Pennsylvania Supreme Court Reopens School Funding Case

Yesterday the Pennsylvania Supreme Court upheld the rights of Pennsylvania’s poorest school districts to seek redress for inadequate and inequitably distributed public school funding.

Here is the statement from Pennsylvania’s Public Interest Law Center: “The Pennsylvania Supreme Court today delivered a major victory to hundreds of thousands of Pennsylvania students by ordering the Commonwealth Court to hold a trial on whether state officials are violating the state’s constitution by failing to adequately and equitably fund public education. The lawsuit – William Penn School District, et al. v. Pennsylvania Dept. of Education, et al. – was filed in 2014 on behalf of parents, school districts, and statewide organizations in response to the failure in Harrisburg to adequately fund public education and provide students with the resources they need to succeed academically. In a sweeping decision, the Court agreed that it has a clear duty to consider the case and ensure legislative compliance with the state’s Education Clause, which requires the General Assembly to ‘provide for the maintenance and support of a thorough and efficient system of public education’ for Pennsylvania’s schoolchildren. The Court also found no basis to deny consideration of claims by parents and school districts that the legislature’s grossly unequal funding discriminates against children based on where they live and the wealth of their communities.”

Last February, Bruce Baker, the school finance expert at Rutgers University, collaborating with the Education Law Center, published a report on the 54 most fiscally disadvantaged school districts in the United States. Pennsylvania’s Reading School District made the list.

And just last Sunday, philly.com reporter Maddie Hanna profiled the problems in Reading, which exemplify Pennsylvania’s educational inequality: “Reading remains a prime example of the paradoxes of educational funding in Pennsylvania, the subject of longstanding complaints and a case now before the state Supreme Court… Over the last four decades, the state’s contribution to local school funding has steadily dipped—from 54 percent in the early 1970s to 35 percent last year…. And within its borders, that’s helped build one of the largest disparities in per pupil spending, thanks to its reliance on property taxes.  In the 2015-16 school year, for example, Reading was spending about $6,500 per pupil on instructional costs—compared with better than $17,000 in the much wealthier Lower Merion School District….

The problem is not that the people of Reading are failing to make a strong local effort to fund their schools: “Reading’s school taxes, in a city with high municipal levies and a 3.6 percent residential wage tax, have measured in the top 20 percent statewide.”

Hanna summarizes the troubled history of Pennsylvania school funding—explaining that “for more than 15 years, starting in 1992, the state didn’t use a funding formula, instead sending districts money based on what they received the year before….”  Lawmakers tried to improve school funding in 2008, but a particularly serious blow hit the state’s poorest school districts in 2011 when Tom Corbett became governor. “(T)he (2008) formula was cast aside in 2011, as federal stimulus money ran out, and a new governor, Republican Tom Corbett, took over.  Poorer districts were disproportionately hurt, in part because budget cuts reversed the formula’s effects….”

In 2016, after the election of Governor Tom Wolf, the state adopted a plan for more equitable funding, but while it helped the state’s poorest school districts, the legislature would agree to apply the new formula only to future increases in state aid.  The new formula was overlaid on years of inequality.  In her article last Sunday, Maddie Hanna explains: “(L)awmakers agreed on a formula that allots more money to districts such as Reading’s, taking into account such factors as the number of students in poverty or learning English, in addition to local wealth and the rates at which districts taxed property. But the state’s past approach to funding still factors heavily into what districts receive: The new formula didn’t apply to what the state was already spending on schools…. As a result, the money that schools receive, raise, and spend today is still rooted in a system that over the years veered between formulas written into law and politically negotiated increases, producing wide spending gaps between high-and low-poverty districts.”

