Third and State
PBPC’s Budget Summit last week in Harrisburg drew about 200 participants and a distinguished bipartisan lineup of speakers, including Katie McGinty, Gov. Wolf’s chief of staff; Sen. David Argall; Budget Secretary Randy Albright; Representative Kerry Benninghoff; Secretary of Policy and Planning John Hanger; Representative Madeleine Dean and Representative Glen Grell.
PCN broadcast the summit’s plenary sessions -- including McGinty’s keynote speech -- and two of the workshops on Saturday. You can also find workshop presentation materials from the summit on PBPC’s website.
Amnesia Anyone … KRC Executive Director Stephen Herzenberg participated in a town hall on pension reform Thursday night, sponsored by the Pennsylvania NewsMedia Association Foundation and the Pennsylvania Chamber. Steve pointed out that pension experts (or “actuaries”) estimated just 21 months ago that moving new public employees out of the existing Pennsylvania pensions into separate 401(k)-style savings accounts would cost taxpayers a cool $42 billion. This hefty price tag killed the proposal in 2013, and yet it appears destined to rise again, zombie-like, this year. PCN broadcast the town hall at 9 pm Saturday.
It’s Elementary. PBPC education analyst Wasilla Miranda blogged last week about a new brief on how, surprise, money matters to school outcomes. The University of Pennsylvania Consortium for Policy Research in Education published the brief. Check out her post on Third and State.
Lifting Wages to Boost the Recovery. KRC labor economist Mark Price gave a talk Friday morning to the Bucks County Women’s Advocacy Coalition on why Pennsylvania’s minimum wage needs to be raised and how raising it will help the commonwealth’s economy.
Boom Chicka…Bust…The Multi-State Shale Research Collaborative will hold a public forum on “Shale Boomtowns: The Economic and Social Impacts of Gas Drilling” at 7 p.m. April 29 in the Community Room of the Sewickley Public Library, 500 Thorn St., Sewickley. For more information or to register, click here.
Who’s afraid of the Wolf budget … KRC’s Steve Ehrenberg explains why business should embrace Gov. Wolf’s budget proposal in an op-ed published last week in the Philadelphia Business Journal.
Coming soon … The Basic Education Funding Commission will meet from 10 a.m. to 2 p.m. on April 27 in the William Pitt Union Assembly Room at the University of Pittsburgh.
katiefoto v2.pdf Legislative Panel.pdf
Keystone Research Center
PBPC’s Budget Summit this week in Harrisburg drew about 200 participants and a distinguished bipartisan lineup of speakers, including Katie McGinty, Gov. Wolf’s chief of staff; state Sen. David Argall; Budget Secretary Randy Albright; Secretary of Policy and Planning John Hanger; and state Reps. Kerry Benninghoff, Madeleine Dean and Glen Grell.
Katie McGinty, Gov. Wolf's chief of staff, spoke at PBPC's Budget Summit
PCN will broadcast the summit’s plenary sessions -- including McGinty’s keynote speech -- and two of the workshops at 2 p.m. Saturday. Click here for PCN’s channel designation in your area. You can also find workshop presentation materials from the summit on PBPC’s website.
Sen. David Argall & Reps. Madeleine Dean & Kerry Benninghoffat the budget summit
AMNESIA ANYONE ... KRC Executive Director Stephen Herzenberg participated in a town hall on pension reform Thursday night, sponsored by the Pennsylvania NewsMedia Association Foundation and the Pennsylvania Chamber. Steve pointed out that pension experts estimated just 21 months ago that moving new public employees out of the existing Pennsylvania pensions into separate 401(k)-style savings accounts would cost taxpayers a cool $42 billion. This hefty price tag killed the proposal in 2013, and yet it appears destined to rise again, zombie-like, this year. PCN will broadcast the town hall at 9 pm Saturday. So you can just about squeeze in dinner between the budget summit and the pension forum.
IT'S ELEMENTARY ...PBPC education analyst Waslala Miranda blogged this week about a new brief on how, surprise, money matters to school outcomes. The University of Pennsylvania Consortium for Policy Research in Education published the brief. Check out her post on Third and State.
WHO'S AFRAID OF THE WOLF BUDGET … KRC’s Steve Herzenberg explains why business should embrace Gov. Wolf’s budget proposal in an op-ed published this week in the Philadelphia Business Journal.
LIFTING WAGES TO BOOST THE ECONOMY ...KRC labor economist Mark Price gave a talk Friday morning to the Bucks County Women’s Advocacy Coalition on why Pennsylvania’s minimum wage needs to be raised and how raising it will help the commonwealth’s economy.
BOOM, CHICKA ... BUST …The Multi-State Shale Research Collaborative will hold a public forum on “Shale Boomtowns: The Economic and Social Impacts of Gas Drilling” at 7 p.m. on April 29 in the Community Room of the Sewickley Public Library, 500 Thorn St., Sewickley. For more information or to register, click here.
