Tax reform need urgent
P roperty owners across Pennsylvania don’t need a think tank study to inform them that their local school taxes have risen over the last five years, which is the case almost everywhere.
But a study by Temple University’s Center on Regional Politics offers a comprehensive look at the degree to which failed state policy exponentially has increased the pressure on local taxation to fund public education.
Some districts, including Scranton, have severe financial problems that extend beyond the systemic issues addressed in the Temple study. Scranton, for example, is underfunded by the state by as much as $32 million a year when compared with similar districts, according to several analyses by the district and state legislators. But even if that disparity is eliminated, the district, like the other 499 statewide, still would be saddled with the problems created by the state Legislature’s refusal to undertake sweeping reforms.
Across Lackawanna County alone, the study found, charter school tuition and public school employee pension costs increased by $17.4 million from the 2012-2013 through 2017-2018 school years, whereas the basic education funding increased by $10.6 million. Over that five-year span, school property taxes countywide rose by $22.7 million.
That flows directly from the state Legislature’s refusal to fully correct the pension reform disaster it created in 2001, when it massively increased benefits for legislators and state and school employees while irresponsibly failing to fund those increases. Now, every school district in Pennsylvania must budget an amount equal to an astounding 34% of its payroll to cover the cost of that greed and incompetence. Yet the Legislature continues to tinker around the edges of reform instead of readjusting the benefits as part of comprehensive reform.
Likewise, lawmakers have refused to reform the charter school system so that districts must pay them per-student tuition based on the charter’s actual costs. Instead, each district must pay based on its own cost-per-student, which inevitably is higher than charter costs. The difference is scores of millions of dollars a year statewide and will only get worse unless lawmakers finally base tuition on the charters’ costs.
According to the Temple analysis, districts that now pay charter schools $1.65 billion a year in tuition will pay $2.32 billion within five years.
That is doubly problematic because, overall, charters have not demonstrated that they deliver education superior to that achieved by conventional school districts.
By the 2021-2022 school year, the Temple study found, local school taxes will rise by $2.8 billion statewide, while projected increases in state funding barely will keep pace with projected increases in charter school tuition alone.
Meanwhile, some lawmakers continue to propose simply eliminating local property taxes and shifting the burden to the state government through increases in state-level taxes. But the objective also must be adequate education funding, and multiple studies have shown that the proposed tax shifts will fail to do that within just three years of their adoption.
Partial property tax relief must be part of a comprehensive package of reforms that include sweeping pension and charter school revisions to reflect the reality on the ground.