In 2014, several of Pennsylvania’s poorest school districts along with parents filed the William Penn lawsuit for greater equity, but in 2015, a lower court rejected the case as “non-justiciable” under the state’s constitution. The case was then appealed to the Pennsylvania Supreme Court. Maddie Hanna reported again yesterday for philly.com on yesterday’s decision in the state’s long-running fight over school finance: “The court’s opinion—joined by four justices and accompanied by two dissenting opinions—does not resolve the William Penn lawsuit.  But it enables a trial court to hear arguments in the case, which contends that Pennsylvania’s school-funding system violates the state constitution’s guarantee of a ‘thorough and efficient system’ of education, and its equal-protection provision. Commonwealth Court had dismissed the suit….”

Hanna quotes Pennsylvania Governor Tom Wolf declaring that the new decision, “validates my long-held position that the commonwealth must further examine the equity and adequacy of public school funding.”

State Is Killing School District While Claiming to Save It

A new, 50 page, bureaucratic report from Pennsylvania’s state Auditor General tells a shocking story about ideology hurting children and promoting parasitic school choice at the expense of the host—the School District of Philadelphia.

Over time Pennsylvania has not only slashed state school funding but also expanded charter schools with a morass of untenable regulations—forcing the School District of Philadelphia to remove a charter school authorization cap in place since 2008—taking away a state reimbursement to help pay for charter schools—withholding contested tuition reimbursements for specific charters from the Philadelphia school district’s state school funding and awarding payments to the charters without ever holding required state hearings on the contested payments.  The rules by which Pennsylvania operates charter schools are clearly a trap for a school district in dire need of support from its state government.

Writing for the Philadelphia School Notebook, reporter Kevin McCorry quotes Pennsylvania Auditor General Eugene DePasquale describing the report’s findings: “Our charter school law is simply the worst charter school law in the United States.”

The report released two weeks ago by the office of the Commonwealth of Pennsylvania Department of the Auditor General  describes some of the constraints imposed on the School District of Philadelphia since in 2001 it was declared by the state to be a “Distressed School District,” and put under the control of an appointed School Reform Commission: “The District is… unique because it is the only district in the Commonwealth that has no power to independently levy and impose most types of taxes, including property taxes.  The District is almost completely dependent on monies received from the City of Philadelphia, the Commonwealth, and the federal government.  Given its status as a financially distressed school district, the District is also not allowed to engage in deficit spending.” Although as a Distressed School District Philadelphia had been permitted since 2008 to hold down costs by imposing a cap on the expansion of charter schools and on enrollment in specific charter schools, the school district launched a “Renaissance Schools Initiative” in 2010 to turn around persistently low-scoring schools. Philadelphia supports a huge charter sector—86 charter schools that serve 68,000 students, a third of students in Philadelphia, and half of all charter school students in Pennsylvania.

Then the legislature removed the cap on the authorization of independent charters in 2014, when, in response to the district’s financial crisis, the legislature did pass enabling legislation for a local Philadelphia cigarette tax.  Into that law legislators inserted a poison pill—a provision requiring “the District and the SRC (the appointed School Reform Commission) to accept new charter school applications and give (previously) denied applicants a right to appeal denials…” The Auditor General’s new report cites the two most serious problems the cigarette tax law will impose on the school district: “First, the loss of more District students to newly approved charter schools will put additional financial strain on the District’s operating budget as charter school tuition payments will continue to increase.  Total charter and cyber charter school tuition payments already topped $700 million in the 2013-2014 school year…. It is possible at some point in the future that additional charter school tuition payments generated from charter schools approved during the time period the Cigarette Tax Law is in effect will outstrip the revenue received from the cigarette tax… Second, the additional responsibilities placed upon the Charter School Office through the application review process and potential appeals process will ultimately cost the District money to provide the resources necessary to properly evaluate new charter applications, review resubmitted applications, and respond to any appeals.” “Given the District’s exponential growth of both charter openings and enrollments, the historical lack of closures, the required acceptance of new charter applications, and the continued legal challenges over enrollment caps, there is no current evidence to suggest that openings and closures will be an even trade off.”