COMING SOON … The Basic Education Funding Commission will meet from 10 a.m. to 2 p.m. on April 27 in the William Pitt Union Assembly Room at the University of Pittsburgh.
The Keystone Research Center is a nonprofit, nonpartisan research organization that promotes a more prosperous and equitable Pennsylvania economy. The Pennsylvania Budget and Policy Center is a non-partisan policy research project that provides independent, credible analysis on state tax, budget and related policy matters, with attention to the impact of current or proposed policies on working families.
Last November, the University of Pennsylvania’s Consortium for Policy Research in Education (CPRE) released a policy brief on how money matters in school funding, especially in large, urban school districts. This brief defines adequate school funding and shows that school districts with large funding gaps are low-achievement and high-poverty. It also shows that large urban schools can be efficient. Below are the three things you need to know about public school funding in Pennsylvania:
1. More than $3.5 Billion Needed for Adequate Funding
For any school to achieve, it must receive fair and sufficient funding. However, 84% of school districts in Pennsylvania do not meet the mark. The gap between this fair and sufficient funding level and what schools are actually spending is the adequacy gap. In 2009-10, the additional funding needed to close this gap across the state was $3.55 billion [or $3.88 billion in 2015 inflation-adjusted dollars].
This translates into an average district-level adequacy gap of $1,559 per pupil. Considering the funding inequalities at the district level, CPRE found that the quarter of school districts serving the largest share of low-income students had an average adequacy gap six times larger than the quarter of school districts serving the smallest share: $2,416 vs. $442 per pupil.
2. Largest Adequacy Gaps found in Highest-Poverty and Lowest-Achieving Districts
The schools dealing with the highest number of low-income students suffer from the steepest adequacy gaps. It’s no surprise then to see that their school districts are also low achieving. When CPRE looked at the 25 poorest school districts it found that their greater needs are not met with adequate funding:
- Excluding Philadelphia, the school districts, on average, had an adequacy gap of $2,608 per pupil in 2009-10. On average, they spent 84% of what was needed to prepare their students to achieve state standards.
- Philadelphia had an adequacy gap of $5,478 per pupil in 2009-10, more than double the average gap of the other 24 highest-poverty school districts, even though the city’s school district serves the same share of low-income students. On average, Philadelphia had only spent 68% of what was needed to educate its students to achieve state standards.
3. Despite Less Funding Philadelphia Outperformed Its Low-Income Peers
Despite this funding discrepancy, Philadelphia schools outperformed other high-poverty schools. Looking at the achievement outcomes of the 25 highest-poverty schools, CPRE found that Philadelphia students performed “slightly better” in math and English language arts (ELA). Philadelphia earned 15% greater achievement per dollar than other high-poverty schools.
This policy brief helps justify the push to restore state funding of our public schools after years of cuts. When school districts in low-income neighborhoods lose state funding they often cannot replace that funding on the local level, resulting in adequacy gaps. For these gaps to disappear funding should meet need. Only then can all children in public schools be prepared to achieve.
The Washington Post ran a story on March 12 about unequal education funding between the haves and have-nots in America. Because children in low-income families have greater needs, the schools they attend require more funding to give them a fair chance at educational success. However, 23 states give low-income schools less state and local funding than the wealthiest of school districts, fueling even more inequality.
Pennsylvania ranks the worst by far among states in this inequity. Pennsylvania also is one of just three states without a predictable funding formula for basic education. The Campaign for Fair Education Funding, of which the Pennsylvania Budget and Policy Center is a member, has proposed a student-driven funding formula that strategically directs resources to students and school districts with the greatest needs and provides the investment necessary to enable every child to succeed academically.
Gov. Tom Wolf has also proposed a funding formula and a significant investment in basic education in his 2015-16 state budget plan.
Pennsylvania Budget and Policy Center Research Director Mike Wood revealed the flawed arithmetic behind the Commonwealth Foundation’s “analysis” of the tax impact of the Wolf budget plan in his blog post this week “Budget Critics’ Stupid Math Tricks.” CF made an error in adding up the total taxes in the first year (whoops!) and included all corporation taxes as part of what families pay (huh?). CF claimed that families would pay more under the Wolf plan -- without actually analyzing the impact of the plan on any real families. Neat trick! In fact, most families in the school districts that receive the largest tax relief are likely to see lower taxes as well as many families in other communities. Given the size and targeting of the property tax relief most homeowners earning up to $100,000 may benefit – as the Wolf Administration claims. But don’t worry. We’ll check their math too.
Fighting amnesia on pensions … In an op-ed published this week in The Patriot-News and on Pennlive.com, and in a new pension “primer,” Keystone Research Center Executive Director Stephen Herzenberg reminded legislators who want to move employees toward a 401(k)-style plan that Gov. Corbett made this proposal just two years ago. Actuaries for the state’s pension plans estimated this would cost $42 billion. And that’s just one of the problems with the idea.
