1

SENATE OF PENNSYLVANIA SENATE AND HOUSE EDUCATION COMMITTEES

n re: Public Hearing - Forum on School Finance

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Stenographic report of public hearing held in Room 8E A and B, Capitol East Wing, Harnsburg, Pennsylvania, on

Thursday October 7, 1999 9:00 a.m.

SENATOR JAMES J. RHOADES, CHAIRMAN REPRESENTATIVE JESS STAIRS, CO-CHAIRMAN

MEMBERS OF SENATE AND HOUSE EDUCATION COMMITTEE

Rep. Nicholas A. Colafella Rep. William Russell Robinson Rep. Thomas W. Druce Rep. Samuel E. Rohrer Rep. Patrick E. Fleagle Sen. Allyson Y. Schwartz Rep. Thaddeus Kirkland Rep. P. Michael Sturla Rep. Todd R. Platts Rep. Connie Williams

LSO PRESENT: avid Broderic, Executive Assistant (Sen. Rhoades) ebecca B. Gross, Executive Secretary, (Sen. Rhoades)

Reported by: Janice L. Maulfair, Court Reporter Senate of Pennsylvania

UT» Y Senate of Pennsylvania 2

INDEX TO PRESENTERS

*ESENTERS: PAGE lairman James J. Rhoades, Opening Remarks 3

D-CHAIRMAN Jesse Stairs, Opening Remarks 3

Dhn Myers, Consultant, Augenblick and Myers ack Van Newkirk, Superintendent, York City School District 51 c. Cornelius V. Cain, Superintendent, Camp Hill School District 60 Llliam A. Nichols, Superintendent, Corry Area School District 66

Llliam Hughes, President, Keystone Research Center 104 c. Arnold Hillman, Advisor, Pennsylvania Association of Rural and Small Schools 154/157 r. John A. DeFlaminis, Superintendent, Radnor Township School District 155/176 c. Jim Goodhart, Executive Director, Pennsylvania League of Urban Schools 168 c. William Hartman, Professor, School Finance, Penn State University 169

Dm Gentzel, Convener, Alliance for School Aid Partnership (ASAP) 204 avid Helfman, Alliance for School Aid Partnership 206 ay Himes, Executive Director, Pennsylvaniaa Association of School Business Officials 210 tinson Stroup, Alliance for School Aid Partnership 212 an. James J. Rhoades, Closing Remarks 223

Senate of Pennsylvania 3

CHAIRMAN RHOADES: Good morning. And welcome to this omt forum on school finance.

Today, the Senate and House Education Committees will egm to address one of the most pressing issues in education oday: How the Commonwealth can fund its public schools in a ay that will ensure a high-quality education for all of our tudents and reduce local school districts' reliance on the roperty tax.

Today, we will begin asking this question in an effort

D identify the issues that the General Assembly must address

11 order to arrive at an answer.

Today, we will begin to study proposals that present

Dssible alternatives to the current system.

I would again make reference to the Supreme Court's scision which says we reaffirm the General Assembly's occlusive jurisdiction over matters relating to school inance. It sits squarely in our particular lap.

There is no question that any effort to address issues f school finance and local taxation presents a daunting aallenge. While quick fixes and one-time solutions exist, ley do not offer true answers to the issues that exist today.

In a state as diverse as Pennsylvania, one size does

Dt fit all.

We have 501 school districts and educate 1.8 million-

Lus students in the public schools. We spend over $3.7

Senate of Pennsylvania 4

.llion on the basic instructional subsidy and millions more

1 specific programs for special education, safe schools/ and

:hers. The amount of money that the Commonwealth spends on isic education has increased almost every year since I was

.ected to the Senate in 1980.

At the same time, however, there is a great disparity

I spending among our school districts and an increasing jliance on local property taxes to pay for ever-more cpensive programs.

The highest per pupil expenditure for actual istructional expense for any school district in the

>mmonwealth is $10,859, which is in Jenkintown School

.strict. The lowest is $3,140, which is in Juniata School

LStrict. The median is $5,033 per pupil and 250 of our

Lstricts spend less than that.

Clearly, efforts to increase state spending on special iucation have not resulted in uniform benefits for all of our

:hool districts. Clearly one size does not fit all.

As we sit here today a solution to this problem is not

^parent.

Proposed formulas to revise our school finance system

:e incredibly complicated and are driven by competing jlitical, legal, technical, and ideological concerns.

Our current system of local taxation is just as apenetrable. With a quagmire of taxes, assessed and market

Senate of Pennsylvania 5 alue calculations, and income considerations/ it can confuse ae most astute experts in tax policy.

I say this to underscore the fact that quick fixes and ae-time deals will not work for long. They will not get to le root of the problem. We are not going to leave this room oday with an answer to the question we have posed. Truly, jr challenge is a daunting one. But it is a challenge that

2 can begin to address today.

So, we begin today with a recognition that a problem icists in the way we fund our schools. And this forum rovides the Education Committees with an opportunity to begin

Lscussions about this issue as they should begin: with ame facts and with some ideas.

If we are to accept the challenge of addressing the ssues of school finance and local taxation, we must approach us issue with reason and not with rhetoric. With facts and

Dt with fantasies. With solutions and not with scare actics.

In short, we must begin to address this issue by idressmg it and by beginning a rational discussion that can sad us to real solutions.

Today, I think, is a good beginning.

So, I thank my fellow Senators, when they get here, my olleagues in the House of Representatives who are here, and ir presenters for joining us today, as we make this

Senate of Pennsylvania 6

>eginning, and I look forward to the conversations that will esult. As I said, we are sharing the day together. We have

.one this many times together.

Representative Stairs, it is yours now.

CO-CHAIRMAN STAIRS: Thank you, Senator Rhoades.

It is certainly a pleasure to be on this forum with ou. We have cooperated in the past and I am very confident hat into the future we will also be cooperating with other oint hearings as well. But I would certainly like to welcome ou on behalf of the Members of the House of Representatives o this very timely and critical forum on public school inance.

This is, I think, very pertinent now because ;just ecently the courts have stated that the legislature is the ppropriate place for the discussion of this subject. So I hink it's quite timely after last week that we are right here ollowing up today with this discussion.

I would like to caution people, though, that certainly s we talk about this funding issue it did not occur in a acuum. You know, at this time in our Commonwealth we have any people who are looking at education and certainly are not ocusmg strictly on money. You have parents, taxpayers, olicymakers, media people, among others, they're kind of eriously questioning the quality that we are paying for and he return that we are getting. So I think that it is also

Senate of Pennsylvania 7 irtment that we have a serious debate that includes several

.fferent subjects, such as how do we define adequacy and luity in financing of our education and how can we best use le resources? Should we target it to make increases in

:udent performance? And I guess the big question is should

;, and if we should, how do we prioritize the need to the lblic schools? Do we use categorical funding or do we use road unrestricted funding? And I think it adds up to a very iportant question to how to make sure we have educational and

.seal accountability. And I guess also we should say who lould pay for public education and what revenue sources lould we use?

And probably finally, I think this issue is lseparable from such discussion on special education, school

>vernance, labor relations, mandate relief, local tax reform, jcational education, and even school choice. So I think it's

>ing to be a very meaningful discussion that we begin today id certainly many more days to follow. So I really welcome us opportunity as a Member of the House to join with the jnate and Senator Rhoades to begin this arduous journey, but jrtamly a journey we must take and a journey that I think is

)ing to be successful. There's a lot of hard work and I know le dedication is there so we're going to do it. So thank

>u, Senator, and let's begin.

CHAIRMAN RHOADES: One thing I want to add, up here

Senate of Pennsylvania 8

)u see a little box with a little green bulb on top of it, id when I press the little button here it will light up. I

>e it for a timer, for one reason if I let you go we'll be

»re till 12 o'clock midnight, believe me, we will. Okay. id what happens is the last minute and a half it starts to

Link, which then begins to tell all of us that that irticular session is up, that segment is up.

CO-CHAIRMAN STAIRS: We could use that at some of our ietings too, Jim.

CHAIRMAN RHOADES: Yes. I have to because truthfully

> I've said, I've gotten to the extent when they start going

I sometimes I let them go on and some days I run 2 and 3

)urs over and I won't do that again. So when we get to the id and it starts to blink, I don't want to be rude by cutting lyone off, but by the same token too it should signify to us lat we're going to try to close that particular session.

Our first presenter today is John L. Myers, and John

» definitely no stranger to Pennsylvania. John is with the mver-based consulting firm of Augenblick and Myers. He's sen there since May of 1993.

I first met John here in Pennsylvania when he was with

-SL and he has served as a consultant a number of times in snnsylvama. He has done that across the United States. I link there are 30 different states that he's worked in from

.me to time. Right now among his many titles he's director

Senate of Pennsylvania 9

: the Colorado School Finance project. He brings with him a jalth of information and experience and we have asked him ire today to come in and give us some background as to what

> occurring across the nation as we look at school finance id paying for our schools in the education process.

So, John, if you would take the center stage. And ress the button to make sure the green light is on and is jrking.

MR. MYERS: Thank you, Mr. Chairman.

It is a pleasure to be back, Chairman Rhoades and lairman Stairs and Members of the committee.

It has been a number of years actually since I've been

»re to the Capitol building to visit with the legislators ire in Pennsylvania. I've done it numerous times actually ick at the time when I was the education program director for le National Conference of State Legislatures when we took a

>ok more closely at school finance here at that time.

It has actually been over the last 15 years that I've sen doing school finance with various places and primarily le role has been one of saying how do we get better school

Lnance systems across the country? Working with sgislatures, working with governors' offices, working with le Departments of Education, those are probably the primary sople that we kind of work for. Obviously when I worked for

3SL it was almost exclusively legislatures that we worked for

Senate of Pennsylvania 10 nd it was really a part of some major school finance changes n states like Kansas and in states like South Dakota, and srtamly it played some significant roles, also my partner id in Kentucky. I was one of the first consultants in sntucky and my partner was the lead consultant to the finance ommittee there.

So that's just by way of a brief introduction. nat Senator Rhoades didn't mention is I started doing school inance from your side of the table. I served 3 terms as a amber of the Kansas House of Representatives, and so that's md of how I got started in the discussions of these kinds of ssues as a member of the State legislature.

But over this period of time we really developed some leas really on how do you know a good school finance system len you see one, and that's where I thought we would start xiay, and you'll hear from other people throughout the day aout what their view is on these things, but I think you'll

3e some similar trends and some similar things that are going a with some of these issues.

But before I go to that, I am reminded this morning, I tarted watching television early this morning as I got up to

Dme over here, and there was something that came out of arvard University, and I have to mention that not only have s been bipartisan in our work across the country, we are now ripartisan because lately we signed on to help the Governor's

Senate of Pennsylvania 11 ffice in Minnesota. And maybe you've noticed Jessie was at arvard yesterday, but I just thought, wow, you know, out of

11 the people we've worked with, because that really is a ultural conflict in my mind, the differences that come from he Minnesota Governor, and I thought about him there at arvard University.

It has been interesting working there and I will say e is very good at asking very tough questions. That reminds e that school finance can get very complex sometimes. And so

know there are complexities that go with this, you know, on our side that you're going to have to deal with over time.

I'm going to try to keep it on some concepts and some essages I hope that even though they're complex and in-depth an help you think about these things. I'm going to go through his very quickly. When I was on your side I always thought, ee, I can read. He doesn't have to read this to me, I can ead it. So to the extent that you want to read the materials

've provided for you, please do that. Otherwise I'll just aise some key concepts and hope that then we can have a lot f time for questions and answers where you might be able to ollow up with some of the things that are going on in other tates in the country.

How do we know a good school finance system when we ee one? Well, obviously State legislatures are responsible. tate constitutions regardless of the constitution, very often

Senate of Pennsylvania 12 ive language in it that says that ultimately the State jgislature is where the action is. Now there are a couple of cceptions to that, certainly Louisiana with what they call leir SESE board. That's their board of State Elementary and icondary Education. It is the one that adopts a school

.nance formula and the legislature can only accept or reject

:. Now that's the exception. The rule is in most states lat is a responsibility that lies with the State legislature. id so when we begin to think about these concepts it is iportant to know that you're the ones that are in the role to ike a difference.

So how do we know a good school finance system? We low that it allocates state aid based on the needs of school

.stricts. Why is that? It's because of course that you've ien organized, as almost all states are, into school

.stricts and those school districts have varying wealth in leir property taxes. This is not news. But it's because we

»ly a lot on local property taxes. There are three main ixes typically that are used for education, there's property ixes, which are local primarily, and sales tax, and income ixes. Yes, there are other things that come into your sneral Fund, and I understand that, but those are the big

Leces that are going to make up the difference. So when we

:art out saying how do we know good school finances, it's jnsitive to needs of local school districts, and needs in

Senate of Pennsylvania 13 us case would be students' needs or they can be district ieds. Certainly school district size is one thing that has

;en found to be a need. Certainly the needs of at-risk

:udents have been assumed to be a need in all states. Okay.

> the allocation of State aid is sensitive also to the fiscal ipacity and to tax effort.

Now recently the trend has really been — we'll get to rends here in a second — but recently the trend has been ward more uniform tax effort, and one of the things that is

.ear across a number of states, whether it's Vermont, with leir statewide property tax, or New Hampshire, or South ikota, or Kansas, in a number of states they have gone to a ich more uniform property tax for funding an overwhelming roportion of their education program. But to the extent to nch there is any variation in that, the tax effort as well

> fiscal capacity is taken into consideration.

Variations in spending should be primarily because of leir needs in tax efforts. If you have variation spending in le State, and I don't know, we looked at it back in 1992 and lat we found at that point is there was variation in spending sre in Pennsylvania that was related to wealth. It wasn't ilated ^ust to needs and tax effort. If that is still the ise, and I don't know that, then that's something that's a

>ncern. It's something that ought to be addressed by the jgislature.

Senate of Pennsylvania 14

Number 4. School districts have a reasonable amount of lexibility to determine how much they want to spend. And hat flexibility now is becoming more controlled in states ban it used to be. There are a lot more places that have put bsolute caps on total spending or absolute caps on spending n a variety of areas. But the flexibility is still something hat we think provides an important function of a good system. rid that they have a lot of flexibility on how to spend their oney. This is the question that I think Chairman Stairs was ind of commenting about when he was talking earlier, or tiairman Rhoades too, the idea of do we do categoricals and squire the money be spent in a certain way, or are we willing

D say at the State level our role is one of setting standards rid assessments tied to those standards and providing adequate unding, and how the local school districts or school site oes around spending that money is their responsibility.

That's one of the issues, and we come down on the side f saying there ought to be flexibility for the local school istrict of how they go about trying to spend their money.

All types of expenditures ought to be considered. And tiis is a hard point for many States probably because you lght equalize a certain amount but then you've got ategorical programs or you've got capital programs, and the apital dollars are not- there are some states that do very ell with assistance of capital dollars so in their cases

Senate of Pennsylvania 15

Dviously they don't provide as much State aid in those areas. it all forms of expenditure ought to be considered in a rhool finance system. State aid that is not sensitive to salth, and it should be very small, and in fact in some

Laces it is becoming almost nonexistent because those are secial incentive funds or hold-harmless kinds of funds. And mce our report of "92 I know you've worked to reduce those mds of impacts.

States should be asking school districts to develop

^sterns by which they determine how they're going to get to seal school sites. One of the big debates nationally, and

)u probably are very aware, is of course how much site-based jntrol should there be over funding and site-based inagement. The concept of the sites is playing a bigger role

1 terms of funding. You could argue charter schools are slated to this, and in fact what you've done is you've set up

>re fiscal independence at a school site. One of the lestions is how do you distribute money from the district to

Ltes? And there has been a lot of work done on how to jtermme how much money is actually spent for the school

Ltes. So we come down on the side of saying that the State aght to at least pay attention to that and have some thoughts jout whether the school districts need to make some common aproach to understanding as to how the money flows down to

:hool sites.

Senate of Pennsylvania 16

Taxpayers ought to be treated equitably. And of jurse that's a complex issue.

And finally No. 10 is how do you know that you're

;hieving adequacy and equity? Well, it's because you look at

: and have regular studies, and the legislature ought to be sttmg up a group that sets up some way to regularly evaluate le system. That is kind of our position.

Now you've heard the preaching and I'll hopefully go

1 to more about kinds of trends and what's happening across le country.

Trends in *99, I guess the biggest trend currently ippening is in New Hampshire. As many of you know, in New impshire they were the lowest percentage of State money for

•12 education in the country. They were down to like 10 jrcent of the money from the State, and this last year they ide a dramatic change by using the uniform statewide property ix and increasing other taxes - and there are a variety of laller taxes I guess is the way to say that - to combine into

pool of money, set an adequacy level, which we'll talk more

3out in a little bit, and tried to bring all school districts

) to that adequate level. They moved from about 10 percent

:ate money, and if you count that property tax they moved to lat would be about 60 percent of their total amount paid for it of State dollars as opposed to property. Now remember lat's still property taxes in New Hampshire. So New

Senate of Pennsylvania 17 impshire was the biggest change and it was in response to a

)urt case. We'll talk more about their adequacy approach a

Lttle bit later.

The other major change that has happened recently is

1 the 1990s previous to that every decade we have spent more

)llars per kid when adjusted for inflation. Each decade the sending had gone up. In the 1990s the revenue growth looks

.ke it's going to be very close to that level, or it may not ren meet that level, which means that in essence we're sending less money on K-12 education or the growth in

>ending on K-12 education has not kept up with what it had sen.

And there are a lot of reasons for that, but I think ie of the things is this call for accountability. Many of us

) back and remember 1993 a nation at-risk, it kind of began tat was kind of the first wave of major legislative tvolvement in the reform of K-12 education. And we've gone trough several waves of that kind of reform, but the bottom

.ne is that the call for accountability in education is seded, and certainly Chairman Stairs said that when he was ilking earlier. And what that means is now States are joking to how do they link together school improvement and

:udent performance with revenue and so a lot of the work we ive done lately is on what we would call adequacy. How do

»u link together student performance with the amount of money

Senate of Pennsylvania 18 ie State provides? And it's really that relationship that I link has gotten a lot of attention lately. And we'll talk ore about that in a second.

School finance systems have become more equitable,

Jen here in Pennsylvania. I think you can certainly argue, I aven't looked at it closely, but I know you'd argue that some f your movement recently has moved to somewhat more suitable. But there's still a long ways to go because of the sst pressures in a lot of places. Now I mentioned already

Dme states are doing what we used to call draconian measures c pretty dramatic measures such as statewide property tax or

Dsolute limits on revenue to promote that equity, but they ave become somewhat more equitable. And although there's srtainly a lot of controversy around special ed funding, and

3U have it here in Pennsylvania, the trend is really toward jnsidering special education in terms of being able to ientify approaches that are much more on the matter of State sntrol of some of that as opposed to unlimited opportunities, id because there was a perception that there was money that as being taken out of the General Fund to be used for special iucation students. So special education funding is an issue lat we see a lot of attention on and the trend nationally has sen toward what you did here, which is kind of a census-based pproach, and I would argue that now there needs to be a trend lat takes a closer look at that and says, yeah, but you know,

Senate of Pennsylvania 19 m've still got school districts out there that have dramatic

.fferences in the number and identification and the cost of

>ecial ed students.

The major focus now is on adequacy and court cases.

;w Hampshire, I've mentioned a little. Ohio and Wyoming

;'ll talk about some more. I won't talk much about the icilities side of that unless you have questions, but there

:e court cases, Arizona was the first State to have their rstem declared unconstitutional primarily because of icilities and there has been a response to that. Colorado is a court case that has been brought simply on variation in inding around facilities because the State does very little. id Wyoming's court case also took a look at facilities as irt of their overall finding of unconstitutionality. And ially the concerns here are developing procedures that take ire of the needs for the future also, adequacy and jchnology.

