July 27 — 11:49 am, 2013

Philly lags other cities in school funding

 

We’ve done our part. And then some. Now it’s somebody else’s turn.

That seems to be the prevailing view of Philadelphia’s City Council members on the school funding crisis.

Two years ago, City Council swallowed hard and raised property taxes for the schools. A year later, Council did it again, while also increasing the use and occupancy tax. And this spring, Council enacted a city cigarette tax to provide additional funding for the schools (though Harrisburg failed to approve enabling legislation).

All these actions were taken as federal cash evaporated with the end of the stimulus and state funding for the state-run School District of Philadelphia plummeted.

“The state really has the responsibility for the schools. There is almost no other way to put that. They are responsible. They have been responsible, and they have been derelict in their responsibility,” said Councilwoman Cindy Bass.

That opinion is widely held by City Council members.

And yet, local support for school funding in Philadelphia trails that of most large cities, national data shows.

Most cities contribute more

In the 100 biggest districts in the nation, local funding — mostly taxes, but some other sources as well — accounted for an average of 46 percent of school funding in 2010, the latest year available, according to a Notebook analysis of data from the National Center for Education Statistics (NCES).

But in Philadelphia, local funding contributed just over 30 percent of the District’s budget that year, the 79th lowest total in the group of 100 districts.

 

The city’s share of school funding looks less miserly when the comparison is limited to very high-poverty districts, where the school-age family poverty rate tops 30 percent.

In those 22 high-poverty districts, local funding tends to be far more modest: just 36 percent of total revenue, on average. But even in that cohort, Philadelphia’s 2010 funding share was comparatively low. And some districts with high poverty rates get most of their funding from local sources, including Atlanta, Houston, Boston and Dallas.

Philadelphia places among the lowest of the local-funding ranks in the Commonwealth as well, a distinction that is doubly problematic for city schools, given that Pennsylvania offers far less support for local education than most states. Of the 267 districts with more than 2,000 students, only 19 had a lower local funding ratio than Philadelphia.

Like Philadelphia, the cities that struggle with local funding tend to be high-poverty communities, such as Reading, Chester, and Altoona.

Philadelphia would probably fare better compared to its national peers with more recent data, given the recent local investments in the School District. But even taking that spending into account, the national and state comparisons suggest that Philadelphia’s taxpayers are not unduly burdened by school taxes, no matter how City Council might feel about the prospect of additional tax hikes or budget cuts to free up more cash for the schools.

Philly’s unique challenges

But then, Philadelphia is different from other cities in key respects, and the case for additional local school funding is hardly a slam dunk.

Despite the relatively modest support for local schools, the city taxes its residents more heavily than just about any big city in the nation. A recent report published by municipal researchers in Washington, D.C., concluded that Philadelphia trailed only Bridgeport, Conn., in the overall tax burden it places on residents. Given that, squeezing more out of city residents and businesses – even for schools – is a politically challenging sell — particularly when it’s a sell Council has been asked to make three years running.

“Fundamentally, Philadelphia’s problem is we have too many taxes, and that essentially kills our competitiveness in terms of job creation,” said at-large Councilman Bill Green, who has consistently opposed raising city taxes not just for schools (excepting the cigarette tax), but for virtually everything else as well.

While some may blame the city’s high taxes on an inefficient government, Philadelphia has some structural disadvantages that most other cities don’t face. As its own county, Philadelphia also funds its court system, prisons, row offices and other county functions. In most cities, those county expenses are shared with nearby suburbs. Philadelphia also has an unusually large number of land-owning hospitals, universities and other charitable organizations that are exempt from local property taxes, which reduces the amount collected by both City Hall and the School District.

Philadelphia also has one of the nation’s most distressed public pension funds, owing to low employee contribution rates and chronic shortchanging of the fund by a long line of mayors and city councils. Those pension problems have badly hobbled the city’s budget: over the next five years, 20 cents of every general fund dollar the city spends will go to pensions. And that’s just making the minimum payment allowed by law.

Which is why it was such a blow to some on Council when lawmakers in Harrisburg decided the best way to partly patch up the District’s funding crisis was by making the city’s temporary sales tax permanent and using it to pump up the schools budget, instead of the pension fund as some had hoped.

Using the sales tax to inflate the pension fund “was probably the best opportunity” the city had to defuse its largest financial liability, City Council President Darrell Clarke told reporters last week.

“Then all of a sudden there’s this conversation in the General Assembly that essentially would take all of that revenue and apply it to schools, so clearly we were significantly concerned about that possibility,” Clarke said.

