EPLC Education Notebook
Friday, December 9, 2005
Special Session on Property Tax Relief
- On Monday, the House Special Session Finance
Committee moved forward a property tax relief package put forth
by the bipartisan Local Tax Policy Caucus. The plan
would reduce property taxes by eliminating school districts'
responsibility to pay for special education, allowing districts
to levy a local personal income tax, and establishing special
property tax limits related to poverty. A more detailed
description of each bill in the package is below. All four
bills have been re-referred to the House Appropriations
Special Session House Bill 14: Makes the state responsible for providing and paying for all special education services for children with disabilities; gifted education would remain under the purview of local school districts. HB 14 establishes an Office of Special Education within PDE to oversee all special education services provided in the Commonwealth, evaluate whether students qualify for special education services, develop individualized education plans for students with disabilities, and coordinate service delivery. Instruction would continue to be provided locally through intermediate units, school districts, in-house staff or private contractors. The state would take responsibility for the full costs of special education over a five year period, with 100% state funding responsibility in 2009-2010. Special Education would be funded through state gaming dollars. Funds would be transferred from the Property Tax Relief Fund (in which gaming funds are collected) to a restricted receipt account in the state's General Fund, based on an amount annually certified by the Secretary of Education.
Special Session House Bill 15: Establishes a new system for local education funding. SB 15 breaks education funding into two categories - instructional and other - and identifies unique funding streams for each category. School districts would levy a personal income tax to cover instructional costs and levy a real property tax and a realty transfer tax to cover all other costs. Additionally, districts would be required to reduce school property taxes to account for the increase in revenue from the new personal income tax. Districts must reduce homestead property taxes by the full amount of the homestead exclusion allowed by state law before reducing other property taxes.
HB 15 also places a limit on future school property tax increases, but not through voter referendum. Future property tax increases would be limited to the percentage increase in the statewide average weekly wage for the preceding year (excluding taxes levied for new construction or tax increases caused by home improvements that increased housing values). Prior to a property tax increase, the school board must certify its estimates of total local tax revenues used to calculate the tax increase with the court of common pleas; the court may revise the estimates and reduce the rate of the increase on its own motion or upon consideration of a petition by a school district taxpayer. HB 15 includes seven exceptions through which districts may increase property taxes beyond the percentage increase in the statewide average weekly wage without having to provide documentation to the court of common pleas.
Additionally, HB 15 limits future local PIT increases. Districts may only increase the PIT rate if the district experiences an annual increase in weighted average daily membership of at least 1%; the increase is limited to the amount needed to maintain the gross PIT revenue per student ratio of the prior school year. HB 15 includes a special provision relating to the Philadelphia School District that allows the city to impose a wage tax on non-residents who work in the city, however, non-residents would be responsible for paying only the difference between their local PIT and the city wage tax. HB 15 also allows school districts to exempt qualifying senior citizens and low-income persons from the PIT. All PIT revenue would be collected at the state level. HB 15 was amended to prohibit the deduction of PIT taxes paid to other states by Pennsylvania residents from liability for a school district's PIT taxes.
Any revenue collected through a local PIT, property tax or realty transfer tax that is placed into a reserve fund may be used to support any permitted expense after two fiscal years in reserve. Finally, HB 15 eliminates school districts' authority to levy nuisance taxes.
Special Session House Bill 16: Exempts individuals who meet certain poverty levels from paying more than 3% of household income in school property taxes. The Commonwealth would reimburse school districts for lost revenue.
Special Session House Bill 17: Amends the state constitution to change the homestead exclusion as it applies to school districts. Language would be added that reads, "The exclusions authorized by this clause for a school district shall not exceed one-half of the assessed value of a homestead property within that school district." Currently, the homestead exclusion is limited to "one-half of the median assessed value of all homestead property" in a taxing jurisdiction.
- On Tuesday, the House Special Session Finance
Committee rejected Governor Rendell's plan for property tax
relief. The Committee voted 18-12 to reject
Special Session House Bill 1, which represents the
Governor's proposal to mandate school district participation in
the Homeowner Tax Relief Act (Act 72 of 2004) - the state
program that trades gaming funds for property tax reduction.
The bill previously was passed by the House Appropriations
Committee, but was re-referred to the Finance Committee after
debate by the full House.