Having kind of laid out what the trends are, then lat's happened to the structures of school financing? Well,

>st school finance formulas clearly are foundation type jrmulas. Yours would be defined as that where you set this ise and you set that base and then you make adjustments on

>p of the base, and the base ought to be something that jvers the- well, what I would describe it should be on an iequacy level- and that level then is funded by equal tax

Senate of Pennsylvania 20 ffort among school districts and State aid. Those two hmgs. So that's very brief. You'll hear a lot more from ther people about their approaches to a foundation-type ormula. But certainly more foundation formulas have been put nto place and we're developing new approaches to setting that ase level and that's the last thing we'll talk about.

Also States are developing more adjustments or more

Dst pressures, and the biggest one obviously of course is sonomically disadvantaged children. I know here in your tate you've spent some time trying to develop how to best sfme it, but nationwide the trend clearly is one that says shool finance formulas are taking a closer look at how much

Des it cost to bring kids up to standards who will come into

=hool with an educational deficit, and it is primarily scause of economic issues and also language issues, and of

Durse special ed kind of relates to it as well. But the cost ressures additionally the new things kind of in this area are tie cost-of-living adjustments as well as of course work on ize, one of the size issues are also some of the things.

Now States have started to create more second tiers, evels that are absolutely capped so they provide districts ith equalized opportunity to generate funds, but the State sn't paying the same percentage that it does in the base dequacy level. And there's development of more of those and hat certainly is true technically.

Senate of Pennsylvania 21

Another example of something new in the structures, slatively new, certainly it comes out of what we talked about

Lready, and the States are beginning to cap local revenues.

)me are recapturing. New Hampshire did it as part of their sw formula last year. And what that means is that if you set us base and you have this uniform property tax and in some

:hool districts it raises more money than is needed, then you

;tually take that money and you'll be able to use it in other

Laces, because the concept is that the State ought to be stting this level that says here is how much should be mailable to kids in all school districts to meet that iequacy. Many now would define that as being able to get

.ds up to State standards. What level is that?

Once you've set that then you can have a uniform tax

1 order to pay for that. That's equitable. And so there are lose that have gone as far as recapturing it. And you can

»e some examples of that. I mentioned statewide property ixes. Some of the new ones are here, and they have them out

1 Kansas, and some others have gone through that as well. id States are,involving more performance-based fiscal icentives. These again, a number of the things that we're ilkmg about are small and on the margin and are limited in

>proach but they certainly have been used. And we can talk

>out Kentucky's where they provide fiscal incentives to

:hool sites for performance. And then some states have

Senate of Pennsylvania 22 raluated those systems.

Okay. Now we're down to the latest on educational lequacy, and this is the area where I wanted to really turn iur attention more than others because that's kind of the irrent trend. The current trend in states is to recognize

Lis need to try to think about how much money is needed out lere and to try and tie together student performance with the ivenues we provide to them. And there really are only two

>proaches that have been adopted nationwide by states. One

; what we call the Wyoming approach. Some in the academic

.rcles would call it the professional judgment approach.

:hers would look at it and call it the market basket

»proach. It was used in Wyoming because the State Supreme iurt in Wyoming said that the formula must be based on the

»st of the market basket of goods and services for education. id so they went about hiring a consultant, and it was Jim ithrie, Management Analysis and Planning Associates - if you illow these things - but they did the work that really

•ought together professionals in fields and said here is what s need in order for kids to be able to receive this list of lucational services. And it involved everything you can link of, class size, number of teachers, certainly

'ofessional development opportunities. There's a list of

Lem. How many nurses in schools. They identified this

T?othetical district or school site, and then they

Senate of Pennsylvania 23

:cumulated the school sites into a school district and they iployed what they called cost-based block grants and they

.ve the money to the school districts so they can use it how ley want to. And a lot of it was done on statewide average ita and they cost that out and they put the cost to them, and ley adjusted for small schools. In fact our role in this

Lse was the small schools group in Wyoming and in that case

; assisted with kind of a special identification of the need

>r those small schools. But the idea again is this leoretical relationship between these resources that were seded and the student performance that's going to come out of lat.

Now no accountability system in Wyoming that has been lopted is directly related to that but of course there is iat assumption. The assumption is that if the State says you

>ed to have X class size or we're going to give you money ised on Y numbers of librarians in your school, the isumption is that is the direction they will go. That

.ffers from the second approach. The second major approach i often called the inferential approach, which means that you ifer from successful school districts how much money is ieded for all school districts, and this approach was adopted i Ohio, and a similar approach is used in Mississippi, and

>w it's used in New Hampshire. I mentioned New Hampshire irlier, and basically what it does is the State sets

Senate of Pennsylvania 24

:andards, the State has assessments tied to those standards. le State says here's how we know a successful student, and len you say, well then if we know that then we can determine lat percentage of successful students we expect in every

:hool district and school site. And then in those successful

:hool districts we can look at how they spend their money.

3W this approach does recognize that there is very much of a

Lfference among school districts because of the district seds or student needs. So you take out the impact of both mancing of those things, set them aside and come back and ijust to them later and say, okay, let's just look at this ise, let's look at the core on the regular student cost. And us approach then looks at that and says we understand now com the successful one how much they spend, having looked at lat more closely we can have this uniform base cost that is ie average basic spending level for effective districts in ie State and from that then we bring it back and say, okay,

DW we're going to adjust for economically disadvantaged, for pecial ed, for transportation, for things that are ijustments that you're familiar with in your formula. And aen having identified these objectives we can hold the school istricts accountable for success because we now know that aere can be a rational basis to determine what the costs are tiat are incurred and what the needs are. And again this is a ombmation of State and local money, not unlike the

Senate of Pennsylvania 25

>proaches we have talked about.

So this is kind of a full review. Again, you can read

>re detail in the materials I handed you, but I wanted to lay

L the table the big trends that we see happening in other

:ates and be able to respond to your questions.

CHAIRMAN RHOADES: Thank you, John.

I'm going to open now to the panel to ask questions. usually do that first before I start.

Representative Fleagle.

REPRESENTATIVE FLEAGLE: Thank you, Mr. Chairman.

I was just trying to get some idea or concept of where

>vements are going in other States, and I sense that rather tan going to an income tax based system of financing that

:her states are going to statewide property taxations. Is tat correct?

MR. MYERS: Mr. Chairman and Representative, yes. The itional trend really most recently has been toward this liform property tax, but overall it is to hold down property ixes or lower the property taxes. And the way that that's

>ne typically most recently has been sales tax, or a sales

LX-mcome tax combination, but primarily sales tax. Sales tx has been more popular. Michigan is an example of that.

REPRESENTATIVE FLEAGEL: What's been a barrier to rely i income tax?

MR. MYERS: I think it's probably more the politics

Senate of Pennsylvania 26 round the popularity of individual taxes. That's probably le reason why we're seeing a trend toward that.

REPRESENTATIVE FLEAGEL: And then the property tax is

Dre popular than the income tax?

MR. MYERS: No. I meant the sales tax is more popular lan the income tax. And sales and income tax are both more spular than property taxes. So overall the property tax — len I say these statewide, in almost each of these cases

:operty taxes came down as part of the creation of the

:atewide. The overall level is actually a lower property tax

?llar revenue piece so they're more uniform but they're swer.

REPRESENTATIVE FLEAGEL: Just one other question in jmparison to other states. It always baffles me that we've jved away from our subsidy or the people's subsidy on their

3BE plan here in Pennsylvania for years. Do you know of any

:ate that has a strict or pure formula driven revenue funding surce that is not supplemented by other types of funding that

:e supplemental?

MR. MYERS: I have to think about that a second scause—

REPRESENTATIVE FLEAGEL: I know you said Louisiana. I

2lieve it was Louisiana has a take-it-or-leave-it formula lat the legislature has to either approve or disapprove. But

»'re constantly, at least since I've been here, 11 years,

Senate of Pennsylvania 27 issaging the formula that we have. Do you know of any States lat have successfully adopted a funding formula and have

:uck with it?

MR. MYERS: Yes. Certainly there are a number of

:ates. Those states that are most successful are the ones

10 adopt some basic concepts and say here's the concepts

J're going to follow and do what we've suggested, which is raluate that fairly regularly. So, yes, almost every year lere is efforts that every legislature makes, tinkering lings. In fact it's one of the reasons why you need to raluate your system regularly, because almost every igislature regularly comes in and tries to tinker with making

>me changes. But those things that have been most successful

L trying to keep a direction have done so because they've

>tten concepts. Very often that is m response to court ises where the court has said here's what our bid is and terefore the legislature begins to look at that and say,

:ay, we'll follow that over time. But even those States I

.11 tell you it is fairly regularly tinkered with with the

>proaches.

REPRESENTATIVE FLEAGEL: Thank you, Mr. Chairman.

CHAIRMAN RHOADES: Representative Williams.

REPRESENTATIVE WILLIAMS: Thank you, Senator Rhoades.

I would like to follow up on that just a little bit. i the States where the uniform property tax was decreased,

Senate of Pennsylvania 28 iat happened to property values?

MR. MYERS: Well, Mr. Chairman and Representative, the roperty values vary a great deal in the approaches. You're

/are if you follow the property tax assessment things across le country it is not a consistent pattern. Some states have

lot of what you would call - the name for it slips me - the irious categories of funding, classifications. Some states ive a lot of classification of property taxes so that various roperty taxpayers pay at a different rate. Others have irious property tax assessments procedures. I remember here

1 Pennsylvania when we did the work quite a while ago you had board of equalization and tried to look at equalizing the roperty tax. So that part of the answer is as you increase le reliance on a more uniform property tax you increase the

:rutiny of equal assessments.

REPRESENTATIVE WILLIAMS: I'm sorry, I may have

.sstated it, the value of properties, not the tax.

MR. MYERS: Oh, the value of properties?

REPRESENTATIVE WILLIAMS: Has your study impacted the roperty values in areas where the property taxes, where it's scorning an equalization for uniform property?

MR. MYERS: I'm not an academist by background, but a

)t of the academists who I work with and talk to would lggest that property values are to a large extent determined

? the marketplace that's driven out there for other reasons.

Senate of Pennsylvania 29 i example would be Vermont with what they call their gold

)ast towns or the towns that have a lot of second houses and le wealth is driven by outside money, if you would. And it

3 not the — obviously there's a short term increase. If you iduce property taxes you're going to get a short-term icrease in value. But the big trend, the reason why roperties are as level as they are and as well in value is scause of the market.

REPRESENTATIVE WILLIAMS: Thank you, Mr. Chairman.

CHAIRMAN RHOADES: Senator Schwartz.

SENATOR SCHWARTZ: Good morning.

MR. MYERS: Good morning.

SENATOR SCHWARTZ: It's interesting to me what makes a

3od finance system and so the value is placed on that, and ren. your comments in starting out with the question of iequacy and performance. I have a couple questions on that.

It seems particularly important given the seat we're

Ltting in that there's a lot of discussion about performance id about the need to bring up performance in our school

Lstricts, particularly our poor performance school districts, id now we started statewide assessments and we have to put a indie on which school districts are poor performing. But the act that it starts with adequacy, it starts with what does it ake to educate our children well and then you figure out how

3 pay for it equitably, is a little different than when we

Senate of Pennsylvania 30 pproached it in Pennsylvania and it would be a very big shift i our thinking. We've basically gone by history and then justed for some difficulties that school districts face and srtainly where we've gotten to. So I just want to say to the lairman I appreciate the fact that we are actually taking

Line to really think about if we're going to do the formula lat would it take to do it not just equitably but adequately. ren adequately may be too inadequate a term. So a couple lestions on that because excellence might even be a referable point/ but adequate would be a start.

Could you speak to, and I realize some of these langes in other states is still relatively new, could you jeak to what affect it has had on performance? Do you have a jnse of whether the focus on adequacy and more equity has in ict included performance for our children in our school in lose States, and have you looked at any comparison with

:ates that are using more the model we're at now, which is isically either incentives for performance or threats of poor jrformance is a terrible thing to happen to you, whether that

:tually has been. Can you speak to it as being more ifective to actually use the kind of approaches for that inding and value-base assuming it makes a difference?

MR. MYERS: Mr. Chairman and Senator, yes, that's the

)ugh question. If you really get down to it the reality is lese are very new systems, but I think I can answer it in a

Senate of Pennsylvania 31

>uple ways.

First of all, yes, let's go back and say how did we it where we are? We got here because again I mentioned the

:cellence movement, if you would, that leads to this I guess rstemic reform, standards-base systemic reform. The concept sre again is one that says the State set standards. They ive assessments tied to those standards. They determine what

successful student and kid, what a kid should normally be

>le to do, and through that process they then identify an iequate amount of money. Now what you described here is what

> typical in most States and up until just handful of years ro every state, and when I was in the legislature I did the ime thing, it was how much money do we have available this sar and what did we spend before? What's our current per ipil spending and here's how much money we have available. ill, okay, we kind of know we need this much for education so

>w do we split that up to make it a little bit more equitable r a little bit more on the student program of need that I'm iterested in. That's how most legislatures functioned up itil very recently, and the exception to that were only jsponses to court cases which typically until very recently sre equity responses which meant that, you know, okay, this

.strict has more than this one so we have to worry about it.

> this new adequacy growth, this new standard-based systemic

'form approach is very different. What's its affect on

Senate of Pennsylvania 32

>rformance? Well, some would argue, and there is research it there and you can look at it, that says there are a indful of states that were early into this business that had tese new assessments on line and they've shown some progress.

Now, in most cases they are not the same States that

: this point have gone to this adequacy system of State and inding, but one would argue that they're consistent. The lestion becomes how can you hold school districts accountable

.ght now? How can you, as you say, someone said, be hard on iem? How can we pick on school districts when you don't know

Lether they have adequate enough funding? That becomes the isue. We are now at a point where we want to have an

:countability system. That's the other big news out of this

Lrticular year, one of those accountability systems in

.orida, I don't mention this much because from the school

.nance formula, that small voucher program is really very infusing and it's a very small amount of money, but one of

Lose systems was adopted this year in Florida where school

.tes that didn't catch up they were giving vouchers to kids. lat's one of the responses. Well, the State needs to adopt i accountability approach that says we haven't identified iccessful school districts, school sites, and what are we

>ing to do about that? And that's why school finance has sgun to say, okay, we're going to align with that, we're ting to say yes, States are going to adopt these

Senate of Pennsylvania 33 xountability systems, but they really shouldn't be able to

>ld school districts accountable unless they know there's iequate money there.

SENATOR SCHWARTZ: Are there other models that have,

:her than the vouchers in Florida, you know, saying if you

>ntinue to fail that's the way we're going to go, are there

:her approaches to what happens in a school district after a jrtain period of time once they determine adequacy? Are lere other models who would have this intervention?

MR. MYERS: Yes. And I think in some of the material, no, you get a sense, a beginning sense of some of what ley've done there. Yes, there are. Typically states, the rend right now and there are 16 States I believe that have

>me kind of an accountability model that gets to the point lere they're really down at the level of sanctions at school

.stricts or school sites, and in those states the typical rend would be first of all they go in with assistance, you low, some way. Once they have identified, and it usually squires them to do this in a minimum of two years, usually ley go in with assistance and that assistance takes the form

:, to answer your question, development for teachers, but lat's usually the first step. The second step then is often

>me kind of additional state requirements for action and jrtam things then become required. And finally it's ikeover. There are some places that go as far as takeover in

Senate of Pennsylvania 34

:hool districts and takeover in school sites.

SENATOR SCHWARTZ: But we haven't gotten to those

>ints in most of those States and I guess that's the other lestion. How much of the early interventions make a

.fference or how much is adequacy actually taking care of the juitable funding and in setting those standards and

:pectations to get school districts there?

MR. MYERS: I would argue it's too early to know that. would also argue, though, on the bigger issue of standards- ised systemic reform, that issue that says have you found

:ates that have been successful in having these assessments, ring the assessments to the standards, and trying to hold

.stricts accountable. Look at those numbers. Have they been

>le to focus more attention and raise performance? I think le answer is yes. And you can find research on that.

SENATOR SCHWARTZ: I have just one other question on lat. Are there other States, and I think Pennsylvania is at us point right now where we have set standards and we're smanding accountability but we haven't dealt with the issue

: adequacy of funding? The answer has been that there's

>ns of money in the system and just do it. So even though lere is incredible disparity in Pennsylvanian across the 501

:hool districts, we're basically saying to all school

Lstricts we're going to hold you equally accountable even lough what you spend and how you spend it is obviously very

Senate of Pennsylvania 35 ach a local issue. We all know that disparities are great id we hold all of those school districts accountable for the ime standards.

Are there other States that have been called a model -

'm not sure we actually have made a determination that way - at that's basically the system we're in right now. Do you low whether other States have been in that situation where ley have created those assessments, those standards and those ssessments, and not dealt with the issue of equity and

Hiding and then held the school districts accountable, or ive those states, and as we said, it's risen to the issue of iequacy of funding, and the issue of state responsibility in roviding adequacy funding has risen out of that process or is us an unusual situation that we haven't taxed the whole ball

: wax?

MR. MYERS: Well, of course it reminds me of the fact lat when you work with States, every State is unique and lerefore to find a common pattern is an interesting thing, it the more you know about them the more you say no, we're

3t like that, or here is why we're different, or whatever, id I can understand that. I guess I would try to say when I link about school finance equity, for example, the starting sint, I kind of tier states into groups and there are those roups that have the absolute caps on expenditures and uniform roperty taxes and a fairly uniform profile, or like

Senate of Pennsylvania 36 ashington State where there's fairly statewide, the State

Lcks up an awful lot of what's going on. So you have tiers nd Pennsylvania certainly fits into the tier of States that re not very equitable. And, again, I haven't done recent ssearch and I don't want to argue that, and you might hear com others later as to that, but what we did and what I slieve has happened here would suggest you're still not very suitable in that system. So that raises this additional lestion. I don't know that there have been a lot of states i the same tier that you are in that have done what you are sking about. I believe what you have, you have the

Kceptions, you have New Hampshire, a dramatic exception

2cause they have so small a state aid and there's was all roperty taxes and the variation was dramatic. Well, that's langed just this year.

You have Ohio. Ohio has 608 school districts, so they ave a lot of variation and they had a variation also that ley have now changed.

Michigan is an example of a State that obviously on le tax side, you know at one point they voted to do away with roperty taxes. And no State has ever done that and they idn't do it, so remember that when you're thinking of it scause they were among the highest property tax in the States

Dr education purposes in the country and they moved down to le middle. What they brought back, of course, was the sales

Senate of Pennsylvania 37

LX increase and it's uniform.

SENATOR SCHWARTZ: But they focused on the issue.

MR. MEYERS: Yes, that's right. That's exactly right.

SENATOR SCHWARTZ: Thank you.

CHAIRMAN RHOADES: Anyone else?

John, let me come in. From the standpoint of scisions that were made in terms of funding, how much of it

>uld you say is research-based in terms of looking at, you

LOW, we found this out that this is true? Not that we're

>ing research but that we found out from what has been

:complished, these are the best practices, therefore we lould be funding them because we know that we achieve when we

» these things. Has that occurred in many of the States?

MR. MYERS: Well, again, Mr. Chairman, I hesitate to imment on this in part because I remember when I was on your

.de and you've heard the debates on the floor of the House or

Le floor of the Senate at least, and how many times do you sar, I believe, I think, my neighbor told me. And how many

.mes do you hear I have the data that shows, or there are icts and here's the facts. There is a mixture but usually

:'s more the anecdotal example that drives legislation. The xeption and part of the reason why I do what I do I guess is icause I believe you can begin to bring more data, lformation, and facts to the table and it will make some

.fference. That has been true in some states in a limited

Senate of Pennsylvania 38 ly. When the courts order something then you're required to

>end money on research, on data. So more States that have lat court challenge tend to do that, but generally the answer

> it's much more political, even the adequacy studies, and I

.11 tell you, if you look closely at New Hampshire, and I ilked about how they looked at their State standards and they

.eked the successful school districts and they took an rerage cost of those. Well, the researchers, in this case rself and my partner, working with them, suggested that that ight to be an average of all of the school districts. What

.d they choose, the average of the bottom half of the school

.stricts. So was that data-driven or was that driven by ilitics, by available revenue? Well, it's the political

:ocess. So the 30b here I think, and what I try to do, is sip people get more data with an understanding that there is

:ill going to be this political environment in which you make iese choices. But it's why you make the big picture of

Loices around some things you want to have happen. Do you int to have a tie between performance and funding? Do you int that? Because if you do, then you follow one of these

>w models.

