EPLC Education Notebook

Friday, March 10, 2006

    Education Issues Workshops for Legislative Candidates and campaign staff will be hosted by EPLC in Valley Forge (Friday, March 17), Monroeville (Saturday, March 18) and Harrisburg (Tuesday, March 21). These Workshops are open to incumbent and non-incumbent candidates and staff. For a Workshop agenda, registration form and additional details, see www.eplc.org/candidateworkshop.html.

    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

  • Representatives of approved private schools (APS) and state chartered schools for the deaf and blind appeared before the House Education Committee on Wednesday seeking assurances that funding owed for past services will be paid according to a previously negotiated schedule and offering solutions to make that happen. In 2004, the legislature adopted a new system for funding the schools ( Act 70 of 2004) that makes future funding more predictable, but this new system did not resolve debts owed for services provided prior to July 1, 2004. In that same year, the schools and the Rendell administration agreed to a five-year payment schedule for debts owed as a result of audit findings. The schools are concerned that the state will not achieve this five-year goal under the current rate of repayment. In order to meet its funding obligations, the schools said the state needs to increase allocations to the audit resolution fund and recover tuition dollars owed by school districts. Joseph Fischgrund, Headmaster of the Pennsylvania School for the Deaf, suggested the appropriation for audit resolution funding be increased to at least $12 million for FY 2006-07 and subsequent years in order to meet the negotiated payment schedule.

    Gov. Rendell has proposed $5 million for audit resolution funding in FY 2006-07, the third year of the agreed to audit resolution period. Nicole Westerman, chief of staff for Budget Secretary Michael Masch, said the administration is committed to meeting the state's obligations over this five year period. APSs estimate the state owes them between $22 million and $32 million (based on a survey of APSs conducted in September 2005); the chartered schools for the deaf and blind estimate the state owes them between $7 million and $10 million. The range in debt obligations results from questioned costs from incomplete or unresolved audits. According to the most recent data available, Westerman said the state has a minimum $19.5 million liability and estimates the maximum liability could be $37.5 million, but it is possible these figures will change as audits are finalized.

    While none of the schools are in jeopardy of closing due to unfunded state obligations, Alliance of Approved Private Schools president Bill Alexy said many are paying off loans taken out to meet expenses, delaying capital projects, and not providing expanded services to students because of funding issues. Committee members asked if the schools had identified repayment priorities, such as first repaying schools that rely on state support and then repaying schools that have healthy endowments. Representative of the schools said repayment priorities were not discussed during previous negotiations because the focus was on developing a stable funding system going forward and that little endowment money can be used for operating expenses.

    Prior to 2004, APSs and chartered schools were funded based on a system where the state provided revenue to the schools, then audited their expenses. Based on the audit results, which could take numerous years to complete, the schools either had to return money to the state if too much had been advanced or were owed money from the state if too little was advanced. Reimbursements for shortfalls in the amount appropriated were supposed to be paid through the state's audit resolution fund, however, that fund was depleted during the Ridge Administration and has not kept pace with costs since that time.

    APSs were established in 1961 to provide special education services to children who, because of the severity and complexity of their disabilities, could not be appropriately educated in public schools. Currently, there are 30 approved private schools that provide services to more than 4,000 Pennsylvania students between the ages of 2 and 21. Additionally, the state supports four chartered schools for the deaf and blind.

  • The March 4, 2006 volume of the Pennsylvania Bulletin includes notification from the Pennsylvania Department of Education about "Public Charter Schools Planning Grant Availability." Grants of up to $50,000 are available for the planning of a public charter school that will open in 2007. The deadline is March 29, 2006. See www.pabulletin.com/secure/data/vol36/36-9/363.html for additional information.

  • 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.


  • The 2006 Pennsylvania Education Policy and Leadership Conference will be held Sunday, March 12 to Tuesday, March 14 in Harrisburg. Registrations will be accepted on site. This Fourth Annual conference will feature two Pre-Conference Workshops on March 12 from 1:00 p.m. to 3:45 p.m. The Workshops are on "Building Effective Community-Based Education Foundations" and "Interventions that Work to Improve Student Achievement". The Conference begins on Sunday at 4:00 p.m. with a session that looks at the 2006-07 budget proposal made by Governor Rendell. Speakers include Pennsylvania Secretary of Education Gerald Zahorchak. For additional information, including registration materials and an agenda, see www.eplc.org/conference.html.

  • Next Week...EPLC hosts the Fourth Annual Education Policy and Leadership Conference on March 12-14 in Harrisburg. The House Veterans Affairs and Emergency Preparedness Committee meets Tuesday to consider House Bill 2437 and Senate Bill 1081. The Pennsylvania Athletic Oversight Committee meets Tuesday in Harrisburg. The House Education Committee meets Wednesday to consider House Bills 2055, 2397, 1506, 2465 and 2357 and Regulation 6-298. The Senate Education Committee holds a public hearing on Wednesday on safe schools legislation (Senate Bills 965 & 966). The Legislative Budget and Finance Committee meets Wednesday to discuss and release a report on reimbursement for educational services for adjudicated youth in private residential facilities. The Pennsylvania State Board of Education meets Wednesday and Thursday in Harrisburg. EPLC hosts an Education Issues Workshop for Legislative Candidates in Philadelphia on Friday and in Pittsburgh on Saturday. The National Association of Secondary School Principals meets March 17-19 in Reno, NV. For information on these and other upcoming events, see www.eplc.org/calendar.html.

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