During the meeting, Rep. Stan Saylor said he opposed the bill because the idea had already been rejected through school boards. Only 20% of school boards chose to participate in Act 72 when the tax relief plan was initially offered. Saylor also expressed concern that the level of tax relief provided by the plan is too small to represent the real reform expected by voters. Rep. David Levdansky, who voted to move the bill forward, said school boards' rejection of Act 72 was based mainly on the legislation's required back-end referendum on school budgets and not on the law's tax relief component. Levdansky said homeowners have expressed support for the Governor's plan because the vast majority submitted applications to receive property tax relief through the program.
- On Monday, the House Special Session Subcommittee on
Sales Tax Initiatives met to review a proposal from
Rep. Dave Reed that would provide dollar-for-dollar property tax
reduction using a combination of the state sales tax, state
personal income tax, and state gaming funds. To pay for
property tax relief, the sales tax would increase to 7%
(from 6%) and the PIT would increase to 4% (from 3.07%).
Property taxes would be reduced for businesses and vacation
homes, as well as homeowners. Reed's proposal also addresses
the distribution of funds to school districts. Each
district would receive a per-pupil amount based on the
district's average daily membership. Depending on the amount
raised by gaming, districts could expect either $2,579 or
$2,867 per pupil. Reed's proposal gives school districts the
option of reducing property taxes by an additional 25% through
a local earned income tax. The three-bill package has been
assigned to both the Sales Tax Subcommittee
Special Session House Bill 50) and the Alternative
Revenue Sources Subcommittee
(Special Session House Bills
52), who plan to meet jointly next Wednesday to
review the package as a whole.
Links to legislation introduced in the Special Session are
available on the EPLC web site at
Pennsylvania Education Policy Activity
- The House passed a package of legislation
this week (House Bills
2246) which cuts the administrative budgets of state
departments by 10 percent for the current fiscal year and cuts
$7.305 million from a state tutoring program to provide
additional funding for Medical Assistance (MA). The
legislation also prohibits the state Department of Public
Welfare from imposing a monthly premium on the families of
certain disabled children who receive services through MA;
premiums were proposed by DPW this year due to budget
constraints. State funding for Medical Assistance - Outpatient
Services would increase by 10 percent to $928.385 million and
the appropriation of available federal funding for outpatient
services would increase by 10 percent to $1,297.501 million.
Additionally, HB 2243 requires insurance companies to provide
coverage of up to $2,000 per month for autism spectrum disorders
for individuals under age 24. The legislation awaits Committee
assignments in the Senate.
The prohibition of MA premiums addresses concerns that
the proposed premiums could negatively affect school districts'
special education budgets. During a hearing of the
House Health and Human Services Committee held in October, DPW
Secretary Estelle Richman said if the cost of the state premium
causes families to drop out of the MA program it could "have the
unintended consequence of reducing federal funding to Local
Education Agencies, school districts and Intermediate Units,
through the School-Based Access Program which is tied to the
number of children enrolled in MA." School districts that
provide health-related services for special education students
are eligible to have a portion of the service costs reimbursed
through federal Medicaid dollars as long as the student
receiving services is enrolled in MA and a parent grants
permission. Under federal law, districts are responsible for
providing health-related services for special needs students and
would bear the full cost if families drop MA coverage.
- The House also passed the following legislation this week (each bill awaits referral to a Senate Committee):
House Bill 338:Repeals the 5% gross receipts tax on cell phones. The bill includes no replacement for the $345 million hole the tax cut would create annually. Repeal of the tax, enacted in 2003, would slash about $35 a year from cell phone bills.
House Bill 194: Requires that low-interest loans available for the installation of sprinkler systems in college dormitories include costs associated with sprinkler installation, plumbing and renovation needs, asbestos removal, and modifications to smoke detection and fire alarm systems. This requirement would apply only to bonds issued after HB 194 becomes law.
House Bill 609: Creates a low-interest loan program to assist with the installation of sprinkler systems in off-campus student residences not owned by a college.
House Bill 509: Requires properly trained campus police at Pennsylvania State System of Higher Education universities to carry firearms in the course of duty.