CHAIRMAN RHOADES: I guess part of my concern is when

look at that performance I've gotten to the point of saying

: that performance based on, I'll say, practices, good, sound isearch-based practices and accountability that is

Senate of Pennsylvania 39 aasurable? I mean, because we can all sit here and I think s could all say we all like these things, we think they tiould be in, which is again as you said, they have no, it's tie political ideological more than it is the technical and ractical objective type of measurement.

MR. MEYERS: Right.

CHAIRMAN RHOADES: And I'm trying at least to drive o the objective to this is what works, this is what we should

3 doing. And I'm still trying to.

MR. MYERS: Well, Senator, the assumption in the tandard-based systemic reform is the State role is not to do lat you just said. The State role is not to decide what

Drks in performance. The State role is to say we don't care

Dout a school district or a school site, how do you get the srformance. My partner sometimes does tell the story what if

5e Iacocca was all of a sudden hired in XYZ school site to be le principal. Now that would cost you a million bucks robably to get Lee Iacocca to do that. And ordinarily you'd ay a million dollars for school administration at a school ite is ridiculous. You know, there's no way that's the ogical thing. But what if because of that all of a sudden erformance went out the roof? Would you care that 80 percent f the money is spent on administration? No. Because you are for performance. Right? So that's just kind of an bsurd example. I understand that that's not reality, but you

Senate of Pennsylvania 40 sn't care whether that school site centers on music as the sre of why it is all those kids are beginning to perform.

3U don't care whether it's science or whether it's computers,

>u care about performance. That's the argument that is made

1 standard-based systemic reform. You're going to set the

:andard. You're going to have assessments tied to those

:andards. You're going to provide adequate dollars. How ley spend that money is not at all your concern obviously as

)ng as they do it legally, and remember when I talk adequacy lat means you're also providing money for adjustments for rerage kids and for special ed and stuff like that, so you're iking care of some bases.

CHAIRMAN RHOADES: Let me look back at that formula jain too as well. I'll call it the foundation or the actual istructional expense. What do you see are the more common ungs that are defined that are put in there? Because I look

: average kids and I've got to say, okay, do I put more money lto that program or are they part of the overall funding that

am doing? You know, we have special education. I know that lother issue is in some states I think they include special iucation in their regular formula that they drive their money

1.

MR. MYERS: You ought to do that, yes.

CHAIRMAN RHOADES: Well, see that's the question. We xnd basic ed and we fund special ed. Some roll it all right

Senate of Pennsylvania 41 ito one, that there aren't two sources of funding or two jrmulas, it's all one formula.

MR. MYERS: Correct.

CHAIRMAN RHOADES: And I guess what I'm looking at is,

3 that a trend that is occurring more and more or are we

:ill in the same practice we're doing here in Pennsylvania?

MR. MYERS: Well, there are a lot of states that are

:ill in the practice where you are. The trend is toward more lclusion. And I said, it is one of the principles of how you low good school finances is that you take into consideration

LI the money. If you have money that's going out to special iucation it ought to be a part of that same formula that says jre's how much property taxes are going to be and how much

;ate aid is going to be, and are you under that realm, if you

L11. And the assumption in the future is that — well, first

: all I need to step back and say whenever you're setting lis adequacy level, in the approach that we use the basic

)st is a cost that tries to take out for those special ed,

;-risk, etcetera, costs. So those revenues coming in are iken out before you establish the base and then they're added ick in as the additions because they vary among school

Lstricts. If you had no variation among school district

=forts you wouldn't have to do that, but if it varies among

:hool districts then you're going to take that out. And fpically what you bring back, the key issues, and here's the

Senate of Pennsylvania 42 roblem that I think needs to be worked on nationwide, and j've been talking a lot about that, is how do you identify le special ed and the at-risk, the economically disadvantaged

:udent? How do you do that? Because right now what we've mnd is that most of the work we've done in every State that is tried to be more specific, and you're going to hear some

>re specifics here, suggestions about how to look at that, lere is a high correlation between the simple proxies like

:ee and reduced lunch. The political viability of other roxies when combined with the correlation of what you're

:ymg to achieve is very high on some of the civil proxies,

:ee and reduced lunch. AFDC, it used to be that. What is le name now? TANF. But those are some basic proxies for lat we're trying to achieve.

And until we get to the point where you are testing

.ds more regularly and being able to really get a better ientification of the reasons why. We know that economics tkes a big difference in student performance. It's the

.ghest figure for student performance in almost every place i work. But that doesn't mean that these other resources

>n't make a difference. They still do make a difference, but le relationship between that we need to know more about, so i need more information about student performance in order to

.gure out if there's a better way to identify them than the ree and reduced lunch or not. But in most states the

Senate of Pennsylvania 43 ational trend is still whenever you look closely at it the orrelation is so high that they go back to free and reduced unches.

CHAIRMAN RHOADES: The issue of caps, caps on spending rid caps on taxing. If I log that in place and say you can't pend more than - and I think that's one of the formulas aat's out there - how do I take those who are on the bottom,

DU know, the 250 that are behind in Pennsylvania, and how do

pull them up? Because I think research has shown us that

Lstricts that spend less than the median when they get more

Dney they make better academic or achievable levels up to the sdian, above the median, it doesn't begin to show that

Lgnificant a difference. What I'm looking at is, is there a srmula or method that's used to bring them up so that they ave as much money as those who are achieving?

MR. MYERS: Yes. Mr. Chairman, what I have been lggesting here is this approach that is the foundation jproach that has an adequacy level in it that says you bring rerybody up to that level. So it is the definition of that svel that's important, and if everybody is going to spend at lat adequate level or above, and you can do some things above lat if you want. How do you bring them up? Most states have

>und on the revenue side you have to do something with a more nform property tax, which means that you're going to have

>me winners and losers, and, let's face it, that's the

Senate of Pennsylvania 44 ifficulty in the legislature. I often used to say when I was

1 the legislature I had computeritis. That was the disease lere I went down and to the right when the computer printout ime out, found my district and was my district a plus or mus. I had more than one district, but, you know, you've

3t to add that up.

Again, ideally you would have some concepts that say

JS, you're going to have to vote that way, but some people

:e going to have some numbers that are pretty even. How do ley vote? Well, there ought to be another analysis and robably vote, and there ought to be an overall equity and iequacy system. And it's those things I think that I suggest

> you ought to be considered.

CHAIRMAN RHOADES: Which States would you say have the

)st equitable system? I mean one of the things is there's a

:eat disparity, and you mentioned it before, 10,000 in one ise, 3,000 in another, the average is 5. Which State has the sst equity formula which you found, and I'll say this on a ssearch objective measurable balance?

MR. MYERS: Well, the problem is again, before I say lis I've got to get to the disclaimer which is that every

:ate is unique and there are problems with the numbers and

:uff like that. And I have an easy answer, Hawaii, because ley have one school district. That didn't count, right? I low. But beyond that you go to States, traditionally you go

Senate of Pennsylvania 45

3 a State like the State of Washington, where they have a sry high State level participation and the State basically is covering a whole lot.

New Mexico is another example. New Mexico is very suitable, but on the adequacy side it's pretty well down lere. I think of the most recent education need quality sunts and I know there are real problems with some of this robably. And I didn't even look up where Pennsylvania was.

probably should have done that. The quality counts comes it in January and each year for the last 30 years and they ive this system of identifying adequacy.

I want to respond to what you were saying earlier

)out caps, because there's two thoughts when we come to caps, le of the caps is the overall kind of tax and budget

.nutations, and we see it in Proposition 13 in California. i've seen others. In Colorado what was called Limit 1, which

> the budget and tax limitation. And those kinds of caps, lose ones that some of us who are education people would

:gue are arbitrary and outside of the education system and

:e forced on education, okay, those create a different

:enario than the caps that are within this finance formula. id I was implying that quality counts in education because if

>u look at that and you look at this adequacy measure, which is on three factors, recently cost adjusted per pupil

>ending, how the funding has changed over a 10-year period of

Senate of Pennsylvania 46 lme, and what percentage of State wealth is being used to und education, those three factors were combined by ESBE and hey ranked States on how their school districts were on those easures. And the bottom States were ones that had these rtificial outside caps. They were the bottom States in dequacy. The top States were the ones that have for a ariety of reasons, primarily in response to court cases m ome States, New Jersey, for example, or others, had made dditional investments. They made changes. Those that have ade more aggressive changes were at the top. And some of hose that were at the top still had absolute caps on spending ithin their formula. See, that's the difference. The lfference here is whether you have constitutional restraints n taxes, because ultimately the revenue of sales tax, roperty taxes, and income taxes are what determine how much

Dney becomes available for education.

CHAIRMAN RHOADES: You mentioned, too, site-based anagement, and I guess what I'm asking for is in terms of afinition, and I'll get into site base, is begin to take some f that local control, local determination out of there, but

'm also looking at the accountability, the fiscal scountability of following the dollar into the classroom to se just how much is being spent for instruction. Likewise, tie cost of education index from the standpoint of how much re you spending for text books versus districts of similar

Senate of Pennsylvania 47

Lze in the same area. Has any State gotten into that type of

:ogram?

MR. MYERS: Yes. There are certainly a number of

:ates that have begun to look at those kinds of issues.

)uth Carolina is one that used, it used to be Coopers and fbrand, it is now Fox River Running, Insight it's called. ive your districts done much of that here in Pennsylvania?

CHAIRMAN RHOADES: Some have.

MR. MYERS: Some have. Because that really is a fstem that tries to trickle down the money so that you get a jtter picture of how much is spent at school site levels.

)me full States out there have used that kind of method.

Our view of that is generally that that may be helpful

1 making some local choices, but again when you think about

:, if you follow the philosophy that I talked about earlier, jain, I said how do you know a good school finance system is

;eded, is that you need to know that a school district has a

)gic and rational way that they go about funding school

Ltes. Beyond that how they do it is up to them. You can be

;ry site specific or you can be very district controlling

Lth finances as long as there's students that say you don't ire. That, again, is the philosophical background. However,

know that there's real concern.

What we do know from the charter schools, we've done

3me things evaluating charter school finance, for example,

Senate of Pennsylvania 48 id the initial responses from them would suggest that what we se is the additional flexibility that comes to a school site

> used primarily around things that are not core based in the ime way that, well, 80 percent of the money is currently

>ent on salaries more or less. Out of that probably 15-plus srcent is spent on teachers' salaries. Teachers' salaries

•e based on a combination in almost all places of number of sars of service and the hours, master's-plus or BA-plus hours iken. Typical salary scans. But what we find in variation

•om that is one that says that's not what's followed when you

.ve more incentive, more opportunity, more flexibility in

:hool size. The teachers are now funded and the

Iministrators are now funded on a different basis and that is

Lrt of the learning that has come out of site-based magement and charter schools and other things. That is part

: what's changing.

I have to tell you before I go on that one of the hats wear is I assist the National Board for Professional saching Standards in some of their policies within the

:ates. That's the gambit because I want to say something dative to teacher quality.

Teacher quality, when you start to look at this

Lequacy issue one thing we know is teacher quality is one of te big impacts on students. You have the big impact on

>cioeconomic status, economically disadvantaged students,

Senate of Pennsylvania 49 icetera. You have a big impact on teacher quality. You have

1 impact on time, time on the subject, those are the things

>u have a big impact on. Now there are some places that ipact on other things, but the research would suggest those

:e the things you have an impact on. So when you begin to link about this adequacy research, one of the things you want

> think about is the quality of the teaching force. How do

)u get more quality teaching force in the way we go about

>endmg money right now?

Research also shows that there's not much relationship jtween the 16th year of teaching and the 20th year of caching, or between the 7th year of teaching and the 12th

;ar of teaching. Yet what we do is we spend money. Research

.so shows there's not a lot of relationship between a BA plus

I and a BA plus 30, yet they get more money for it. What we low is teachers' knowledge and skills do get more. We know jachers' verbal abilities get more money. So we know that lality teaching as in reflected practice makes a lot of

.fference. We know that professional development makes a lot

: difference if it's done well. So much of it is not done ill. So when you start to think about the area you're jaded towards school size, how are we going to make a

Lfference in performance, you know, the State can encourage

>me of those but again it's the local school site and the

)cal school districts that make those decisions. But what

Senate of Pennsylvania 50 an you do to foster that? Well, you can support things like tie National Board for Professional Teaching Standards. You an support things like good quality, high performance, rofessional development, and those kinds of things.

CHAIRMAN RHOADES: John, I want to thank you for sing here with us. As you can see, the green light is out so e're staying within the line anyway. But thank you for iving us a picture of what's going on across the nation as we ave to begin to make our decisions. And I think somewhere long the line we may have you back to ask you some more aestions.

MR. MYERS: Thank you, Mr. Chairman. It is a

Leasure. I know NCSL was where you started, and Terry ntney was not able to be here so I hope I was able to fill i for him. I hired him. I brought him into States like snnsylvania and Indiana to help him get started when he tarted some 8 years or 9 years ago. So I hope there will be pportunities to continue to work and do call on NCSL and NECS

•>r that matter. Thank you.

CHAIRMAN RHOADES: Thank you very much.

Our next panel of presenters with the Educator's

2rspective will be Jack Van Newkirk, Superintendent of York

Lty School District, Dr. Cornelius V. Cam, Superintendent of amp Hill School District, and Mr. William A. Nichols, iperintendent of Corry Area School District.

Senate of Pennsylvania 51

Please come forward, take the center stage, and please ake sure the microphones are on with the green light and we an begin.

MR. VAN NEWKIRK: Good morning, Senator. Thank you for he invitation. My name is Jack Van Newkirk. I am upenntendent of the School District of the City of York. he invitation indicated that I was limited to 10 minutes and tiat is my plan.

CHAIRMAN RHOADES: Sounds good.

MR. VAN NEWKIRK: The intent is to share our srspective on school finance and I'm going to give it to you com the perspective of an urban superintendent.

My personal background is one of a public school

Lassroom teacher. I am a public school administrator. I was ired as an administrator and for the last 18 years, I started

/ 19th year, as superintendent of York City.

The purpose of my being willing to present to you is nat the School District of the City of York needs help. We sed help on two fronts. We need help financially and we sed help with general and technical assistance. Full follow- nrough on technical assistance. Specifically, we know that ir academic achievement is not what some folks are looking sr and we need more than rhetoric to deal with that issue. It

Les into finance because we know that we need to have, as reviously stated by our speaker, the quality of ongoing staff

Senate of Pennsylvania 52 ivelopment to deal with the change in characteristics of an rly development of frustration.

My presence is one of frustration. Senator Schwartz

:epped out for a moment, but Senator Rhoades, you know I've ien coming to these meetings for sometime. In fact I believe began my first trek here in 1984.

The presentation and request is not an apology or an ibarrassment. Let me ]ust tell you about York. There are

2 square miles. We use one bus for the students to go

:ross the hazardous route. Some of our students walk to

:hool.

The median household income is $25,294 and there are indreds of household incomes that are under $20,000 a year. ie average home price is $43,799, and if you follow the ad,

: you have nothing else to do late at night, watch the real itate ad around York and you'll see that there are dozens

Ld dozens of homes that sell for under $35,000.

Our equalized mills, 30.1, which gives us a State rank

: 28. I've given you a handout for that. And I've also icluded for your review the districts with the highest

[ualized mills in the State. Isn't it interesting that so iny of them fall into the poverty category? There's got to i a relationship. And there's got to be some pride in the snse that four districts are willing to put forth the

.gnificant tax effort to provide for their students.

Senate of Pennsylvania 53

We're the highest tax rate in York County. I've given m a comparison sheet in my handout for that. And I've given

3U a York County assessed valuation comparison identifying le assessed valuation per pupil. While we may not be the

)orest in assessed valuation,, we do have 7,000-plus students jmpared to districts that have significantly less.

The issues facing the school district are very real. jecial education has to be at the top of the list. Using the svere formula of low incident, if you would, we get paid for

1 students. The PDE count indicates 94. The school district

: the City of York count is 231. I've given you an itachment to that effect.

We've been talking in the last few days that there jems to be a new interpretation that SED is no longer a jvere category, and I would submit to you that anyone in the apartment who has not stayed a full day in a SED classroom

>es not know what a severe or low incident category is. But jrhaps it happens to be a way of not being responsible for

.locating the funds for that student. We believe that our lortfall in funding is 154 students times the 14,535 and it's

1.2 million plus or minus. The history of the problem is lat our special education population continues to increase id the demands for service continue to multiply.

The citizens of the School District of York, with a ink of 28 equalized mills, have not been afraid to fund their

Senate of Pennsylvania 54

^ligations. But at what point do you take a group of

Ltizens whose household income has a median of $25,000 and

Dntmue to place on them an excessive tax rate? You will md that our salaries are in the middle of the ranking in the sunty. They are not at the top. You will find our average istructional expense, if you look at the sheet provided for

?u on the handout, is pretty much in the middle of the pack.

School districts do not set regulations or squirements regarding class size. The Commonwealth does. As

understand it, IDEA is much more flexible. Parents rights id responsibilities are established by regulation. I'm not rymg to undermine or deny a parent any right, but we must scognize that there are some undetermined costs associated

Lth having to have regular education teachers involved in IEP snferences during the regular school day, or we're going to ave to have some sense of rotating substitutes to accommodate jr that exclusion from the classroom. You can't have a sgular education teacher leave the classroom to go to a IEP inference and leave those 25 students unattended.

Mental retardation suspension requires an immediate

>nvening of the full IEP team, parents, regular ed teachers, fecial ed teachers, psychologists, and administrators.

The School District of the City of York has 300-plus jntally retardation students. Special education requires a

Lsproportionate allocation of space. The statement is not

Senate of Pennsylvania 55

=ant to indicate that special education students should have ibstandard facilities. That's not it at all, but when you it 8 students in a classroom that can accommodate 25 to 28 sgular students and you start doing that at the rate that the

:hool District of the City of York does, you find that our pace is being gobbled up. A brand new elementary school, mcoln Elementary School, opened 4 years ago and no longer ses a separate music room and a separate art room. Those

:eas have been divided so that we can accommodate additional

Lasses because of the placement and the location of special iucation students.

The School District of the City of York depends on

2deral money to support critical programs. I really want you

5 be aware of this. We are fortunate to be able to get a sry generous Title I allotment. We do not know or believe lat is an ongoing forever guaranteed source of revenue.

I want to share with you the list that we use. Sixty sven of our staff members are paid out of Federal money. All

E our student services personnel, our deans of students, our sme school liaisons, all of our psychologists, and there are

I, all of our English Language Learners staff, 16 members of lat group, 2 art teachers, 7 kindergarten teachers, Title I

Ldes, 5, and all of our technology hardware. All of our schnology hardware either comes from the Link to Learn grant

: Title I. We have no general revenue in our general budget

Senate of Pennsylvania 56 lat can accommodate that need.

Changes in the school district for the last 18 years. lese are reasonable predictions. It's amazing how you can't

Lnd data after 18 years. But I think it's pretty accurate. i 1981, English Language Learner Staff, zero. In 1999, 16

Lus the director. Instructional Support Teachers, zero in

381. Six in 1999. You can see the list. Special Education icreased from 91 to 153. Psychologists from 5 1/2 to 12. iternal Suspension. They didn't talk about it in 1981. We

3W have 3, probably need 5. Alternative Education Staff, ley shared a program in 1981. Three of the staff were ours.