Lawsuits already filed by charter schools and management companies around charter school authorization and growth and over the school district’s attempts to oversee charters have, “resulted in uncontrollable and unpredictable legal costs, as well as legal complications over the past several years. Constant litigation has impeded the District’s attempts to manage charter school growth, improve its financial position by controlling charter school tuition payments, and better its charter school oversight by implementing policies aimed at keeping the District more informed about its operating charters. Continual appeals have extended cases for several years, with no final resolution in sight.”

Especially problematic are 65 disputes the School District of Philadelphia has filed to protest what it alleges are questionable tuition payments to charter schools.  Pending the resolution of these disputes, the state has been withholding (from the school district’s state funding) these charter schools’ tuition payments and awarding tuition in question to the charter schools: “(B)y withholding state funding from the District without giving the District the opportunity to be heard in a formal hearing to consider the District’s evidence regarding disputed charter tuition payments, PDE (Pennsylvania Department of Education) reduced the District’s state subsidy funding, without knowing whether or not the charter schools were actually entitled to those payments.” “During the 2012-13, 2013-14, and 2014-15 school years, PDE deducted $15 million from the District’s state subsidy payments for charter school tuition payments that remain disputed and unresolved.  PDE’s failure to address and resolve these disputed amounts is, in part, due to its changing procedures over the past four years… In addition, the CSL (Charter school Law) lacks clarity as to PDE’s requirements regarding charter school withholdings and disputes.”

The School District of Philadelphia, enduring a long financial crisis particularly since former governor Tom Corbett cut Pennsylvania school funding by $1.1 billion in 2011, has been trying to manage its state imposed responsibility to oversee charter schools with a skeleton staff: “The District’s CSO (Charter School Office) operated with a staff of only six employees and no Executive Director during the 2014-15 school year, yet it was tasked with overseeing 86 charters authorized by the District, educating approximately one-third of the District’s public school students. The CSO also inherited the additional responsibility of considering new charter school applications in 2014-15 for the first time since 2008. Further, the CSO is constantly faced with the possibility of having to revise existing policies and procedures based on court case decisions impacting its oversight capabilities.”  “By failing to have sufficient staffing and resources to adequately perform and document routine oversight measures, the District is unable to verify the validity of hundreds of millions of dollars it is paying to charter schools in tuition payments. In addition, the District is unable to determine if all of its charter schools are operating efficiently, effectively and in accordance with the charter agreements.”

Ironically, while the state auditor cites the problem of lack of capacity in the Philadelphia school district’s Charter School Office, the report refrains from assigning blame to the School District of Philadelphia.  The state has clearly created a fiscal and regulatory nightmare.

Pennsylvania Inches Toward Budget and Appropriations—for Last Year

At the end of March, Pennsylvania governor Tom Wolf allowed last year’s budget to become law without his signature.  While it would seem that the final arrival in late March of a state budget for the ongoing fiscal year that will end on June 30 would resolve a mass of problems for Pennsylvania’s schools, it isn’t going to be so easy.  In Pennsylvania a fight is brewing over what is called “the fiscal code” that will determine the distribution of the education dollars in the state budget.  The legislature had come up with a bipartisan proposal, but Wolf vetoed the legislature’s proposed fiscal code, believing that it fails to remedy some of the biggest problems—notably the funding crisis in the School District of Philadelphia.  And the amount in the budget is also far less than is needed by school districts across the state.

Here is Kevin McCorry’s explanation for Newsworks: “On Tuesday (April 5, 2016), Wolf released details of his ‘restoration’ funding formula to the protest of leading Republican state lawmakers.  Although Wolf allowed the state budget as passed by the Republican-controlled legislature to become law without his signature in late March, he vetoed the fiscal code code bill which, in part, acted as a roadmap for how new education funding should be apportioned… Wolf and other Democratic leaders argue that districts should first be made whole from cuts that occurred when the legislature agreed to Gov. Tom Corbett’s 2011 austerity plan that coincided with the expiration of federal stimulus dollars.”  Corbett, a proponent of state tax cuts and austerity budgeting, devastated state support for school districts when he slashed $1.1 billion out of the public education budget.

