Third and State
For the education data geeks out there (admit it, you're probably one) here is data comparing new classroom funding (in budget geek speak that's the basic education subsidy plus the ready to learn block grant) by school district as proposed under the bi-partisan budget framework versus the same funding under the final budget for 2015-16.
For those of you who have already blocked out the last four months of education policy back-and-forth, the bi-partisan budget framework proposed increasing classroom funding in 2015-16 by $377 million. What finally became law only boosted education funding by $202 million.
The excel file that you can download here gives you a table of funding amounts by school district. It also lets you build your own graph like the one below for your school district, and finally presents our graphical analysis of the changes in funding after breaking down school districts by poverty status (new funding by poverty / cuts remaining by poverty).
The resolution of the 2016-17 budget should be oodles of fun now go vote!
April 22, 2016
The Insider News is a weekly look at the work of the Keystone Research Center and the Pennsylvania Budget and Policy Center.
20th Anniversary Conference
Are you registered yet for KRC’s 20th Anniversary Conference? It's just around the corner — June 8-9 — and it's going to be amazing. We'll celebrate 20 years of progressive economic activism and kick off KRC’s next decade of collaboration with statewide and local partners to achieve a Pennsylvania economy that works for all. Speakers include Saru Jayaraman, Restaurant Opportunity Centers United, and Carmen Rojas, The Workers Lab. Plus two dozen interactive workshops and hundreds of your friends and colleagues.
Join us for the conference — and think about becoming a sponsor. There are lots of sponsorship and advertising opportunities, big and small. Check them out here orcontact Stephanie Frank for more information.
Space is limited, so register today!
Last week, we told you about the launch of the Pennsylvania's Choice campaign. A diverse collection of organizations from across the state, including education advocates, community service organizations, faith-based groups, environmental groups and labor organizations have come together to bring attention to the devastating consequences of budget cuts across the commonwealth and to advocate for a Pennsylvania budget that best serves the people.
Since last week, we've added new member organizations and held planning meetings with organizers in 31 districts across the state.
One ask — if you haven't already done so, please sign up for updates and information by clicking here.
This is the best way for you to stay informed about campaign activities and opportunities to engage. Please sign up!
This Week's PBPC Podcast
On this week's podcast, we welcome SEIU 668 President Tom Herman to talk about how budget uncertainty affects his members across the state, and why SEIU 668 felt it was so important to join the Pennsylvania's Choice budget campaign.
On Monday, May 2 the Campaign for Fair Education Funding along with parents, students, teachers, and school and community leaders from across the state will rally for fair education funding at the state Capitol in Harrisburg.
WHO: The Campaign for Fair Education Funding
WHAT: Rally for Fair Education Funding
WHERE: The state Capitol, Harrisburg
WHEN: Monday, May 2 (12:30 p.m. press conference in the Main Rotunda)
WHY: There is no more pressing issue facing lawmakers than fixing Pennsylvania's broken public school funding system
Want to join? Fill out this form and someone from the Campaign will be in touch with you!
KRC/PBPC In The News
By Marc Stier - The sugary-drink tax proposed by Mayor Kenney, also known as the "soda tax," is controversial because it takes a greater share of the income from poor families than rich ones. And since we at the Pennsylvania Budget and Policy Center are fundamentally committed to economic justice, we are always inclined to be suspicious of taxes that do that.
PBPC Director Marc Stier appeared on PCN this week to talk about the budget and PBPC's recent paper about options for new revenue. Video of the interview is behind a paywall, but available on the PNC Select site.
According to John Dodds, the Keystone Research Center has estimated that the increase in wages would generate $121.5 million though income and sales taxes.
“We can help better the lives of 1.2 million low-wage workers who have gone without a state increase in the minimum wage since 2007,” said Dodds, who believes Republican leadership is blocking legislation and preventing a vote on the issue.
Marc Stier, Director of the Pennsylvania Budget and Policy Center, discusses the Pennsylvania Choice Campaign and why telling stories about the effects of budget cuts can move the needle in Harrisburg.
Today is April 15, also known as "4-15."
In 300 cities in 40 countries today fast food workers are driving home the point that "McJobscost us all." Pennsylvania workers in multiple service industries are now very active in the Fight for $15.
For example, nearly 5,00 nursing home workers at 42 nursing facilities in Pennsylvania recently achieved contracts that lift their wages to $15 per hour over time. KRC reports released two days before "4-15" in 2015 and on November 9 made the case for this increase.
Just a couple of weeks ago, UPMC in Pittsburgh announced it will increase wages to $15 per hour as noted in this KRC statement and this Pittsburgh Post-Gazette column quoting KRC.
Airport workers in Philadelphia, fast-food workers, security guards and janitors have also been active and achieving victories in the Pennsylvania Fight for $15...with organizing efforts building in home care and child care.
Check out this graphic (also copied below) from the Center for American Progress, which explains how important the "and a union" part of the phrase "Fight for $15 and a union is." You see, $15 per hour in the near term would be a massive gain that drastically expands the number of living-wage jobs. But "and a union" — unions that once again represent at least 35% of the workforce anchored service industries that can't relocate — would make tens of millions of McJobs part of the middle class permanently.
Hats off to the Fight for $15 workers in Pennsylvania and across the country for helping to save America from itself and lighting the fire that eliminate the scourge of inequality from our job market, or political system, our communities, and our schools.
Over the past five years, Harrisburg has mastered the art of pitting school districts, parents, and students against each other in order to draw attention away from the damage their policies and the lack of adequate state education funding have inflicted on children, schools, and communities throughout the Commonwealth.
In the 2015-2016 budget, lawmakers tossed out a handful of crumbs in new state dollars to school districts desperate for state funding. They then proceeded to encourage school districts and parents to fight over these crumbs by telling Pennsylvanians that there would be winners and losers in the 2015-2016 budget, depending on how this new money was distributed.
Creating a school funding Hunger Games and manipulating schools districts and parents to fight against each other for crumbs has been a brilliant political move for lawmakers who don’t support funding education. So many school districts and parents have been focused on who gets more and who gets less, that most have failed to notice that every single school district in Pennsylvania is a loser with the 2015-2016 budget, no matter how the funding is distributed.
Lawmakers who support the 2015-2016 budget have good reasons for wanting to distract people from closely examining this document.
The 2015-2016 budget, which is a creature of the Republican Party, contains a meager increase for schools that is less than 2%. This increase doesn’t pay for the state-mandated cost increases all school district will face, let alone allow school districts to begin rebuilding their schools after years of deep cuts in opportunities for children.
This budget fails to address Pennsylvania’s charter school law, which Auditor General Eugene DePasquale recently called, “the worst in the United States.” This budget continues to send about $200 million in state funding intended for children with special needs to charter schools to be used to pay their operating expenses. This budget proposes to pay for construction reimbursement payments owed to school districts by issuing $2.5 billion in bonds and incurring at least $1.5 BILLION in interest payments and bank fees. Lawmakers have not shared how they plan to pay off this substantial new debt.
Harrisburg’s 2015-2016 budget ensures that Pennsylvania will continue to have the shameful distinction of having the most inequitable school funding in the nation, where our poorest students receive the fewest opportunities. In fact, if lawmakers continue to provide this level of state funding increase in future budgets, they will ensure that children in preschool today will graduate from high school before the inequities in Pennsylvania’s school funding system are fixed.