2 now have a full program of our own and we have 10 staff sople. The difference is 101 people on issues and problems iat have magnified because of the changing characteristics in le school district.

Free and reduced lunch in 1981 was 41 percent of our

:udents. You just heard testimony about the importance of lat staff. This year district-wide it is 72.3 percent. It

3 80 percent at the elementary level. It is not the same at le secondary because the secondary students will not fill out ie forms.

Therapeutic Staff Support. I didn't even know what lat word meant in 1981. We now have on board, not from our alary schedule, not from our money, I want you to know that, it again, it's a characteristic of what's happening in the

Senate of Pennsylvania 57

Lassroom. We have 89 adults accompanying children through le school system every day from various agencies in the

>mmumty. I walked into a room the other day and I thought I id gone to the wrong place. There were 5 students and 7 iults. It was special education. The instructional staff is correct, but there were 3 TSS staff.

Additional demands for time and financial resources lat did not exist previously, student assistant programs, istructional support team training, and the maintenance

)sence. The maintenance absence that occurs with 1ST and SAP squires a significant number of substitutes we brought in for lose people to go for their continuous training. Let me lare with you that we not only incur the cost of the lbstitute, we diminish the effectiveness of the use of istructional simulcast. Peer mediation at all grade levels jcause of the new aggressive characteristics of students.

The English Language Learners. I identified the imber of staff. I was at a briefing yesterday with my ibinet and it appears we're going to have to ask the Board

>r three additional teachers this year. The students keep

>ming and it's also true with special education. We do not inufacture these students; they show up at our doorstep. We sel a genuine obligation to implement the law as it has been jveloped.

Drug and alcohol education. We put a lot of time in

Senate of Pennsylvania 58

>stpomng sexual involvement. People criticized us because

: our high pregnancy rate, but we have found over the last 3

;ars of implementing this program that we've able to reduce ie teenage pregnancy rate.

AIDS education. The educational challenges in our

>urt and in poor districts as a whole limit early childhood ivelopment.

Academic catch-up. We need tutorial advantage. When

:udents are significantly behind, ladies and gentlemen, you ive to invest the time for individual effort.

Truancy/absenteeism/tardy syndrome. The greatest need

>r individualized student assistance and the most limited ssources. The great number of students who do not receive

;he push from home as the school attempts to pull." And we

.so encountered contemporary poverty and contemporary

Lvantage. May I explain.

Contemporary poverty is where families who are poor I slieve make inappropriate judgments for their children in norities. Many of us in this room can identify and relate

> a past poor. I will not presume to be able to read reryone's background, but I know that I had parents who did

>t have excessive amounts of money, but it was very important lat I had music lessons. They didn't succeed but I played rery instrument under the sun. It was important that I went

) the Philadelphia orchestra. It was important that I went

Senate of Pennsylvania 59 o the ballet. It was important that I took the tram into he theater. All of that was done with financial sacrifices. ut I'm finding today that the parents with limited resources ill find it convenient to bring three bags of McDonald's home or dinner instead of preparing something from scratch. What

find is that they are willing to buy a Tommy Hilfiger shirt ather than pay for private music lessons. That's ontemporary poverty. And contemporary binge, on the other and, deprives our children of parent time. It is more mportant for parents to be involved in, please fill in the lank. It might be the boat club, it might be the golf club, t might be the bridge club. They have resources so they rovide stuff and the kids have things, but they are coming up tiort under contemporary advantage because they do not have tie most precious gift a parent can give, and that is time.

11 of these things affect what a school district encounters rid has to approach as an opportunity each day.

My observations. Can a school district be all things o all students without the required resources? I don't think

D. And I think the legislature and other people who are ssponsible for education are going to have to come to grips

Lth what is it, what are the fundamentals that we want our shools to provide?

Are you aware that schools only have the presence of a tudent for 7.8 percent of the time of their first 18 years of

Senate of Pennsylvania 60

Lfe? A lot of people don't take time to figure that out. If

DU throw in 8 hours of sleeping each night, well, then we ave them 11.7.

Elimination of any naturally acquired deficiency from ie lack of other exposure requires substantial supplementary

^tivities and programs. When students come to us without

Lgnificant exposure we have to play catch-up. If a nation

316.

Alexis de Tocqueville (paraphrased): America is great scause it is good. When it ceases to be good it will cease

5 be great.

I believe our history as a Commonwealth is long

:anding for common good—that public education has been the jualizer of opportunity and enrichment without special iterest and without special privilege. I want America and mnsylvania to always be "great."

Thank you.

CHAIRMAN RHOADES: Thank you, sir. We appreciate lose comments.

Who wants to go next? We'll wait until all three of

)u have presented and then we'll start our questioning.

DR. CAIN: Senator, thank you for the opportunity to jstify before this joint session of your committees. I'm

Senate of Pennsylvania 61 ncouraged, as are my colleagues, by the fact that the egislature is concerned about the serious problem in this

Dmmonwealth, and that is the funding of schools.

My part of this program was to provide some insights nto the problem of school financing from the perspective of nburban schools. And I am Cornelius Cain. I'm the upenntendent of the Camp Hill School District. And I have a

2W words about Camp Hill.

Camp Hill is a small district, we are located, as many f you know, right across the river from Harrisburg. We are srtamly a suburban school district. We only have about

,130 kids. A profile of our community, our community tends to

2 a pretty much educated middle to upper middle class

Dmmunity. Our students tend very much to be college bound tudents so that 90 percent of our students will go on to

Dllege. Many of our students attend 4-year schools.

I think that suburban schools may not face some of the roblems that urban schools face. They may not face some of le problems that rural schools face, but there's still some

2rious problems with suburban schools as well. And as with le urban and rural schools we find ourselves in a position

DW, 1999, where the State funds 35 percent of our expenses lere in the '70s the State funded 50 percent of our expenses.

Dviously this becomes more difficult because as that srcentage has decreased of course our expenses have continued

Senate of Pennsylvania 62

3 rise. We have to fund our schools, and of course if we in't fund them with more State money then of course we have

3 fund them with more local money, and of course that would use the taxes.

Some of the problems that we have to face, and Jack an Newkirk has spoken very openly about this, and that is secial education, and I want you to know that the problems

Lth special education apply not only to urban schools but

Lso to suburban schools. And I'm sure you've heard of IDEA

1, in other words the Federal law that was passed in 1997, id that upped the requirements for dealing with special iucation students. And in our case in Camp Hill our special i expenses have increased only over the last 4 years,

500,000 to $1.2 million for this school year. And you may iy that, and it is certainly true, that this is in large jasure a result of IDEA '97 because that was the year for it

;ing a Federal mandate, it should be special education funds, id I certainly subscribe to this, however the problem is

:ill here. It was a problem back then, of course, but we

:ill have to find our place.

In our case in Camp Hill, as is the case with many lburban districts, the enrollment of late is increasing. In ir case over the last 6 years our enrollment has increased by

) percent and that fact plus the fact that our special iucation services that we have to provide has increased,

Senate of Pennsylvania 63 lat's going to mean that we're going to have to do something

Lth our buildings. We're going to have to build new

Hidings. We're going to have to expand our present

Hidings, and of course that costs money and that's all the

Dre expense.

Some of you may be familiar with Cumberland Valley

:hool District. That also is very close to Harrisburg, right

;ross the river. Cumberland Valley over the last 10 years

Lll have spent $100 million dollars for building projects. id of course they have special education and building and so jrth, the usual expenses certainly for them.

Salaries continue to increase. Benefits continue to lcrease. And as I'm sure everybody is aware school

Lstricts, are people-intensive organizations or industries. id in our case, as is the case with most districts, 75 jrcent of our budget is devoted to personnel costs, salaries id incentives.

In our situation, in the Camp Hill situation and also

I the case of many other suburban school districts, we really ike pride in our reputation for academic excellence, and we

:e expected by our constituents and by our residents to lintain that reputation for academic excellence. And what lis means in our case is maintaining small class sizes. It sans, for instance, continuing to be on the cutting edge in ichnology as it applies to the curriculum. And of course as

Senate of Pennsylvania 64

>u keep class sizes down that means more teachers. As I just intioned that of course is a greater expense. Technology lifers great promise for education but technology is really

»ry, very expensive.

Well, since we need to fund most of our expenses from

>cal funds, what that really means is increasing local taxes, lcreasmg real estate taxes, and as is the case in any lburban districts we really face some difficult choices. In imp Hill we face the problem that we are built-out. There's

)t one square inch of land in Camp Hill that doesn't have a

Hiding on it. So while our expenses are increasing it's

;ry easy to solve that problem, you simply increase revenue. ill, if your tax base isn't increasing you aren't going to lcrease your revenue except by raising taxes. So that's what i find ourselves having to do. In Camp Hill's case, again as

1 the case of any suburban district, we have a relatively

.gh proportion of elderly residents and elderly residents are

:ten on fixed incomes and swallowing as far as real estate ix increases is relatively difficult. So in Camp Hill, as in

>st other school districts in this State, there is really itense pressure for us to keep our taxes down. And Camp

.11, of course, has been said to be a relatively wealthy

.strict, but if you look at our tax base we rank 191st in tax ise. That puts us well above average. For this year, the

599-2000 school year, to keep our taxes at a reasonable level

Senate of Pennsylvania 65

: will be necessary for us to cut textbooks from our budget.

I think that tax reform is certainly a really noble

:fort, however, in its present form it really does nothing at

LI to help Camp Hill. The reason for that is that in Camp

Lll we rely heavily upon nuisance taxes, in our case most of le occupational assessments. And as you may recall, Act 50 squires that with that extra revenue that you generate from using the earned income tax you must first take out the lisance taxes. Well, when we do that the money that is left rer to defray real estate taxes is really very very small.

) tax reform, unfortunately, has not been the answer for Camp

.11.

I would hope that some way, somehow the effort to deal

.th education and the financing of education will continue, id I hope that there is another attempt made to do something

>out the tax structure. And what I would like to see happen i we're paying for colleges is to simply attach it to the

:ate income tax. The State income tax, of course, is a well iown tax, it's a proven revenue provider. I think that if le State income tax were raised and that money were, a larger

>rtion of the money were given to the schools, I think that

; would solve many of the problems that we have in supporting lucation.

Again, thank you very much for the opportunity to istify before you.

Senate of Pennsylvania 66

MR. NICHOLS: Mr. Chairman and your Committee, I hank you very much for this opportunity.

I have written my comments in kind of a thumbnail ketch, which you have. I still would like the opportunity to o over them and highlight the things that pertain to our istrict.

I am here today representing a rural district, Corry rea School District, and like many of you have committed to fie people in my school district. Also like many of you I'm a ife-long resident of that school district. I've been an nployee of theirs for 30 years and I'm in my 26th year of ininistration within that district. I feel I know the aportance education plays to each person in my district, the arents, the students, the employer. And I know the impact of

Late funding, at least on our district.

I want you to understand a few things about our

Lstrict. We are kind of unique. As I listened this morning

2 are certainly a very diverse district in comparison. We ave one comprehensive middle-high school and the amprehensive means we also have our own vocational school and lat's due to our commitment to vocational, but the next

Losest school to us would be a 30-mile bus trip outside our

Lstrict. And I'll tell you in a minute the size of that so

3U can see the impact. Vocational education is expensive.

We have 5 elementary buildings. We're 250 square

Senate of Pennsylvania 67

Lies covering 3 counties with one high school. Tremendous

Lversity compared to what's at the table here this morning.

5 drive 2,500 miles to pick up our children on our busses ich day. Our buildings range in age from 80 years of age to

elementary, our smallest one, which is 15 years old.

We right now have a major split within our community, id as we speak from a phone call this morning I know there

:e petitions circulating in our community. We have a 5-4

>ard as to how to resolve not education and not whether we're

>mmitted to it, but how are we going to resolve the building roject that carries a major significance to the wealth of our

)mmunity or the lack of.

Our students live 30 miles apart within our district,

) the distance to a vocational school or to activities may

>t seem drastic at 30 miles on a rural road but they may be i the other side of our district, so they might be 50 or 60

.les from that vocational school. That's a pretty

.gnificant distance within our district.

Our high school and all of our schools are community riented from hundreds of night activities to senior citizens

10 have a pass to all of our activities and they come in the

.nute they turn of age. We have 50 to 100 walkers in our

.gh school nightly that we talk with that walk in there for

:ercise as well as programs. We are the community, there's no testion about it.

Senate of Pennsylvania 68

Our budget compared to many may not be huge but it's

10 million with an aid ratio of .76. One collected mill is

L70/000. We operate on a 28 mill budget. Millage comes very ird. When I returned to Corry School District the millage is approximately 30. The millage is now 28. We live and die

{ State reimbursement. We live and die by the natural lcreases that come in, not by millage increases.

These figures are approximate. As you know they lange from time to time. We spend at the rate of about the

Lddle of the State. We're 250th or thereabouts under the

)1. We tax at the rate of 250th under the 501, and we rank

)0th under the 501. We're 20th from the poorest within the

:ate of Pennsylvania.

Fifteen percent of our people live below poverty and

I percent of our people make $15,000 or less. And it's very

.fficult to go to those people and ask for an increase in

.llage. Also, there is definitely a difference as you heard

: the table this morning. Two percent of our people earn

'5,000 or more. That's not an overwhelming number by any jans to come forward and support education in the district. le average market value within the District is $180,000, ours

> $78,000. Seventy percent free/reduced lunches, high divorce id separation. Twenty thousand dollars for average household icome.

I put this comment in here about the number of

Senate of Pennsylvania 69 imilies we have that dropped out of school and education was

3t afforded to the parents and grandparents. I was principal aring some of those years. I was a student during some of lose years and for many jobs that were available in our area

commitment to education wasn't needed. We made very good sney. I had students that I encouraged to drop out who sturned later to show me their W2 when I was high school rincipal. That's not true anymore and I think you know that.

I also want to preface that what we do offer we could

3t and would not do that without you. It's not possible

Lthout Federal aid and State aid for us to offer any programs id for that we are very appreciative. Please understand that lr district is like many others, we are dependent on State

Ld and for Corry people we already rank very high on the ixation side so it is very difficult to go for more.

I also want to comment on our school board. I know

3U folks are all elected and I don't question the process you

3 through and I recognize that. But our school board sits irough very difficult meetings face-to-face with our public i a two times a month basis and struggles with decisions. le people have tremendous access to them. There's no lestion that they are committed to their jobs and committed

3 the community/ and I don't question that you are or you're

3t/ but they have this tremendous access to a school board amber.

Senate of Pennsylvania 70

I also want to brag about what we've been able to do i the past few years. We added full day kindergarten because

2're the kind of District in which we believe that really can ave an impact. We stopped short of an early childhood rogram because of money and because of conflicts within our

Lstrict whether we should be doing that. But our Board stood le ground. We added a full day kindergarten. And we didn't

2ll them you would give us aid but we implied at that time, at there was a lot of conversation about increased aid. I

:and here today and that hasn't happened and I respect that id I understand that. We put principals in every building

;cause we felt that was the way to get performance and we're

;ry comfortable with that decision.

Technology, our District, and keep in mind we're cactly opposite of the gentlemen to my left who talked about

•year colleges, our Board went out and borrowed a million

)llars just a few years ago on a loan solely for the purpose

: putting computers in classrooms. They took the time to ible and wire every single building, including the 80-year-

Ld building, so kids could have computers in K-12. In our

.strict there's computers in every single room and I think ley should be applauded for that.

We have reduced ratios and most recently we accepted le Federal moneys. For how long I don't know but we accepted

: to try and reduce ratios. And we've turned closets into

Senate of Pennsylvania 71

Lassrooms, and maybe that's a dangerous thing to say in irnsburg, to be looked at here with closets as classrooms.

We have school-to-work programs, shadowing programs, sch prep, reading recovery. We were just honored for our

:emendous reading recovery program. Textbook series. And we at Spanish in our elementary because our Board was really jmmitted to the fact that our kids are going out and

5mpeting in the world outside of Corry and outside of this lge district, and we felt it was important for them. At the ime time we approved LERTA and we approved the Keystone aportunity Zone, and that may seem like an easy thing but len you're sitting at a Board table and you say to your

)mmunity, we lack sufficient money to provide the right iucation and we turn around and say but we're going to give a ix-free zone, for a board that people have access to it's a

>t more complicated than that.

We received industry and private reassements like many id reduced our income. We received reduced percentage from le State funding during this time, including a year of flat inding. Our interpretation at least was flat funding. icreased costs for mandates. I almost feel bad that you're

)ing to hear more about special ed in my comments, but

>ecial ed being the largest of our mandates.

The question has to be, well, okay, folks, how did you

> it and why won't you tell us what you have done? During

Senate of Pennsylvania 72

Lat same time we reduced staff members like many at the ible. We've cut every corner, we've cut supplies, trips,

:tracurricular, reduced workers comp, and we're proud of lose changes. Our health care, somebody should model what ir trust and our business manager and that committee has me. They should take a look at that because we have reduced salth care costs and probably have the best program around.

We have a cost grant that has worked very

Lccessfully. We have a probation officer in our schools. We ive Drug Free, Service Learning. We have private foundations

.th 50(c) (3)m which we have grants coming in. They have mded recreation programs. They are funding activities for ds, not to great dollars but it's an effort on our part to ke it happen.

We spent some of our fund balance and I know it's a lestionable thing whether you should or shouldn't have it.

:t it was actually frightening enough for us that we spent x fund balance to make ends meet during the flat funding, it we turned around the following year and made additional its to restore the fund balance because we didn't know where ie State might go with the money and when we might need that fain. It may not seem that to some districts but to us it is a major concern, not whether we should have a fund lance, but we needed it. We have to have it because of the

.mited ability we have to tax people.

Senate of Pennsylvania 73

We did raise taxes. Because we're a tri-county school

Lstrict there were some automatic increases set even though

2 lowered millage we increased local property taxes.

This one may surprise some of you. We looked at the mdow totally different than many people. We looked at the mdow as an opportunity for us to raise money. An sportunity to encourage experienced staff members who maybe

)me didn't belong there anymore, but encouraged them with a iall stipend to leave. Not because we didn't want them and

;ed some of them but because it was an opportunity for us to lise money short-term without raising taxes. Building rojects are not huge in our District, as you might guess, but us was an opportunity the past couple years for us to raise

>ney.

We replaced certified school nurses with BSNs. We low that's risky on the State level to keep those numbers cactly the way they are and we took a lot of heat from the jmmunity because they were confused about what we were doing.

We settled a teacher's contract far below the State rerage and our area and sold that based on the fact that we

>n't have the money. We take, and especially the Board ikes, tremendous heat for these difficult things. Whether iey're cutting or adding it's a difficult position to be in.

I think what I'm here to tell you, though, is not what i've done so much as where we really are. We feel as a

Senate of Pennsylvania 74 istrict, whether it's the board that's split 5-4 or the dministrators, we're at a max. We really don't see another orner to cut. We have elementary librarians that used to be ull time but we have them at three-quarter time now to save a ew bucks. We don't know what corner is left for us to cut, nd it's not out of disrespect for you, it's out of an nphasis to understand. I don't see what's left for us to at. There might be a corner somewhere that we have not seen at I assure you there's not large dollars left anywhere.

We also want you to know that we have made every ffort to make change. Standards is not something here. You idn't see any of our District down here to say it's not an opropnate move. We are comfortable with standards. We were

Dmfortable before working towards them, but it does take

Line, it does take energy, and it does take money, and that is lat we're really here to say to you this morning.

I don't think there is anybody in our District that

Desn't have the message that I'm here to deliver today. Our

Dard has it. This week, this Monday night, they never said a

3rd when I said we have to hire a special ed aid. They

Ldn't moan and they didn't groan - at least to the public lat didn't happen - they went ahead and did it.