Wolf says he does not oppose the legislature’s fiscal code distribution formula, but before it is implemented, some of the deepest cuts under Corbett must be restored.  On Tuesday, Jan Murphy of the Harrisburg Patriot-News reported, “Wolf said he is carrying through on his promise to restore funding that was cut during the Corbett years and to push for a fairer funding formula.  He said the bipartisan-backed formula that lawmakers wanted to see used—and he supports—‘cannot truly be fair unless the cuts are fully restored. Currently, only 4 percent of districts have seen their funding restored to 2010-2011 levels and we are currently over $370 million short from fully restoring the cuts.’ ”

There is $50 million of new money for schools in the budget passed by the legislature in late March.  On Tuesday, according to Murphy, “Wolf announced he planned to distribute the additional $50 million set aside in the March budget for basic education this way,

  • $25 million is being allocated for the restoration of the charter school reimbursement program.
  • $20 million is being allocated to continue to restore cuts made in 2011-2012.
  • $5 million is being allocated through the new basic aid education fair funding formula.”

Wolf had in December of 2015 already signed a partial budget that restored $150 million to schools.  Overall if Wolf has his way, according to McCorry of Newsworks, Philadelphia will see $76.8 million in additional state funds for the 2015-16 school year, “a 7.55 percent increase over last year.” McCorry adds, “Of the $5 million that Wolf plans to direct through the new student-weighted funding formula—which accounts for measures such as concentration of poverty, number of English language learners, and district geographic sparcity—Philadelphia looks to get 23 percent of the sum.”  He notes that Philadelphia serves 12 percent of the state’s students.

McCorry’s coverage focuses on Philadelphia, but the Corbett-created school funding debacle in Pennsylvania is far more widespread. Smaller cities like Reading and Allentown are struggling to provide adequate services for children, and the school funding crisis is also affecting poor rural school districts.

Several of these school districts filed a lawsuit, William Penn School District v. State, in November of 2014 that declares the state’s school funding system fails to meet the “thorough and efficient” and equal protection clauses in Pennsylvania’s constitution.  The state has requested that the case be dismissed based on precedents when similar school funding lawsuits were previously brought in Pennsylvania.  While a lower court did dismiss the William Penn School District case, plaintiffs and advocates filed an amicus brief last September, simply to ask that plaintiffs be granted the right to present their case and evidence to the Supreme Court, which is scheduled to hear an appeal of the case this spring.  Last September, David Sciarra, executive director of the Education Law Center noted: “Pennsylvania school funding is among the most unfair in the nation. The current protracted standoff over the state budget makes it even more imperative to give these school children their day in court.”

Despite the election in 2014 of a Democratic governor who ran on platform of correcting the school funding shortfalls imposed by Corbett and his all-Republican legislature, it will very likely take years to undo the devastation to Pennsylvania’s public schools, where, as reported in January by the Center on Budget and Policy Priorities, Pennsylvania’s general funding per student (in inflation-adjusted dollars) remains 13.2 percent lower than before the Great Recession in 2008.

Pennsylvania School Funding War Drags On

Pennsylvania doesn’t yet have a state budget, something the state is required to have in place on June 30. A protracted, years-long, and politically contentious fight about inadequate and grossly inequitably distributed school funding is a primary reason for the impasse.

A Republican-dominated state legislature has refused to compromise with the new Democratic governor on a plan that would fund the government and restore desperately needed money for the public schools.  Former governor, Tom Corbett, who ripped more than a billion dollars out of the state budget for public schools, was soundly defeated last November.  But Governor Tom Wolf has not been able to move Corbett’s allies in the legislature to do the right thing for Pennsylvania’s children.  Wolf defeated Corbett last November in large part due to a statewide school funding crisis created by Corbett’s tax cuts.  Corbett and the legislature had pretended to help the School District of Philadelphia—already devastated by school closures and staff layoffs—to survive by passing enabling legislation to permit Philadelphia to enact a cigarette tax on its own residents, a local sin tax dedicated for the public schools.