Borrowing revenue-boosting ideas … Jan Jarrett outlined in a blog post and email blast just how similar some of Gov. Wolf’s revenue proposals – such as personal income and sales tax increases – are to Republican plans introduced last legislative session. So how come they are already disagreeing?
Doing wonders for the state budget … KRC and PBPC released a joint brief showing that Pennsylvania could generate up to $6.9 billion in revenue if top income groups paid the same state and local tax rate as middle-income Pennsylvanians. Tax Fairness: An Answer to Pennsylvania’s Budget Problems found that if the highest-income one percent of taxpayers were taxed at the same rate as the middle 20 percent, Pennsylvania could raise $3.75 billion per year. And if the top 20 percent of income-earners paid the same as the middle 20 percent, Pennsylvania could raise $6.93 billion per year.
“Revenue lost because of the one-two punch of rising income inequality and regressive state tax codes has led states to impose years of unnecessary austerity — underfunding schools, cutting investments in higher education, and deferring maintenance of aging infrastructure,” KRC Executive Director Dr. Stephen Herzenberg noted. “After 30 years of a middle-class squeeze, it’s time to restore balance.”
Gov. Wolf’s property tax relief targeted to middle- and lower-income communities is one way to make progress on tax fairness.
Reforming cyber school funding … PBPC education analyst Waslala Miranda blogged on Gov. Wolf’s plan to reform cyber school funding. She says all public school students stand to gain under the plan.
Testifying for a higher minimum wage … KRC labor economist Dr. Mark Price testified in Philadelphia again in support of raising Pennsylvania’s minimum wage to $10.10, this time before the House Democratic Policy Committee. Mark told them that a higher minimum wage will increase the wages of 1.2 million Pennsylvanians and create 6,000 new jobs.
Going fast … Registrations continue to surge for PBPC’s 2015 Budget Summit on March 25 at the Hilton Harrisburg. Space is filling up fast. So if you want to hear the keynote address by Gov. Wolf’s Chief of Staff Katie McGinty, you should register ASAP.
This may be a first for an economist. A map based on a report by our very own Mark Price -- the Increasingly Unequal States of America -- made the Sports Illustrated blog at the end of last week. Fortunately, it was not accompanied by a picture of Mark on the beach during his recent work-related trips (yes, plural) to Miami.
Gov. Wolf’s proposed state budget addresses the commonwealth’s structural deficit and raises the money needed to strategically invest in growing Pennsylvania’s economy, educating its children, creating good jobs, and caring for its most vulnerable citizens. His plan plainly lays out where the revenue will come from to make those investments possible.
None of the governor’s revenue-raising ideas are new. Similar ideas have been proposed in prior legislative sessions by lawmakers on both sides of the aisle.
For example, the governor proposes raising the personal income tax to 3.7 percent and the sales taxes to 6.6 percent, while broadening the sales tax to include some additional goods and services but not food and clothing. Our online side-by-side comparison breaks down how these increases compare to Republican-sponsored legislation introduced last session.
Specifically, 2013-14 House legislation proposed by Rep. Reed would have increased the PIT to the same 3.7 percent level the governor proposes, while Rep. Cox and Sen. Argall proposed a higher increase to 4.34 percent.
Rep. Cox and Sen. Argall proposed raising the sales tax to 7 percent, higher than the governor’s proposed 6.6 percent, and broadening it to include most food, clothing, and personal services. Rep. Reed also proposed raising the sales tax to 7 percent but did not broaden it to additional items.
The Cox and Argall proposals garnered support from a large number of legislators:
- 48 Republican and 13 Democratic cosponsors in the House, and 13 Republican and 12 Democratic cosponsors in the Senate.
- 47 Republicans and 12 Democrats in the House voted for Rep. Cox’s proposal.
- 12 Republicans and 13 Democrats in the Senate voted for Sen. Argall’s proposal.
Rep. Reed’s proposal was not voted on; it had seven Republican cosponsors.
Since 2008, legislators on both sides of the aisle have also introduced legislation similar to the other revenue proposals in the Wolf budget: a severance tax on natural gas drilling, a tax on smokeless tobacco and cigars, and proposals to close the loopholes corporations use to artificially lower their income taxes (such as the Delaware loophole).
Obviously, legislators’ willingness to support raising revenue depends on how the money is used. On that issue it is noteworthy that a main use of the revenue raised in the Wolf, Cox, Argall, and Reed proposals would be to lower property taxes.
Because revenue proposals similar to the governor’s have received bipartisan support in the past, the budget debate this year should not be short-circuited by the claim that lawmakers won’t support broad-based tax increases on this scale. That claim is demonstrably false.
Gov. Wolf’s proposed 2015-16 state budget, unveiled last week, proposes to reform cyber charter school funding so that it reflects their actual costs, freeing up an estimated $160 million more for classroom funding.