I have a statement here that we recognize education, id I know you know education has to be for all kids, and we earned that this last few years, especially in special

Senate of Pennsylvania 75 lucation. But I will tell you now when 44 percent of your eople earn less than $15,000 it is very difficult in our istrict to provide the education.

I also want you to have a thumbnail sketch of our istrict and special ed. We have a $1.8 million special ed idget. That's the exact dollars we can account for. That's

Dt the administrator that might be spending their time or the sgular classroom teacher, that's who we hired. You provide

Dout $950,000 to us. Now that's 50 percent, and I recognize

DU can say, and anybody else can say, that's a pretty fair aal compared maybe to some districts, but to our's that's 5

(2 of our mills. Five and a half of our 28 mills are spent i the special education that we've identified for you.

say this, and again not with any disrespect, we are special iucation broke in our opinion these last few years.

We are also emotionally drained and physically

2 don't believe there's any good that comes from them, but scause we've asked staff to do more on the emotional side and ley see the stretches we've made in the money in the last few

»ars.

Because I'm in the same district I just wanted to lare with you, I became principal in the late "70s and when le first learning disability teacher came to our district it is 1980, so I started 1 year prior to that and gave you a 20

Senate of Pennsylvania 76 sar sketch. We had 4 employees in 1979 for special education i our district. Today we have 34 full time employees and

Dout 125 fewer kids then we had at that point. And again, it

3 money. It's not here that you don't understand that and

Dn't have that. One of the gentlemen here talked about the

3S services. When that first started we also looked at that,

3w wait a minute, we're going to put an aid on to be with a nId. We now don't look at it that way. We now say how any, what's our limit, can we get them in the room? And I ay that with respect to the bind that you have in here also.

I also want you to understand all this special lucation doesn't relate that we think that we don't owe our

Lds something. We certainly do and I think we do an itstanding ;job with them and I think the commitment is there. it we also set goals in other respects that the Board

Lghtfully so or understandably has said to us, yes, you can id those things, and yes, we will support that, but show us lere the cuts are coming that are almost equal to that new rogram, or the same as that new program. Not out of

Lsrespect for full time kindergarten, but out of the need to ilance the budget or come as close as humanly possible for lat.

I put in here, with all respect, that you are our Mr. reenspan, because I do think nationwide we respect the intleman and couldn't have any more respect for him as does

Senate of Pennsylvania 77 ie stock market or they wouldn't go up and down when he seaks if it wasn't out of respect for what he has to say.

When you speak, in all honesty, we get concerned. lat you say about funding, you are our Mr. Greenspan. We're

3t going to respond to the stock market, we're going to sspond to cutting programs, or cutting supplies, or slebrating. Certainly there's some support that comes in

Lrections we're on that will help us in that particular area.

> it is with respect that I say we listen to every word that

>u share.

I don't have the solutions. I sure wish I could say

>w here's what you need to do. But I will tell you that it

3 very complicated in our District. And we say to you that le PARSS solution, or one of the PARSS solutions were the inding. In our District I've been on a Corry Area Industrial svelopment roundtable with industry for a number of years. I id the fortune of chairing that so I've watched that for a sriod of time and know the importance of the tax-free zones i bringing in business. But in our District with the PARSS

)lution our local property tax would go from $5 million to

500,000. The impact that would deliver to our people, and I link to economic redevelopment I think would be startling and

: would be way beyond the LERTA program or an economic ix-free zone would be my belief.

We would add programs. We would meet the State needs.

Senate of Pennsylvania 78 id I don't need to read those. We would, with all due aspect, do everything that you have to do. I'm here to tell

)u that the complications we have trying to make ends meet.

would encourage additional funding. I would encourage inding for special ed, or a least some kind of solution for

>. This one sounds funny, but I encourage the return of the itirement windows. We're saving 70 staff members that create

lot of tremendous successful programs for us, but it's also l opportunity that we can bring on two staff if necessary for ich one that retires that's my age. id I would also say to you, thanks for the mandates. Please

>n't deliver any more mandates to us unless the money is

:tually attached to it, because we certainly want to support lat you deliver and what our community needs, but the indates are important to us.

Again, with all due respect, I thank you very much for iing with us.

CHAIRMAN RHOADES: I want to think all three of you.

think one thing that is very evident from your testimony is lat just from your 3 districts we have 3 different diverse

.stricts that carry a different set of problems, whether it's

>rk, Corry, or Camp Hill, but you all come down basically to le same problem, you can't deliver a program if the dollars ren't there. And I think that's one of the problems I run irough back in my home area. It seems if you're wealthy you

Senate of Pennsylvania 79 ive to almost carry it by yourself and if you're poor you

>n't have enough money to pay to be able to go. Meanwhile

:'s like how do you find the equation that puts it together.

>metimes I think that's probably where we have to come down

), to put that plus or minus sign in between them to see what ikes the difference.

Representative Colafella.

REPRESENTATIVE COLAFELLA: Thank you, Mr. Chairman.

With all due respect, Senator Rhoades and Senator

;hwartz, have been strong advocates as well as the Members

;re, are trying to help school districts in this State.

Over the last 4 or 5 years every time we try to take

)re and more money from school districts we hear about your roblems. We hear down here from the top people that schools

>n*t need more money. Throwing money at schools won't help.

>wever, for 4 or 5 years when businesses wanted tax cuts and ley wanted grants and so on to improve or expand their lsmesses this State provided them with moneys. But it's nazing how moneys will work to help businesses, but moneys

)n't mean anything to help schools.

With that said, let me :ust say that last year there

;re 10 poor school districts in western Pennsylvania. Ten iperintendents who sent a letter to the Governor with a irbon copy to the Secretary of Education. School iperintendents who were in dire financial straits because of

Senate of Pennsylvania 80 jiue of the things that you said sent a letter to the Governor id the Secretary of Education requesting a meeting to outline leir problems. They never even got a response.

Later, I believe it was the Governor and Secretary of iucation went to visit one of these school districts and nd, you are now a distressed school district. And the resident of the student body about a month after that ippened criticized the Governor severely and said you've lined the reputation of our school by calling us a distressed

:hool district. And it was almost an apology issue and it is on the front page of the Pittsburgh Post-Gazette.

Now with that said, let me just say this. Next week m going to meet with, let's see, the Superintendent of Still illey, Monessen City School District, New Castle, Carrol, and believe there are about 6 or 7 more superintendents who are

>mg to meet with me. And I'm going to tell them the same ung that I told the superintendent of Farrell months ago, If

>or school districts in this State want some real help you've

)t to create a tremendous amount of public awareness so that us legislature in next year's budget has to provide more

>ney to pay. How do you do that? Let me tell you how I'm

>ing to tell the superintendents, what I'm going to tell lem. You've got to get as many superintendents to come down

*re and go into the Rotunda and have a news conference. And it me tell you something, years ago I was the prime sponsor

Senate of Pennsylvania 81 l a number of pieces of legislation to help physicians and

»ar after year we couldn't get anything done. You know what,

)u have to come down here. You have to come down here and

.ght your cause ^ust like lawyers do, pharmacists do, nurses

). They come down here and they scream and they make noise,

) that people all over the State really, really understand

)ur plight.

About 4 or 5 years ago I believe we had a tremendous lount of physicians that took the day off. They had a big

JWS conference, visited every legislator, and for the first

.me there was some meaningful legislation enacted to help lysicians.

What I'm saying to you is we're for you. I think it's

>solutely disgraceful what's going on and here we are a

:ate with a billion-dollar surplus and it's the first time tat we could have helped those districts immensely. The

:hool districts in western Pennsylvania and Corry — I slieve Corry is in Erie, am I right?

MR. NICHOLS: Right.

REPRESENTATIVE COLAFELLA: I don't know how you people in continue to function over the next few years. And if you

) it the kids are going to continue to suffer and it's not

.ght. But I want to tell you something, until the iperintendents of all those schools come down here, have a sws conference and visit all the legislators and create a lot

Senate of Pennsylvania 82 f activity and a lot of noise, we'll be here next year, and I

Lll continue with Jeff Stairs and Senator Rhoades and ask for

: least 50 percent funding for special ed and so on. But ltil, you know, the superintendents, principals, or whatever,

:e willing to stick their necks out it isn't going to happen, id I'm being very, very honest. If you want to react to lat, any of you, please feel free to do so.

MR. NICHOLS: I would react to that on the basis of,

Lrst of all, I agree with you or I wouldn't be here today. I link it is something that we need to do, but it's

.gnificantly more complicated than I'm comfortable with it

;ing here and I'm comfortable with the point I am in my ireer, but there is a concern that raising the flag in your

.strict and claiming you're distressed financially is not

.ways the brave thing to do, and I apologize for that being irt of the answer.

REPRESENTATIVE COLAFELLA: What I'm saying to you

> that you've got to come down here and you've got to come

>wn here with other superintendents throughout the State,

)or districts, average districts, wealthy districts, and make

: known that funding in Pennsylvania has got to change. And s've had states such as Michigan, Texas, and a number of

:her states who this year spent an enormous amount of money jcause this economy is booming. And if we're not going to ike care of the schools now while the economy is booming, lo

Senate of Pennsylvania 83 rid behold, in a couple of years if there is a minor economic ownturn, if you think you're in bad shape now you're going to e in worse shape, because if we're ever going to do anything or public schools or for higher education this is the time to o it. And until you all get involved in it I don't think it's omg to happen and that's just my opinion.

CHAIRMAN RHOADES: Senator Schwartz.

SENATOR SCHWARTZ: Thank you.

I appreciate those previous comments. There are a umber of us who have been fighting and we're told money

Desn't matter. But two of the comments that were made about

LI day kindergarten and early child intervention, you have sen doing it and many school districts are doing it anyway, ad I feel sort of apologetic that we have not been helping

DU the way we should be.

While I've been speaking about it a lot, I haven't

Dtten the kind of support that would be helpful to my

Dlleagues or helpful to you, but you're doing it anyway, and

commend you for that, and I will commit to you that I will antinue to talk about all day kindergarten and the fact that a're going to help you reduce classroom size in the early rades, and I think that is important. And I think I've even

Dnvmced my colleagues here about that issue on a substantive asis, so hopefully we will be able to do something about it.

Let me ask you this. I couldn't agree more that it

Senate of Pennsylvania 84 akes a difference, that we need to be getting into this

Lscussion. The State has to be more willing to step up to le plate and help you do your 30b. And I guess I only

Lsagree that it's not really just up to superintendents. lere's the Philadelphia superintendents. There's the State sgislature that has been asked a number of times and the iswer has always been, you're on your own and if you can't all it off we'll take you over. So the answers that we have sard about school financing, one of you mentioned Act 50, the

:her two solutions have been State takeover, if you can't do

3ur job we'll take you over. That's the risk they're nplying you could be faced with, because that's a threat that

)u've been handed actually in a way. That if you complain

50 loudly, if you draw a line in the sand that you cannot cut

: anymore, even in Camp Hill where you suggested you've

Limmated new textbooks one year. That's pretty dramatic. id I assume it's a wealthier school district than many and if

?u don't have enough money to do that then something must be

:ong if you can't pull this off. If you just can't keep lising taxes enough or cutting your budget enough, that the

;ate will take over.

Let me ask you the question this way. I would jpreciate your reaction to that, but do you think that the

:ate would do a better job? Could we cut more? If the State apartment of Education came in and took you over, do you

Senate of Pennsylvania 85 link we could do a better job? Are you willing to relinquish lat rather than cut more or raise taxes more? Maybe 1*11

»k that one first. And then I want to get back to the iggestions of our first speaker about the issues of adequacy id equity, and how you would react to some of the principles.

Are you willing to respond to that? Or if you feel it

; politically too sensitive, I will leave it as a statement.

MR. NICHOLS: As with Corry, I don't believe there's

>ing to be the possibility of finding anything significant to it in the school district of the City of York. Eighteen sars ago when I entered the district it was $175,000 away

•om being distressed. We are now reasonably balanced. We do irrow a million dollars in the fund balance each year to ilance the budget and we work like all get-out not to spend

: during the school year. We have budgeted $57 million and

:'ve been successful with that. But then the rest of our ind balance stays in around $200,000 to $300,000 which is a etty insignificant amount of money for our overall

:penditures.

I don't believe that there will be any greater isistance coming from the Department of Education today then

Lat I requested in 1981. The Board President and I made a ip to Harrisburg and said I need some suggestions. I need

•me help. I have looked at everything that I can possibly lagme. And I had already contracted management for food

Senate of Pennsylvania 86 rvice. I had already modified schedules of instructional aff. I had already eliminated elementary art, elementary

/sical education, elementary counselors. They were gone by

:rition so that the folks could be reassigned. But when you art making those kinds of choices and then 18 years later an you continue to have a change in your poverty level, and

I'll notice I have no interest even in discussing ethnicity

a school district. That has nothing to do with anything. a need to look at what is the poverty level of a school strict because poverty with any ethnic group carries the ne set of characteristics.

There is a lesser importance on education, a lesser pport for individual student achievement, and therefore the lool has to pick up the support to help the student be a

-cess.

There has been a lot of conversation all over the mtry about are schools successful. At the risk of being asted out of the Commonwealth, Senator, as chairman of the

Dup I'm expecting you to protect me, I don't believe society

Duld judge an individual until they're 35 years old as to ather or not they're going to be a competent adult. And if are's anyone who hasn't had some ups and downs in their life

that they don't fit somewhere in that, I think there's a snomer on what the expectation is of young people today.

're finding that there is a lack of sense of commitment.

Senate of Pennsylvania 87 ople are willing to quit a team because it doesn't go well,

they'll drop out of a play production because it requires o much time after they're halfway through. They won't mplete the term paper and turn it in on time because it just

too much effort. This is a collective societal kind of mg. Schools are a reflection, Senator Schwartz, of the mmunities in which we live.

We need to have a loftier goal. We need to have a eater vision. We need to understand what we're talking out in the common good, and I mentioned that in my comments. d I recognize that it would be helpful for us to be in the tunda making noise. I would like to think that reasonable ople can discuss an issue with reasonable consequences.

When you leave here today you are going to be up to ur eyeballs in fish and game plans, highways. You are going

be hit with deals with Corrections. You're going to have

deal with welfare. Every single issue is going to also hit ur desk, as well as education. And I appreciate your rsonal interest in education. Therefore we have limited ne available, but we have to go one step beyond and there s to be a consensus on the part of the leaders in what is it at we really want to do.

Do we believe that there is a difference in young ople? Do we believe that some people learn more rapidly an others? Do we believe that some people get their life

Senate of Pennsylvania 88 raightened out at a later time than others? Some are more ick than others. I have an 88-year-old neighbor who takes re of my dog when I have to come to Hamsburg. And every ze in a while a new youngster will move into the lghborhood and she'll talk to me, and she will make an sessment of that student. She is rarely wrong. And yet at we are able to do as a school district is to develop an lalization and a leveling, if you would, if we're given

Dugh time and resources. I don't want anyone to call the

100I district in the City of York academically distressed,

~ause our students that perform well, that make a nmitment, that do the 30b go to the finest institutions of jher education, and trade schools, and junior colleges that

2 available. Our challenge is with the changing elements in

^iety the concept of doing well is diminishing because ication is not being seen as a high priority. We can change at but we have to have greater opportunity to do more dividual tutorial of structural change in the student's fe.

I apologize for the sermon.

SENATOR SCHWARTZ: That was a global answer to my sstion but I appreciate your comments. I think that where I ry much agree with you is that we have not come to a common derstanding in Pennsylvania that education is absolutely key

not only those individual children's lives but to the

Senate of Pennsylvania 89 ture of this Commonwealth. And we have instead said that sically it's up to the individual to achieve, and for the dividual school district to achieve, the individual student

achieve, and if it's not working for most of the children

are not about to help you very much more. We're willing to low kids to maybe try and, quote, "escape the bad system" d condemn that system, and that's really what we've been up ainst.

We've been arguing the issue of vouchers when we

Duld be discussing the issue of how to make sure that the lldren will have an adequate if not excellent education and w we get there.

I think what we're trying to get to today is the ranon interest, and I would assume the reason the three of a were asked by the Chairman to speak is that you represent ry different districts, and yet while Senator Rhoades said at you are quite different and face different problems, I tually heard it quite differently. It seems to me you're cing very similar problems. The wealthiest school district tting in front of us cut the most last year it sounded like. ey were not willing to raise taxes, they felt they were mted.

The York and the Corry area, you both spoke to how ch you don't want to cut anymore because your students have e least to be able to go home and rely on. That's really

Senate of Pennsylvania 90 at we're seeing in the, quote, "low wealth school district," at you're being left more and more on your own.

The real question is how we can get together to come

with a system that is accountable, that sets standards, at helps you meet those standards, and recognizes that a're not going to get there without more help from the ate, and that's true for all three of you.

So I just want say that I appreciate your comments and and just going to ask one question, and you can answer lckly. The issue of accepting standards and the issue of septing accountability, do you believe that you can do that?

you believe that you can meet the statewide standards and at if you can't with the dollars that you now have? Will u continue to raise property taxes to get there, or will you st be willing to be labeled somehow not adequate to do the sk? What's going to be your solution if in fact your hools don't come up to the standards/^statewide testing with e resources you now get from the State? Do you think you n deal with that locally?

MR. CAIN: I'd like to answer that, Senator.

I think what has been said for quite a while about ucation is "me," and "me" has meant that the Federal vernment and State governments have thrown a whole lot of ney at schools and it really has made no difference. And so at's being talked about now is of course if money is going

Senate of Pennsylvania 91

be thrown at schools that there needs to be some countability, and I think that's absolutely true.

I think in our own lives we only get what we pay for, i I certainly support the idea of the State getting what it ys for, but to get it you need to pay for it and that really think is the crux of it.

MR. NICHOLS: Senator, we have a plan that we al for our district will allow us to meet the State's pectation for standards. It's a 3-year plan. It's very rd but we tried to put blinders on what the first year's

Dres are, although we are satisfied with them it's not where

're going to end up. But to stick to that plan we're fine c the short term. Anything longer, though, or any other

]or change we're in deep trouble because we really don't

5l we can go back to our people for more money. Twenty ousand dollars, absolutely. But when we start talking about llage it just isn't there with our people. And even those

D say it is, if you look at the 44 percent that don't come rward you know that they're not there to pay more millage.

SENATOR SCHWARTZ: Thank you for the good work you do.

CHAIRMAN RHOADES: Representative Williams.

REPRESENTATIVE WILLIAMS: Thank you, gentlemen. ank you, Mr. Chairman.

I realize we're only a third of the way through this ssion today and I hope by the end of the day or whatever it

Senate of Pennsylvania 92

, I think it's a wonderful opportunity to have this joint ssion with the Senate and the House.

I think we really do need to look seriously at these sues of access and equitability as well as the funding of scial education, which I think is sounding like it's a parate and very serious issue for every school district in

B State.

I appreciate what you three said today about this. I present a very wealthy school district, which also has great i serious concerns about the special education funding that

faces. So I hope that we will by the end of the day come

with some sort of plan to go forward.

CHAIRMAN RHOADES: I think we're upsetting a lot of

Dple doing this, but, by the same token, it is due, it is pessary, it must be addressed, and if you don't push it neone will just leave it in a corner somewhere along the le.

Do we have the answers here? No. But that's the rpose of today, we're trying to see if we can find the swers, and then between us find that consensus point that ts us 26-102, then the Governor to sign it. That's the ttom line as far as it goes. That's all we're trying to do.

Representative Sturla.

REPRESENTATIVE STURLA: Thank you, Mr. Chairman.

