August 14 — 12:13 pm, 2014

Commonwealth Foundation’s analysis of Philly school finances is flawed

chart 20for 20rfa 20post big Photo: Source: Pa. Department of Education

Note: This is adapted from a brief that was published Aug. 8 by the Philadelphia-based group Research for Action. The full brief can be found here.

Philadelphia’s school funding situation is a central issue in state policy discussions. The recent debate has focused on city’s authority to raise taxes on cigarettes. But the essential questions on whether the school system has enough money have been present in the state capitol for at least two decades.

The Commonwealth Foundation released a brief on Philadelphia school trends recently that received prominent attention in the local press. It argued that despite a funding increase, the District has little academic improvement to show for it.

The main arguments presented in the brief are:

·         “Revenue and spending have soared over the last 10 years.”

·         “Despite spending more on education, performance is lagging.”

·         Student “enrollment has declined more rapidly than staff.”

·         “Systemic reform is needed.”

But our analysis shows that the brief’s evidence and conclusions are misleading, inaccurate and devoid of context. For instance, the foundation fails to note that the bulk of the revenue “increase” in the last five years of the sample came in the form of proceeds from borrowing. And much of that money went to pay for mandated, and climbing, costs related to special education, and charter schools.

We examine each point below, using our own data supplemented by research from other non-partisan organizations.  

Claim: “Revenue and spending have soared over the last 10 years.”

The authors say that District revenue increased by more than $1 billion from 2003 to 2013, total spending per student has increased, and charter schools spend less money than District schools. Each claim deserves attention.

According to the brief: “Even accounting for inflation, the district has received revenue increases from state, local, and federal sources.” The authors select 2002-2003 through 2012-13, the most recent year that District annual financial reports were released by the state. The foundation is correct that the total revenue has increased during this period. Philadelphia, like every district in the state, received substantial state funding increases from 2002-03 to 2008-09. But the foundation’s analysis does not provide a full picture of Philadelphia’s situation.

The above chart shows what has happened in the last five years of the sample, from 2008-09 to 2012-13.

Funding did not “soar,” as the authors claim. Closer examination shows a $350 million increase to the District since 2008 – 13 percent over five years – $260 million of which came from borrowing. City and federal revenue showed net gains of $120 million and $97 million respectively, while state funding declined by $144 million. The borrowing is reflected in the “other” line.

The graph shows clearly that when state and federal funding dropped $300 million in 2011-12, local funding increases could not cover the gap. In 2012, local officials borrowed $300 million to open the schools. That money covered just one year but must be paid back with interest over the long term, further adding to the rising annual costs that the Commonwealth Foundation repeatedly decries in its analysis.

Further, it should be emphasized that the 2013-14 school year is not incorporated in this analysis. In that year, District officials laid off 3,700 teaching, support, administrative, and other staff. They closed 30 school buildings in the last two school years.

Why the cost increases occurred, and what money must be spent on, are at the heart of the matter here.

Mandated costs in areas like special education and charter schools, along with debt payments and transportation, have increased. Charter schools, the largest of these expenditures, now account for 30 percent of the District’s budget. They undeniably contribute to the District’s rising costs. More than 35 percent of Philadelphia’s students are enrolled in charter schools, one of the highest rates in the country. The number has doubled in the last five years. Each seat costs the District an extra $7,000. In this way, the authors criticize the District for spending money on the same schools they contend should be further expanded.

One last point: It is not clear that “charter schools spend and receive less money per student than district schools.” For example, in 2011, the average per pupil spending in a Philadelphia charter school was almost even with spending per pupil in district schools ($11,674 to $11,637), according to the most recent data released by the federal government. However, this information needs to be examined more closely, over a period of years, before coming to a conclusion.

Claim: “Despite spending more on education, performance is lagging.”

Nobody should be satisfied with academic performance among city students. Outcomes – test scores, college attendance, job rates – do not match those of suburban districts. However, the way the analysts choose their supporting evidence and what they leave out are important.

The analysis of lagging student achievement rests solely on rates of proficiency and above on the National Assessment of Educational Progress (NAEP).  Decades of social science research point to a close link between levels of concentrated poverty and student test results. Given that Philadelphia’s poverty rate is among the highest in the nation, it is not surprising that the District’s NAEP results would lag behind other districts. Context matters here. Philadelphia has comparable NAEP scores to Los Angeles or Chicago, two cities with significantly lower poverty rates.

Claim: “Enrollment has declined more rapidly than staff.”

The authors state that Philadelphia School District enrollment has declined by 25 percent from 2003 to 2013 and that the number of teachers declined 6.7 percent during this same period. There are a number of cautions with regard to this point. First, the range under examination does not include 2013-14, a year of drastic cuts to the District. Second, dividing student enrollment by the teaching complement does not provide an accurate reflection of average class sizes. Other factors complicate this calculation, including high rates of special education students who require more teachers. Third, noting a 25 percent enrollment drop without mentioning parallel growth in charters masks an important point: Philadelphia’s enrollment has shifted more than it has declined in the last decade

This shift adds costs to the entire school system. This cost is particularly acute in Pennsylvania due to the nature of the state’s funding design, which passes the burden of charter costs to the local level. State law requires local districts pay charter schools for each student who enrolls. Districts are hard pressed to pare personnel, building, and service costs proportionately, and Pennsylvania no longer provides funds to help school districts offset the costs caused by rapid charter growth.

Lastly, even if this point were accurate, shrinking class sizes could be seen as a positive development, as research suggests that smaller classes contribute to achievement gains for historically disadvantaged students in early grades.

Claim: Systemic reform is needed.

The authors conclude their brief by stating that additional taxes will not solve Philadelphia’s problems, saying instead that “Systemic reform is needed. This should include expanded school choice, union concessions in labor contracts, and seniority reform to end ‘Last-in, First-out’ rules.”

Few districts in the nation have experienced more education “reforms” than Philadelphia during recent years. These efforts included state takeover, expanded school choice through both brick-and-mortar and cyber charter schools, an initiative to diversify school managers, and school closures. Philadelphia has faced state funding cuts during a period of rapid cost escalation. Local funding increases have not kept pace.

A more complete grasp of the situation here is what’s truly needed in Harrisburg, not coded calls for "reform."

John Sludden is a policy analyst at Research for Action.

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