While Harrisburg continues to haggle over how to distribute the crumbs in this state budget, it is time for Pennsylvanians who believe all children deserve a chance to get a quality education to stop fighting against each other in our districts and instead focus our attention on the Capitol. We must hold lawmakers accountable for the decisions they make that hurt our children and our schools and put an end to Harrisburg’s school funding Hunger Games.
This is a guest post from Susan Spicka, Director of Education Voters of Pennsylvania. It was originally posted at their blog here.
A diverse coalition of groups from across the state, including education advocates, community service organizations, faith-based groups, environmental groups and labor organizations launched the "Pennsylvania's Choice" campaign today to bring attention to the devastating consequences of budget cuts across the commonwealth and to advocate for a Pennsylvania budget that best serves the people.
If Pennsylvania continues to enact unbalanced state budgets, the commonwealth will run a deficit that grows every year. Without new tax revenues, Pennsylvania will not be able to maintain the needed funding for education, human services, the environment, or community and economic development.
"Pennsylvania's Choice" partners will be organizing in areas across the state, bringing together community members to make clear to elected officials that, if the state cannot secure new revenues, these communities will face devastating cutbacks to programs in these and other areas that are critical to Pennsylvanians every single day.
Utilizing earned media events, digital media and face-to-face meetings, the campaign will be highlighting stories of how budget cuts — and continued threats of additional budget cuts — are affecting Pennsylvanians from rural communities, to suburban towns to big cities.
Many of the partner organizations were in Harrisburg today for a kick-off press conference:
Marc Stier, Director of the Pennsylvania Budget and Policy Center explained the genesis of the campaign: “We’ve come together because it is time to face the reality of the fiscal cliff. We’ve come together because the time for budget balanced in name only is over. We’ve come together because we must avoid the devastating cuts that would be necessary to balance the budget without new revenues. We’ve come together because we know that it is possible to raise new revenues without putting the burden on Pennsylvania’s middle class. And while we call the campaign ‘Pennsylvania’s Choice,’ we’ve come together because we know that the truth is we really have no choice. We must deal with the fiscal crisis honestly and transparently. Or we will all suffer terribly.”
“The Arc of Pennsylvania supports a budget which protects and enhances the right of people with disabilities to live, learn, work, and thrive in their communities,” said Ashlinn Masland-Sarani, Policy and Development Director for The Arc of Pennsylvania. “The Arc of PA and its members believe that providing community access to people with disabilities and supporting their families is a core responsibility of our state government.”
"The people of Pennsylvania have a right to clean air, pure water, and the preservation of the environment - that right is compromised if the lead agency charged with upholding it can't even afford to fill necessary vacant positions. The Department of Environmental Protection has been systematically underfunded for years, and we cannot allow that to happen again in 2016,” said Sierra Club - Pennsylvania Director Joanne Kilgour.
"We can no longer afford to continue down the same path of papering over the problem with accounting gimmicks unsustainable revenues and empty rhetoric. Our children cannot afford it. Our communities cannot afford it. Our Commonwealth cannot afford it,” said JoAnne Sessa, Secretary-Treasurer, Service Employees International Union (SEIU) Local 668.
“The 2015-2016 budget embodies the absolute failure of our state government both to meet the needs of Pennsylvania's public school students and to pay the obligations the Commonwealth owes to school districts in construction reimbursement payments,” said Susan Spicka, Director of Education Voters of Pennsylvania. “With this budget many schools will experience a substantial decrease in money available to support academic programs and services for students and communities will shoulder significant additional costs, as the state has shifted a considerable financial obligation onto the shoulders of local taxpayers. Education Voters of PA is joining together with the diverse coalition that makes up the PA’s Choice campaign so that we can work together to ensure that the travesty of the 2015-2016 budget does not repeat itself.”
Learn more about the campaign at www.pachoice.org.
Organizations Supporting “Pennsylvania’s Choice”
The Arc of Pennsylvania
Bucks County Women’s Advocacy Coalition
Community Action Committee of the Lehigh Valley
Consumer Health Coalition
Education Rights Network
Education Voters of Pennsylvania
Great Public Schools Pittsburgh
Greater Philadelphia Coalition Against Hunger
Mental Health Association of Northwestern Pennsylvania
Mental Health Association in Pennsylvania
Mental Health Association of Southeastern Pennsylvania
Pennsylvania Budget and Policy Center
Pennsylvania Council of Churches
Pennsylvania Food Banks
Pennsylvania Health Access Network
Pennsylvania Mental Health Consumers’ Association
Pennsylvania State Education Association
Philadelphia Federation of Teachers
Pittsburgh Federation of Teachers
Public Citizens for Children and Youth
SEIU Healthcare Pennsylvania
Service Employees International Union (SEIU) Local 668
Sierra Club - Pennsylvania Chapter
Unitarian-Universalist Pennsylvania Legislative Advocacy Network (UUPLAN)
It appears that some elements in the Republican Party of Pennsylvania have one and only one goal – to not raise taxes.
It doesn’t matter if spending in our classrooms, and especially in the classrooms in our lowest income communities, have not recovered from the Corbett cuts of 2011-12; they won’t raise taxes.
It doesn’t matter if waiting lists for mental health and intellectual disability services grow; they won’t raise taxes.
It doesn’t matter if tuition keeps rising for our colleges and universities.
It doesn’t matter if the budget is “balanced” with smoke and mirrors; they won’t raise taxes.
It doesn’t matter if the ratings agencies can see through the smoke and mirrors and plan to downgrade our credit again; they won’t raise taxes.
And now that all the special funds have been raided, all the bills have been put off to the following year, and all the tricks and gimmicks have been used, and we find ourselves facing a fiscal cliff of almost $2 billion dollars; they still won’t raise taxes.
Suspended as they are, in mid-air over Pennsylvania’s fiscal cliff, they have to do, or at least say, something. And so they say we must balance the budget by cutting it, starting with waste, fraud, and abuse.
If that is their position, then it is time, as we used to say on the playgrounds of my youth, for them to put up or shut up
It’s time for them to Name The Cuts.
Name the line items you are going to cut.
Name the $1.8 billion of waste, fraud, and abuse to be found.
If you can’t do that – and no one who is both knowledgeable and honest will say that there is anywhere close to $1.8 billion of waste, fraud, and abuse in the current budget – tell us what programs you will reduce and eliminate.
Don’t tell us about “across the board cuts.” That’s just one more way to duck responsibility for the consequences of your inaction. Name them.
Name the cuts in programs that serve seniors needed to balance the budget
Name the cuts in school funding needed to balance the budget
Name the cuts in programs that serve those with mental illnesses needed to balance the budget.
Name the cuts in programs that serve those with intellectual disabilities needed to balance the budget.
Name the cuts in higher education funding or financial aid to students needed to balance the budget.
Stop the games. Stop the dissembling. Stop the pretense.
Name the cuts. If you really think we can balance this budget just with cuts, without devastating education and human services in Pennsylvania, show us how.
And if you can’t, then let’s start talking about how to raise taxes fairly.
The following is a guest post from Susan Spicka, Director of Education Voters of Pennsylvania. It was originally posted at their blog here.
In the 2015-2016 Republican budget, many members of the General Assembly failed to deliver state funding owed to school districts and demonstrated that they are unwilling to pass a responsible budget that pays for the state’s obligations to public schools and meets the needs of Pennsylvania’s children.