The way I view this there's only one mandate in the

Senate of Pennsylvania 93 mstitution and that is that we educate our citizenry. schnically we could eliminate everything else in the budget id still meet our constitutional mandates if all we did was iucate our citizenry. And so I get a little upset when jople say, well you know, there's just quite not enough money

) do what we're supposed to do with education, because we ive some other program we want to do or something else that's

>t constitutionally mandated, but it's nice and it helps get

> votes and does things like that. And many people have ud, you know, we've just got to watch that we don't just irow money at the schools. And I always look at it not so ich as throwing money at the schools as it is investing in ir children's future. And so in that sense I don! t see us

LSting money by investing in education.

One of you said earlier that you would hope that sasonable people could discuss issues and come up with iasonable consequences. I've been here 10 years, and given

Lat I see as unreasonable consequences in the education area, have to conclude that we're dealing with unreasonable sople, and given that I then say then you have to deal with treasonable people on a different level. And I think it

:arts to get to what Representative Colafella talked about, imebody needs to show up and say I'm mad as hell and I'm not ting to take it anymore. And I believe that there's sort of

L interesting game that gets played here.

Senate of Pennsylvania 94

If we want to sanction a foreign country we do a

Lockade around it and we do an economic embargo and we try id starve them out. And what I see happening to a lot of

^hool districts, a great number of school districts in the tate of Pennsylvania, is that we've drawn a line around them id called it the school district boundary, and we say do you ave a tax-base that's depleting within that? We're going to it off State funding. We're going to hold you at the level

3U were 10 years ago. We're going to do categorical funding f we do do aid so that France gets the same amount as atswana, and we've literally, I believe some people have sclared war on the school districts.

Now they count on your national pride. You're not sing to give in. You're not going to be called economically

[stressed. You're not going to give up your local identity. it given the fact that I believe we're dealing with irational people, I think it's time that you start calling leir bluff. That some of you start saying, guess what,

Du're right, I can't do the 30b. If you're going to starve

2 economically and not provide State funds, I give up. Take ver the school district. I dare you. And it's not 3 or 4, it 10 or 20 or 50 school districts in the State of snnsylvania that said that, came and petitioned the State to issolve themselves so that they would have to be surrounded ito the wealthier suburban districts or that they would have

Senate of Pennsylvania 95

) be taken over by the State, and say, you know, we've banged lr head against the wall long enough here, if you truly ilieve that we're not doing the things that we should be able

) do, go ahead and take us.

Now, I think all of you have too much pride to do lat, but somebody has got to call their bluff. And I guess I

)uld encourage you all to start getting to that level of rustration and be angry when you come in here and testify at

>me of these hearings and truly force this issue because the lly way I believe that you're going to get the kind of itention you need in the public is to create an outrage. jcause I'm at a point where I believe that talking reasonably id rationally to unreasonable people is not getting us lywhere. So if any of you want to comment on that, feel free

). I just wanted to vent for a minute.

MR. NICHOLS: I would comment for two reasons. ie, going back to the Senator's statement which kind of

>ined in with this, I would not want our district to be taken rer certainly, and there is a sense of pride to that, but I

)uld say to you that I think in our district at least I don't link the State can do better with the same boundaries, the ime guidelines, because I have all 30 years in that one

Lstrict, you'll have fewer skeletons in your closet when you st there than I do. But I don't believe you will do a better

3b in the long run and I don't think you will develop it, and

Senate of Pennsylvania 96 ot a shot at vouchers and choice, but think about some of the hings that we've talked about in the recent past few months n particular, a couple years, if you don't do well, we'll ake your best kids to another district. I don't know how hat solves the problem. I mean that's what we're facing now. o I don't think you'll do better based on those statements hat come out of Harrisburg in general and, no, I have too uch pride for that to happen.

I also think there's one other thing that's being issed here. For us to really deliver that message to our sople on the street there is a sense of pride but also they

Dn't understand the issue. We have tried very hard to get it sross to them and it's not the building principal or the sard member, or the superintendent, it is the system. So, as, I could stand up in a couple weeks in a Monday night

Dard meeting and say, I've had it. But this is 29 1/2 years or me, not 30. So although I don't have the tenure I have le contract. And I make that point because I think our istrict needs to be brought along and that's why I say to

3U, our board is there. Our board understands this very

311. That's why we restored the fund balance. We don't spend lat fund balance. We're very careful with it because we know lat just separates us further from the point of our ability

D pay and tax and deliver programs.

CHAIRMAN RHOADES: Representative Stairs.

Senate of Pennsylvania 97

CO-CHAIRMAN STAIRS: If I could just make one quick jmment. I understand that and I sympathize with that. I less the one thing I would encourage is that you perhaps ake an hour a week to spend with your local newspapers to say

'm going to explain one more aspect of this to you/ because I jn't believe they get it. We had someone here testifying ist week, my school principal where my daughter goes to

:hool, where there was 140 percent turnover rate of students ist year, and the local newspaper after 3 years of me talking

)out this issue finally showed up and wrote a story about it id said we never realized this. After 3 years. And so part

: this is holding hands, but it's getting that awareness to le point that everybody starts to say, what is somebody going

) do about this? Because I don't hear that public outcry

Lght now and part of it is just I think you and I know what le problem is but we need the public to be sort of marching

I Harrisburg saying you have to do something about it now.

CHAIRMAN RHOADES: It worries me when we have these

)int meetings because I'm beginning to hear things I've been reaching for the longest time and it's from the standpoint id truthfully on line from the standpoint of there's a

.scipline problem in schools and you can't discipline as you ud before. But that discipline came back and it was said jfore I don't want to study. Go ahead and give me an "F." I

)n't care if I don't pass. Now that's not true for

Senate of Pennsylvania 98 reryone. The unfortunate thing is that the system is getting linted by those who don't want to and we're not recognizing lose who are achieving. We have an awful lot of kids who are

:hieving, and I think that's the thing we have to begin to

>ok at, is my glass half full or half empty? I'd rather say

:'s half full and provide me the opportunity to fill my glass le rest of the way.

Now let me come back down again because looking at, id see I still get it from an administrative standpoint of

>mg these things. It's more a policy kind of thing, to say ich of you really are different, each of you have some

.fferent problems to address. In York I'll say you have more

:-risk kids than I may have in Corry, okay, and that I may ive in Camp Hill, an issue of categorical grants versus a

•oad grant.

Do you think one would be the other? In other words,

: I gave you X amount of dollars for at-risk students, if I ive you X amount of dollars for early childhood programs, is

: better that way? And let me add to this, looking at the irmula, see, the key thing about it is you can say we need ire money and then people say you don't need more money. But m saying how do we drive out the money that is here? What's ie best formula to use so that if we do get it out there and can put my standards assessment and accountability into the rstem, that it is equitable and that we do define the

Senate of Pennsylvania 99 iequacy that is needed by all children. Because I think one

E the big problems I'm finding is as it comes down the

^equity in the system. I just figure I've got kids as good

3 anybody else's, but because of our market value, our srsonal income, they don't get as much a chance at the brass mg as some others do, and that kind of upsets me, but I've

3t to find a way to get 26 people, 102 people, and the jvernor to sign and agree to all this, plus you can live with

:. Okay.

MR. VAN NEWKIRK: May I come at that from around the

)rner?

CHAIRMAN RHOADES: Sure.

MR. VAN NEWKIRK: People say we can't throw more money

: education and yet in every other aspect of our life people

:e throwing more money at it. My first house was $6,500, so

'm obviously throwing more money at real estate. Profootball

;ams throw more money every year and some don't do very well

: all.

CHAIRMAN RHOADES: Let's not get into that.

(Laughter.)

MR. VAN NEWKIRK: The public at large that criticizes ixes is throwing more money at stuff. I use the word "stuff"

;cause I'm not sure how to elaborate. But they have so much

:uff that we're building all these little places all over the

)untryside so they can store stuff. So obviously we're

Senate of Pennsylvania 100 irowing money at things and to isolate education is

^appropriate. I would like to see an appropriate formula inded adequately. That's not quite the question you were sking but I wanted to—

CHAIRMAN RHOADES: No, that is.

MR. VAN NEWKIRK: I happen to think that if you were

•> establish a formula that was truly what was needed and then md it I think the rest of the discussion would probably

.sappear. If you can't get the number of votes that you ientified, Senator, then I have to take the second route and ly to you if I can get the money by going categorical then do

:, but I would prefer the other way, recognizing reality.

>r example, these two gentlemen didn't mention any issue to

>u about English language learner. I have 17, perhaps 3 more

:aff who are teaching children how to speak English, and sople who don't have that population, they don't think about

:. It isn't an issue. But let me tell you, what could I do

.th that 17-member staff if I wasn't spending it on English inguage learners.

I think if you investigate most of the poor districts lat you're going to find is special education is being well srved. The gifted and talented are being well served and mr middle-ability kids are sitting in classes with 28 to 35. lat would be my guess. And the middle-level kids are being jueezed out of the picture.

Senate of Pennsylvania 101

CHAIRMAN RHOADES: Let me add one other thing too. ast as we're talking about it today and sharing this nformation, I've said this many times before and I'll say it jam, it would probably behoove you as much to come to the apitol to state your case but also have the Capitol come to

DU. And I've said this to school boards, administrators/ sachers associations, and everyone else, invite your sgislator in and say you can be a teacher for 2 or 3 days.

2'11 give you emergency certification. Get in the classroom id here's your schedule. Bring your brown bag lunch, okay, le bus will be there at 7:30 to make sure you're there to set the kids, and then you begin to get a better sense for le kind of different pressures that are put on in a bus

:hedule. No one knows how many calls you get a day because le bus didn't stop at the right spot, or someone else is

Lghting on the bus. You can say that's very insignificant id that's part of your job, but would you want to start lttmg that into how many hours are in the day from the

:andpomt of not having textbooks to offer the course you int, or technology for the kids who are going to need that schnology to do a report or have the skills to get out. What

'm basically saying is just because you have the walkers into le school it's too bad we can't have them in the daytime scause we have to shut the doors now because of security scause of violence, which is another problem we never worried

Senate of Pennsylvania 102

)out. I mean add all these things to it and you see how

)mpounded it gets, but if you didn't have to spend the money

1 security where could you put it? If I didn't have to spend

: here because, and I'm not going to say a mandate itself jcause it's what society has requested. If I have kids that

:e at-risk and are not performing, what are you supposed to

>, forget about them? You can't. What I'm basically saying

> that has to be shared and put back, just as everybody else

> getting everything, we have to give them a little part of lis so they begin to understand it.

MR. VAN NEWKIRK: Senator, I have to add one more ling. If you were to come and visit the school district of le City of York, I can show you our records and I can show

>u our facility. A year ago we spent one-tenth of 1 percent

: our budget, one-tenth of 1 percent of our budget on indalism. That is some indistinctness of a very positive

:titude on the part of students. It shows that they are good

.ds. My kids are great kids, but there are so many other

Lings in their life. Learning to multiply double digit imbers today just may not be the high priority and we have to i able to move that. We've got to able to change that and

>u're not going do it without resources.

CHAIRMAN RHOADES: Let me add to that, too, is I think

: comes back to, and I've said this many times, if a young

>y or a young girl is kicked out of the house, has nowhere to

Senate of Pennsylvania 103

Leep/ doesn't have a meal, and then you expect them to be in

:hool at 8 o'clock in the morning doing Algebra, it's not sing to happen. But let me ask you, did that problem start i the school? No. But it comes in to you and then you're sked to do something about it. It would be very easy just to

5 very objective about this and say, look, I'm going to give

)u English, history, math, science, and reading. It's going

) be at these particular hours, you've got to be there. If

>u make it, fine. If you don't make it, fine, and we're

)ing to move on. I don't think there is anyone sitting in lis room, I don't think there's anyone that's in any school lat's an administrator or teacher, and if they do have that

:titude they shouldn't be there, that doesn't want to help rery child reach the greatest potential that they can.

The other thing is there are cases that you as iministrators have to figure out how you do that, and that's len you get pulled between the board and your staff, and the

>mmunity and the rest, and I think we can help out or at

;ast should be able to help out. But with a formula that is ur and equitable to all and adequate for all, and that's lat we're trying to do.

And another thing I have to add to it, you know, my lestion was ESBE or even the PARSS, or any other formula, we in put a formula on the Board but if we don't put money into

Le formula it's still going to be useless. So we used ESBE,

Senate of Pennsylvania 104 id that was great, but what happens is if you don't continue jinding you fall short. If we use the PARSS and if we don't it money in there to raise the AIE and don't put the money iere, it's going to fall short.

Another thing with the tinkering, I've got a problem,

2 do too much tinkering. It's tinkering to make sure this is are and that's there to take care of someone's individual

=mand instead of is it a good educational practice based on

Dund research that's going to serve a purpose and help kids. lat's the key and that's what has to be driven out.

Any other questions? The light's not blinking so

2're all right, but if there aren't any questions then I

Duld thank the three of you for being here very much.

Thank you for your testimony. I think you very well

Llustrated the diversity of PA and the demands that are put

Don you every day.

MR. VAN NEWKIRK: Thank you, sir.

Our next presenter is Mr. William Hughes, who is the resident of the Keystone Research Center. He's going to give

3 the background on the history of education funding in snnsylvania. It should prove very interesting.

MR. HUGHES: Good morning, Senator Rhoades.

I have been asked to give you a history of school inding in Pennsylvania and kind of a highlight of what has ippened in the last 300 years in terms of financing

Senate of Pennsylvania 105 iucation. A lot! And so this is just going to be some of le highlights, some of the things that I thought were most uportant.

As you probably know, education funding has always

;en a priority issue for the General Assembly, and that's robably because today more than ever, the best possible iucation is necessary to produce a population that can both irticipate actively in our democracy and advance the economic ill-being of our State.

Now, I think if you look back in the history, and j're going to do that in the next few minutes, you will find lat the mam concern of our forefathers has always been roviding an educated citizenry in order to participate in our jmocracy.

Recently the Keystone Research Center distributed a iport on July 4, 1999, that took a look at the health of our imocracy in Pennsylvania, and we looked at it based on 4 iasures, political participation, money's influence,

>nfidence in government, and electoral competition. Our inclusion, and the report is included right behind the

.story summary, our conclusion was that democracy in snnsylvama is in "poor health." As the report notes, "The

>ntinued nobility of our democratic experiments requires us

) recognize its weaknesses and repair them." I think you

.ght say now more than ever a quality education is necessary

Senate of Pennsylvania 106 r the well-being of our Republic to advance the interests of

.r democracy.

Another aspect that's kind of interesting right now is iat when you look back on the history of school finance in mnsylvama, you find that at the end of the last three mtunes, the end of the 1600s, 1700s, and 1800s, something gnificant happened each time in terms of financing lucation. At the end of the 1600s, Governor Markham's "Frame

: Government" called for the establishment of public schools.

; the end of the 1700 century, 60,000 acres of land owned by ie Commonwealth was set aside as an endowment to fund public

:hools and the new constitution provided for the itablishment of schools throughout the State, in such manner tat the poor may be taught gratis. And then in 1897, the end

: the last century, we established a whole new funding system ised on the number of children and teachers. Prior to that

: was always based on the number of taxpayers. So you're

»ing to wonder a little bit about what's going to happen a mdred years from now. Will the school finance historians

>ok back and say and at the end of the 1900s this is what ippened. That's pretty much up to what you guys do here m ie next few days.

Now, let's start at the beginning. William Penn - ill, all right, a few weeks, 80 days or so, okay - William snn started it all with his original "Frame of Government"

Senate of Pennsylvania 107 ick in 1682. In his original "Frame of Government" he stated, s said, and by the way it was adopted by the General ssembly, he said: "The Governor and Provincial Council shall

:ect and order all public schools, and encourage and reward ie authors of useful sciences and laudable inventions in the nd Province...." And further, he also established the first iucation committee. Now the name was different, it was illed a "...committee of manners, education and arts, that

LI wicked and scandalous living may be prevented, and that

)Uth may be successively trained up in voter and useful lowledge and arts."

And finally, in Section 12 he said, "That all children

Lthin this Province of the age of twelve years, shall be mght some useful trade or skill, to the end that none may be

He, but the poor may work to live, and the rich, if they jcome poor, may not want."

Now that's William Penn, and of course that was

>proved by the king then, William of Orange in those days, a

>t of Williams around. A little later they were trying to

.gure out how to do this, so they said let's start our first inding system. And so the very next year the Assembly, the rovincial Government, put in place the first school funding rstem, any parents that didn't require that their children jam to read and write by the age of twelve would be fined

.ve pounds. That was the first funding system in the State.

Senate of Pennsylvania 108

£ the parents didn't make sure their kids learned to read and cite they would pay a five pound fine. Well, obviously,

3lks it didn't work.

It was a little later that we began to see some rtion. The period from 1770 to 1774 basically was a period len nothing happened in terms of funding. We did have a lot f schools. Schools were created by churches where the mister or pastor would be both the teacher and the pastor.

:hools were created by communities, but they were called lbscription schools where the parents would go together.

:tually the men would build the school. The women would cook

:uff and they would go together and pay each year an amount

: money to pay for the schoolmaster. This was subscription

;hools.

Now, right after the Declaration of Independence, the sginning of our Republic, our forefathers in the first jnnsylvama Constitution in 1776, provided for public

:hools. In the Constitution it said: "A school or schools lall be established in each county by the Legislature" - ah i, the Legislature - "for the convenient instruction of

>uth, with such salaries to the masters paid by the public as ly enable them to instruct youth at low prices; and all seful learning shall be duly encouraged and promoted in one

: more universities."

So the 31st Constitution empowered and directed the

Senate of Pennsylvania 109 sgislature to do something. Well, they decided that they

Duld ask the local communities to provide public schools, and ley did it. Once again in 1790 our new constitution rovided: "The Legislature shall, as soon as conveniently may

2," - and that was the problem - "as soon as conveniently ay be, provide by law for the establishment of schools iroughout the State, in such a manner that the poor may be aught gratis. The arts and sciences shall be promoted in one r more Seminaries of learning." So once again the institution directed the legislature to put in place free iblic schools and the legislature tried.

In 1802 they had the first free public school act assed, but it didn't provide any funding. Now you have to iderstand at this time even though the Constitution said we ive to have free public schools, we had a lot of things going

I in the Commonwealth working against free public schools. rivate and religious schools, which were all the schools we ad, were for the most part opposed to free public schools. le Germans especially had very good private schools that aught their language, taught their religion, and taught the istoms of the home country. In fact, if you check the sgislative record, up until about the 1850's in Pennsylvania

/ery day their record was both in German and in English scause such a large portion of our population was German. id even today we have the Amish that still continue the

Senate of Pennsylvania 110 snnsylvania Dutch customs. They still have their own

:hools.

Quakers also were opposed to free public schools scause their schools, their religious schools taught their sligious ideals, and they felt that was so important they sre opposed to free public schools. Once again — oh, I lought that was interesting. The Act of 1802 said that every

Lty, township, and borough shall have free public schools, id the overseer of the poor, or the supervisor of highways, nchever one, would make sure that each child got a free lblic education and would raise the money to take care of it.

>w, of course, once again the legislature did not provide any inding and so once again very, very little happened. There ire no public schools basically.

In 1809 they tried again. They passed a new law. us time they said that all the poor kids will get free lblic schools. All the parents have to do is say we have no

>ney, we're poor, we're paupers. Well, of course the parents suldn't do that. It was tough enough making a living without iving to tell people you were poor back in 1809, from what I in see and read.

The House Education Committee in 1832 did an analysis, lybe much like today, did an analysis of what was going on in irms of schooling in Pennsylvania. And they found out of

)0,000 children who were between the ages of 5 and 15, out of

Senate of Pennsylvania Ill

00,000 children in 1832, 250,000, over 60 percent, were not n any kind of a school. There was zero education, except srhaps for Sunday school, going on for over 60 percent of the tiildren in our Commonwealth. Clearly, something had to be

Dne. Clearly just telling the communities mandating public chools, making mandate, after mandate, after mandate, with ero funding wasn't going to work. There were no public

~hools.

Finally in 1834 the legislature got its act together.