Cyber charters do not have the same basic costs as other public schools, such as building facilities. The governor's funding reform would cap public funding at reasonable levels: at the highest cost levels of “comparable, high-performing online education programs offered by Intermediate Units”, plus 10% more for any additional administrative costs.
Beyond basic cost differences, there are major outcome gaps that call for cyber charter funding reform. In 2013-14, cyber charters cost school districts $421 million, and yet they produced significantly worse results on School Performance Profiles (SPP) than all other public schools, according to the educational research group Research for Action (RFA).
Figure 1: Research for Action Analysis
Although SPP scores are based on standardized test scores, which are shown to be highly associated with student poverty, RFA found that even the poorest of all other public schools do better than cyber charters. The cyber charter student poverty rate of 48% is not that much higher than the 44% poverty rate of all traditional public schools.
Public funding of any program should rest on transparency and accountability. The public needs to know that their tax money is being invested in programs that work well. When funding reform improves the educational power of every public dollar spent, public school students and our state benefit.
David Letterman would have been proud. The “drown government in a bathtub” crowd put on a show earlier this week complete with props, kids, and stupid math tricks. Unfortunately, the whole show was missing something important: facts.
Pay attention here – we’ll walk you through how the Commonwealth Foundation (CF) tried to make the numbers walk on hind legs and bark. To estimate the overall impact of the Wolf budget plan on a typical family, CF added together all the proposed tax changes, whether a typical family would ever pay them or not, and divided this figure by the magic number of 3,179,000 – exactly one-quarter of Pennsylvania’s population. CF labels the result what a “four-person family” would pay. Perhaps it created the “family” figure rather than merely dividing by the total number of people in the state because, well, it’s four times bigger. (For good measure, CF also added together the tax changes for 2015-16 incorrectly – see page C1-6 of the proposed budget for the correct total.)
The CF “average" is also inflated because it includes severance, corporate, and bank tax changes - all taxes families typically do not pay. Again, this helps make the figures bigger.
Here’s the most important point: the figure that CF computes is a mythical – and meaningless – average. It doesn’t tell us anything about what an actual or average family pays or saves under the plan.
An honest analysis of the impact of the governor’s budget proposal on real families requires looking at what households with different income levels, housing situations, and addresses actually pay in sales and income taxes and how they benefit from a reduction in property taxes.
That requires anti-taxers to do some real analysis – including using income tax and consumer spending data. The impact on actual families depends on their situation (their income, where they live, what they buy, if they own or rent, and the value of their home). That’s a lot harder than taking the total and dividing by the number of “families.”
Based on what we know about the plan and the Wolf Administration’s own estimates, you will likely benefit financially if you live in a lower-income or “higher-taxed” (relative to income and property wealth) area. Regardless of where you live, renters earning up to $50,000 a year and homeowners with incomes up to $100,000 will likely benefit financially, too, according to the administration (we’ll check on that).
We all benefit from the increased state funding of schools. Our kids get a better education, funding won't vary so much from district to district, and school districts become less reliant on local taxes.
We’ve had too many years of budgets based on stupid math tricks that tried to hide the impact of not increasing state taxes. This unjustified and ineffective austerity led to cuts in classroom funding coupled with higher local property taxes. The results aren't surprising - lower test scores, fewer educational opportunities, and a state economy falling farther behind the rest of the nation. Stupid math tricks don’t work, and neither does a state budget based on them.
This was a big week for budget analysts as Gov. Wolf delivered his first budget address and presented his first state budget on Tuesday. He gave us plenty to dig into with an ambitious $29.9 billion proposal to fill the existing $2.3 billion deficit while also restoring $1 billion in education cuts, reducing school property taxes by $3.8 billion beginning in 2016, and funding a $1.75 billion job growth initiative.
The Pennsylvania Budget and Policy Center was busy producing immediate analysis and infographics for the media, advocates and legislators, and rapidly tweeting them out and posting them on our website. See our Summary and Highlights of Gov. Wolf’s 2015-16 Budget Proposal.
Needing an economic turnaround … PBPC’s media statement on the budget explained why Pennsylvania needs a bold budget that invests in education, infrastructure, jobs and skills: the state’s prior cuts-only approach left Pennsylvania 50th in job growth since January 2011, 46th in revenue growth, and resorting to one-time budget fixes that have led to repeated downgrading of the state’s bond rating.
Leaving the job market … Offering further evidence of the state’s need for an economic turnaround, Keystone Research Center Executive Director Stephen Herzenbergblogged this week that Pennsylvania’s declining unemployment rate isn’t such good news because it results from more Pennsylvanians giving up on finding jobs and leaving the labor force. If the labor force had not declined, Pennsylvania’s unemployment rate would still be 6.9 percent. Read more here.
