EPLC Education Notebook

Tuesday, July 13, 2010

The EPLC Education Notebook (current and past editions) also is available by visiting the EPLC website at www.eplc.org/ednotebook.html.

SUMMARY OF 2010-2011 STATE BUDGET FOR EDUCATION

Governor Rendell signed into law the state budget (House Bill 2279) on July 6 at Elmwood Elementary School in Mechanicsburg, PA.  The $28.04 billion budget represents a .7% increase in spending from 2009-2010 after accounting for the use of nearly $2.7 billion in federal American Recovery and Reinvestment Act funds in 2009-10 and $2.8 billion in 2010-11. The budget includes some deep program cuts and a few one-time transfers of money from individual funds.  It does not include revenue from four proposed but not approved revenue sources that were part of this year’s budget debate – a tax on cigars, a tax on smokeless tobacco, ending the discount for businesses that remit sales tax receipts on time, and revenue from closing the Delaware loophole for corporations.  When the budget was enacted (and currently), the U.S. Congress still had not taken action on approving $850 million of enhanced federal support for Medical Assistance programs (FMAP) which was assumed as revenue to balance the budget.  If Congress does not approve this funding, the Governor will need to make further spending reductions to balance the state budget.

K-12 Education

The enacted budget for 2010-2011 includes $5,776,086,000 for Basic Education Funding, paid from a combination of state funds and federal stimulus funds.  This amount is a $250,000,000 increase (4.52%) over the amount appropriated in 2009-2010.  As in 2009-2010, the 2010-2011 appropriation for basic subsidy to school districts includes $654 million of federal stimulus funds.

The budget maintained at last year’s level the funding for special education, career and technical education, and Library Access. Funding was reduced or eliminated for many programs.  Funding for dual enrollment, Science: It’s Elementary, Accountability Block Grants, and public libraries was cut from the FY 2009-10 levels, as was funding for Pre-K Counts, teacher professional development, Education Assistance Program, adult and family literacy, and a host of other programs.

Click here for a copy of the 2010-2011 Pennsylvania Department of Education (PDE) budget which reports funding levels for each program.

Higher Education

Within higher education, the budget held funding level at the 2009-10 levels for community colleges, community college capital projects, and the Thaddeus Stevens College of Technology.  Operating support for the PA State System of Higher Education also remained at the 2009-10 levels, $482.628 million.

Higher education tuition grants for students, funded through the Pennsylvania Higher Education Assistance Agency (PHEAA), were reduced by 3.8 percent to $388.3 million.  Unlike last year, Pennsylvania’s students will not receive any additional Pell Grant money from the federal stimulus funds.  Altogether, the average student grant will be reduced by approximately $500.

There was no change to the 2010-11 funding levels for state-related universities (Penn State, Pitt, Temple and Lincoln) – which are allocated through non-preferred appropriation bills.  With the exception of the University of Pennsylvania’s Veterinary Program and Center for Infectious Disease, other traditionally funded “ non-state-related college, university, and institutions” will not receive funding from the state in this budget.

Revenues

The state ended the 2009-10 fiscal year with a General Fund revenue shortfall of $1.18 billion.  June’s monthly revenues exceeded estimate by nearly $60 million.  June 2010 was the first month since December 2007 that collections exceeded estimate – hopeful evidence that Pennsylvania is beginning to benefit from the improving economy.  The strength of June’s collections was also due in part to the success of the Department of Revenue’s Tax Amnesty program, which exceeded its revenue target by $45 million.

State revenues also are impacted by various tax credit programs.  For instance, the total amount of tax credits available through the Education Investment Tax Credit (EITC) program will be reduced from $60 million to $50 million in FY 2010-2011. The EITC allocations for 2009-10 compared to the new year of 2010-11 are as follows: scholarship organizations (2009-10 = $37.967 million; 2010-11 = $33.502 million); education improvement organizations (2009-10 = $15.633 million; 2010-11 = $11.168 million); and, pre-K scholarships (2009-10 = $6.4 million; 2010-11 = $5.330 million).

Transfers of Funds

Lawmakers used transfers from various funds to help balance the budget for 2010-2011.  The new budget provides for a $180 million transfer of existing funds from the Oil and Gas Lease Fund.

The 2010-11 budget also uses a transfer of $121 million from the Tobacco Endowment for Long-Term Hope to offset General Fund contributions to the Public School Employees’ Retirement System.

In addition, the 2010-11 budget provides for $30 million in transfers from special funds to the General Fund:

• $9.9 million from the Keystone Parks and Recreation Fund;
• $5.4 million from the Pennsylvania Economic Revitalization Fund;
• $5 million from the Emergency Medical Services Operating Fund;
• $4 million from the Small Business First Fund;
• $2.7 million from the Low-Level Waste Fund;
• $1 million from the Local Government Capital Project Fund;
• $800,000 from the Highway Beautification Fund; and
• $745,000 from the Rainy Day Fund.

 Statutory Changes Related to Education

As part of this year’s budget package, the legislature did not enact changes to the state’s School Code.  However, some provisions related to education were included in legislation that amends the state Fiscal Code (Senate Bill 1042).

SB 1042 (now Act 46 of 2010):

• Requires funds received under ARRA to be spent in accordance with federal rules.
  
• Allows schools to reopen budgets to reflect passage of the state budget.
• Limits payments for sight or hearing-impaired students to $500 per student.
• Provides for payment of state and federal funds to community college.
• Provides for Special Education payments to school districts.
• Provides for Educational Assistance Program payments to school districts.
• Provides Accountability Block Grant payments to be distributed in an amount equal to last year or on a pro rata basis if insufficient funds are appropriated. (They will be prorated since the appropriation was reduced,)
• For former employees of the Scranton and Scotland schools, requires the creation of a pool for former employees of these schools are to be offered employment when there are vacancies in designated school entities (district, vocational-technical school, or intermediate unit).  A vacancy in those entities cannot be filled unless it is first offered to the teachers in the pool.  Designated entities include those within 17 miles of the Scranton or Scotland schools or a school district with at least 8,000 students that receives 50% or more of its funding from the state and is within 45 miles from the administration building of Scotland or Scranton schools.
• Requires the Department of Education to submit a report on costs to provide education services to delinquent children under the Juvenile Justice program.
• Requires school districts to maintain certified safety committees as defined under the Workers’ Compensation Act.
• Includes the funding formula for libraries.
• Allows up to $4,500,000 in undistributed funds to be used to assist school districts certified as “education empowerment districts.”
• Provides payments for homebound children.
• Provides for the basic education spending formula for FY 2010-11. (Formula is consistent with last year and based on findings of the 2007 Costing-Out Study.)

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