Education Funding for Successful Generational Transitions in Pennsylvania: Not Easy

Education Funding for Successful Generational Transitions in Pennsylvania: Not Easy Maureen W. McClure Vera Krekanova University of Pittsburgh October 3, 2014

McClure and Krekanova, School of Education, University of Pittsburgh, University Consortium to Improve Public School Finance and Promote Economic Growth, October 3, 2014

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Education is a Core Purpose of the State: Protects Generations as They Transition from Youth to Old Age In Pennsylvania, we can no longer take this for granted PA is a rapidly aging state and taxes little retirement income,

while more younger people need extra help in school Will the growing generational dependencies of the young and the

old contribute to instability in school districts and regional economies?

Perhaps Need to start a conversation about them


3We Need to Better Understand District and Taxpayer Burdens

as Populations Shift We need to better understand and assess the

consequences of generational shifts, and how they will affect regional economies, districts and taxpayers…e.g., Will it mean slower economic growth?

Data analyses of Pennsylvania’s demographic shifts and associated costs are already available, but are not yet well coordinated when considering education funding and strategic planning either at the state or local levels

It is time to examine funding indicators and how demographic shifts will affect taxpayers


4State Has a Limited Capacity to Protect Education Funding from Generational ShiftsThis could lead to trouble :

Two types of shifts in dependencies: Demographic and Economic Demographic dependencies (children and aging

populations)Rapidly growing populations of retirees offset byRapid declines in numbers of taxpaying age groups with

career high incomesEconomic dependencies (people unable to work in any age

group)Unemployed, not in labor force, and those with disabilities

All limit the state’s capacities to produce income


5Generational Shifts are Politically and Economically Destabilizing

For example, the state’s regulation of county level property assessments has been weak and unfair for many decades…yet shifts to income or sales taxes may make things even worse (see other Consortium papers)

Aging taxpayers often want to stay in their homes for as long as they can, but rising school district property taxes threaten some

In the past seniors have tended to support education, but moving forward, that can’t be taken for granted


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And…the 65+ Generation VotesMore Often…

Than other age groups…


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How Big a Problem is it for

School Tax Bases?


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Education is Dependent on All Ages

The shape of a population can be important for government policy and planning because it forces us to think across generations and their dependencies

Education is not an isolated sector – Need to look at the whole population over time

First, we will examine demographic dependency ratios - These measures indicate the number of people who are too young or too old to work, relative to the number of people of working age

Second, we will examine economic dependency ratios -These measures indicate the employment status of those who are, who are not, and who are unable to be employed


9First, How to Read

a Population PyramidPyramids are a good way to show the shape of a

populationAge groups broken out by Males on the left and Females

on the right- Youngest at the bottom, oldest at topTraditionally this looked like a pyramid, but that started

changing about fifty years ago, especially in developed countries

Let’s start with Mexico- It is a transitioning country so notice the rounding at the base as parents are having fewer children – but still looks fairly traditional – notice no baby boom


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11What Do You Think PA’s

Pyramid Looks Like?

Take a guess – Mexico’s median age is about 26 -PA is over 40 –Afghanistan’s is about 18

Pennsylvanians are living longer – must be a great place to live We know baby boomers are already affecting school district funding as

they leave taxpaying jobs and move into tax exempt retirement incomes

We also know about one half of children born today are to single mothers – many with limited resources- extra costs for school districts in aging state with shifting policy priorities

So, did you think it would look like this?


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What Do You See?Baby Boom pushing the edges, followed by a

rapid decline, followed by growth created by their children, the “Echo” generation

Declining numbers of births again in recent years

This in contrast with growing numbers of competing charter schools, cyber-schools and schools of faith

Top heavy, a little unstable? Too soon to tell?



14Quick Look at

Demographic Dependencies Around the State

First, my home borough, OakmontThen my school district, Riverview, where I am on the school

board – emphasis on the population over 80, more likely to have disabilities, still vote

Next at the county level which indicates a larger economy than a school district – and has elected officials who make economic development policies that affect the region

Finally, return to the Pittsburgh MSA regional economy as a case that examines the economic dependencies created by employment opportunities


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17How Will These Changes Affect

School Districts?

Scale problems - Districts may be more prone to financial instability because most are relatively small

Even “gated” districts may be vulnerable because they are still nested inside larger regional economies

Elderly may support education, but they may need to shift it to a lower priority as taxes increase

Poorer districts are likely to take the biggest hit because: Aging populations are likely to be women who have limited

access to Social Security because they weren’t in the workforce If they were in the workforce, they generally made less money

than men and will have more limited access to pensions…they live longer, and they vote…


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Counties: Building Regional Economic Growth

Counties are likely to face problems as the costs of generational transitions rise with aging populations

Older workers retiring later out of concerns for economic stability… Are they shutting out younger workers?

Younger workers with education debt and limited access to jobs may leave

Let’s look at counties around the state with some growth potential: Allegheny County, Pike (rapid growth), Bucks (wealthy suburban) and Lycoming (Marcellus Shale)- Do they face generational issues? If so, are they enough to limit capacities for additional taxation to share with other, poorer counties?


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Allegheny County

A little less stable than the state


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Pike CountyWhat happened? Hollow core….


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Bucks CountyNow too expensive

for young people to move in?