Explaining the budget … PBPC Research Director Mike Wood was a guest Wednesday on WHYY’s Radio Times show on “Unpacking Gov. Wolf’s budget address.” You can listen to it here. Newsworks ran a story quoting Mike about the governor’s plan to increase the sales tax. Even conservative media organizations watchdog.org and the Pittsburgh Tribune-Review came calling for budget analysis. And Friday morning Mike gave a presentation on Gov. Wolf’s education budget proposal before the Education Policy & Leadership Center’s new class of fellows.
Making some better choices … By our count, the governor’s proposed budget includes seven of the 19 recommendations on the Better Choices for Pennsylvania coalition’s tax fairness platform: nos. 1 (close corporate loopholes by enacting combined reporting), 3 (adopt a severance tax), 4 (tax smokeless tobacco products and e-cigarettes), 5 (fix the bank tax), 13 (expand the Tax Forgiveness Program), 15 (maintain the sales tax exemption on food) and 16 (create a property tax rebate program -- Gov. Wolf’s rebate proposal is larger than the Better Choices proposal). PBPC is a member of the Better Choices coalition.
Blogging on the budget … Check out this week’s blog post on how the environment and conservation would win in Gov. Wolf’s budget by Jan Jarrett, coordinator of the multi-state shale research collaborative.
Paying the pension debt … Dennis Owens of ABC 27 interviewed Steve Herzenberg on Wednesday about Rep. John McGinnis’ plan to pay down Pennsylvania’s pension debt. Steve agreed with McGinnis on the need to address the problem and save on Wall Street management fees but pointed out some problems with McGinnis’ proposed switch of new employees to 401(k)-style retirement savings plans (don’t forget the $40 billion transition cost found when Gov. Corbett made the same proposal in 2013). You can see the interview here.
Raising the minimum wage … KRC labor economist Mark Price testified before the Philadelphia City Council on Wednesday in favor of a $15 minimum wage. Advocates are hoping to lay the groundwork for a city challenge to a state law that prohibits municipalities from setting minimum wages. The hearing was held one day after Gov. Wolf proposed raising the state’s $7.25 minimum wage to $10.10 an hour.
Katie’s keynoting … PBPC confirmed this week that Katie McGinty, Gov. Wolf’s chief of staff, will be the keynote speaker at the 2015 Budget Summit on March 25 at the Hilton Harrisburg. Registrations are already up to 125 and filling up fast. Space is limited, so if you want to come you should register ASAP!
Coming soon … Budget hearings begin this Monday, March 9, in the House and next Monday, March 16, in the Senate. To use the oft-misquoted version of the Bette Davis line in All About Eve, “fasten your seatbelts. It’s going to be a bumpy ride.”
… The Basic Education Funding Commission will meet at 10 a.m., Thursday, in Hearing Room 1 of the North Office Building in the Capital Complex, Harrisburg, to hear a presentation on the Wolf administration’s proposal for a fair funding formula.
Pennsylvania’s Economy Still Needs a Turnaround: Falling Unemployment Results from People Leaving the Job Market
While a lower unemployment is sometimes good news, the decline in Pennsylvania’s unemployment rate over the last two years has been driven by the fact that fewer Pennsylvanians are looking for work. Between December 2012 and December 2014, more than 127,000 Pennsylvanians dropped out of the labor force. With fewer unemployed workers “counting” in the official statistics, the unemployment rate went down:
If the labor force had not fallen since December 2012, the state’s unemployment rate would still be 6.9%. (This figure is based on adding the 127,000 to the 293,000 currently unemployed – a total of 420,000 people – and then taking this 420,000 as a share of the total labor force.)
The bottom line: Pennsylvania needs faster job growth. The move away from austerity represented by a state budget that invests in education, jobs, innovation and skills, and in infrastructure should help give Pennsylvania the economic turnaround it needs.
Environmental protection and conservation are winners in Governor Wolf’s proposed state budget. His proposal to levy a 5 percent severance tax on natural gas extraction would generate almost $1 billion in new revenue a year, a portion of which would go to a number of important environmental programs.
The governor would use $40 million a year from the severance tax to finance a $225 million clean energy bond that would be distributed in the following way:
- $100 million for alternative energy;
- $50 million for solar power installation rebates;
- $50 million for energy efficiency;
- $25 million for natural gas distribution line development.
Another $10 million of severance tax revenue would go to the Department of Environmental Protection to beef up oversight of the gas drilling industry. DEP’s entire budget would get an $18.8 million increase.
The Department of Conservation and Natural Resources budget would increase by $8.3 million. Over the last several years, DCNR’s budget has been funded almost entirely from royalties from natural gas drilling on public land. The proposed budget would begin to reverse that dependence by increasing the amount provided from the General Fund by $20 million.
A total of $41.7 million would be available through the Growing Greener Program which provides funding for watershed protection and restoration, parks and forest rehabilitation and community conservation – an increase of $1.16 million. The Keystone Parks, Recreation and Conservation Fund would get $51 million, an increase of $2.6 million, for local recreation projects, open space conservation and parks and forest rehabilitation.