In the 2015-2016 budget, lawmakers eliminated $305 million in construction reimbursement payments that the state was and remains obligated to make to PA’s school districts through the Planning and Construction Workbook (PlanCon) program. PlanCon is a longstanding program that provides school districts with partial reimbursement for qualified new construction and renovation projects. School districts are obligated to make construction payments with or without state reimbursement from the PlanCon program. The loss of $305 million in state funding represents a substantial decrease in money available to support academic programs and services for students.Below are some answers to other questions about the 2015-2016 budget in regards to education funding: How does the Republican budget cut $75 million in state funding to K-12 schools?
The budget provides an increase of $150 million in Basic Education Funding (BEF), $50 million in the Ready to Learn grant (RTL), and $30 million in special education funding and eliminates -$305 million in construction reimbursement payments to school districts, resulting in a loss of -$75 million for schools.
How many school districts were counting on PlanCon construction reimbursements from the state this year?
The majority of school districts in PA were owed reimbursement for construction costs in the 2015-2016 budget. These reimbursements range from less than $20,000 in some districts to over $1 million in others, depending on the project.
The PlanCon reimbursement issue extends beyond schools that did not receive money they were owed and expecting in the 2015-2016 budget. In recent years, many construction projects have received approval for reimbursement payments, but the state has not begun making payments for these new approved projects. Instead, the legislature has placed recent construction projects in a “pipeline” and failed to make any payment at all to school districts for these obligations. PA is delinquent in more than $1.7 billion in reimbursements that are owed to schools in the “pipeline”.Did lawmakers propose to fund PlanCon in the Fiscal Code by issuing $2.5 billion in new debt?
Yes. In the absence of adequate funding in the budget to pay for the state’s PlanCon obligations, lawmakers proposed a scheme to fund construction reimbursements in the Fiscal Code by issuing $2.5 billion in bonds to raise money that would be used to pay for this obligation to school districts.Why did Governor Wolf veto the Fiscal Code bill?
Governor Wolf vetoed the Fiscal Code bill because, given Pennsylvania’s poor credit ratings and the negative outlook signaled by credit ratings agencies after the passage of the Republican budget, borrowing $2.5 billion would have been prohibitively expensive. The interest rates the Commonwealth would pay to borrow money right now would be unaffordably high.If PlanCon payments to school districts had been funded, would the state funding increase in the Republican budget be enough to meet the needs of Pennsylvania’s students?
Absolutely not. The General Assembly’s failure to deliver on what it owes school districts through the PlanCon program is just one example of the state’s failure to pay its share of education funding.
More than 25% of the $200 million increase in BEF and RTL funding will go to banks instead of children’s classrooms because lawmakers did not include reimbursements to school districts for the extraordinary interest payments and fees they have incurred as a result of the budget impasse that was caused by the state government.
The $150 million that is left after school districts pay bank fees and interest is a meager increase that fails to begin solving the state’s long-term school funding crisis, continues to underfund schools that educate the most vulnerable children in the Commonwealth, and ensures that Pennsylvania will maintain the dubious distinction of being the state with the most inequitable school funding system in the nation.Is Pennsylvania’s financial outlook/credit rating better now that the General Assembly passed a 2015-2016 budget?
No. Within hours of Governor Wolf announcing that he would not sign the Republican budget, three credit ratings agencies criticized the budget, signaling their continued negative outlook for the Commonwealth.
PNC stated, “We do not expect the budget to come close to solving Pennsylvania’s fiscal pressures, including its structural budget gap, which is sizeable and growing. Without broader policy changes, Pennsylvania’s structural deficit will worsen.”
Moody’s wrote, “The approved budget relies on nearly $1 billion of one-time measures to balance the budget, does not include a pension contribution at the fully actuarially required level and casts no light on the government’s ability to reach compromise on its long-term fiscal challenges.What needs to happen now to get school funding back on track and Pennsylvania’s fiscal house in order?
Governor Wolf and the legislature must immediately begin working on the 2016-2017 budget and negotiating in good faith and in the best interests of our children so that the travesty of the 2015-2016 budget will not repeat itself.
Lawmakers must support a responsible, balanced 2016-2017 budget that:
- Raises reasonable new revenues to pay for the state’s obligations, closes the $2 billion structural deficit, and provides an increase of $400 million in school funding in the 2016-2017 budget; and
- Pays for PlanCon obligations to school districts either through new revenue in the budget that fully funds a line item or through issuing bonds that are available to PA at an affordable interest rate because lawmakers pass a responsible, balanced budget that triggers an upgrade in PA’s credit rating.
Lawmakers must dig deep and find the courage to make tough decisions and pass a responsible 2016-2017 budget. They must not pass another budget that fails to pay for the state’s obligations, hurts children, and ensures that students throughout the Commonwealth will endure yet another school year in underfunded schools that cannot provide them with the opportunities they need to be successful in life now and after they graduate.
An Explanation of Our Infographic, “Especially for Poor Districts, Drastic Corbett Education Cuts Remain”
So what difference does a budget actually make? Why should we care that we wound up with the Republican budget for this year (HB 1801), rather than the bi-partisan budget agreed to in December 2015 (SB 1073), let alone the budget Governor Wolf proposed in March 2015?
The difference for the education of our kids is found in this first figure above. The $846 million cut from classrooms in 2011-2012 has never fully been restored. And because more funding was cut and less funding restored in the districts that have a higher poverty than a lower poverty rate, state spending per student in those districts remains substantially behind what it was in 2010-11. We call the difference between what was spent per student in 2010-11 and what is spent today the “funding gap.”
The bi-partisan budget – the one agreed to by Governor Wolf and the leaders of the Democratic and Republicans caucuses in the state House and Senate in December – increased classroom spending by $377 million. It would have substantially reduced, but not closed, the remaining funding gap in the districts with the highest poverty rate, reducing it to $217 per student. The funding gap in the schools with the lowest poverty rate would be reduced to $29.
The Republican budget appropriated $177 million less than the the bi-partisan budget for Basic Education Funding, the Ready to Learn program, and Special Education. And, their fiscal code bill would have distributed education funding in a way that provided far less to schools in high poverty districts, even though those schools were hardest hit by the Corbett cuts. Thus they would have left the funding gap for the schools with the highest poverty rate at $441. The funding gap for the lowest poverty schools would be $56.
And note that the disparity in reducing the state funding gap comes on top of what was already one of the most unequal distributions of total education spending in the entire country. As we’ve pointed out recently, schools in low-poverty districts in Pennsylvania spend 33% more than those in high-poverty districts. (And, of course, these figures do not account for the impact of inflation on reducing the value of state funding.)
So what difference does a budget make? It’s the difference between providing all of our kids an adequate education or drastically short-changing kids, especially those who live in high-poverty areas. And that makes a difference. For the states that fund their schools equally have the best results.
The inequality in the education we give to rich and poor kids in Pennsylvania has long been morally indefensible. And the inadequate Republican budget we are now living under in 2015-16 does little to improve or relieve it. We must do better in the budget for 2016-17 fiscal year.
Some Technical Details
1. For those who want the whole picture, figure 2, provides the rest of the story. We have divided the 500 school districts in Pennsylvania into four groups of 125 school districts each, based on the percentage of children under 18 living below the poverty line. To make figure 1 easier to grasp, we excluded the middle two quartiles. They can be found in figure 2.
