EPLC Education Notebook

Friday, January 29, 2010

    Content in this edition:
    Pennsylvania Policymakers
    - State Senate
    - State House

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



    State Senate

  • This week, the Senate Education Committee approved Senate Bill 766, which would establish the Science Technology Partnerships Program (better known as Science in Motion) in state law.  Under the proposal, state funding would be made available to higher education institutions to purchase high tech science equipment to augment science curricula and provide professional development activities to science teachers employed in partnering schools and school districts.  SB 766 awaits further consideration by the full Senate.

  • The Senate Appropriations Committee passed an amended version of Senate Bill 825 this week.  SB 825 provides that if the requirements to obtain a higher education degree change while a member of the Pennsylvania National Guard or other reserve branch of the armed forces is on active duty, the member shall have the right to pursue the degree under the new requirements or the old requirements in place prior to the member’s call to duty.  The bill awaits consideration by the full Senate.

  • The Senate Finance Committee held a hearing on public pension issues on Wednesday.  The Public School Employees’ Retirement System (PSERS) projects that the employer contribution rate will dramatically increase in the near future and remain high beyond 2032.  The State Employees’ Retirement System (SERS) faces a similar situation.  PSERS’ employer contribution rate (shared by the state and school entities) will increase from 4.78% in FY 2009-2010 to 8.22% in FY 2010-2011 and is projected to peak at 33.6% in 2014-15.  The rate increase is primarily due to a downturn in investment earnings (which have served as the primary source of funding for PSERS over the past decade), earnings assumption changes, costs associated with previous liability deferrals, and increased pension benefits enacted by the Legislature in 2001 and 2002.  It should be noted that in recent years employees continued to pay a consistent legislatively required percentage of salary as their pension contribution while the employer shared dropped dramatically.

    Representatives of school employees affected by the pension crisis appeared before the Committee to present options for addressing the significant increase in funds necessary to meet the systems’ current obligations, as well as long-range changes that may be considered to protect the systems’ future solvency.  The state cannot reduce benefits for annuitants or current employees; however, it could consider changes to pension benefits provided to future school employees.

    The COLA Coalition, comprised of 10 organizations representing retired state, public school and higher education employees who worked in Pennsylvania, asked state policymakers to consider providing a cost-of-living adjustment for state and school retirees in conjunction with their solution to the rate spike issue.  Coalition members recognized the challenge of providing a COLA given the state’s current budget constraints, but argued that the buying power of retirees’ pensions has eroded against years of inflation, particularly for those who retired decades ago.  Pennsylvania last provided a COLA in 2002.  Further, the Coalition said the current economy and stock market fluctuations have underscored the importance of maintaining a defined benefits system to protect retirement security.

    The COLA Coalition also identified a variety of solutions to address the employer contribution rate spike such as raising the employer contribution rate gradually over several years, extending the smoothing period, refinancing the retirement system, restoring equal 30-year amortization periods for recognizing investment gains and losses and funding active member liabilities, authorizing state-issued Pension Obligation Bonds, and creating a special commission to determine a recommended course of action to the Legislature within 60 days.
    The Pennsylvania Association of School Business Officials (PASBO) said the state must focus on reducing the employer contribution rate and providing for PSERS long-term financial stability.  PASBO recommends that the state set an employer contribution rate of 11% for 2011-2012 and then gradually increase the rate (perhaps up to 3% per year) until it reaches the maximum level necessary to viably sustain PSERS.  PASBO also said the state should provide as much short-term relief as possible through asset sales or tax revenue from the Marcellus Shale gas extraction tax.  Jay Himes, Executive Director of PASBO, cautioned state lawmakers to approach pension bonds only as a last resort and to carefully structure such bonds so that their debt payments do not make the problem worse.  Finally, PASBO made a number of recommendations related to the design of the pension system, including reducing the multiplier for new school employees, eliminating the return of employee contributions at retirement, using the highest five years of salary (as opposed to the highest three) to calculate retirement benefits, returning to a 10-year vesting period, and increasing the retirement age.  If those changes are not able to produce significant savings, PASBO said the state could consider implementing a hybrid structure of defined benefit and defined contribution plans.

    The Committee also heard a national perspective on the state of public pensions from TIAA-CREF, one of the largest managers of pensions for government, academic and medical employees.  TIAA-CREF also presented options for reducing pension funding risks, including a risk-managed defined contribution system plan that has the benefits of a defined benefits plan.  This plan's aim is towards planned objectives and is focused on a more managed, but lower risk, employee retirement portfolio.  It also uses methods such as limiting the amount of choice that employees have for investments and implementing an employee investment education program to decrease the risks within the employees' retirement portfolios.  Overall, TIAA-CREF proposes to control the risks of a defined contribution plan in an effort to ensure lifetime income.

    Click here for testimony presented to the Committee.