Last Thursday the editorial board of the Philadelphia Inquirer supported Governor Tom Wolf’s pledge to veto a stopgap, temporary budget presented to him by the legislature on September 18: “Republican legislators have put their old, irresponsible fiscal plan in a new wrapper and called it a stopgap budget.  While their plan promises to fund the state until November, it also threatens to delay sincere negotiations, allowing the state’s elected officials—already nearly three months late—to go that much longer without performing one of their most basic duties: passing a budget.  The Democratic governor has already rightly rejected the legislature’s proposal, which would perpetuate Harrisburg’s habit of leaving bills unpaid, relying on one-time gimmicks, and raiding dedicated funds.  Nor would it adequately fund schools or force the shale-gas industry to shoulder its share of the tax burden at long last.”

Then there is the lawsuit filed by plaintiffs across Pennsylvania that the state’s school funding system fails to meet the “thorough and efficient” and equal protection clauses in Pennsylvania’s constitution—the same language to protect adequate and equitably distributed funding that appears in many state constitutions.  The lawsuit, William Penn School District v. State was filed in November of 2014.  The state has requested that the case be dismissed based on precedents when similar school funding lawsuits were previously brought in Pennsylvania.  While a lower court did dismiss the William Penn School District case, plaintiffs and advocates who filed an amicus brief on their behalf last week, simply ask that plaintiffs be granted the right to present their case and evidence to the Supreme Court, which is scheduled to hear an appeal of the case early in 2016.

Derek Black explains the history of the case at the Law Professors Blog Network: “Last fall, plaintiffs filed suit against Pennsylvania, arguing that education is a fundamental right under the state constitution and that the state has violated that right by repeatedly failing to ensure adequate education resources.  That claim moved through the trial court quickly and is now before the Pennsylvania Supreme Court. Pennsylvania is one of the few states that has yet to fully entertain these issues, having dismissed school funding cases in the past as non-justiciable. Something tells me that this time might be different. As discussed several times on this blog over the past few years, the state has been so derelict in its obligations to its students that its action could be declared unconstitutional under any minimal and deferential standard one might imagine.”

The amicus brief in support of the plaintiffs was filed last week by the national Education Law Center and a number of organizations in Pennsylvania that include Education Matters in the Cumberland Valley, Education Voters of Pennsylvania, the Jewish Social Policy Action Network, the Pennsylvania Association of School Nurses and Practitioners, Public Citizens for Children and Youth, and Yinzercation.

David Sciarra, Executive Director of the national Education Law Center commented: “Pennsylvania school funding is among the most unfair in the nation, shortchanging opportunity for public school children across the state.  The current protracted standoff over the state budget makes it even more imperative to give these school children their day in court.”

This blog has covered Pennsylvania’s school funding morass on a number of occasions.  For example, see here and here.

Swarthmore Profs Say Philly Schools Lack Needed Money: PA Funding Process Flawed

“Each year, as predictably as classes end in June, the School District of Philadelphia faces a budget crisis for the coming school year,” write John Caskey and Mark Kuperberg, economists at Swarthmore College. “In 2014, the School Reform Commission, the school district’s state-imposed governing body, for the first time and in violation of the city charter, refused to pass a budget, arguing that there were insufficient funds to run the schools responsibly…  In the summer of 2013…. the budgets of many individual schools allowed for no counselors, no secretaries to assist principals or answer telephones, and no arts or sports programs.  With a last-minute financial-aid pledge from the city, some laid-off personnel were recalled, and schools opened on time.  But the district was still in such dire straits that Philadelphia’s newspapers launched a drive to obtain pencils, paper, and other basic supplies.  This is no way to run a school system, much less the eighth largest in the United States.  We investigate why these school crises keep recurring… We conclude that the unwieldy process for financing the district means that such crises are bound to recur unless that process is changed.”