2. We also excluded Governor Wolf’s original budget proposal for 2015-16. It is included in figure 2. The Governor’s proposal was even better than the bi-partisan budget. Even it did not completely close the classroom funding gap. But the Governor explicitly said that his proposal for 2015-16 was the first part of a multi-year plan to create adequate and equitable funding for our schools.
3. There we explain in more detail We also want to be clear about exactly what we are talking about when we say “classroom funding.” We are not referring to overall levels of spending on education at the PreK-12 level. The total level of spending can be useful for some purposes but it can also be misleading. The state spends a great deal on education that is important but does not find its way directly into the classroom. For example, while funding for public libraries and school transportation is important, money spent for these purposes does not directly affect what happens in the classroom. That is also true, in a different way, for teacher’s pensions. Good pensions help schools attract and retain excellent teachers. But the recent rise in spending on teacher’s pension does not reflect a new commitment to improving the quality of teachers in our schools.
To compensate for these and other vagaries in PreK-12 education funding, PBPC has developed a narrower definition of the state’s commitment to education which we call “classroom funding.” It includes the basic education subsidy for each school district plus formula enhancements, charter reimbursements, accountability block grants, and, when looking back at previous years, funding for schools that came from the American Recovery and Reinvestment Act (ARRA). (see footnote)
4. Finally, for reasons we’ve discussed elsewhere, we should point out that the Governor, rightly, vetoed the most recent fiscal code bill, which used the new funding formula to distribute the new state funding for education included in the Republican budget. We support the new funding formula. But as we’ve pointed out before, we believe that the only way to be fair to all schools is to apply the formula for new school funding after the funding gap from 2010-11 is restored. The Governor has not announced how he will distribute the new funding included in the Republican budget. We hope that the Governor distributes more of this money to the high-poverty schools that have a large funding gap, as he did with the funding he did not line-item veto in the appropriation bill adopted in December, HB 1460.
For more details about recent changes in state funding for education and the different 2015-16 budget proposals, that put forward by Governor Wolf, by the Republicans and as a result of the bi-partisan negotiations, see our recent paper Understanding the Numbers in a Budget Crisis.
For more detail on classroom funding and the data sources necessary to estimate classroom funding each year, see Waslala Miranda, Undermining Educational Opportunity: Pennsylvania’s Unequal Restoration of School Funding, Pennsylvania Budget and Policy Center, October 21, 2015, online at https://pennbpc.org/sites/pennbpc.org/files/finaledcutsbrief.pdf
As most readers of this blog know, Pennsylvania just concluded a 2015-16 budget process nine months late because the legislative majority was unwilling to raise enough revenue to begin funding schools more adequately and equitably.
While unwilling to find another roughly $200 million dollars to fund schools, however, the legislature last week passed, and sent to the Governor’s Desk, a bill (HB 1326) that could increase privatization of water utilities in Pennsylvania, raising water rates for hundreds of thousands of Pennsylvania households. The bill could end up being a backdoor tax increase that ultimately costs taxpayers several hundred million dollars per year.
Maybe the difference here is that the additional money the Governor wanted would have gone mostly to lower- and moderate-income rural and urban schools that experienced the deepest school funding cuts in 2011-12. By contrast, the hidden tax increase from higher water rates at private utilities would go mostly to fatten the bottom lines of private, for-profit water companies such as Aqua America.
Undeserving poor and middle class; deserving rich. Get it?
Most of us haven’t heard about HB 1326 because we’ve been so focused on the drawn out budget battle. In addition, advocates for public water and wastewater systems had understood that the bill would not run this session. As a result of these factors – and, we assume, effective lobbying by the private water industry – the bill passed the Senate unanimously last week after having earlier passed the House 175-22.
Because HB 1326 has not been given the public scrutiny it should have been, we urge Gov. Wolf to veto it. If the bill is sent back to the legislature, the Independent Fiscal Office should conduct an analysis of the range of plausible costs of the bill to consumers, and the Department of Environment Protection should issue an analysis of potential impacts on the environment and smart growth.
Without getting too weedy, the bill could accelerate privatization of municipally owned water and wastewater utilities because it changes the regulations governing their sale price. As it stands, when a private company buys a municipal water or sewer system, it pays the “original cost” of the acquired utility, as depreciated over the years rather than the unregulated “fair market value” (FMV). If the public entities selling the utility don’t get as much money under the current “original cost” approach, they have less incentive to sell. There is an exception to “original cost” valuation now for small (3,300 customers or less) or “nonviable” utilities. In these cases, the PUC may already authorize any reasonable purchase price so long as rates will not “increase unreasonably.” (HB 1326 also includes another sweetener for private buyers because it allows them to defer improvements for up to four years.)
HB 1326 would make FMV pricing the rule rather than the exception. The bill also eliminates important consumer protection provisions that allow the PUC to review acquisitions and determine whether the value is reasonable and whether the merger provides a public benefit. The upshot of all this is that a shift to FMV pricing may make it much more enticing for municipalities to sell their publicly run water systems because they will be paid more. The Pennsylvania bill is based on a similar bill enacted in Illinois in 2013 with the backing of an Illinois free-market think tank.
How do we know that this bill might cost Pennsylvania consumers hundreds of millions of dollars per year? Here’s how.
According to the national non-profit Food and Water Watch in a February 2016 report, private water systems in Pennsylvania charge an average of 84 percent more than public systems per year, adding $323 to a typical household’s water bill. There are 4.8 million households in Pennsylvania. If HB 1326 led to 10 percent more of Pennsylvania’s households (480,000 households) being served by private water companies and paying $323 more per year each, the total cost to consumers would be about $155 million annually.
Interestingly, of the 18 individual states for which Food and Water Watch publish separate data (see Appendix A, pp. 12-13), Pennsylvania and West Virginia private utilities win the prize for the highest average annual water rates in the county – the only ones over $700 per year. The third place state (Illinois) is more than $100 lower per year at $586. Food and Water Watch also found that half of the top 10 most expensive water systems in the country are in Pennsylvania. This likely reflects the fact that PA already has very “investor friendly” laws and regulations for water companies. In fact, Janney Montgomery Scott, a financial services firm, ranks Pennsylvania as number one for its regulatory climate for private water utilities – Pennsylvania’s regulation are the “gold standard” (literally) for companies that want to hit their Return on Equity (ROE) targets (see p. 55 in this source).
The February 2016 Food and Water Watch report also shows that facilitating privatization of water and other utilities goes against the national trend of increasing public ownership. Since 2007, the number of people served by private water companies nationally has shrunk by 18 percent (8 million people). There are sound reasons to favor public ownership of the natural monopolies we call utilities: as well as accountability and affordability, these include more equitable and environmentally responsible service, and better jobs. In many parts of Pennsylvania, plentiful, high-quality water is also an economic development and quality of life asset – one that privatization threatens to undercut.
What we know after a little digging gives us pause about HB 1326 and leaves us with the following questions.
- Since private water and waste water service is working so well that it is shrinking nationally – despite the powerful corporate and ideological support it has – should Pennsylvania be going against the trend and encouraging more privatization?
- Should this significant regulatory change happen while legislators and advocates are focused elsewhere – and without adequate hearings, fact-finding and analysis of potential impacts?
