November 27 — 12:00 am, 2003

PA school budget impasse continues

Months past the original June 30 deadline for adopting a state education budget, proposals for a long-awaited boost in Pennsylvania’s education funding are still tied up in slow-moving negotiations between the governor and the Republican-led state Senate.

Governor Ed Rendell’s ambitious school funding plan was slashed by more than half in the Pennsylvania House, and the Republican Senate leadership so far has shown little interest in the governor’s new education spending initiatives.

Some local advocates see the adoption of an education plan by the state House as progress, while others argue it is a bad compromise that is a setback for funding reform.

Advocates for increased school funding are focused on pressuring Pennsylvania’s Senate to adopt the governor’s plan in some form.

For now, districts across the Commonwealth are short by $1 billion after the first two state aid payments of the fiscal year have been held up. Financially strapped schools heavily dependent on state support have been forced to borrow money, and some have had to cut education spending.

"If we have to borrow again, we will borrow again, but we’re for holding out, we’re for tightening our belts and supporting the governor," said Philadelphia School District CEO Paul Vallas.

The budget impasse dates back to March of this year when Rendell unveiled an education funding plan that would have increased Pennsylvania’s personal income tax rate and other taxes and fees and also provided property tax relief to Pennsylvania residents. Among the 41 states with an income tax, Pennsylvania currently has the lowest rate.

Of the approximately $2.2 billion to be raised through this measure, $650 million was to be earmarked for reforms in early childhood and K-12 education.

Hostile to a tax hike, the Republican-controlled legislature declined to support the plan, prompting Rendell to veto the entire $4 billion state education budget, thus setting the stage for the current stalemate.

In October, the Pennsylvania House took a step to break the legislative deadlock and passed House Bill 113, which scaled back the Rendell education plan. The legislation authorized a modest annual increase of 2.5 percent in the state’s Basic Education Subsidy, along with increases in vocational and special education funding, and it added $250 million in new money to raise student achievement.

In the House bill, $200 million in "accountability grants" would be available for districts to use for research-based reforms including reducing class size in the early grades, pre-kindergarten and full-day kindergarten, and incentives for attracting and retaining qualified teachers.

The bill also provides $15 million more in assistance to Head Start programs and $34 million for tutoring academically struggling students. The necessary funding would be raised through a small increase in the state income tax.

Given budget freezes and cutbacks in many other states, some view this legislation as a step in the right direction.

"The most important aspect of House Bill 113 is the turning of the tide in the status quo, business-as-usual, year-to-year funding of education in Pennsylvania," said Nellie Sepulveda, director of Good Schools Pennsylvania.

"For the first time in too many years, the modest annual increase in the basic education subsidy is accompanied by a significant amount of new funding for education, to be spent on practices proven to raise achievement," Sepulveda added. "New funds are to be distributed based on where the money is needed the most."

Critics of the House legislation assert that the measure makes no significant improvements in the current inequitable system for funding public education. Currently, Pennsylvania ranks third from the bottom among all states in terms of insuring that school spending is spread equally across its schools, according to an analysis by the publication Education Week.

One provision of House Bill 113 that is attracting criticism is a new referendum initiative that would require local communities to call for a vote to approve higher local school taxes. The referendum requirement applies to all communities except Philadelphia.

The referendum initiative would prohibit school districts (with few exceptions) from increasing tax rates beyond a preset "index."

Opponents of the referendum claim that not knowing whether or not voters will approve tax increases from year to year would make it extremely difficult for districts to make long-term spending plans for school improvements.

"I am racking my brain to remember any education proposal in the state’s history that promises to do more damage to education than this referendum," said Tim Potts, director of the Pennsylvania School Reform Network. "This referendum initiative will make it virtually impossible for school districts to meet state and local mandates, and when taxpayers vote and say no to tax increases, the first thing to go will be the things that are not mandated, such as pre-kindergarten," Potts continued.

Five key statewide education groups, including the Pennsylvania Federation of Teachers and Pennsylvania School Boards Association, wrote a joint letter to the Pennsylvania General Assembly urging them to oppose the bill’s referendum provision.

Further complicating the fate of education funding is Rendell’s promise of providing Pennsylvania residents tax relief in exchange for increasing the state’s income tax. Funds to cover the proposed $1 billion in property tax relief are contingent upon state lawmakers supporting the governor’s proposal for adding slot machines at race tracks and off-track slots. Republican leaders in the Senate have indicated that Rendell has little support for the off-track slot proposal.

As the governor and Senate continue to lock horns, the funding for 501 districts hangs in the balance, and Pennsylvania remains the only state in the nation without an education budget.

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