Dvernor George Wolf in his budget message called on the aneral Assembly to fund a free public school system. Samuel reck, a Senator from Philadelphia, put together a Joint

Duse-Senate Education Committee. They drafted the sgislation, and in 1834 the Common School Law passed almost nanimously. It was to become effective the following year. gll, folks, once that happened it got crazy in this State

Dlitically. All of the religious, private church schools, aey were very upset. They vigorously opposed the nplementation of the Common School Act. Many legislators lost heir ;jobs that year. A lot of them got appointed by the

Dvernor the next year or something, but they lost their jobs tiat year and they were not returned back to the legislature scause they had voted for the Common School Act.

The Senate repealed the Common School Act in 1835. ust to give you an example from some of the things I found,

Senate of Pennsylvania 112 sople who spoke German saw free public schools as the enemy

: their language. Others claimed that free schools would lrnish hot-beds wherein idle drones too lazy for honest labor

)uld be reared and maintained. There were people all over us Commonwealth that were electing people to office and lti-Masons got lots of legislators elected that year. The lti-Masons had a fusion with the Whig party and they threw le governor out and they elected a new governor in 1835.

So finally it came into the House. Remember now the snate repealed the Common School Act and it came into the

>use, the House of Representatives, and it looked like the

>mmon School Act was going down the dram, the first law

'quiring free public schools, the first law that funded

'5,000 out of that trust fund. Remember that land that was it aside back in the 1790s, $75,000 on a per-taxpayer basis, id here it came to the House. It had been repealed in the inate. And the House debated it long into the night and it

>oked like it was going down the tubes when suddenly all

»emed lost in the House when Thaddeus Stevens, a House member

:om Adams County, rose to defend the Common School Act. His imous speech is credited with saving free public schools in snnsylvania. What he said then is true today. I'm not going

> give you the whole speech, just a couple of words. What he

Lid then is true today: "If an elected republic is to endure

•r any great length of time, every elector must have I

Senate of Pennsylvania 113 ifficient information, not only to accumulate wealth and take are of his pecuniary in speech, but to direct wisely the sgislature, the Ambassadors, and the Executive of the ation...it is the duty of government to see that the means of iformation be diffused to every citizen. This is a efficient answer to those who deem education a private and

Dt a public duty who argue that they are willing to educate leir own children, but not their neighbor's children."

With that speech, by a relatively close vote, the suse did not repeal the Common School Act. It went back to ie Senate again with a few minor amendments. The Act was not spealed and it became effective for the 1835-36 school year.

Now at that time new Governor Ritner appointed Dr. lomas Henry Burrowes of Lancaster County to the position of jcretary of the Commonwealth, and along with being Secretary

1 that job he became the first Superintendent of the Common

:hools. Now here he was, he has $75,000 that was jpropriated to distribute. It was to go out on the basis of ie taxables. He came into office and as his biographer,

)bert Landis Mohr writes in the 1946 biography, and think

)out this, young man, Lancaster County, in his thirties, ificer, educator, went back to England and got his education, id opposed common schools. He had voted against them. As a jgislator from Lancaster County he had voted against them. iree times when they had come up earlier he had voted against

Senate of Pennsylvania 114 ty kind of funding for public schools every time it had come

> and now he's appointed by the new Governor to be Secretary

: the Commonwealth and the first Superintendent of Common rhools and his survival for rights.

It was on political grounds alone that he was

>pointed; and so little reference was there to the lucational department of his duties that he scarcely knew and srtainly did not think properly of his responsibilities in tat aspect. It was therefore with some surprise and no

.ttle alarm that he beheld the accumulated letters on common

:hool affairs from every quarter of the State, brought in ishel baskets about two weeks after he assumed office. There

;re questions of every hue, kind and shape, - involving

.fficulty as to the location of school houses, the assessment id collection of taxes, the qualifications of teachers, the

(lection of branches of study and school books, the use of ie scriptures, instruction in catechism, what kind of

>vernment, what kind of punishment shall we give to the kids, lere's opposition to the system, on and on and on. Pretty ich the same questions we have today, but the difference was tere was no school code. There was nothing there, let's go

.th the school code, there was no school code. He actually ten, if you read his biography, he spent basically the next iw years with both education committees putting together the

!W school code, taking care of the very first funding and, by

Senate of Pennsylvania 115 illy, we had our public school system.

A little aside. I put his picture in here, by the

Ly. A little aside on Dr. Burrowes, he was Secretary of lucation again in the 1850s. He founded PSEA in 1852, along

.th 17 other school leaders, and he became the fifth

•esident of Penn State at a time when it was just about out

: business. He's credited with saving Penn State as its

.fth president. So he's quite a guy, quite an interesting m in our school funding history.

Now during the first full year of operation of the ee public school system, 536 districts operated under the ovisions of the Act and 371 districts refused. The school stricts were allowed to refuse money and refuse to have iblic schools because there was no constitutional requirement

.at they had to have public schools. The only constitutional quirement was that there be public schools, not that every strict had to have one.

In 1837-38, the General Assembly decided to change the

.y the money was distributed. The first couple of years the mey went to the county, then the county would give the money

> the school districts. The county was instructed they had i raise, in the first year they had to raise an amount equal

• the State funding. So that very first year of funding in

35-36 the counties were told they had to raise at least

[ual the amount of the State funding, about a 50/50 kind of

Senate of Pennsylvania 116 inding system back there in 1835, and no more than twice as ich. Wealthy counties were allowed to raise a little more it no more than twice as much.

A couple of years later they found out a few things, id I didn't write this down. They found out a few things. lere was a lot of fraud in some of the counties. They got le money, the dollar per taxpayer back, let's try to keep us to ourselves. They got the dollar per taxpayer back. ley didn't fund the schools. They returned the money they

)t to the taxpayers. Some of the money nobody knows what ippened to it. So they decided in 1837-38 that the money was

>ing to go directly to the school districts. The Legislature

:opped giving the money to the counties, then the counties to le schools, it was directly to the school districts.

Now these funding systems from 1835, up actually to le end of the century, were all based on per taxpayer and isically it was a dollar per taxpayer. At the time in 1838 le funding was equal to $1 per taxpayer and that was in each

: the school codes from 1838 up, a dollar per taxpayer inding.

But of course the legislature couldn't maintain that

>llar per taxpayer. There were lots of other things going

I, as we were just talking about here earlier, and so by the i50s Dr. Burrowes had to go before the legislature and immittees, and it's in his testimony, and by that time the

Senate of Pennsylvania 117 andmg had fallen to 40 cents a taxpayer, so he went back sfore the legislature asking for it to return to 60 cents per ixpayer so that we could reduce reliance on the local roperty tax. What a surprise!

Finally, - I think I heard that earlier today. It is nazing when you look back at the history of school funding

>w many things really didn't change, how many things are very ich the same. Finally, in 1874, because of a groundswell of lpport for the public schools, because there were still

;hool districts that didn't provide public schools, finally

I 1874 there was a constitutional change that required as, lote, "The General Assembly shall provide for the maintenance id support of a thorough and efficient system of public

:hools wherein all the children of this Commonwealth above le age of six years may be educated, and shall appropriate at jast one million dollars each year for that purpose." That is right in the Constitution. You know, somebody said it irlier today, there is no — I think Representative Sturla lid it just a few minutes ago — there's nothing in the

>nstitution requiring highways, police. There's nothing in le Constitution that we have to fund hospitals, that we have

) fund libraries, the only thing that we have to fund in our

>nstitution is a free public school system. And at this time le very first constitutional change, aside from the branches

: the government of course, and the courts, and the only

Senate of Pennsylvania 118 lblic service that must be constitutionally required to be inded is free public schools, and it flows from the

)nstitution of 1874. And the $1 million reflected about the

:ate population at that time.

Now after 63 years, from 1835 until the turn of the jntury, 63 years basically, school funding was a dollar per ixpayer or thereabouts. It fluctuated up and down. During le Civil War it went down. During the panic, you know, the

.rst panic it went down, but basically it was based on a

)llar per taxpayer.

In 1897 there was an entirely new funding system put i place. It took into account the number of teachers, the imber of children, and the number of taxpayers, one-third, le-third, one-third.

In 1903 there was a major breakthrough in school inding. The General Assembly modified the school funding rstem by adopting a minimum teacher's salary schedule, $35 a

>nth, as part of the funding system. Now the reason that was i]or was because up until that time pretty much the jgislature had not tried to force school districts to do lything, but this time they were forcing school districts to ly at least $35 a month for teachers and they were putting le subsidy system out on that basis.

From 1903 until 1970 each and every school finance iw, from 1903 through 1970 each and every school finance law

Senate of Pennsylvania 119

Dntained a teacher's salary schedule and virtually every one untamed a teacher's salary schedule increase. And somebody as saying about the interest in teacher's salaries, I suspect lat one of the reasons we had a lot more people interested in ie school finance system from 1903 to 1970 was because all le teachers have their salary increases depending on what you

Ld in terms of school funding.

In 1911 the Legislature changed the school code and lat they did is they eliminated funding on the number of ixpayers. The population of the school district as to the sople who could pay taxes, that was eliminated from the

Drmula and they basically funded the teachers salaries. asically the school funding was the teachers salaries. Also

I 1911 for the first time they allowed local public schools

) fund education of the handicapped, 1911, and they also jrmitted local schools to fund public transportation, 1911.

One of the most important acts of this century was the imond's Act passed in 1921. The reason it's important is jcause basically it was the funding system from 1921 until

J46. That was the Edmond's Act passed in 1921. The first ung it did, it began to fund on the basis of the number of aacher units or classes. A teacher unit was the so many lpils per teacher. Now at the end of the funding system 30 lpils was a elementary teacher unit, and 22 pupils was a jcondary teacher unit. You recognize that, 30 was an

Senate of Pennsylvania 120

Lementary, 22 was—

CHAIRMAN RHOADES: That was a long time ago.

MR. HUGHES: Yeah, a long time/ Senator Rhoades.

Anyhow, so that was the first thing that happened. jcondly, the Edmond's Act put in place the thing called lcrement for teachers salaries. Up until that time they

Linply funded an amount per month, but this bill put into

.ace a teacher's salary schedule with increments for years of jrvice. And finally, it equalized the funding of teacher's ilaries based on a district's population. School districts

: population over half a million received $300 per teacher

;r year. Districts with a population from 5,000 to 500,000,

150 per teacher per year. And rural small districts, less lan 5,000 population, received $50 per month for each

.ementary teacher, and $65 per month for each secondary jacher. Now school terms were about 7 months in those days,

> what it amounted to was the smaller the school district the

.gher the State funding. Once again, the smaller the school

.strict the higher the State funding.

The Edmond's Act was amended in 1923, and that lendment provided that we would use assessed value per sacher as the equity system, assessed value per teacher unit

; the equity system. Now understand, assessed values are all rer the place, just as they are now, so it wasn't very good it this is what they did.

Senate of Pennsylvania 121

From 1924 through 1948 pretty much nothing happened in

:hool finance. We did have a lot of studies, though, and I ive one of the best ones here. This is a study that was done

{ the Commission to study the Distribution of State Subsidies

> School Districts. It was done in 1927 by the legislature, id the House and Senate Education Committees hired Dr. Paul

>rt, who was from Columbia University and was a very well lown school finance expert in those days. Hired Dr. Mort. le Governor appointed some people. The Senate and the House jpointed people and they did a complete study of our school mance system. And we had a lot of studies from 1924 through

)48, but we had no changes to the school finance system.

In his study he did a number of things. He jcommended that we not use assessed value, that we come up

.th some sort of a State agency that would calculate market ilues for each school district, and from the calculation of le market value for each school district we could develop

>me sort of equalization system. He also called on complete jualization so that every school district had the same amount

: money per teacher unit as every other district. It was illed power equalization. You would put a certain amount of ixes required for every district in the State, taxes per jacher unit. Everything was teacher unit in those days. rerything was a class. Everything was kind of like a class

.ze. So you would do so much taxes per teacher unit, and if

Senate of Pennsylvania 122

>u couldn't get to $3,000 per teacher unit the State would ike up the difference. That was actually proposed in the igislature m 1933, but of course that was right after the ipression had really started to kick in, and so during the ipression nothing really happened in terms of any changes to ie funding system that would cause an increase in State

>llars. There were no increases in State dollars. In fact

L those days a lot of years the teachers were being paid in nts. They didn't get their money right away during the ipression.

The only thing that happened in the Depression, and it sally didn't affect the funding, but the big thing was mure. The Tenure Law happened in the late N30s because so my teachers had to buy their ^obs each year because there is so little money around.

The State Tax Equalization Board, by the way, icommended by the Mort Commission was established then in

•48 and did give us a method for equalizing subsidies based

L market value per pupil.

The 1945-46 subsidy system implemented the first State ibsidy system that guaranteed a certain amount of money for ich teacher unit. In effect this was it. We finally got

[uity in the system. In 1945-46 that subsidy system said

Lat everybody would get $1,800 per teacher unit, in effect itting in place the Mort proposal. School districts all had

Senate of Pennsylvania 123

D have a certain level of taxes. I'll say it again: School

Lstricts all had to have a certain minimum tax effort to articipate. I'll say it a third time. In the mid-*40s the sgislature required all school districts to have a certain ax level. The legislature would make up the difference to

2t to $1,800 per teacher unit.

Between 1946 and 1965 the State continued to increase ie value of a teacher unit to reflect the increased cost of iucation. But the actual cost of education as usual lcreased even faster, and by 1965 the State again faced a risis in school funding. Now during that period a lot of lings happened that affected school funding. In 1955 you put l excess cost funding for special ed. Up until that time

>ecial ed costs were reimbursed as part of the teacher unit iimbursement, but in 1955 the legislature passed, put in

Lace, that every penny over and above what it cost to educate

special education child would be paid by the State.

In 1948 you equalized elementary and secondary ilaries. Up until that time elementary salaries were less. ie salary schedule was less than secondary salaries.

In 1955 you passed the local wage tax, allowing school

Lstricts to tax wages up to 1/2 percent to be used for the inding of education. Now that actually came from a Sterling

:t tax that passed back in the mid-v30s in Philadelphia, jcause the Philadelphia School District went bankrupt. That

Senate of Pennsylvania 124 as an act that allowed the City of Philadelphia to levy a age tax and also to levy a tax on the people who did business i the city. We enacted a tax like that for all school

Lstricts in 1955 called the Wage Tax. It was supposed to cpire in 15 years but then was reenacted.

Finally another thing that really affected funding of iucation during that time period was the Reorganization Act

E 1963. In 1963 we had 2,600 school districts in snnsylvama and you can imagine - and Paul Mort has every one

Z them in his book with their financing and how many kids,

:'s page after page. In 1963 we passed a law which said we

»ed to reorganize school districts and reduce the number of

:hool districts. And if we look back in history you'll see lat a lot of the reason was so we could save money. A lot of le debate in the legislature was if we do this we'll have an

;onomy of scale, we'll have fewer administrators, we'll have

Lgger buildings, we'll have a lot of big savings of money, iich, of course, didn't happen.

The latest Pennsylvania Constitution in 1968 continued ie public education requirement of the 1874 Constitution. ir current Constitution says: "The General Assembly shall rovide for the maintenance and support of a thorough and

Efficient system of public education to serve the need of the jmmonwealth."

Perhaps the most important act of the second half of

Senate of Pennsylvania 125 tie 20th century was Act 580 of 1966. Once again the agislature hired a group from the University of Chicago. ley had come in and done a study of our finance system, they ade a number of recommendations, and their recommendation was

2 go to percent equalization. So in 1966 you passed Act 580. lat established that the State shall pay 50 percent of the

Dst of the statewide cost for instruction as the mam subsidy

/stem.

The main subsidy system has three components, and iey're still around today. One component was the aid ratio, le percent of State support that each school district was ltitled to, the aid ratio. It was a very simple calculation.

DU took the amount of property wealth per pupil in your

Lstrict, divided it by the statewide average property wealth sr pupil. Took it times a half, subtracted from one, and lat was your percent State support. Nothing to it. isically all it does is if you're above average wealth of irket value per pupil, you get less than 50 percent State ipport, and if you're below average wealth of market value sr pupil, you'll get more than 50 percent State support.

Now it's not a straight line calculation. If you have tfice as much wealth as the average in the State you will get sro. If you have four times, you would get a minus, you

)uld have to give back. So the legislature did enact a

Lnimum aid ratio in those days of 10 percent, they increased I

Senate of Pennsylvania 126

: to 15 percent in the mid-'70s.

The second component was the pupil count. Now if you jmember a few minutes ago, Senator Rhoades, you were shaking

)ur head when I said the teacher unit was 30, elementary kids is one teacher unit or class, and 22 secondary kids was 1

;acher a class. So instead of getting fancy they took 30 and

LVided it by 22, which gives you 1.36. Everybody that thinks lat somehow this 1.36 of weighting for secondary children is ised on anything is wrong. It's not based on anything. It's ist based on that old teacher unit that started back in the imond's Act in 1921, and it's just 30 over 22, 1.36. So what i do for secondary students that are in membership, not

:tendance in the State, membership for 180 days, we give you weighting of 1.36. Elementary kids are weighted for jmbership. One hundred eighty days are rated at one, and ilf-time kindergarten children are weighted at one-half.

The third factor in this calculation, the third factor is the reimbursable amount per pupil, and that was supposed

> reflect the statewide expenditure per weighted pupil. If

>u multiply the three things together, then the amount per lpil will reflect the statewide expenditure per pupil, the

.d ratio in the number of weighted children, you've got the isic subsidy plan.

Act 580 also provided a new teacher salary schedule. jmember, teacher salaries from 1903 until 1970, they provided

Senate of Pennsylvania 127

new teacher salary schedule effective for the 1967-68 school sar that increased the increment to $300 per year of service, nd at least $600 additional to teachers with a master's sgree, and provided a beginning salary of $6,000 if the new

:ate subsidy system was fully funded.

Now this proposal to give 50 percent State funding and lbstantially increased teacher's salaries led to the largest smonstration in the history of our State when on March 4,

J68, more than 20,000 teachers and administrators took the ly off, came to Hamsburg and demonstrated out in front for ill implementation of the new subsidy system, which also lcluded salary increases for all. And guess what? The new lbsidy system was implemented.

The State was able to fully fund its new 50 percent

:ate basic subsidy system from 1966 until 1976-77. The

.ghest level of State support in history was reached during

J74-75, 25 years ago, when the Commonwealth provided basic ibsidy at $1.2 billion to reimburse expenditures of $2.2

Lllion, paying and reimbursing 55 percent of school costs.

Now if you get a chance to look in your book, it's ihmd page 11 of the testimony. There's a chart. In a revious career I worked for PSEA so I started doing this lart when I came on staff in 1970, and so there's a chart lat I started back about 30 years ago tracking State subsidy, id that's State subsidy for basic instruction. Now by basic

Senate of Pennsylvania 128 istruction we're talking about all the money to teach the uldren. All the money that deals with administrators and

.ass books, and rooms, and text books, and heat, and light id gas, and maintenance of the building to pay for the

Hiding. We're not talking about authority rentals or buying le building. We're not talking about transportation, health jrvices. These are subsidies that are categorically paid. le general subsidy is a subsidy that pays for instruction. lat's the biggest subsidy the State provides and that's the le we usually talk about when we talk about school funding.

As you can see when you look at this instruction ibsidy, and I wanted to point out a couple of things off this tart. You can see where it is 55 percent in 1974-75, that is the high water mark. The legislature was not able to untain that, but in the period from 1975-79 it was at 46 srcent. Now if we just come 20 years ahead until today you in see from 1995 to 1999 it is 36 percent. Let's do that rain. From 1975 to 1979 it was 46 percent. From 1995 to

>99 it was 36 percent. Now, a difference of 10 percent on a

.0 billion instruction expenditure of all the school

.stricts, if we went from 46 percent 20 years ago to 36 srcent today, and the total instruction costs are $10

.llion, and that's roughly the case, you can see that $1

.llion of money that used to be funded by the State is now iid for locally out of the property tax. Just a drop from 46

Senate of Pennsylvania 129

) 36 in the last 20 years has transferred $1 billion of money lat historically had been financed and funded through

:oad-base State taxes back to the local school district, back

> the local property tax.

