The commonwealth reached its peak contribution to school costs – 55 percent. It maintained at least a 50 percent ratio until 1976, when it slipped below that.
The legislature replaced the Basic Instructional Subsidy with the Equalized Subsidy for Basic Education. ESBE removed the 50 percent state obligation and revised how each district’s base subsidy per student was calculated, adding a factor measuring local tax effort. It kept the add-ons for poverty and density, and included more, such as one for small, rural districts.
More revisions to ESBE had a big impact on the distribution of state aid. A “hold-harmless” provision said that no district would get less than a 2 percent increase each year and no district would get an increase above 7.45 percent. These changes hurt poor districts while benefiting wealthier ones.
The Pennsylvania Association of Rural and Small Schools (PARSS) filed a lawsuit saying that the state’s distribution formula was unconstitutional.
ESBE, with all its built-in inequities, was abandoned. From that year forward, state aid increases were distributed through special supplements that changed every year and were sometimes targeted to specific districts. Districts no longer got adjustments based on changes in student population, unless through a “growth” supplement.
The state charter law was passed, along with a detailed formula on how money would be driven to these independently run, tax-funded schools.