The sales tax gambit wasn’t the Nutter administration’s plan either, but the mayor is willing to accept a permanent sales tax hike if it provides “desperately needed funding for the schools,” said Nutter spokesman Mark McDonald. “Both school funding and the pension fund are critical issues and we must find long-term solutions for both.”

The Nutter administration hopes to make at least some progress on the pension problem when – or rather, if – it reaches new deals with the city’s blue- and white-collar unions. But that is far from the sure bet of a dedicated pension funding stream, which the sales tax would have provided.

At the very least, Council wants to see additional city spending on schools matched by state investments, which it considers a reasonable request, given the fact that the state controls the School Reform Commission.

State share climbed, then dropped

But that’s actually exactly what’s happened for the last 11 years. Between the 2002 and 2012 school budgets, city funding and state funding of the Philadelphia schools both increased by 39 percent (or about 6.5 percent, adjusted for inflation). Over the long term, the state and city are matching each other.

More recently, however, the city is doing all the heavy lifting. Since the 2009 fiscal year, the city has increased its funding of the schools by nine percent, while the state has slashed its share by 12 percent. That shift roughly coincided to when Gov. Corbett took over from former governor and Philadelphia mayor Ed Rendell.

The shift in that trend line troubles city officials and Council members alike.

Councilwoman María Quiñones-Sánchez has been one of the most consistent advocates for more school funding on Council, even if it meant local tax hikes or city spending cuts. But even she is frustrated by the last few years.

“We had eight years of Rendell and increased funding,” she said. “This last decade, we had an abundance of state resources, and since the state takeover, there’s this notion on Council that if the state wants to take over they have to carry the lion’s share. Now they’re changing the deal.”

Council reluctant to help

As for her colleagues, they are even more frustrated. Interviews with Council members and some staffers finds that:

  • Some Council members are prepared to simply wait Corbett out. They’re hoping for a Democratic winner in next year’s gubernatorial race, and some new faces in the General Assembly.
  • Council is reluctant to commit to new long-term school funding commitments when the Nutter administration still lacks contracts with two of the city’s biggest unions. Without new contracts, Council members say, long-term financial planning is almost impossible.
  • Council members are also keen to see a resolution to the District’s negotiations with the Philadelphia Federation of Teachers. Right or wrong, the perception among some on Council is that past city funding hikes for the District were simply added on to teachers’ contracts.
  • Council thinks there still a chance that the General Assembly will give Philadelphia the ability to raise cigarette taxes once it reconvenes this fall.

At least some of Council’s reluctance to find more money for the schools is tied to its lack of influence over the District.

“Really, all we are allowed to do is appropriate money for the School District. The rest falls under the state’s jurisdiction,” Bass said.

Of course, the School District is in an even more difficult position. Unlike all the other districts in the state, Philadelphia’s has no authority to raise taxes. Instead it must appeal to a City Council that resents the District’s independence, and to a state legislature that is often openly hostile to Philadelphia.

On top of that, divisions in the education advocacy community — between charter supporters and those who prefer traditional public schools – have made it even easier for Council to delay settling the school funding question.

“It gives people a pass. It’s easy for us to say to folks, ‘You guys aren’t united. Talk to me when you’re united.’” said Sánchez. “We use all that stuff. In this last education debate we saw every little political spin played.”

“We’re playing out the clock. The state clock. The PFT clock,” Sánchez said. “But at what expense?”

One option for enhanced school funding that received little public consideration in Council this year is to cut city spending, and to shift a greater share of the money collected in property taxes to the district.

Green made a pitch late in the budget cycle to do just that, but it went nowhere. Earlier this month, the watchdog group called the Committee of Seventy called on the city to reconsider, and to trim city spending by one to two percent, and allocate the savings for the schools.

“Incalculable harm is being done each day that this is unresolved,” said Zack Stalberg, executive director of the Committee of Seventy. “It might not be quite fair, but it is the reality that’s it’s the local community’s responsibility to educate its kids. And in Philadelphia we’re doing a poor job of it, and it manifests itself in the poverty rate, the unemployment rate, and a whole bunch of other things.”

When asked about the prospect of city budget cuts to fund the schools, Nutter spokesman Mark McDonald replied: “Where would the Committee of Seventy choose to make the cuts? What services would it select for reduction?”

Calling for city cuts is far easier than enacting them. With so much of the city’s budget locked up in mandatory expenses – pension payments, debt service, contract obligations and so on – a one to two percent cut can easily translate into a much larger budget crunch at the operational level.

Sánchez – a progressive who favors full funding of needed city services – understands why some colleagues might flinch at cutting the city’s budget to send more money to a state-run school district that does not answer in any meaningful way to City Council.

“We should go to the state every year. Every year,” she said. “But ultimately, these are our kids.”

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