The House Committee on Education is considering two bills that could change how student performance is measured in public education:
- House Bill 168 (Rep. Tobash, R-Schuylkill) would decrease the number of Keystone Exams from 10 subject areas to three — Algebra I, literature, and biology — and would prevent the state from requiring high school seniors to pass a standardized state exam to graduate.
- House Bill 177 (Rep. Grove, R-York) would establish the Academic Standards Commission to review current core standards and requirements and make recommendations to improve or even replace the current system.
Several people testified before the committee, representing various viewpoints -- from business leaders and school board members to educators. They disagreed on the best way to measure proficiency and help students improve.
The speakers testifying largely split into two groups: those favoring state standardized testing, including the Business Council and the State Board of Education; and those opposed to it, including the Pennsylvania School Boards Association (PSBA), the Pennsylvania Association of School Administrators (PASA), and the Pennsylvania State Education Association (PSEA), all representing officials and employees responsible for education at the local level.
H.B. 177 drew the support of two of the three local educator groups. PASA supported it with “strong caution” against changing state standards again, and PSBA supported it to help increase public review of state standards. The major point of contention was H.B. 168 and state standardized testing in general.
Those in favor of state standardized testing and exit exams believe these methods are the best way to ensure that graduates are prepared for postsecondary education and can earn a good living. However, according to the PSBA, there is no proof that state standardized exams or graduation requirements accomplish that.
The PSBA highlighted research that showed high-stakes standardized testing:
- Failed to prepare students for either college or career success. Testing does not increase college enrollment nor is it linked to better employment or higher wages.
- Increased dropout rates. Exit exams increased the dropout rate of 12th-graders by 11 percent; for vulnerable students it is even higher (their graduation rate dropped by two entire percentage points).
- Whittled down the curriculum. Teaching to the test narrows the curriculum, resulting in whole subjects and extracurricular activities being dropped. Skills that cannot be tested but remain important in college and beyond — such as writing research papers, public speaking, or conducting laboratory experiments — are also dropped. This is especially true for low-income students.
Furthermore, standardized testing does not measure school or teacher effectiveness. The Center for Evaluation and Educational Policy Analysis (CEEPA) finds that School Performance Profile (SPP) scores, which are based on state standardized exams, do not “accurately identify school effectiveness” nor should they be used to evaluate teachers. Instead, they’re strongly linked to the socioeconomic background of the students and the school district—something beyond teacher and district control. To begin to see how effective schools and teachers actually are, SPP scores would have to be adjusted for these socioeconomic factors. Even then, comparison should be done with caution.
According to the PSEA, legislators must focus on socioeconomic factors to improve public education for all. The concerns raised by local educators echoed what several New York State Teachers of the Year recently wrote in a letter to Governor Cuomo:
“Merit pay, charter schools and increased scrutiny of teachers won’t work because they fundamentally misdiagnose the problem. It’s not that teachers or schools are horrible. Rather, the problem is that students with an achievement gap also have an income gap, a health-care gap, a housing gap, a family gap and a safety gap, just to name a few. If we truly want to improve educational outcomes, these are the real issues that must be addressed.”
Florida Gov. Rick Scott is in Philadelphia today and tomorrow peddling the attractions of the Sunshine State to Pennsylvania businesses. On this frigid February day I'll give him the warmer weather.
But that's about all I'll concede.
You see Gov. Scott is trying to tell Pennsylvania businesses that their taxes would be lower in Florida. But they wouldn't. To be sure, Pennsylvania has that famous sore thumb 9.99 percent corporate net income tax (which, by the way, few corporations actually pay). But when you consider all business taxes, Pennsylvania businesses pay less than Florida's (as a share of Gross State Product and as a share of all taxes paid). For more detail and sources, see our memo to the media distributed earlier today.
Gov. Scott is also trumpeting a job creation approach that doesn't work. Business-census data show that no state gets a meaningful number of jobs by stealing them from other states. Instead, virtually all job growth comes from the expansion of existing businesses and the creation of new startups in state. Good Jobs First, the D.C.-based business subsidy accountability clearinghouse, has done a series of studies on this, including this one funded by the Heinz Endowments on which KRC partnered.
While job piracy doesn't work, it does waste taxpayer resources on ineffective tax breaks and subsidies. This deprives states, as a group, of the resources they need to invest in the foundation of a strong economy -- education, skills, infrastructure and innovation.
Business leader Doug Neidich makes some of the same points in his Philadelphia Daily News piece on Scott's visit, published today.
Neidich, CEO of GreenWorks LLC, in Harrisburg, also points out that Scott is fact-challenged on Pennsylvania vs. Florida business taxes, and has faced a barrage of criticism for his refusal to accept climate science, even as The National Geographic calls Miami one of the “most vulnerable” coastal cities to rising seas.
Neidich offers a possible explanation for why Scott flew north into the bitter cold: he faces what Salon recently described as a “corruption spiral” back home.