It can be hard to sort out the truth in discussions of public finance, because, of course, politicians select the numbers that deflect blame from themselves and their policies.  In Philadelphia the politics around the funding of Pennsylvania’s largest school district are filled with rancor.  Philadelphia is a poor city in a very rural state, a city where many of the children are black and Hispanic, while Pennsylvania’s small towns are largely white.  It is helpful to be able to read an objective academic report that lays out the facts and realities of the Philadelphia school crisis, especially in these next few days when Superintendent William Hite will be forced to decide whether he can safely open school on September 8, 2014, at a time when the state legislature won’t even meet again until mid-September to consider enabling the School District of Philadelphia to levy a $2-per-pack cigarette tax that school administrators are counting on to raise $81 million to make up part of this year’s school budget. (This blog most recently covered the Philadelphia school crisis here.)

Here, according to Caskey and Kuperberg, is the way funding is set up for the school district, which—unlike many cities in other states—has no independent taxing authority.  “Of the district’s $2.7 billion in revenues for 2013, 50 percent came from the state and 14 percent from the federal government; city and local contributions made up the remainder.” “From the perspective of the district, multiple sources of funding create three significant planning problems. First, the state legislature can alter the governor’s proposed budget.  Second the city council may not grant the district’s request for funds…. When the allocations from the state and city deviate from what the district expects, it must adjust its budget.  Third, there is a ‘who goes first?’ problem.  In years when the district appeals to the state and city for additional funding, each is reluctant to pledge new funds without knowing how much the other will commit.”

One problem Caskey and Kuperberg don’t address is that Pennsylvania lacks a school funding distribution formula that sufficiently equalizes state aid to the school districts with problems like concentrated poverty and limited ways to raise local funds.  Many states have formulas that equalize school funding more effectively than Pennsylvania can according to its current system.  Earlier in the summer, David Sciarra, executive director of the Education Law Center, declared, “The state, through the school district and the Department of Education in Harrisburg, has utterly failed these children.”

After the recession in 2008, Pennsylvania made its state education budget overly dependent on federal stimulus dollars that ended during the 2010-2011 school year, at the same time the new Governor Tom Corbett pledged not to raise taxes.  Corbett immediately cut $1 billion from the state’s education allocation, a full 10 percent of the school budget, though some investments were added later to bring the cuts to 7 percent of the overall state school budget.  “Reductions in state funding fell disproportionately on Philadelphia. The district, which educates about 10 percent of the state’s children, shouldered about 30 percent of the state cuts.”

Caskey and Kuperberg remind readers that school districts cannot easily manipulate their budgets, as many costs are fixed and others have been negotiated in contracts.  Fixed costs include: federal mandates for special education, state laws that determine class size based on enrollment, fund transfers to charter schools, heating and maintenance for buildings, and required debt payments.  The authors report that between 66 and 80 percent of costs are “predetermined from one year to the next, and many of these costs, such as negotiated wage contracts increase automatically.”  Because school districts, by their very nature, bring the services of professional adults to serve children, the primary place any school district can cut is by reducing staff, which is what happened a year ago and what Superintendent Hite worries about as school opens in 2014.  Hite believes a climate of safety where children can learn can be established only with an adequate number of teachers and other staff.

The authors conclude: “Philadelphia is a much poorer city than many people realize.  With one-quarter of its residents living below the poverty level, Philadelphia is the ninth-poorest U.S. city with a population over 250,000.  Relative to Pittsburgh and the Philadelphia suburbs, the school district is significantly underfunded by the state and its city government, especially when one adjusts for the comparatively large percentages of special education, English language learners and low-income students.  In short, the district faces huge challenges with limited resources.”

The report documents an alarmingly serious set of structural problems. What it cannot tell us is whether there is a way to break through this logjam and amass the political will to educate the over 131,000 children and adolescents who reside in Philadelphia.  This is really not a school finance question.  It is a moral question.