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.