Responding to overwhelming public support for enacting a severance tax on natural gas production, Governor Wolf and several members of the General Assembly have released severance tax proposals in 2015. Actual production results from 2014 show that these plans would generate hundreds of millions of dollars in funding for schools, health care, environmental protection, and other critical needs.
Newly released gas production figures confirm that Pennsylvania is a natural gas production giant – number two in the country following only Texas. Conservatively, the natural gas produced in Pennsylvania had a market value of $13.9 billion in 2015. Yet Pennsylvania remains the only major oil- and gas-producing state without a severance tax.
Growth in both the number of wells and amount of production was strong in the second half of 2014, despite recent low prices. In October 2014, gas insiders said Marcellus operators would still make money even if gas prices remain low in the long term.
Source. Pennsylvania Department of Environmental Protection
This brief examines how much several of the new severance tax proposals would have raised had they been in place in 2014 (using a natural gas price of $3.49 per MCF - $1 less than the Henry Hub price).
Many signs point to continued increases in natural gas production. The numbers of permits issued and wells drilled increased from 2013 to 2014. Infrastructure and demand constraints are also resolving. The industry is developing additional pipeline capacity. Power plants in the region are switching from coal to natural gas, and a natural gas foreign export facility is opening in 2017. Increases in natural gas prices will only fuel more activity.
Gas production values in 2014 show how much revenue Pennsylvania continues to leave on the table by failing to enact a severance tax. As lawmakers and the governor negotiate the 2015-16 budget, a severance tax should be part of the solution.
A report by UCLA’s Civil Rights Project shows that racial and economic class segregation continue to worsen in Pennsylvania’s public schools, with low-income minority children bearing the brunt of limited educational opportunities. As minority and low-income children make up an increasing share of public school children in the state, this new era of double segregation is threatening their education and our future.
Fifty years ago, research found that the two most powerful predictors of student achievement are first, the socioeconomic status of a child’s family, and second, the socioeconomic status of a child’s classmates. The UCLA researchers found that over the past two decades, Pennsylvania has seen the number of intensely segregated schools—those in which more than 90% of students are minorities—more than double. Furthermore, there is near-total overlap between race and class as 85% of children attending these schools are also low-income. This creates a one-two punch for these students, decreasing their odds at succeeding academically.
Across Pennsylvania, including Philadelphia and Pittsburgh, we see a rise in racial and class isolation, even as the state’s student population becomes more diverse. UCLA found that from 1989-2010 the share of Latino students tripled, and the share of Asian students doubled across the state.
Despite Pennsylvania school children being 72% white in 2010-11:
- The typical black student attended a school that was 30% white.
- The average Latino student attended a school that was 39% white.
- The typical white student attended a school that was 85% white.
When you see high levels of racial and class segregation, it shouldn’t be surprising to see achievement gaps show up along racial and class lines.
Figure 1: Pittsburgh Post-Gazette Analysis
However, there is also research by the Century Foundation that shows that when low-income children attend low-poverty schools, they help close the achievement gap. Low-income fourth graders who attend low-poverty schools end up pulling ahead of low-income students in high-poverty schools in math—by two years. Moreover, RAND looked at the affordable housing policies of Montgomery County, Maryland, and found that desegregating schools is better at improving the academic achievement of low-income students than increasing funding of high-poverty schools.
Beyond Maryland, other counties and cities are looking at how to break down racial and class segregation. Pennsylvania could gain from fighting segregation, too. To continue the status quo jeopardizes the educational opportunities of an increasing number of our children. A state that doesn’t develop its human capital will be left behind economically.
Yesterday, the Wolf administration announced that it is changing the state's course on Medicaid expansion. Under Governor Corbett, Pennsylvania was to have a Medicaid-light expansion, which expanded coverage for low-income folks, but through private insurers.
Governor Wolf's administration is scrapping this proposal and shifting people who were receiving private coverage to public coverage. This move is supposed to make the coverage options more streamlined and the process less complex for folks covered under the plan.
You can find some frequently asked questions about the change here.
The 2014-15 budget already incorporated a number of the state savings that would have been reaped by a Medicaid expansion, so it isn't clear if this will have a fiscal impact on the current budget. More details on what it means, financially, for the state in 2015-16 will likely be included in the Governor's budget proposal coming out on March 3.
We will keep you informed as we find out more.
Enacting a severance tax on natural gas would raise much needed funding for education, environmental, and other critical services and help close the projected $2 billion budget shortfall in the 2015-16 budget. With support from Governor Wolf and many legislators on both sides of the aisle, 2015 could be the year when Pennsylvania finally enacts a severance tax on the withdrawal of this valuable one-time natural resource.
Even though the new legislative session is only a month old, lawmakers have already come forward with several natural gas severance tax proposals. Here is a brief look at the some of the plans announced so far (in no particular order).