- Doesn’t better regulation of water and wastewater utilities that saves consumers a few hundred million dollars a year qualify as reining in waste and abuse, which leading lawmakers now champion?
- If consumers spend a few hundred million dollars less on water and wastewater utilities might it not be a little easier for the state to adequately fund education?
In sum: a veto of HB 1326 by Gov. Wolf would give the legislature and stakeholders a chance for a do-over on a critical issue where it looks to us like Pennsylvania needs a do-over.
Listen to the extremist Republicans who are blocking a Pennsylvania budget deal and you might hear the echo of American revolutionaries standing up to King George.
The stakes seem to be beating back a Governor who seeks to drastically expand the size and scope of our state government.
Need some examples?
- The Commonwealth Foundation calls for overthrowing the cycle of ever-increasing spending and taxation.
- Representative Russ Diamond, for whom even the Republican budget is too large, says that, “The running theme here seems to be that state governments should remain monoliths of scope.”
- Representative Scott Grove says, "It has always been about Wolf and his desire to increase the spending, size and scope of state government."
- And, Senator Scott Wagner seemed ready to commit tyrannicide when he told the Republican State Committee that “we had him down on the floor with our foot on his throat and we let him up. Next time, we won’t let him up.”
Putting aside the embarrassing tone of Senator Wagner, does any of this make sense? The short answer is “absolutely not.”
The standard way of measuring the size of government is to look at the share of Gross Domestic Product (GDP) taken by government spending and taxes. From 1994 to 2011, state government expenditures averaged 4.71% of the state GDP. It has been remarkably stable, ranging from 4.22% to 4.90%. The last four years of draconian cuts to public education and services by the Corbett administration saw spending fall to 4.38% of GDP.
So, far from growing inexorably, government was stable in Pennsylvania – at least until Governor Corbett’s radical, and extremely unpopular, reductions in spending.
Does Governor Wolf want to reverse direction and drastically expand the government as Republicans in Harrisburg say? Again, the answer is no.
His budget proposal for the current year would still leave state expenditures at 4.65% of GDP, below the twenty-year average. And spending under the bi-partisan budget framework, to which he and the Republican leaders agreed, is even lower at 4.57%. That figure not only splits the difference between the Governor’s plan and the Republican budget (4.49%), but is close to the average of the Corbett years.
Look at state employment and the results are the similar. Far from growing, state government employs 440 fewer people than in 1990, while non-government employment has grown by 664,300.
Does Governor Wolf propose to hire thousands of new government bureaucrats with new spending? The answer here, too, is no. The governor wants to send almost all of that money to the 500 local school districts across the state.
The truth is that the extremists in the Republican Party don’t want to stop the government from growing. They want to continue on the Tom Corbett path and shrink government more. The $1.8 billion structural deficit the state faces next year is, for them, an opportunity for more radical reductions in spending on education and human services.
This radical path not only has been rejected by Pennsylvanians, but it also ignores the experience of every advanced country, starting with our own.
The widely shared prosperity that characterized America for most of the twentieth century was created by a partnership between the public and private sectors. The entrepreneurial skill of business people and the innovations of technologists were necessary to our prosperity. But so were the public investments in a highly-educated workforce, a first class transportation and communication infrastructure, and a scientific and technological network second to none.
Spending on those public goods made our prosperity possible. It also had two other positive consequences. It created the opportunity that ensured that the whole community would benefit from the talents and energies of everyone, and it protected those among us who, through no fault of their own, suffered from physical, emotional or intellectual disabilities.
That’s what most people in Pennsylvania want, regardless of political affiliation. They don’t want an over-weaning, all-powerful government; they want a partnership between public and private sector, one that benefits all of us
And what do the extremist Republicans want? Only, it seems, to cut taxes. The Republicans say tax cuts increase our prosperity. But $2.4 billion a year in corporate tax cuts gave us a structural deficit, not economic growth. Only the rich and corporations benefited.
No one wants a Leviathan in Pennsylvania – an overwhelming, all-consuming government. But most of us want the kind of government that once brought everyone opportunity and prosperity. That’s the common sense view Pennsylvanians voted for in 2014 that the extremist Republicans are rejecting today.
The Inquirer’s Joseph DiStefano reported last week that Standard and Poor’s is threatening to cut Pennsylvania’s credit rating due to the states failure to address the structural budget deficit. Ratings on debt issued by Pennsylvania have been downgraded five times in the last four years and every downgrade costs the commonwealth tens of millions of dollars on each billion dollars of borrowing.
Indeed DiStefano reports that, “Pennsylvania taxpayers had to pay investors an extra 0.52 percent interest to sell bonds as of last month, more than any state except New Jersey and Illinois, according to a report by PNC Financial Services Group.”
Spending more than we should to borrow money means spending less on making sure that every child in Pennsylvania gets access to a high quality public education.
What often gets lost in the discourse about future tax increases or spending cuts is the reality that the state has already made drastic cuts to public education and social services over the last few years, while still running up future deficits and we’ve seen the consequences. While many are content on pointing fingers at Governor Wolf for vetoing the GOP budget proposal in December, the reality is he, unlike GOP leadership in Harrisburg, is willing to address the hard truths about the state’s fiscal future.
S&P is confirming what Governor Wolf has been saying for months. The only remaining option for a sustainable budgetary environment in Pennsylvania is the consideration of reasonable revenue mechanisms. Now that it isn’t just their political opponents who are saying it, will the GOP leadership listen?
This week, Governor Tom Wolf announced that, through executive order, he would require Pennsylvania state workers under his jurisdiction and employees working on future state contracts to be paid at least $10.15 an hour.
Prior to his action, these workers making the minimum wage, many of whom who are heads of household, were often not making enough money to live above the poverty line. None of them were making enough money to have what economists call a living wage -- the wage rate required to meet minimum standards of living in a given area. In many places across the state, a living wage for workers with a family is well more than even the $10.15 an hour that this executive order raises wages to. You can see MIT's calculations for living wage by family by Pennsylvania county and metro area here.
We have a moral obligation to ensure those working in Pennsylvania are paid enough to make ends meet.
This week's executive order is just the first step. The minimum wage needs to increase for all workers in Pennsylvania. And that’s true not only because it helps working people, but also because it relieves pressure on Pennsylvania’s budget. People who make the minimum wage spend almost all they earn. Thus raising the minimum wage generates new economic activity. Keystone Research Center estimates that a higher minimum wage will increase revenues from the Personal Income Tax by $45.6 million and the Sales Tax by $75.9 million. And it will also decrease state expenditures because many working people making the minimum wage will move from traditional Medicaid (which we call Medical Assistance in Pennsylvania) to the expanded Medicaid created by the Affordable Care Act. The federal government reimburses Pennsylvania for a bit less than half the cost of traditional Medicaid, but the reimbursement rate for expanded Medicaid is 90% or more. We estimate that raising the minimum wage for all Pennsylvanians will reduce state spending by $104 million.
At a time when we face a structural deficit of about $2 billion, we can’t afford to pass up this opportunity to reduce it by $225 million simply by raising the minimum wage to $10.10.
But beyond that, we can't look past the moral obligation we have, as a Commonwealth, to make sure that working Pennsylvanians are able to support themselves and their families. Raising the minimum wage is the right thing to do. And the time is now.
