The COVID-19 pandemic has changed Pennsylvania’s landscape in nearly every way. The world of public education changed dramatically as schools took unexpected and expensive steps to re-prioritize how they deliver instruction and provide for the health and safety of students and staff in compliance with ever-changing guidance. The COVID-19 pandemic highlighted the critical role schools play in our communities, while widening the gap between the wealthiest and poorest communities as school districts remain chronically underfunded by the state.
In discussing the topic of education funding with legislators, it is important to remember a few important points.
State and federal support for schools
In May 2020, the General Assembly recognized the importance of public education by providing full-year funding for public schools without reductions in key education line items in the 5-month budget. This included level funding for the Basic Education Funding and Special Education Funding subsidies. In addition, nearly $50 million from the School Safety Grant Program was designated to support schools’ health and safety needs related to the pandemic.
The U.S. Congress provided roughly $2.8 billion in emergency pandemic relief funding to Pennsylvania schools which could be used to address a wide variety of pandemic-related needs. However, this is one-time funding and does not resolve systemic budget pressures that continue to exist.
Roughly 38% of education funding comes from the state, which ranks Pennsylvania 44th in the country in state share of funding for public schools.
Projected decline in state, local revenues
The Pennsylvania Independent Fiscal Office projects a state revenue surplus in the 2020-21 fiscal year due to federal stimulus funding, but also projects state revenue deficits of $2 to $2.5 billion annually for the next five years as the state’s economy recovers.
School districts are expecting a reduction in total local revenue ranging from $850 million to as high as $1 billion, depending on how quickly the economy recovers. This represents a loss of 4-5% in local revenue for school districts across the state.
Systemic budget pressures
While school districts are thankful for the financial support received from the state and federal governments during the pandemic, this assistance will not address the underlying reasons why additional education revenues are needed. Systemic budget pressures come primarily from increases in mandated costs which are beyond school districts’ control, specifically pensions, special education, and charter school tuition. Since the 2007-08 school year those three specific mandated costs have increased by a combined $6.8 billion.
In PSBA’s annual State of Education survey, charter school tuition payments, pensions, and special education costs have been the top three budget pressures in each of the five years that the survey has been conducted.
Unfortunately for school districts, the pandemic has not slowed those costs down as more than 22,000 additional students were enrolled in cyber charter schools at the start of the current school year due to the pandemic, taking with them an estimated $335-$350 million.
State funding to assist with paying for these mandates has failed to keep pace. Although the state contributes roughly half of school district pension contributions, the state’s share of special education and charter school costs have declined. Ten years ago, state funding for special education represented one-third of school district expenditures for special education. But by 2018-19, that share had shrunk to less than 22%. The state also no longer provides any reimbursement to help school districts pay for charter school tuition – the program was defunded in 2011-12.
As mandated costs rise and state funding fails to keep pace, school districts are forced to rely on local sources of funding, such as property taxes, to make up the difference. But, in areas where property values and income levels are low or other challenges exist, this presents exceptional difficulties. Where additional local revenues are not an option or are insufficient, school districts are forced to look at cuts in order to balance their budgets, which has a direct impact on students.
How the General Assembly can support school districts
As the pandemic lingers on into 2021, school leaders are expected to deal with a number of challenges in the future. Primary among them is how to identify and address the academic impacts of the pandemic caused by the reduction of face-to-face instructional time, budgeting for next school year, and responding to other COVID-related challenges. The following are areas in which the General Assembly could help school districts:
Basic Education subsidy
Pennsylvania ranks 44th in the nation in the share of state revenue it provides for education, leaving school districts to fund the greater share of expenses. The state provides about 38% of revenue for school districts, while the local share is about 59%. The General Assembly is urged to:
- Increase funds for the Basic Education Funding (BEF) subsidy in the state budget, and to do so in a manner that benefits all school districts equitably.
- Enhance or accelerate funding to those school districts that the Basic Education Funding Formula, at its current funding level, cannot adequately support in a timely manner.
Special Education subsidy
- State and federal share of special education expenses have failed to keep up with the pace of growth in expenses for these federal and state mandated services. In 2018-19, only 27.4% of special education expenses were covered by state and federal special education funding. That leaves over 72% of special education expenses to be paid from other, predominantly local sources.
- The General Assembly is urged to increase the state contribution for special education services and continue its commitment in helping our most vulnerable students.
Charter school tuition payments
- An overwhelming number of school districts (84%) identified mandatory charter school tuition payments as one of their biggest sources of budget pressure this year in our annual State of Education survey.
- While always a significant issue for school districts, the pandemic-induced mass exodus of students to cyber charter schools has further elevated the need for charter school funding reform. At the start of the 2020-21 school year, more than 22,000 additional students were enrolled in cyber charter schools than the prior school year, taking with them an estimated $335-$350 million. That is in addition to the expected increase of at least $125 million this year in charter tuition payments unrelated to the pandemic.
- Because tuition rate calculations are based on the school district’s expenses, they create wide discrepancies in the amount of tuition paid by different districts for the same charter school education and result in drastic overpayments to charter schools, especially when it comes to special education and cyber charter tuition payments. Charter school funding reforms are needed that are predictable, accurate and reflect the actual costs to educate students in regular and special education programs, and in cyber charter schools. The General Assembly is urged to reform the current 24-year-old charter school funding formula.
Broad mandate relief
- As public schools and the General Assembly are faced with the significant economic impacts of COVID-19 school districts need solutions which provide savings and flexibility without the need to only rely upon new or additional state appropriations. One specific solution is broad, permanent relief from mandates that consume much of their budgets and can stifle innovation.
- The General Assembly is urged to permanently reinstate a mandate waiver program like the highly popular and successful one which operated in Pennsylvania from 2000 to 2010 – such as the proposal introduced in Senate Bill 73 by Senator Wayne Langerholc and a companion bill in the House to be introduced by Representative Staats.