- On Wednesday, the House Education Committee
Senate Bill 384, which allows associations that represent school retirees to request and receive information about the last district of employment and home address of retired teachers from the Pennsylvania School Employees Retirement System (PSERS). As originally introduced, the bill applied only to the Pennsylvania Association of School Retirees, who wants to obtain the information for recruitment purposes. However, the House Education Committee amended the legislation so that the Pennsylvania Federation of Teachers also will be eligible to receive the PSERS information. The Committee further amended SB 384 so that annuitants must "opt-in" to allow disclosure of their personal address. This reverses previous language in the bill that required annuitants to take action to refuse having their personal information shared. SB 384 has been placed on the House Tabled Bills Calendar.
- On Tuesday, the House Local Government
Committee amended and moved forward a package of
legislation related to the awarding of non-bid
contracts, including three bills relevant to school
House Bill 1860 amends the Public School Building
Authority Act to increase the dollar amount requiring full
advertising and bidding of contracts to $18,000, up from $4,000,
subject to future adjustment by an index based on the consumer
price index for all urban consumers (CPI).
House Bill 1866 amends the Pennsylvania School Code
to increase the dollar amount above which school districts would
be required to undergo full advertising and bidding of contracts
from $10,000 to $18,000 and to increase the amount requiring
telephone price quotes from $4,000 to $7,000, also subject to
future adjustment by an index based on the CPI. HB 1866 also
allows districts to award construction contracts without seeking
competitive bids for jobs less than $18,000 (up from $10,000)
and allows districts to use their own maintenance staff to
perform construction or renovation work less than $7,000 (up
from $5,000). Both bills make it illegal to sign multiple
smaller contracts in order to avoid competitive bidding
requirements for business that should be part of a larger
House Bill 1867 raises the dollar amount under which non-competitive bids can be awarded for joint purchases between entities such as school districts, counties and townships. All bills related to the package have been placed on the House Tabled Bills Calendar.
- On Monday, the House Appropriations Committee
House Bill 1085, which makes any student
who is a Pennsylvania resident and has been accepted into an
approved higher education institution eligible for state grants
from the Pennsylvania Higher Education Assistance Agency
(PHEAA). The original bill spoke specifically to homeschooled students, who have encountered problems receiving PHEAA grants because they do not meet current eligibility requirements of being a graduate of an approved high school or holding a secondary school diploma. HB 1085 was previously amended by the Education Committee to extend beyond homeschoolers to address an issue raised by PHEAA related to students with parents in foreign service. Some Pennsylvania residents who complete their secondary education abroad also encounter problems receiving PHEAA grants if they do not attend a foreign high school approved by PHEAA. HB 1085 awaits consideration by the full House.
- The Senate has approved legislation that would
reduce the state personal income tax rate to 3.05%
(down from 3.07%) and also cut several business taxes. On
Monday, the Senate concurred in House amendments to
House Bill 515; Gov. Rendell has said he will veto the legislation. The bill includes no replacement for revenue that would be lost to the tax cuts. Under the PIT reduction, a family with a household income of $50,000 would save only $10.
- On Monday, the Senate Appropriations Committee
House Bill 894, which exempts retired
teachers who return to school service from state-mandated
professional development requirements if they work no more than
180 school days. Retirees who return to teaching for more than 180 days would be required to fulfill the state's continuing education requirements. HB 894 also requires the Department of Education (PDE) to provide access to its free, online professional development courses to all educators, not just those currently employed by a school entity. Finally, the bill requires PDE to maintain all retirees' teaching certificates in active status. HB 894 was passed by the Senate Education Committee on June 8 and now awaits consideration by the full Senate.
All legislation from the Pennsylvania General Assembly,
including bills cited in this Notebook, can be found at
Research and Reports
- A new report from The Brookings Institution
makes recommendations for leveraging Pennsylvania's higher
education assets to revitalize local communities.
"Higher Education in Pennsylvania: A Competitive Asset
for Communities", says the "true value - both real and
potential" - of the Commonwealth's higher education sector has
not been fully realized. The report provides examples of how
some Pennsylvania institutions are positively impacting their
communities and makes recommendations for how local, regional
and state leaders can develop partnerships with higher education
to advance economic development. Among its recommendations for
state policy leaders, the report says the state should: establish
a higher education advisory board, target state investments near
colleges and universities, and create a state grants program to
facilitate university-community partnerships. Read the report at
- A study of 257 California elementary schools serving
primarily low-income students identifies instructional
practices and policies that lead to higher academic
achievement. The report identifies four practices
associated with high-performing schools: prioritizing student
achievement; implementing a coherent, standards-based curriculum
and instructional program; using assessment data to improve
student achievement and instruction; and ensuring availability
of instructional resources. Additionally, researchers say their
findings point to the importance of principal and
district leadership in high-performing schools.