The majority of Pennsylvanians believe that every child in Pennsylvania deserves a high quality education. We believe that the best education for everyone is central to creating economic opportunity for individuals. And we believe that economic growth is only possible with a highly educated work force. And we know both of these aims can only be attained if we provide adequate and equitable funding to each of our schools.
So when legislators or advocates on the right challenge the demand for adequate and equatibale funding we sometimes find it hard to understand what they want. How little funding are they prepared to give students in poor communities Pennsylvania before they will say it’s too low? How low will they go?
A recent op-ed by the Commonwealth Foundation gives us the beginning of an answer. And it's extremely disturbing.
To judge by this piece, the opponents of increased funding for public education are OK with the schools attended by children in our poorest communities getting the level of funding per student, $9,387 found in schools attended by the children in the poorest communities in the average state. This places us just a bit below West Virginia, which spends $9,571 per student.
That may seem OK. We’re average. What’s wrong with that?
But go back and think about it. Opponents of increased education funding are saying, first, that it’s OK to have our extraordinary levels of intra-state inequality between poor and rich schools in Pennsylvania. The schools attended by kids in our poorest communities spend $9,387 per student while the schools attended by kids in our richest communities spend 33% more or $12,529.
Or, in other words, they are saying kids who live in poor school districts in Pennsylvania don’t deserve the same kind of education as kids in rich school districts.
Opponents of increased funding say this intra-state inequality is OK because kids in our poorest communities attend schools where the level of funding per student is about equal to the average found in schools in low income communities across America. As long as we are average, they are not troubled that the schools attended by the kids in low income communities in Massachusetts spend 46% more than we do or that those in New Jersey spend 82% more.
Students in Massachusetts and New Jersey do better on standardized tests than those in Pennsylvania. And one reason may be that in both states schools spend more in low-income communities, where students need more help, than they do in high-income communities, not drastically less as we do in Pennsylvania.
The fundamental unfairness in how we fund education is obvious. It’s wrong for kids who live in poor communities in Pennsylvania to get a second- or third-class education compared to those who live in rich communities here and poor and rich communities alike in nearby states.
Schools as good as the schools in the average poor community in America are not good enough for any of Pennsylvania’s children. And it is, frankly, morally reprehensible to say that it is.
Do we want kids in our low-income communities to have the kinds of opportunities and aspirations found in the worst schools in a state like West Virginia, or do we want them to have the opportunities found in the best schools in the states to which we usually compare ourselves? The answer is obvious. We want to give all of our children a top-notch education. We want them to have them the opportunity to make the best use of their talents—to go to a good college, secure a good job, and become active participants in the life of their community.
We should want this no matter where we live or whether we have children in school or not. All of us should want children in every Pennsylvania community, including low income ones, to get a first rate education. Those low income communities are everywhere in Pennsylvania, not just in our big cities, but in rural areas as well. It’s not just the children in low income communities who suffer when we don’t offer them a first rate education. If we want the businesses that pay the highest wages in Pennsylvania, we need to provide them with an educated work force. Our economy needs the talents of every child, no matter whether they grow up in a poor or rich community.
Pennsylvania’s inadequate support of education doesn’t just hurt children in low income communities. Interstate inequality in school funding in middle and high income communities is also high. The schools attended by children in our middle income communities are outspent by schools in middle income communities in Massachusetts by 14% and New Jersey by 35%. And even in the highest income communities, interstate inequality is evident. New Jersey spends 25% more than we do in those schools.
But it is in our low income communities that the brutal burden of the severe inequalities that afflict education in Pennsylvania are greatest. No decent, civilized state should allow those inequalities to persist. And it is truly disturbing that people who speak out on public policy are ready to sink so low as to defend this stark and appalling inequality in how we educate our children.
The following is a guest post from Susan Spicka, Director of Education Voters of Pennsylvania. It was originally posted at their blog here.
What is happening with the school funding lawsuit?
On November 10, 2014, six school districts, the Pennsylvania Association of Rural and Small Schools, the NAACP – PA State Conference, and families whose children attend under-funded and under-resourced schools filed a case in the Commonwealth Court asking the court to:
- Declare that the current system of funding our schools does not comply with the state constitution;
- Order the defendants to cease using a funding system that does not provide adequate funding where students can meet state standards and which discriminates against low wealth districts; and
- Order the defendants to create and maintain a constitutional school funding system that will enable all students to meet state academic standards and does not discriminate against low-wealth school district.
In April 2015, the Commonwealth Court decided to dismiss the case on the grounds that it presents a political question that cannot be addressed through the court system. In September 2015, the petitioners filed a brief asking the Supreme Court to send the case to a full trial. They contend that the Commonwealth Court erred in dismissing the lawsuit against legislative leaders and state education officials. The appeal is now fully briefed by all parties, and the high court is expected to hear argument in the case in 2016.
The Supreme Court will hear oral argument from both sides sometime later this year. After hearing the argument, the Supreme Court will decide whether or not to allow the school funding lawsuit to proceed to a full trial.
We most strongly believe that parents and students should have their day in court.
- Only if the case goes to a full trial will the plaintiffs have the opportunity to share with the court how state’s current irrational and inadequate funding system is hurting children throughout the state.
- Only if the case goes to a full trial will the court be able to enforce the constitution instead of leaving this most important duty up to the General Assembly, which has categorically failed to do its job.
For more details about the school funding lawsuit, please refer to the Updated Lawsuit FAQs.Why is public support for the school funding lawsuit important?
Lawmakers must understand that that we are watching them and that we know they are neglecting their constitutional duty. The state has consistently failed to meet its basic responsibility to put in place a school funding system that delivers the essential resources all students need to be successful and it is Pennsylvania’s children who are paying the steep price for this failure.
The current budget impasse dramatically illustrates both the need for court intervention and the reason why we must create a climate where lawmakers feel they must support long-term, adequate funding for schools.How can I support and help raise awareness of the school funding lawsuit?
Write a letter to the editor in support of the school funding lawsuit so people in your community and your area lawmakers will read about this in their local paper.
- Visit our Updated Write a Letter to the Editor to Support the Lawsuit for talking points and a link that will make it easy for you to email your letter to your local newspapers.
- Make sure to include some information about the local impact that the broken school funding system has had on children your community.
Encourage your local community group or school board to pass a resolution in support of the school funding lawsuit and send the resolution to your area newspapers, your lawmakers, and the governor.
- Any organization can propose and pass a resolution in support of the education funding lawsuit – a community group, a PTO, a PTA, a home school association, a school board, a municipal organization such as a borough council, etc.
- Even proposing the resolution at a public meeting will get people talking about the lawsuit and the issue of inequitable school funding in Pennsylvania.
- Download our Sample Resolution in Support of PA School Funding Lawsuit. This resolution is long and designed to educate people about the lawsuit as they read it from beginning to end. Your organization is welcome to change the resolution to suit your needs.
- If you pass a resolution, please email it to Susan Spicka at email@example.com. We are compiling a list of organizations that have done this.
- For more information, read our Frequently Asked Questions about Passing a Resolution in Support of the School Funding Lawsuit
Plan to attend the oral argument before the Supreme Court. When the court schedules a date, we will let you know so that you can put it on your schedule and show up to demonstrate strong public support.
