EPLC Education Notebook

Wednesday, November 4, 2009


    Here is a summary of the education funding highlights of the state budget (House Bill 1416) that Governor Rendell signed into law on October 9 after a more than three-month impasse.  The $27.8 billion budget increases funding for education while reducing overall state spending.

    K-12 Education

    The budget includes a commitment to honor and improve the new school funding formula enacted last year by providing a $300 million increase for basic education.  It uses $654.7 million in federal economic stimulus dollars to support the basic education subsidy - $300 million to increase overall basic education funding to $5.5 billion and $354.7 million to replace a reduction in state funds for the subsidy.

    The budget held steady at last year’s levels funding for special education, Accountability Block Grants, Pre-K Counts, Head Start, Science It’s Elementary, and reimbursement of charter school costs.  Funding was reduced or eliminated for many programs.  Support for the Office of Safe Schools Advocate, technology initiative, Classrooms for the Future, and alternative education were among the programs eliminated.  Funding for dual enrollment, tutoring, Career and Technical Education and public libraries was cut from their FY 2008-09 levels, as was funding for science in motion, teacher professional development, high school reform, adult and family literacy, and a host of other programs.

    Click here for a copy of the 2009-2010 Pennsylvania Department of Education (PDE) budget which reports funding levels for each program.

    Higher Education

    Within higher education, the budget reduced funding for community colleges’ operating support by 0.2% (to $235.741 million) and uses a mix of state dollars and federal stimulus dollars to support this funding.  Funding for community college capital projects was increased by 4.2% (to $46.369 million), while support for regional community college services was maintained at last year’s level.  Operating support for the PA State System of Higher Education was reduced by 4.1% (to $482.628 million), and also is supported by a mix of state dollars and federal stimulus.

    Higher education tuition grants for students, funded through the Pennsylvania Higher Education Assistance Agency (PHEAA), were reduced by 1 percent to $403.6 million.  However, state officials note that Pennsylvania students will receive an additional $262 million in Pell Grants as a result of federal stimulus funding.

    Finally, in this first week of November, funding for state-related universities (Penn State, Pitt, Temple and Lincoln) – which is typically allocated through non-preferred appropriation bills – still awaits approval.


    The FY 2009-10 budget includes nearly $1 billion in new, recurring revenues in order to balance the budget, but does not include any broad-based tax increases.  Revenue options considered to increase the personal income tax, assess sales tax on the arts, tax small games of chance, and tax natural gas extraction were not included in the final budget package.  The budget does increase the cigarette tax by 25 cents per pack, institute a new tax on little cigars, and delay the phase-out of the Capital Stock and Franchise Tax (CSFT) and set the CSFT rate back at 2008 levels.  Click here for a list of new revenues being used to support the state’s 2009-10 general fund budget.  In addition to these sources, additional revenue is anticipated from legalizing table games in Pennsylvania.  Legislation to authorize table games is still being negotiated.  The budget package also transfers funds from a variety of accounts, including using all of the state’s $755 million Rainy Day Fund, and reduces a number of tax credit programs, including the Educational Improvement Tax Credit (EITC) program.

    The total amount of tax credits available through the EITC program will be reduced from $75 million to $60 million this year and further reduced to $50 million in FY 2010-2011.  EITC reductions will be applied as follows: scholarship organizations (current: $44.666 million; 2009-10: $37.967 million; 2010-11: $33.502 million); education improvement organizations (current: $22.333 million; 2009-10: $15.633 million; 2010-11: $11.168 million); and, pre-K scholarships (current: $8 million; 2009-10: $6.4 million; 2010-11: $5.330 million).

    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 addresses the state’s fiscal code (House Bill 1614).  HB 1614:

  • Provides the Western PA School for the Deaf with an additional $500,000 appropriation for the next two years (FY 2010-11 & 2011-12) for serving students of the former Scranton School for the Deaf at a satellite campus.

  • Requires ARRA funds to be spent in accordance with applicable federal rules and guidelines.

  • Allows school boards to reopen their FY 2009-10 budgets to reflect state and federal appropriations

  • Limits annual payments to higher education institutions for defraying expenses of hearing-impaired or sight-impaired students to not more than $500 per student.