Uses of Funding
Details likely next month as part of budget proposal
All proceeds go to school employee pension system to pay down pension debt (unfunded liability)
Tax is on top of Act 13 impact fee
Not yet assigned
40% to basic education, 35% to pension debt,
15% to human services,
10% for environment program funding
Tax is on top of Act 13 impact fee – making total effective tax rate approximately 5%
Distributed to school districts in same ratio as basic education funding
Drillers receive dollar-for-dollar credit against tax for impact fee payments
Not yet assigned
$100 million per year for Growing Greener, rest split 60% for public schools, 40% for pension debt
Not yet assigned
Reintroduction of SB 1349 from last legislative session
Why all the interest in a severance tax?
Pennsylvania is now the second largest natural gas producing state in the U.S., but has seen little in growth in the tax revenue from this increased economic activity. Other large oil and gas producing states (Texas and North Dakota, in particular) have seen their state revenues boom due to increased severance tax collections.
Since 2012, Pennsylvania has had an impact fee, but it equates to a tax rate of less than 2% of the value of natural gas produced and little of it is used to fund basic statewide needs.
Impact fee collections totaled $226 million last year. Communities that host shale wells (counties and municipalities, but not schools) received 60% of these collections and are permitted to use the funds for a wide array of uses. Impacts from other oil and gas activities – such as pipelines and processing facilities – are not included in the impact fee.
Due to a 2002 Pennsylvania Supreme Court ruling, oil and natural gas deposits are not subject to local property taxes – unlike coal, gravel, and other mineral deposits.
Neighboring West Virginia has a 5% severance tax that largely goes to its General Fund and a $0.47 per thousand cubic feet (MCF) tax that is used to pay off workers’ compensation fund debt. Natural gas deposits are subject to property tax in West Virginia, so production increases property tax payments to local governments – counties, municipalities, and schools.
Many agree that Pennsylvania should ask more from drillers. A well-designed severance tax, along with strong protections for our health and environment, would be a long-awaited step in the right direction.
General Fund revenue collections exceeded revenue targets by $90 million in January, pushing the fiscal year-to-date revenue surplus to $360 million, or 2.3%. January marks the sixth straight month where tax collections exceeded the monthly targets.
Collections this fiscal year are $1.05 billion higher than at this point last year. Roughly one-third of this increase from last year is due to increased transfers from other funds and other non-tax collections in 2014-15. Tax collections are $707 million higher this year, or 4.9%, a general signal of an improving economy.
While this all sounds like good news, January’s results are more lackluster than they initially appear. Total revenues exceeded the January target due largely to $80 million in liquor store profits finally being transferred to the General Fund (the budget plan expected these profits back in September).
Of the major taxes, only sales and corporate net income taxes exceeded estimate in January. Many of the other major taxes – personal income, inheritance, realty transfer, and cigarette taxes fell short in January. So far, these shortfalls do not appear to be a pattern.
Corporate tax collections could be falling from last year’s levels in coming months – due to the capital stock and franchise tax rate cuts in 2012, 2013, 2014, and yet again in 2015. These repeated cuts contribute to the state’s funding gap for next fiscal year, which is $2 billion and rising.
Across the state, public school enrollment continued its long, downward trend with a 2.9% decrease since 2007-08. This isn’t surprising when you realize that Pennsylvania has been a low population-growth state for 30-40 years. Of all the states that had any positive population growth in 2013, Pennsylvania came in dead last with the addition of only 9,326 people. We also have one of the oldest populations. The 2010 Census showed that among states Pennsylvania had the 4th highest percentage of its population over age 65 (15.4%), and the 3rd highest percentage of its population over age 85 (2.5%).
On the regional level, we see some differences in how this low growth has affected public school enrollment. While all regions have experienced a net loss of students since 2007-08, some have fared worse than others:
- Regions 4 and 8, in the northeastern and north central parts of the state, had the highest losses, 7% and 8.5%, respectively.
- Only one region had losses of less than 2%: Region 1, in the southeastern corner, saw losses of 1.1%.
At the county level you see that:
he The bottom five counties for student enrollment all had losses greater than 15%:
- Cameron: 23.4%
- Forest: 15.7%
- Monroe: 15.6%
- Pike: 16.2%
- Susquehanna: 15.1%
· Only three counties gained students:
- Chester (6.5%)
- Montgomery (1.0%)
- York (0.5%)
The losses across the state in public school enrollment reflect the reality that fewer people are moving to or remaining in Pennsylvania, and the population is aging. Because people generally move to where the jobs are, and we need a younger and educated work force to provide for our elderly, strengthening our economy must be a top priority. Providing the funding necessary to ensure a quality public education will help our state develop, attract and retain talent. Restoring funding to our public schools will lay the cornerstone of a strong economy with ripple effects far beyond the classroom.
You can read more about public school enrollment on the Pennsylvania Budget & Policy Center's Education Facts webpage.