The courts must act and rule in favor of the plaintiffs. They must declare what is happening is legally wrong and join the demand for a just remedy so every child in PA has an opportunity to learn. But the courts alone will not solve this problem. It will require all of us.
Immigration has been a hot-button topic on the campaign trail this year, and it will continue to be as the Supreme Court hears arguments in the coming months regarding President Obama’s recent immigration executive action.
Just this week, the Institute on Taxation and Economic Policy released a comprehensive report on the state and local tax contributions of undocumented immigrants. In the public debate about immigration policy, there are often gross inaccuracies about undocumented immigrants that are presented as facts. This important report provides state-by-state and national estimates on undocumented immigrants’ current state and local tax contributions, including a breakdown of sales and excise, personal income, and property taxes.
Nationally, the numbers are pretty staggering:
- Undocumented immigrants contribute significantly to state and local governments, collectively paying an estimated $11.6 billion in state and local taxes.
- Undocumented immigrants’ nationwide average effective state and local tax rate (the share of income they pay in state and local taxes) is an estimated 8 percent. (The top 1 percent of taxpayers nationwide pay an average effective tax rate of just 5.4 percent.)
- Granting legal status to all 11 million undocumented immigrants as part of a comprehensive immigration reform and allowing them to work in the United States legally would increase their state and local tax contributions by an estimated $2.1 billion a year. Their effective tax rate would increase from 8 to 8.6 percent.
- The state and local tax contributions of the 5 million undocumented immigrants who could be directly impacted by President Obama’s 2012 and 2014 executive actions would increase by an estimated $805 million if the actions are upheld and fully implemented.
For Pennsylvania, undocumented immigrants pay over $139 million in state and local taxes. That number would increase by more than $17 million if President Obama’s executive order is upheld, and it would increase by over $51 million if congress passed a full immigration reform bill.
Scrolling through my email yesterday morning I came across the sad news that Ruth Mathews (later McGrath) had passed away. Reading her obituary brought tears to my eyes -- good, rich tears.
Ruth had an extraordinarily accomplished life, including as an associate dean at the Manhattan campus of Empire State College in New York City. And then, at the age of 61, she came back to Reading and started United Community Services for Working Families. This community-based "labor liaison" non-profit agency performs critical services in Reading, including a YouthBuild program that is a lifeline for many youth without a high-school degree. Ruth started that program in her mid-70s. The programs she and her team ran in Reading for predominantly Hispanic high-school kids and older, at-risk youth -- helping them obtain a degree and enter college or careers in unionized construction -- have been models for similar efforts in Pittsburgh and elsewhere.
Ruth was a life force who somehow combined enormous vitality, and a sharp mind and wit with a hint of sadness. It was as if she could never quite forget the struggles that our unequal society imposes on the least fortunate families and children. She carried with her a deep sense of responsibility for trying to improve their lives. That partly explains how she could find the energy in her 80s for giving at-risk youth in Reading the level of personal support that would exhaust a high-energy 25-year old.
For a progressive who spends a lot of his time in data and policy abstractions, Ruth was the kind of friend who keeps you honest simply by the power of her example. Without saying a word, she reminded you of your own responsibility for making an actual, concrete difference in people's lives.
I hope Ruth understood the respect and reverence that many people had for her. She will be missed. But her example will live on. In five years, for example, maybe I will stop crunching numbers and waging policy wars and give my last quarter century (if I'm that lucky) to directly helping some folks. There are worse ways to go.
The Independent Fiscal Office’s projection that the Commonwealth of Pennsylvania faces a $1.8 billion structural deficit for the fiscal year beginning July 1 is now beyond dispute. And we at the Pennsylvania Budget and Policy Center (PBPC) believe that there are only two ways forward. One path leads to a relatively small tax increase that closes the deficit and restore funding for education and human services. The other path leads to devastating cuts in education and human services.
In response to that stark choice, Senator Corman has decided to change the subject by focusing on pension costs in his column in Pennlive.
But Senator Corman must know this is a complete fantasy. PBPC has analyzed various pension “reform” proposals over the years and we’ve shown not only do they barely reduce expenditure in the short term, they also don’t save much money in the long term. We’ve also demonstrated that pension costs for state workers are not out of line with what other states and the private sector pay.
But don’t take our word for it. The Republican leadership put forward a pension proposal last year. It failed in the House and a majority of Republicans votes against it. Why? Precisely because it didn’t save much money in the short or long term. As a few of the honest Republicans pointed out, the only provisions that actually did have an impact on the budget were unconstitutional because they violated the state’s contractual agreements. As Senator Corman knows full well, after five years of obsessing about the issue, he and his caucus have no actual proposal to cut pension costs.
Corman is right only in this: Pension costs are taking more of the state budget. But the reason is that in the past governors and the General Assembly have consistently underfunded them one among many ways in which they “balanced” the budget with gimmicks and flimflam.
Governor Wolf rightly has said he won’t sign a budget that is “balanced” in name only. And if we avoid budgetary deception, we do face the difficult choice described above, to raise revenues or make drastic cuts in education and health care costs.
If you read Senator Corman’s column closely you will see he almost recognizes this. He says “…it is important to realize this is not the first time that lawmakers have faced a shortfall in state revenues. Five years ago, the deficit had reached $4 billion.”
The Senator doesn’t really need to remind us of that; Pennsylvanians remember it well. Five years ago we faced the same choice then that we do now: raise taxes or deeply reduce the budget. Five years ago, over the protests of the majority of Pennsylvanians, we saw Governor Corbett and the General Assembly make the wrong choice. The results in our schools and communities were so horrible that Pennsylvanians, for the first time in our history, denied an incumbent Governor reelection.
This time, we need to take the other path. Pennsylvanians are ready to pay a little more in taxes to avoid the devastation of one more Corbett-Corman budget.
Pennsylvania is at a crossroads. We face a stark and profound choice between two different paths. The first path would build on the broad consensus about public policy that animated our politics for generations. That consensus, forged by both Democrats and Republicans, recognizes that without good public education, our kids won’t succeed and our economy will stall. It accepts responsibility for taking care of the disabled, ill and aged who, through no fault of their own, need our help. It seeks no more, but also no less, taxation and government necessary to attain these critical goods. And it places the tax burden on those who can afford it most, corporations and the wealthy.
The other path, which abandons common sense and is contrary to the experience of most Pennsylvanians, tell us that government never works. It falsely proclaims that our schools don’t educate our kids, and that the health care and human services we provide to the aged, the ill, and the disabled are not our common responsibility. Its aim is to protect corporations and the wealthy from paying their fair share of our public expenses.
Our state government tried the extreme path of radical budget cuts in 2011. And the voters of Pennsylvania rejected it. Last year an extreme ideology held by a few stymied good-faith efforts on both sides of the aisle to compromise and achieve consensus. The result is that Pennsylvania faces an extraordinary deficit of $300-500 million this fiscal year and $1.8 to 2 billion next year. Our credit rating has been downgraded time and again.
If the extreme view prevails, the state budget will be devastated. Because so much of the budget is mandated by federal requirements and contractual obligations, there are few areas where substantial spending reductions can take place. Closing a huge structural deficit is likely to lead to a billion dollars in new cuts to education, cuts that will lead to the loss of thousands of teachers, guidance counselors and school nurses; that will deny our children the opportunities they deserve; and that will undermine our economy by starving our businesses of educated and trained workers. Closing the structural deficit without a tax increase will also bring about around $600 million in cuts to health and human services, cuts that would eliminate prescription drug coverage for hundreds of thousands; that would slash support for the intellectually disabled and those suffering from mental illness; and that would drastically reduce funding for child care.