  • Distributes funding for community colleges so that each school receives the same amount it did in FY 2008-09.  If insufficient funds are appropriated, payments will be made on a pro rata basis.

  • Distributes funding for special education, the Educational Assistance Program (tutoring), and Accountability Block Grants so that each school district receives the same amount it received in FY 2008-09.  If insufficient funds are available, payments will be made on a pro rata basis.

  • Provides for the transition of employees of the Scranton School for the Deaf and Scotland School for Veterans’ Children who are being suspended due to the schools’ closings.  For three years following suspension, school districts, vocational-technical schools and intermediate units in the vicinity of the Scranton School and Scotland School must offer employment to former Scranton or Scotland employees if a vacancy they are properly certified to fill becomes available, as long as no current employee of the school entity has a right to the vacancy.  These school entities are prohibited from hiring new employees until the position has been offered, in order of seniority, to all properly certified members of the hiring pool in their geographic area.  Employees hired from the pool, as well as former employees of the Scranton School and Scotland School who resigned within six months of the schools’ closure and accepted a new job at a school district, I.U, or vo-tech school, will be credited for all sick leave and years of service for purposes of salary schedule, sabbatical leave, suspension and realignment rights, eligibility for retirement incentives or severance payments.

  • Requires PDE to complete a report on the costs to school districts and the state to educate children who are adjudicated delinquents and committed to nonpublic residential facilities.  The report is due to the General Assembly by June 1, 2010.

  • Requires school districts to establish a Workers’ Compensation Safety Committee by December 31, 2010.  PDE is authorized to deduct state funding from districts that do not have a safety committee equivalent to the insurance discount the district otherwise would receive.  This does not apply to a district that cannot receive a premium discount because it is authorized to self-insure or pool its liabilities.

  • Provides for the distribution of state funding to public libraries.

  • Allows PDE to use up to $4.500 million of unexpended, unencumbered funds for education empowerment districts.  These funds will be transferred into a restricted account in the State Treasury and must be used to supplement the operational budgets of empowerment districts (Chester-Upland School District & Duquesne School District).

  • Provides that payments to school districts for the instruction of homebound children will be made only to the extent that funds are appropriated for this purpose.  The FY 2009-10 budget did not include funding for homebound instruction.

  • Continues the distribution of basic education funding via a new adequacy formula based on the state’s education costing-out study.  Every school district would receive at least a 2% increase.  Districts must continue to use basic education funding increases that exceed an inflationary index to support a list of state-approved programs, however, PDE may grant a waiver for the use of up to 25% of these funds if all of the following apply: 1) the district would need to reduce or eliminate one or more targeted program due to a projected budget shortfall, 2) the funds are used to maintain one or more of these programs, 3) PDE has determined that the district has pursued alternative opportunities for greater efficiency and internal savings in order to fund the program(s) without the wavier, and, 4) PDE has determined that the program to be maintained addresses a significant need of the district’s students and has demonstrated effectiveness in increasing student achievement in the district.

  • Requires PA State System of Higher Education (PASSHE) universities to accept full transfer of an Associate of Arts or Associate of Science degree for full junior standing by December 31, 2011.  This expands the state’s current transfer and articulation law that required PASSHE universities and the state’s 14 community colleges to identify at least 30 core education credits that could be seamlessly transferred among the institutions.  HB 1614 also now requires state-related universities (Penn State, Pitt, Temple and Lincoln) to participate in the state’s transfer and articulation system by identifying at least 30 core education credits that can be transferred without loss of credit.  Previously, state-related institutions could voluntarily participate in the transfer system, but were not required to do so.  Under HB 1614, the state-related institutions must apply credit for the identified transfer courses in the same manner it would count if the course was taken at the state-related institution.

  • Abolishes the Scranton State School for the Deaf.


EPLC Education Notebook is published by The Education Policy and Leadership Center (EPLC). Permission to reprint or electronically redistribute the Notebook in whole or in part is granted provided attribution to EPLC is provided.

The Education Policy and Leadership Center is an independent, non-partisan and not-for-profit organization. The Mission of EPLC is to encourage and support the enactment and implementation of effective state-level education policies in order to improve student learning in grades P-12, increase the effective operation of schools, and enhance educational opportunities for citizens of all ages.

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