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Lycoming CountyMarcellus Shale country…

Notice skewed growth of young males


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The Future Is Here …Now…


28Pittsburgh MSA

Region as a Case

Regional cases are also important to understanding education tax capacities because economies are regional

Not all those of employable age….are….Different age cohorts have different

combinations of workers and non-workers –Need to look at employment status, compensation and disabilities


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Look at Four EconomicDependency IndicatorsUnemployedLow-wage employedNot in labor forcePeople with disabilities


30Employment Status by Age

Male Female


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Employed: Hourly Wages


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Disabilities Can Also Limit Ability to Pay Taxes

DISABILITIES

0 TO 75+ 65+

MALE 12.2% 32.6%FEMALE 13.7% 36.4%


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And Then There Is This One

Other Thing …Time Shifts…


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35Significant Population

Shape Shifts in Only Five Years

Baby boomers moving into retirement age and out of higher earning tax brackets

Shortfall in number of eligible taxpayers in higher earning age groups

Baby boom “echo” showing similar disruptions Need to better account for the shape of

taxpayer populations


36So What Does This Mean?

“Shape shifting” generational cohorts matter to the state’s education funding and strategic planning functions

Rising dependency rates may financially destabilize some school districts – gain of elderly + loss of income earners

Seniors should be at the table now – because they will vote later

We also need to attract and retain younger cohorts so they don’t leave – build on strengths of higher education in PA

We need a broader conversation about trans-generational education funding policies


37Should Demographic and

Economic Dependency Ratios Be Part Of The Education Funding Solution?Yes. Need better indicators of the roles of

generational shifts in education funding todayCan dependency ratios used in other sectors

be adapted to meet educational needs? Worth a try

Need for generational fairness on all sides to avoid competing interests


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Education is An Essential Solution

To the Rapidly Growing Complex and “Wicked” Problems of

Successful Generational Transitions


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Thank YouMaureen W. McClureAssociate ProfessorAdministrative and Policy StudiesSchool of EducationUniversity of PittsburghPittsburgh, PA 15260

Phone: 412.648.7114E-mail: [email protected]

Data Sources: US Census Summary File 1: QT-P1, Three Rivers Workforce Investment Board, and The Center for Rural Pennsylvania

mailto:[email protected]


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APPENDIX

41Education for Whom?

What kinds of jobs does the next generation need to be successful?

PA business is not a monolith and education funding policies need to better recognize these differences

PA has different kinds of industries with different kinds of jobsHigh Wage – High Employment/ High Wage – Low

EmploymentLow Wage – High Employment/ Low Wage – Low Employment

Will older workers with good jobs be replaced by younger workers? Or will many current good jobs disappear?

Not only a “skills gap,” also a “good jobs gap” McClure and Krekanova, School of Education, University of Pittsburgh, University Consortium to Improve Public School Finance and Promote Economic Growth, October 3, 2014


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Good Jobs Aging Out?

About 1/5 on high wage jobs will age out soon


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All Businesses Are Not Created Equal: Higher Wages = More Older Workers

Description of PA Industry 2014 Earnings 2014 Jobs2010-2014

Change Male %

Female %

Age 55-64 %

High Wages –High Employment Construction $66,506 215,104 9,541 88% 12% 15%Educational Services $64,315 168,757 (10,472) 40% 60% 20%Finance and Insurance $96,915 242,042 (2,290) 37% 63% 17%Government $79,035 681,998 (47,677) 44% 56% 20%Health Care and Social Assistance $54,993 926,751 40,121 21% 79% 18%Manufacturing $72,370 561,366 935 74% 26% 21%Transportation and Warehousing $51,826 210,749 14,710 71% 29% 18%Wholesale Trade $75,795 198,155 1,915 72% 28% 19%High Wage –Low Employment Information $86,343 82,253 (7,575) 57% 43% 17%Mining, Quarrying, and Oil and Gas Extraction $94,643 33,054 9,463 91% 9% 15%Management of Companies and Enterprises $137,728 131,410 16,632 51% 49% 19%Utilities $139,149 21,298 (434) 80% 20% 25%


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Good Jobs GapMany young people in low wage

industries… how many will be able to overcome “skills gap” and make

the leap to higher paying industries?


45All Businesses Are Not Created Equal:

Lower Wages = More Younger Workers

Description of PA Industry

2014 Earnings

2014 Jobs

2010-2014 Change

Male %

Female %

Age 55-64

%Low Wage - High EmploymentAccommodation and Food Services $19,278 444,725 34,774 43% 57% 7%Administrative and Support and Waste Management $39,082 268,456 23,205 60% 40% 13%

Retail Trade $31,618 632,611 8,082 48% 52% 14%Low Wage – Low EmploymentArts, Entertainment, and Recreation $36,574 99,165 10,823 54% 46% 13%Agriculture, Forestry, Fishing and Hunting $37,010 22,898 282 70% 30% 10%Other Services (except Public Administration) $33,852 185,346 4,771 46% 54% 17%


46Generational Transition

Problems are “Super Wicked”

Defined as a mega-wicked problem where in addition to being wicked (can’t be “solved,” but must be dealt with)…

Time is running outWeak or no central authorityThose seeking solutions are causing the

problem Policies discount the future irrationally (Levin

et al 2012)

Documents

Education Funding for Successful Generational Transitions in Pennsylvania: Not Easy