Governor Wolf has rightly chosen the first path. But his proposed investments in education and proposals for new revenues are too modest. He does not ask enough of the corporations and the wealthy. With more revenue, collected in a fairer way, Pennsylvania could more boldly take the first path that works for all of us.
The governor does, however, stay true to the core Pennsylvania value that the state has an obligation to provide educational opportunity for all and the recognition—articulated long ago by Republican Thaddeus Stevens—that this investment benefits everybody because it strengthens the economy. As we analyze his budget in detail, we will have disagreements about specific tax and spending proposals. But, at a crossroads for Pennsylvania that could shape the future of the state for decades, we believe that Governor Wolf has chosen the right path.
As the saying goes, “It’s better to keep your mouth shut and appear stupid than open it and remove all doubt.”
The last time I recall talking to Dennis Roddy was when he was still a member of the Corbett communications team and phoned the Keystone Research Center (KRC) office. At the time KRC was engaging on the opposite side of a debate over public sector pensions with the Corbett administration. Mr. Roddy let on that he knew our eight-person non-profit provides its employees with a 401(k)-style pension plan. When I stopped laughing, it occurred to me that this was an attempt to intimidate us.
Call me old-fashioned but I hang onto the idea that we’re better off when policy and political debates are based more on logic, evidence, and transparency, and less on playing fast and loose with the facts, attempts at intimidation, or personal attacks.
In Mr. Roddy’s latest column on shale jobs – which we recommend you read and then read again – he wants you to believe that the Wolf Administration has politicized the counting of shale jobs and that the Corbett Administration was as pure as the driven snow when it came to letting the numbers people in the Pennsylvania Department of Labor and Industry (PDL&I) just provide “the facts.” Even if you don't know what happened, Roddy’s story has the ring of fantasy about it.
But I do know what happened.
At the end of the Rendell Administration and into the Corbett Administration, there was a great hunger for information on the shale boom. In response to this customer demand, the entrepreneurial civil servants leading the data shop within PDL&I, the Center for Workforce Information and Analysis (CWIA), put together a new report called Marcellus Shale Fast Facts.
This booklet included numbers on employment in oil and gas extraction and pipeline construction, six detailed industries that CWIA labelled the “Marcellus Core.” Everyone – CWIA under Rendell, Corbett and Wolf, KRC, academic experts, even Dennis Roddy, accepts employment in these six “core” industries as a good estimate of direct jobs in shale extraction itself plus in pipeline construction.
To estimate Marcellus Core employment requires two steps. First, add up total jobs in the six industries; second, subtract jobs in those industries as of 2005 or 2006 before fracking began in earnest, since those jobs were in conventional gas extraction. (Since separate industry categories do not exist for conventional and unconventional gas extraction, everyone has to assume that all employment change in these six codes since about 2005 is due to fracking not conventional oil and gas extraction.)
As well as “Marcellus Core” employment, however, Marcellus Shale Fast Facts also included lots of other numbers – in fact, pretty much the kitchen sink of numbers related to shale. While heavy on numbers, the booklet was light on interpretation, leaving reporters, industry and others to try to make sense of the numbers largely on their own.
The first episode in misinterpreting Marcellus Shale Fast Facts numbers, ignoring the difference between “new hires” and “new jobs,” is what drew KRC into the shale jobs debate. We published this June 2011 brief correcting the error -- which earned us this personal attack from the Marcellus Shale Coalition and another one from the state Republican Party, both of which we responded to here. Who knew that correcting the factual record was a contact sport? (For more on this particular episode, read this op ed, which is a companion piece to this blog.)
The more significant misinterpretation of Marcellus Shale Fast Facts, which Roddy goes to tortured lengths to defend, is an estimate of employment in Marcellus shale “ancillary industries.” As defined by CWIA, the 29 Marcellus Shale ancillary industries are all industries in which shale extraction creates some supply chain jobs – industries such “engineering services,” “trucking,” and “highway, street and bridge construction.” While shale does create some jobs in these and other ancillary industries, most jobs in these industries have nothing to with shale – e.g., UPS drivers are part of trucking but not part of the shale jobs footprint.
Piling absurdity on top of absurdity, to get numbers over 200,000 you also have to count all jobs in these industries, not just the increase since fracking began around 2005. So apparently fracking created about 170,000 ancillary and core jobs even before unconventional drilling began.
Using this method to estimate shale’s jobs footprint isn’t an exaggeration it’s just making stuff up. Yet as recently as January 22, this employment number was used to support a Marcellus Shale Coalition claim that the shale industry supported 243,000 jobs in 2014.
In stopping the routine reporting of jobs in Marcellus Shale ancillary industries, the Wolf Administration has simply stopped publishing numbers that don’t mean anything and have proved susceptible to misinterpretation. This positive, common-sense step also means that CWIA will no longer unwittingly echo invented and exaggerated shale jobs claims.
Dennis “Through the Looking Glass” Roddy, sees the story differently.
First, he misrepresents Marcellus Shale Fast Facts as a “scientific” document produced by “statistical wizards." He then goes into a long “how I learned the secrets of the temple” explanation of the standard economists’ method of estimating total jobs impact.
While it may be mysterious to Dennis, it is well known among economists that the total jobs impact includes three components: direct jobs, supply chain or “indirect” jobs, and the “induced” jobs created in consumer industries when workers, owners, and royalty recipients in the shale industry and its suppliers spend their additional income. Roddy ends his discussion of this standard economic method with the sentence “that was the context of those numbers” and then quotes Patrick Henderson, Corbett’s energy executive at the time and now with the Marcellus Shale Coalition, "We have about 240,000 Pennsylvanians working in industries that are supported directly, or made more secure, by the growth of oil and gas activity in Pennsylvania." Roddy seems to be trying to suggest that the 240,000 figure comes out of using the economists’ standard methodology for measuring total jobs impact. But that is not true.
In addition, Roddy doesn’t appear to realize – or at least acknowledge – that the Wolf Administration has actually just done what his opinion piece suggests should be done. The new Wolf methodology DOES explicitly estimate indirect and induced jobs and then add those to direct shale jobs to get the total jobs footprint. The current estimate for direct jobs is 22,058 jobs (down a bit from a year earlier), with an additional 15,706 jobs at suppliers and 19,912 “induced” or consumption-based jobs. That’s a total of 57,676 jobs. In sum, the Wolf Administration is not underestimating the total jobs impact of shale. It has just set aside a ridiculous approach that led to estimates more than four times a legitimate estimate.
Even if Dennis Roddy is living in his own fantasy world, other sources have recognized that the change in methods makes sense. For example, the Times-Tribune calls the new approach a “more honest reporting method.” Several economists have also noted that the new figures create a “much more accurate” employment picture of the shale industry.
At the end of the day, going “inside (the mind of) Dennis Roddy” doesn’t matter. What does matter is the combination of factual distortion and attempts at intimidation that are aimed at blocking lawmakers from enacting state natural gas policies that benefit Pennsylvanians rather than simply cater to the industry. We are still a good ways from achieving the right outcome on that front.