December 5 — 8:47 pm, 2018

Council must use this moment to fix the way it funds the District

The needs of the schools must be considered in tandem with those of the city

council hearing may 9 Superintendent William Hite, Chief Financial Officer Uri Monson, and SRC member Marjorie Neff appear before City Council on May 9.

At City Council’s first meeting with the new Board of Education on Nov. 27, Mayor Kenney said a page had been turned in Philadelphia’s history now that the School District is back under local control after 17 years of being led by the state-run School Reform Commission.

“Now, our city’s future is in our hands — right where we want it to be,” he said. “Together, we can ensure that there are quality schools in every Philadelphia neighborhood.”

The operative word here is together.

Despite the welcome return of the District to full local control, the dynamics between the city and the District have not been fundamentally altered. Now, as in the past — dating to well before the state takeover in 2001 — Council treats the School District as a secondary responsibility, with lesser needs than city government.

Both the mayor and Council often boast that the city contribution to the District’s budget has been growing over the past five years or so. But the nature of that growth leaves something to be desired. Over time, to finance the District’s needs, Council has enacted sin taxes, more recently adding a levy on cigarettes to one enacted in the 1990s to liquor-by-the-drink. Each year generally produces another patchwork combination, usually one-time grants combined with accounting maneuvers and optimistic revenue projections.

It is not a pretty history. And what went unsaid at the November meeting is that local control or not, Mayor Kenney and Council are still not on the same page when it comes to how the city should raise money for the schools.

Earlier this year, in anticipation of the momentous changeover of power, the mayor had asked for a 4.1 percent increase in the property tax rate, the District’s largest and most reliable source of local revenue. Now, schools get 55 percent of the total collected, and the city gets the rest. The property tax comprises 51 percent of the District’s local revenue and 24 percent of its total revenue, including the state and federal contributions.

Council leadership balked, saying that the burden of this levy falls most heavily on poorer homeowners. It largely relied yet again on solutions that are not recurring and reliable. For instance, a slowdown of a planned wage tax reduction will yield nearly $400 million in additional money for the District over five years. That is one of the more long-lasting and lucrative fiscal maneuvers that the mayor and Council have employed, but those benefits will run out once wage-tax reduction takes effect. Methods like these do not allow the District to plan adequately for the future.

The issue of raising the property tax is difficult. For one thing, housing costs make up a disproportionately large share of working peoples’ expenses in this city.

Advocates are ramping up their calls to end the 10-year tax abatement, which they say primarily helps developers and those who can afford their pricey condos. They say that taxes shouldn’t be raised on “working people” as long as this abatement is in force. The city counters that the abatement spurs development, and a city analysis of ending the abatement says that Philadelphia would see more money for 20 years, then revenue would decline due to less development. It is certainly time to consider this as a way to generate more property tax revenue for education, but phasing out the abatement alone will not solve the long-term problem.

Council members also noted that the the recent property reassessment had saddled many homeowners with higher   bills. But one reason that these reassessments pack such a punch is that the city has done a terrible job over the decades of keeping property valuations current, uniform, and fair. It is no secret that the valuations are so haphazard due, in part, to a long history of political protection of certain Council districts. The “actual value” initiative that was meant to rectify this has been underway for some time now, but it still has its problems. Perhaps the lax attitude toward getting this right has something to do with the fact that city government is so much less reliant on this revenue source than the schools are.

Finally, Council leaders say that the city’s contribution to the schools has increased for several years and that it’s time for the state to fulfill its responsibility, too. Among all the states, Pennsylvania ranks near the bottom in terms of the share it contributes to total education spending compared to the local burden; a landmark lawsuit is underway seeking to force Harrisburg to pay its fair share. Philadelphia, in particular, has suffered from the state’s haphazard funding system. (Under the administration of Gov. Wolf, however, state aid has been going up, keeping the city’s share of the total burden roughly the same.)

In any case, the state’s sorry record of education spending doesn’t absolve the city from getting its act together on local school funding. As for the budget process itself, each year, the District comes before Council and tries to present itself as a good fiscal steward able to put together a balanced budget. Council focuses on reaching that goal, and there is rarely an objective evaluation of how much money the District might actually need, as buildings crumble and students make painfully slow progress toward academic proficiency and graduation.

Part of this is a function of Philadelphia’s unique system, with the School District as a separate entity, and the inability of its governing body to raise its own revenue. In other urban centers, the schools are a department within city government, with equal claim on its tax dollars.

But even within this unusual governmental relationship, the city’s process of determining how to raise revenue and how to spend it on services could be overhauled to look at overall priorities to improve Philadelphia’s quality of life (more school counselors or more police?), with the needs of the schools considered in tandem with those of the city.

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