Public Education Funding Proposal

2008-2009

January 2008

Consistent with the costing-out study of 2007

– Develop comprehensive, systemic, sustainable proposal

– Based on the principles of equity, adequacy efficiency, accountability, & predictability

– Enact statutory changes

GoalsGoals

– Annually adjust all data

– In 2008-09, significant start toward full implementation

– Fully fund by 2013

GoalsGoals

Principles

– Use the results of the costing-out study

– Increase adequacy and equity

– Reduce over-reliance on local property taxes

– Improve fairness in the tax efforts

– Provide adequate resources.

Principles

Build the capacity to achieve state and federal accountability requirements:

– State – for financial resources and technical support.

– School district – for student outcomes, local financial resources.

Principles

Promote efficiency by:– Providing incentives for money to be spent wisely to

achieve state academic standards

– Insuring that state and district decision-makers have shared responsibility to raise revenue to fund their decisions

– Providing predictable funding for school districts

MethodologyMethodology

– Costing-out study’s adequacy level is the basis for each school district’s allocation.

– The state allocation shall be a market value/personal income aid ratio multiplied by the costing-out study’s adequacy level, plus whatever amount is necessary to fund the Educational Adequacy Cost after application of a local tax effort cap.

– The state allocation to a district for the expenses covered by the costing-out study shall be in no case less than it was in 2007-08.

Methodology

– The local share shall be the remainder after the federal and state allocations are subtracted from the adequacy level.

– No district will be required to exceed a state set Local Tax Effort Cap in order to meet the Educational Adequacy Cost level.

– The Local Tax Effort Cap shall be set in terms of the percentage of personal income the district collects from residents of the district in the form of residential property taxes and non-property taxes.

Methodology

– Local support in excess of the costing-out study may continue.

– A state supported contingency fund of .5% of the new appropriation is established to provide additional support for unusual circumstances.

– Combine the 27 current appropriations covered by the costing-out study into a single new appropriation for basic education; the remaining 26 appropriations would continue to separately fund existing programs.

MethodologyThe programs and expenses covered by the costing-out study and no longer requiring separate state support are:Basic Education 7110 Other Programs 7299Charter Schools 7140 Health Services 7330

Tuition for Orphans 7160 Safe School 7360

School Improv Grant 7170 Acct Block Grants 7501Staff & Program Dev 7180 Dual Enrollment 7502

Homebound Instruction 7210 Project 720 7503

Alternative Education 7230 Other State 7599

Driver Education 7240 Soc Sec/Medicare 7810

Migrant Children 7250 Retirement 7820

Special Education 7271 Technology 7900

Ed Assistance Programs 7291

Methodology

The programs and expenses NOT covered by the costing-out study and requiring continued separate state and local support are:

– Pre-K/Early Childhood– Transportation– Adult Education/Literacy – Vocational/Technical – Capital Outlay– Debt Service– Food Service

Data

– Subsequent years’ funding will continue to use the costing-out methodology.

– Adequacy base amount ($8,003) will be increased annually by using the Act 1 base index.

– Student counts (ADMs) and student counts for poverty, special education, gifted education and English language learners will be updated annually based on the most current school year data available.

Data

The following data items will be updated annually:– Market value / personal income aid ratios– Geographic cost of living index– Local tax effort for each school district– District size adjustment

Data

– Annually report the breakdown of each district’s adequacy amount into the base and adjustments for students with disabilities, English language learners, students in poverty, gifted students

– In 2014 a new costing-out study should be undertaken to determine the status of education funding and student achievement in Pennsylvania

Simplify and Reform

– The Basic Education Budget for 2008-09 would contain one major appropriation to support Basic Education and 26 additional appropriations to support educational costs not included in the costing-out study.

– The new Basic Education Appropriation for Adequacy in

School Spending and Equity in Taxation (ASSET) would replace 27 appropriations.

Hypothetical School District Factors:

Adequacy Level from Costing Out Study: $ 6,000,000

Non Residential Tax Revenue: $ 800,000

Other Non Tax Local Revenue: $ 200,000

Federal Revenue: $ 100,000

Personal Income: $ 40,000,000

MV/PI Aid Ratio: .6000

Statewide School Tax Ratio Cap: 3%

Step #1: Contingency Fund

0.5% (.005) of the appropriation is set aside

Step #2: Determine State & Local Support for Adequacy

Adequacy Level $6,000,000 Multiply by Aid Ratio x .6000

------------- State Support $3,600,000

Adequacy Level $6,000,000 Multiply by (1-Aid Ratio) x .4000

-------------- Local Support $2,400,000

Step #3: Determine Residential Step #3: Determine Residential Property Tax SupportProperty Tax Support

Calculated Local Support $2,400,000

Subtract Non Residential Taxes - $800,000

Subtract Other Non Tax Local Rev - $200,000

Subtract Federal Revenue - $100,000

---------------

Results in Adjusted Local Share $1,300,000

Step #4: Determine Cap on Residential Property Tax Support

Adjusted Local Support, $1,300,000 Personal Income, $40,000,000 = School Tax Ratio

= .0325 (or 3.25%) Local Support Capped at 3% of Personal Income

District’s Personal Income $40,000,000Multiplied by Statewide Cap x .03

---------------District’s Local Support Limit $ 1,200,000

Step #5: Determine Additional State Support for Property Tax Reduction

Property Tax Revenue Reduction

Adjusted Local Share $1,300,000

Local Support Limit - $1,200,000

--------------

Additional State Support $ 100,000

Step #6: Determine Total State Support

State Support by Aid Ratio $ 3,600,000

Plus State Support due to Local Cap + 100,000

Total State Support $ 3,700,000

Conclusion

District’s Adequacy Level $6,000,000

Local Residential Tax Revenue $1,200,000Non-residential Tax Revenue $ 800,000Other Local Non-Tax Revenue $ 200,000Federal Revenue $ 100,000Total State Support to District $3,700,000

--------------TOTAL FOR DISTRICT $6,000,000