said growing pension obligations have caused an increasing debt for the state PSERS retirement fund, and said the state’s total levels of taxes and charges on businesses are the second-highest in the country.
Dietrich added a concrete example, citing real estate taxes as another factor.
“Merck is one of our largest taxpayers. Merck alone provides somewhere around $12 million in real estate taxes. And we need Merck to be thriving, for the North Penn School District to be thriving,” he said.
“One thing we can’t have is Merck slipping, and not being able to continue to pay what they pay, and appealing their property tax assessments,” Dietrich said, referring to an ongoing topic for the board.
Another area the district is watching: the strength of malls and commercial shopping centers across the district, as lockdowns have accelerated the shift to online shopping.
“Thankfully, Wegman’s has really helped us. If we didn’t have Wegmans ... that whole mall area is just real concerning to us,” he said.
Hanbidge shared a fact sheet from the state house appropriations committee detailing facts and figures about the funding formula debate, and all four said local residents were welcome to contact them or their offices with questions or to show support.
“This issue is not going away, and it seems like it’s an uphill battle,” Leonard said.