EPLC Education Notebook
Friday, March 10, 2006
Proposed FY 2006-07 State Budget
The Senate Appropriations Committee rounded out its FY 2006-07 budget hearings this week, meeting with the Pennsylvania Department of Education (PDE) on Monday and the Pennsylvania School Employees' Retirement System (PSERS) on Tuesday. Following is a review of the Committee's discussions.
Pennsylvania Department of Education: Secretary of Education Gerald Zahorchak reviewed the Governor's proposed FY 2006-07 education budget, which includes a 5% ($224.6 million) increase for basic education, a 4% ($38.1 million) increase for special education, and new initiatives to improve science education in elementary schools, provide laptop computers in high schools' core subject classrooms, and support teachers seeking certification from the National Board for Professional Teaching Standards. The Governor also proposed to expand funding for Head Start, accountability block grants, dual enrollment and high school reform initiatives. A more detailed review of the Governor's education budget proposal is available at www.eplc.org/notebook2006/February8.html.
Sen. James Rhoades questioned the proposed distribution of basic education funding. According to Rhoades, 91 school districts would receive a smaller increase in their basic ed subsidy than they did last year. Seventy-four of the districts he cited are more affluent than the state median and seventeen are less affluent than the state median. Under the Governor's proposal, basic subsidy increases for districts range from 2% for some districts to double-digit increases for others. The Senator said there needs to be a fairer way to distribute these funds that takes into account the needs of growing school districts. Zahorchak said the basic education distribution is equitable in that it targets funding toward districts that currently spend less than the identified foundation level (see below) and who are making a significant local tax effort. Growth is accounted for by directing funds toward districts where student growth is unable to keep pace with local revenues. Further discussion of the distribution issue raised by Rhoades is available in the Senate Education Committee's newsletter at www.pasenategop.com/committees/ed/EdNL022706.pdf.
The Governor's proposed budget includes a foundation funding supplement that earmarks $64 million of the basic education subsidy for districts that currently spend less than $9,030 per student. When the concept was introduced last year, the foundation level was established at $8,500 per student, based on adequate funding levels identified by other states and Pennsylvania's median per pupil spending level. This year's foundation was set by adjusting the $8,500 figure using the inflationary index established by The Homeowner Tax Relief Act (Act 72 of 2004). Rhoades said the foundation supplement is creating inequity in how basic education funds are distributed by giving more to districts that simply aren't spending the identified amount and that the system falls short by not comparing spending to achievement results. The Senator asked to see the research that says $9,030 is the adequate funding level and suggested the state might consider establishing a commission to define adequacy.
Many Senators told Zahorchak the budget should prioritize resolving funding deficits for early intervention program providers and approved private schools. Zahorchak said PDE is looking at the variance in expenses among early intervention providers and is working to create a more fair and predictable funding system going forward. The Department previously reached an agreement to pay down funds owed to approved private schools over a five-year period. Sen. Edwin Erickson suggested the tempo toward accomplishing that needs to be picked up since the Governor's budget allocates only $5 million for this purpose in FY 2006-07 while the state has a much larger outstanding debt. Next year, the state will enter the third year of the five-year period agreed to pay down that debt.
Many Senators also expressed reservation toward the Governor's proposal to put laptop computers on the desks of high schools' core subject classrooms. Senators were concerned that laptops can be easily damaged or stolen and that having units with email and gaming capabilities continually on desktops could distract students during instructional time. Zahorchak said many such concerns can be addressed through classroom management and that research shows positive academic benefits from integrating technology into instruction in this manner. The administration plans to expand the $20 million proposed for this initiative in FY 2006-07 over the next few years to provide laptops to all schools that choose to participate in the voluntary program. Senators also expressed concern over costs to maintain and upgrade this technology. The Secretary said most districts already include technology upgrades in their budgets and that those who choose to participate know up front that they will need to figure in maintenance costs.
Finally, Senators criticized the Governor's elimination of funding for the "Science in Motion" program. Sen. Mary Jo White said the Governor's proposed Science It's Elementary program would benefit less schools at a higher cost than Science in Motion, which provides traveling science outreach programs through school district and higher education partnerships. Zahorchak responded that the Governor's proposal to provide grants for up to 150 schools to improve elementary science teaching is based on a program proven to increase student achievement. The Secretary also said, historically, funding for Science in Motion is added by legislators at the end of the budget process and that districts can choose to use block grant dollars to support Science in Motion programs. White recommended that PDE evaluate the academic benefits of Science in Motion.
Other issues raised by Appropriations Committee members included revising the special education funding formula, making changes to cyber charter school funding, establishing a statewide healthcare plan for school employees, providing funding for distressed school districts, and expanding the educational improvement tax credit program.
Public School Employees' Retirement System (PSERS): PSERS requested Appropriations Committee members provide $40.255 million in administrative support for FY 2006-07, slightly less than the agency received last year. Board Chair Roger May also advised Appropriations Committee members of an impending spike in the employer contribution rate for school employees' retirement costs. May said the fund's strong investment returns have helped hold down the amount contributed annually by the state and local school districts, but warned that the low rate holiday is expected to end in 2013. The employer contribution rate is projected to increase from 5.46% in 2012 to 22.52% in 2013. Robust investment returns - like the 12.87% return earned by PSERS for the fiscal year ending June 30, 2005 -already have helped reduce the 2013 rate from an initially projected 28%, but there is no guarantee returns will stay strong to help keep contribution rates low.
Senators sought solutions to keep the employer contribution rate down, such as shifting from a defined benefits to a defined contributions plan. However, such a change would not alleviate the 2013 problem because it would apply only to future employees. Senators also suggested increasing the amount contributed by employees. Such a move would require a change in state law because the employee contribution rate is set by statute.
Information about the proposed FY 2006-07 state budget is available on EPLC's Education Policy Information Clearinghouse at www.eplc.org/clearinghouse_2006-2007budget.html.
Pennsylvania Education Policy Activity
All legislation from the Pennsylvania General Assembly, including bills cited in this Notebook, can be found at www.legis.state.pa.us/cfdocs/legis/home/session.cfm.