  • Last week (January 21-22) the Senate Education Committee held hearings in Harrisburg and Pittsburgh to receive feedback and recommendations on Committee Chairman Jeff Piccola’s proposal to overhaul the Education Empowerment Act (Senate Bill 1192).  Pennsylvania’s current empowerment law is set to expire on June 30, 2010.

    Senator Piccola's proposed Education Empowerment Act (EEA) legislation is intended to increase the options, incentives and penalties for schools and school districts that persistently fail to make adequate yearly progress (AYP).  The Piccola proposal outlines numerous strategies for each status of EEA schools (i.e. Warning, Improvement I, Improvement II, Corrective Action I, and Corrective Action II) as defined under NCLB.  For instance, those districts and schools that do not make AYP for two to four years in the same subject  (Improvement I & II and Corrective Action I) may renegotiate teacher contracts, employ merit pay, create accelerated learning academies and develop higher education partnerships to improve student achievement.  Those districts failing to make AYP for eight years or more (Corrective Action II) would fall under control of a three-member School Reform Commission (SRC) which would report to the Secretary of Education.  The SRC would have control for at least five years.  In addition, the Piccola plan would grant authority to the Secretary of Education to close a school or dissolve a district.  The Secretary could order a School Reform Commission to: reconstitute the district or schools, convert schools to charters or place schools under private Education Management Organizations (EMO). The Piccola measure would allow parents to petition the SRC to have an EMO manage the school, convert it to a charter school or close it.  The draft proposal also includes conditions for termination of state control when AYP is met for two consecutive years.  To view school districts that may be affected by this proposal, click here.

    Discussion among those testifying at the Harrisburg hearing focused primarily on the state’s struggling urban school districts failing to make adequate yearly progress (AYP).  Secretary of Education Gerald Zahorchak began the discussion with an update on the status of the state’s application for federal Race to the Top (RTTT) funding, which includes provisions for turning around the lowest achieving schools.  Under the state’s RTTT application, districts with turnaround schools must select one of four models (turnaround, transformation, restart, school closure).  Among the 120 participating RTTT school districts, there are 23 districts with at least one school that will participate in the turnaround initiative.  With his focus on the RTTT application process, the Secretary did not provide specific comments and recommendations regarding Chairman Piccola’s legislation, but will do so at a later date.

    Committee members were briefed by Christopher Minnich, Director of Standards, Assessment and Accountability at the Council of Chief State School Officers, on reauthorization of the Elementary and Secondary Education Act .  According to his testimony, it is widely believed that the RTTT program will serve as a blueprint for the new federal education law.  Dr. John Chubb of the Edison Learning Institute offered comments on the takeover measures included in the Education Empowerment proposal from an education management organization perspective.  Also weighing in on the measure was Lawrence Jones, President of the Pennsylvania Coalition of Charter Schools, who testified to the role that charters can play in effective school reform.  Lastly, Michael Crossey, Vice President of the Pennsylvania State Education Association, expressed concern with the proposed strategies to improve low-achieving schools and emphasized the need to implement research-based strategies and practices that have been proven to increase student achievement.

    Click here for testimony presented at the hearing in Harrisburg.

  • State House

    This week, the House Education Committee approved House Resolution 592, which directs the Legislative Budget and Finance Committee (LBFC) to study the various models and costs associated with establishing the supplementary virtual learning program recently recommended by Pennsylvania’s Virtual High School Study Commission.  HR 592 awaits consideration by the full House.



  • Rep. Bill Adolph (R-Delaware) has been elected the new Minority Chair of the House Appropriations Committee.  Former Chair Rep. Mario Civera (R-Delaware) was elected to serve on Delaware County Council during the November 2009 General Election and resigned the Committee post last week.  While Civera resigned his leadership position in the House Republican Caucus, he has not yet stepped down as a member of the State House.

  • Senator Raphael Musto (D-Luzerne), Minority Chair of the Senate Education Committee, has announced he will retire at the end of the current legislative session.  Representative Paul Clymer (R-Bucks), Minority Chair of the House Education Committee, who previously announced his retirement has reconsidered and announced he will run for the State House again in 2010.



    Next week…

    The Pennsylvania Senate returns to session on Monday, February 1.  The Pennsylvania House returns to session on Monday, February 8.

  • Job Training for Beaver County, Inc. & Southwest Training Services, Inc. host a Science, Technology, Engineering & Math Conference on Wednesday in Monaca, Pa.

  • The House Appropriations Committee holds a budget hearing with the Pennsylvania School Employees Retirement System on Wednesday.

  • The Pennsylvania State Interagency Coordinating Council for Early Intervention meets Thursday in Harrisburg.

  • EPLC’s Education Policy Fellowship Program meets Friday in Harrisburg.

  • For information on these and other upcoming events, see www.eplc.org/calendar.html.

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

    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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