Specifically, in high-performing schools "principal leadership
in the context of accountability-driven reform is being
redefined to focus on effective management of the school
improvement process" and "district leadership, accountability,
and support appear to influence student achievement."
The study is based on a survey of approximately 5,500 teachers
and 257 principals from schools across the state of California
with similar demographics but wide variations on the state's
academic performance index (API). Researchers analyzed which
common educational practices were correlated with high API
scores. The study concludes that the range of API levels
demonstrated by schools with similar demographics shows that
socioeconomic background is not the sole predictor of
academic success, rather "what schools do - and what resources
they have to do it with - can make a difference." Read
more in "Similar Students, Different Results: Why Do
Some Schools Do Better?" at
- A new policy alert from the National Center for
Public Policy and Higher Education predicts that
"if current trends continue, the proportion of U.S.
workers with high school diplomas and college degrees will
decrease and the personal income of Americans will decline over
the next 15 years." The alert speaks to the negative
impact on America's tax base and the international competitive
disadvantage that may result from this trend. However, authors
say closing the achievement gap between racial/ethnic groups can
help increase the percentage of Americans with bachelor's
degrees and increase the future income tax base. Read more at
- "Using Student Progress to Evaluate Teachers: A
Primer on Value-Added Models", an informational
publication from the Educational Testing Service
(ETS), reviews the growing use of value-added assessment and
concerns about using such analysis to evaluate teachers. Learn
No Child Left Behind
- The U.S. Department of Education needs to be more
transparent in its decision-making process when approving or
rejecting changes to state accountability plans
required by NCLB, says a new report from the Center on
Education Policy (CEP). In "States Test Limits
of Federal AYP Flexibility", CEP analyzes approved
changes to state accountability plans that the Center says make
it easier for schools and school districts to make adequate
yearly progress. The report reviews the most common flexibility
method requested by states and the most popular methods approved
by the USDE, and says the Department needs to do better in
publicly explaining why certain changes were accepted or
rejected. Read more at
- Next week...SPECIAL SESSION MEETINGS
- The House Special Session Finance Committee
meets Tuesday (December 13) to consider Special Session House
Bills 3 and 29, followed by a meeting of the Special
Session Subcommittee on Income Tax Initiatives. The
House Special Session Subcommittee on Property Tax
Reform meets Wednesday. The House Special
Session Subcommittees on Sales Tax Initiatives and Alternative
Revenue Sources hold a joint meeting on Wednesday. The
House Special Session Subcommittee on Sales Tax
Initiatives meets Thursday to consider Special Session
House Bills 12 and 50.
OTHER EVENTS - The Senate Finance
Committee meets Tuesday to consider Senate Bills 292,
592 & 993 and House Bill 1427. The House Education
Committee meets Wednesday to review proposed
regulations related to Academic Standards and Career Education.
The Governor's Commission on Training America's
Teachers holds a regional meeting in the Lehigh Valley
on Wednesday and holds a Commission meeting in Harrisburg on
Friday. The House Education Committee holds an
informational meeting on high school reform/raising expectations
on Thursday in Harrisburg. For
information on these and other upcoming events, see
- The PA House and Senate have published their Session Schedules for the beginning of 2006.
The Pennsylvania House will be in Session: (nv = non-voting)
January 3 nv, 23 nv, 24, 25, 30, and 31
February 1, 6, 7, 8, 13, 14, and 15 nv
March 6, 7, 8 nv, 13, 14, 15, and 20 nv
April 3, 4, 5, 10 nv, 24, 25, and 26
May 1, 2, 3, 8 nv, 22, 23, and 24
June 5, 6, 7, 12, 13, 14, 19, 20, 21, 26, 27, 28, 29, and 30
The Pennsylvania Senate will be in Session:
January 3, 4 nv, 23, 24, 25, 30, and 31
February 1, 6, 7, 8, 13, 14, and 15
March 13, 14, 15, 20, 21, 22, 27, 28, and 29
April 3, 4, 5, 17, 18, 19, 24, 25, and 26
May 1, 2, 3, 22, 23, and 24
June 5, 6, 7, 12, 13, 14, 19, 20, 21, 26, 27, 28, 29, and 30
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