Now it's true that the legislature is doing what it

.d at the very beginning and it's giving local school

.stricts more authority. Remember, they gave them authority

: the very beginning to fine the parents. It's true that

>u're giving them more authority. It's true you're giving lem more authority to find ways of funding schools with Act

), but the fact of the matter is there's a $1 billion shift

:om when you originally said you were going to fund 50 srcent then what you really did fund 20 years ago in the

.d-40s to what you're funding now which is in the mid-30s.

Now the legislature responded differently when it was

>t possible to fund schools where they sit. It was very lickly, just 10 years after the 50 percent funding went into

.ace, that they could no longer provide 50 percent funding.

:her things were coming up, highways, whatever. So the first ssponse of the legislature to its inability to provide an rerall increase in State support in 1976-77 was to look for lys to change the formula, and so they did.

In 1977 Act 59 was put into place. Act 59 made a

>uple of very important changes. Number one, because of the lability to fund schools in 1970, we had gotten a new

Senate of Pennsylvania 130 svernor, Governor Shapp, and Governor Shapp had run on the

Latform that he would put in place a new State income tax, id part of the reason for the new State income tax was to and education. Now believe it or not, a person who ran on a

Latform to increase taxes actually won. Because in 1970, for latever set of reasons, people believed that they wanted to ind education. They wanted to provide those State services lat the State government was providing, and they actually

/erwhelmmgly voted for someone who made no bones that if ley got elected they were going to put a new State income tax

1 place, they were going to increase taxes, and they were

)ing to fund education. I don't think that's happened since.

'm not sure, but I don't remember it. But the fact of the itter was we got a new State income tax in 1970 and we were len able to track income data from school district to school

.strict. Did you ever fill out that form on your income tax lat says check your school district data? Well, the reason i wanted to check the school district data, the reason we ike all the citizens of the State put their school district

I their tax form - what a pain that is - is so we can collect lformation on the amount of income per student in each school

.strict, so we can change the subsidy system to better

'fleet the wealth of our State. And so in 1977 Act 59 langed the calculation of the aid ratio, so it wasn't just on roperty wealth, as it had been for the first 10 years, it was

Senate of Pennsylvania 131

)w 60 percent on the market value wealth of your school

Lstrict and 40 percent on the personal income wealth of your

:hool district. And the reason that was 60/40 is in 1977 if

)u totaled all the wealth in the State, the value of roperty, the value of all the income that year, it was about

60/40 split that year. So that's why it was put in as

)/40.

The feeling also was eventually the legislature would

Lve local school districts greater taxing authority on icome, so that ultimately when it was done an 80/20 split roperty taxes income ultimately it would become 60/40. That

.dn't really happen but that was the feeling in the mid-*70s.

Another thing that happened that I don't have in the jstimony, there was a little thing put into the subsidy rstem called the base-earned for reimbursement. School

.stricts with the highest taxes have a higher reimbursable lount than school districts with the lowest taxes. The

.ghest taxing districts earned the median and the lowest ixing districts earned a point that was $200 below the idian. The reason for that was because the courts in ilifornia had held that you couldn't have a difference of

)out 10 percent on school funding and it could still be institutional at least in California. That base-earned iimbursement didn't last very long. Some of the people

Ldn't like it, they called it a tax-and-spend more kind of

Senate of Pennsylvania 132 ung, the more you tax the higher your reimbursement. So ule the State could not provide increases sufficient to get

) 50 percent, Act 59 did provide the 46 percent subsidy and

: did that for a 4-year period.

Now, up until this time, and this is where changes are

>ing to start, up until now pretty much school districts had

>me idea of what would happen so they could plan their ldgets. Pretty much it's a reimbursement system. Pretty ich they can even plan out 2 or 3 years. We have more kids

>ming in, our aid ratio is going up, our aid ratio is going

>wn. But that was all about to cease because during the

;riod from 1980 to 1983 the legislature stopped making yearly langes to their reimbursable amount and instead they iplemented minimum and maximum increases. In fact they even ilked about grants and all kinds of new ways of doing it in lose days, but basically minimum/maximum increases which lcreased disparities by not reflecting local wealth of school

LStrict population changes on a yearly basis.

Finally, Act 31 of 1983 replaced the basic instruction lbsidy with a system called the Equalized Subsidy for Basic lucation. Now this next section, this covers the last 15 jars, I call it 15 years of increased inequity, and there's

>od cause for that. Act 31 of 1983 replaced the basic istruction with the ESBE. It was effective for the 1983-84

:hool year, and you know, it really didn't have many changes

Senate of Pennsylvania 133

:om the old system except it changed all the names and it

Liminated 50 percent funding.

They repealed the section that required 50 percent inding. The Factor for Educational Expense replaced the

:tual Instruction Expense in the formula, and that factor was it every year by the legislature. During the 10 year period

: was about 70 percent to 80 percent of the median spending. le pupil weighting component at the bottom, remember 1.36, ie, a half, it stayed the same. The aid ratio, well, the ime aid ratio, once it was changed by Act 59 for instruction

: stayed the same.

All three components were still multiplied together.

>u take the fee times the aid ratio, times the number of sighted students, and then you ignored that. Every year you fnored it. You did the calculations but you ignored it. The jgislature put in place minimum increases of 2 percent, iximum increases from 6 percent to 8 percent year after year, iter year.

After 10 years of ESBE some wealthy districts, because

: the 2 percent increase and because of the decline in their

:udent population, some wealthy districts were getting over

)0 percent of what the formula calculated. Chartiers Valley i 1990-91 was getting 210 percent of what the formula ilculated. Lower Moreland was getting 207 percent of what ie formula calculated.

Senate of Pennsylvania 134

On the other end of the scale, the low income istricts had the opposite problem. The caps of 6-8 percent i increases had caused many low income districts to receive ar less, not 207 percent, far less than their entitlement. ley were increasing student population. Their wealth was

Ding down much more rapidly and yet they were being capped very year at 6 percent to 8 percent. The result was that all le measures of equity for our subsidy system worsened during le 1980s. Low wealth districts had higher local taxes and

Dwer spending than wealthy districts. The disparity in pending from the highest to the lowest in the Commonwealth icreased substantially.

I'll just use the number that Senator Rhoades used at le beginning of this hearing today. In 1980-81 the highest pending district was Jenkmtown, they spent $2,646 per sighted pupil, and the lowest spending district was Northern ambna at $1,038, the ratio was a little over 2.5. Two and a alf times top to bottom.

Ten years later under ESBE by 1990-91 Lower Merion in

Dntgomery County was the highest spending district at just oout $8,000 per pupil. Northern Cambria still had the bottom lot at about $2,332 per pupil, but the ratio had increased rom about 2.5 to 3.4. From 2.5 to 3.4, just about a

0 percent increase in the ratio from top to bottom. The sllar amount increased a lot more, but the actual

Senate of Pennsylvania 135 srcentages, the ratio, percent increment, instead of spending iO times more than the lowest spending district, the highest sending is now spending 340 percent more than the lowest

)ending district.

As the Pennsylvania Association of Rural and Small

:hools - and they'll be here later - said in this lawsuit

Lied in January 1991, and I quote: "The ESBE formula has uled to achieve the constitutional mandate of a thorough and rficient system of public education, has defeated the jualization of educational opportunities available to the

:hool children of the Commonwealth, has permitted gross

.sparities to exist in educational resources available to the nldren of the Commonwealth, and has not relieved the lucational deprivation experienced by school children who jside in school districts with low property values and

;rsonal incomes."

Well, finally the ESBE was repealed in 1993. mgratulations. The legislature responds to a lot of

;udies, National Conference of State Legislators, Terry litney did a study, if you remember that. There were

:udies, PARSS did studies, other groups did studies. In jsponse to these studies - the PSEA did a study - that the

3BE had increased the disparities and opportunities among

:hool districts, the legislature took the following steps in

J93-94, and this was a breakthrough. What you did in 1993-94

Senate of Pennsylvania 136 nd 1994-95 was just great in terms of equity. It wasn't nough in terms of amounts but the concept was just great. he first thing you did, you allocated almost all the increase or that year, 1992-94, $93 million, to 225 school districts hat were low wealth with above average taxes and with total xpenditures below $6,193 per pupil. You guaranteed that istricts with a local tax effort of 19.5 mills on market alue, that was the State median at that time, could generate

3,875 per pupil. Just about 80 percent. And you made up the lfference. You did the calculation, took every district and at 19.5 mills on it, you took off of their current subsidy, latever it took to get them up to $3,875, you gave it to riem. The next year you bumped it up to $4,700. It was a arge increase. We were on our way to equity. We were truly a our way with what was called the foundation grant, and I link you heard John Myers talk about it, the PARSS, the

Dundation grant. We had two years of moving toward a

Dundation grant. You also had a growing district supplement

D offset 10 years of caps so districts that had more than a

.5 percent increase in student population got an increase.

3U really did some commendable things to the school finance

/stem in terms of equity for those two years.

While the first steps were small and the main portion

£ the subsidy was still distributed on the basis of the ESBE, lese efforts reduced the increase in disparity so that by

Senate of Pennsylvania 137

398 the ratio had changed hardly at all. At least it stopped le increase in disparity.

Since 1993, however, we have not had a subsidy system lereby districts can project their payment for the coming sar based on local wealth, spending, and student sinographies. In fact, in 1995-96 you left the foundation

/stem - I don't want to get into why, but if you remember it asn't that long ago. Something else came up that took

/erybody else's time in 1995-96, something everybody was

Drkmg on, so you just put a 3 percent increase per pupil

Lght on top. And then in 1996-97, if you remember, there was

freeze. That was the second freeze of the nineties. If you

3 back in our history the last time there was a freeze was ie Depression days. We didn't have any Depression in

369-97. Our State economy was doing really well, but we had

freeze in 1996-97.

In 1997-98 you ignored the foundation and it went tfay. It was never changed, it was just never continued. You

Ld, however, try to deal with low wealth districts by saying

Lstricts with an aid ratio above .4 would get an increase. rowing districts got an increase but you put back the minimum jam. You brought the old minimum increases of the ESBE back jain. When you put minimum increases in for the wealthy

Lstricts and not give it to low wealth districts you are

Ding to increase disparity, there's no question on it, by

Senate of Pennsylvania 138 sfinition.

In the last couple of years you did about the same ung. Small increases, looking at aid ratio, looking at rowing districts, looking at AFDC. And for the last couple

L years you basically have been dealing with trying to go ick to the categorical age, and you've been looking at, it spears that instead of providing general aid to school

Lstricts you're concentrating on specific categories of need iiong our districts. This has been especially true in special iucation where the last couple of years low wealth districts

Lth high special educational expenses have received special itention, and they need a lot more.

In conclusion, because we're done, we have the

.ghlights up to here and what new highlights we have you're

>ing to do it. So in conclusion, the future of Pennsylvania

> a Commonwealth will in great measure be shaped by the icisions you make in the next several years. Funding public

:hools is critical to the vitality of our form of government id the economy of our State. It isn't enough simply to make rovisions for our own children or grandchildren to have a lality education. In the words of Thaddeus Stevens, we must lucate all children.

In school funding and public policy more generally, jgislators have to ask themselves a basic question: do they ivor one Pennsylvania or two? Do we want to continue our

Senate of Pennsylvania 139

>mmitment to equal opportunity? Or do we want to drift irther toward the new feudalism — a society in which some nldren start with such enormous advantages that the children

I working people look with angry cynicism at the claim that lybody can become anything if they just apply themselves?

:e we all in this together, with a common commitment to

)mmumty and to a high quality of life for all ^ jnnsylvanians? Or have we reached the point that /is okay, or avoidable, or out of our hands, that the "fortunate fifth"

>se its sense of connection with the less fortunate mr-fifths?

This legislature must raise the level of public school inding in the poorer areas of our State so that all children

> matter where they reside receive a quality education. lomas Jefferson imagined an educated population that would ike up public service to protect and advance the interest of ilf-government and our great democracy. Today education imams the most fundamental building block of the future as ivisioned by our forefathers and the future we all should sek. You have perhaps the most important job of anyone in lr State because you have the power to provide educational juity for all of our children. Our children and their lildren are counting on you. Thank you.

CHAIRMAN RHOADES: Thank you, Bill.

I'll tell you, you talk about timing, you used the

Senate of Pennsylvania 140 lole green light up, right to the point.

MR. HUGHES: Did I use it all?

CHAIRMAN RHOADES: Yes, you used it all.

MR. HUGHES: I get carried away.

CHAIRMAN RHOADES: That's fine. It's interesting as

DU went through the whole history I began to think it wasn't

=ally much different if it was 1718 or the 1900s, we're still aced with the same thing of trying to find a formula that is air, equitable, and adequate for everyone and not a matter of rying to guess who is getting what for where, for when, and

DW. I appreciate that.

Does anyone have any questions?

SENATOR SCHWARTZ: Well done. That was great, Tom.

I think it's important to go through this history and

3U give it great humor and interest as well, so I appreciate lat.

My recollection, by the way, is that Governor Shapp id to have the General Assembly vote twice on his income tax, f I remember correctly, because one was found

^constitutional. So when we're talking about political

Lfficulties I would encourage whatever you might want to say.

Let me ask you, I am assuming you have also looked at

:her States, and while I think we have to look at our own

:ate and our own history and our own commitment to educating

LI of our children, one of the issues I think we ought to

Senate of Pennsylvania 141 ook at is, and as you pointed out, educating not only our own tiildren but our neighbors' children, is that it seems to put ennsylvania at greater risk economically than other States as e heard the first person testify this morning was that other tates were moving ahead on a shorter way to equity than ennsylvania is. They are tackling the issues of adequacy, quality, accountability, and funding in a way that we're not.

Particularly with the recent research that you did, do ou have any comments to make about how Pennsylvania will band economically if we actually continue this trend of the asic percentage increases or lack of equity as to whether our nldren will be able to compete with our neighbors' children i other States who are actually tackling it in a very

Lfferent way in different school districts?

MR. HUGHES: That's a good question, Senator, thank

3U.

Our research center, the Keystone Research Center, has

:tually done some studies of how Pennsylvania is doing

:onomically compared with the other States, and not as well

3 we would hope. I think part of it is that the rural parts f our State, and I don't know if it's a chicken-egg problem

: what it is, but in the rural low income areas of our State s don't have a very good educational system. We don't have

»ry good educational funding. We don't have a lot of schnology. We only had a technology grant starting at $33

Senate of Pennsylvania 142

Lllion a few years ago.

We still have school buildings that aren't wired, ilieve it or not, for technology. We don't have one

)mputer per child or one computer for every 10 children. So len this is the case it's kind of like when I came out of

;hool and high school I had a decision, I could pick up a room and go work for the Pennsylvania Railroad and make about ilf again as much as a school-teacher in those days. That is in Altoona. People that lived in Johnstown, they could go

)wn to the mill and get a job. People that lived in

>ntgomery County, I don't know, did they have any mills? m sure they had someplace they could go down, get a job, and

) to work and make as much as school teachers, and there were

>od jobs out there like that. So education wasn't that big a

;al in that sense. I went to college because I had been to

.toona and we had some advanced training. I actually had

:ipped a lot of the first year classes when I went on to

>llege. So that was nice. It was an advantage to me being

: a progressive district. Today it is a lot different, you ilk out of your high school with no education and no jchnology understanding, you're not going to be left behind, m're left out. And so in our rural areas of the State we iven't had a lot of increase in growth and economy, I think irtly because we don't have the educational infrastructure.

Now in other States whether it's the equities that

Senate of Pennsylvania 143

Leir courts have held, as our court did not, that the courts ive held that they had to change the system, and of course le legislature has to do it, anyhow whatever the courts say id the legislators have done it. I don't know if in Kentucky

;'s making a difference yet in the rural poor areas, what iey call the hollers in Kentucky, but I do know that in some

: the other States it is beginning to make a difference.

:'s making a difference in the economy of Texas. You can ike a look, Texas had tremendous growth in their economy in ie last 15 years, and especially the last 5 or 6 years. chigan, Wisconsin, these States also have had equity changes id their growth has been phenomenal. So it's not an easy lestion, Senator. It's not one that I think you can answer nckly and an investment in education you understand doesn't,

>u don't see it tomorrow, you know. I always loved the fact i would do a subsidy system and right away we started to lasure what it was doing. It takes years when you invest in iucation. I guess that's why it's so hard.

SENATOR SCHWARTZ: I appreciate your comments and I

.11 just follow up with one comment too, you pointed out very

•ecifically that the Constitution, has been talked about

:fore, requires us to do this, but interestingly you're minding us that it is worded in the State Constitution that

; is the General Assembly that is required to support and

.intain a thorough and efficient system of public education.

Senate of Pennsylvania 144 id then there sits the General Assembly, and it is one that I link we ought to take to heart. The courts just told us that jam it's our responsibility, and I've said all along that iren if they told us to do it, it would still be up to us to

D it, so I thank you for that reminder and appreciate this as

first step in getting us there. It's going to take a while.

I will leave it at that and I appreciate your history ssson. I would encourage you to get more information about le last 5 or 6 years and go into exactly what has happened in le last 4 or 5 years, this discussion about what we've

:tually done and going backwards. I think it might even be slpful to spell that out a little bit more.

MR. HUGHES: Actually the intent here, and I thought

:om Senator Rhoades and Representative Stairs, was really to sip all the kids. I'm doing a study. You guys know what ippened and my perspective might be helpful and I'll do that. lank you.

CHAIRMAN RHOADES: Representative Williams.

REPRESENTATIVE WILLIAMS: Thank you very much.

I do want to say that there is a similar analogy xiay, though, with education and with jobs, because not for

:hool-teachers but for daycare workers and for MH/MR workers, id for workers who are helping in our extended care icilities, many times they can go to McDonald's and get more sney than they can working in those facilities. So things

Senate of Pennsylvania 145 aven't changed so much.

The other thing I'm concerned about as a spresentative of Montgomery County School District, is that I spe as we go forward with this and talking about it that we

3 not go below the common denominator of equity and

:cessibility. I would like to see all the school districts i Pennsylvania and all the children in Pennsylvania have the mds of opportunities that the children in my school district

3, and I hope that we will talk about that sometime. Thank

3U.

CHAIRMAN RHOADES: Representative Sturla.

REPRESENTATIVE STURLA: Thank you, Mr. Chairman.

You talked about school consolidation in 1963 and said lat it didn't necessarily produce some of the savings that id been promised in terms of, you know, going from 2500 to

)0 school districts, you should realize the savings, the tiount of administrators, things like that, that all of those

Ldn't necessarily come to fruition.

I guess the question I have, having looked at the amber of school districts we currently have in Pennsylvania,

)1 versus other States that are similar size that have, you low, 50 and 75 school districts, do you believe that

Dnsolidation helps eliminate some of the disparity in terms f tax base? And the kind of example I guess I'll give is incaster County, York County, Dauphin County, where you have

Senate of Pennsylvania 146

poor urban area surrounded by wealthy suburban areas, where he tax rate in those poor urban areas is 40 percent higher han the surrounding suburban areas, and yet the county as a hole is relatively wealthy, but there are pockets of rather arochial disparity, and would moving to a system more similar o other States help to alleviate some of that, if not save us oney in actual building costs and things like that, would it t least help level the playing field in terms of disparity?

MR. HUGHES: That's a great question. Again, and with

caveat to what happened back in the 1830s when they gave the oney to the counties and the counties didn't give it all to tie school district, with keeping that in the back of your ind, certainly the Keystone Research Center supports the idea f regionalization of school finance. Not school districts.

2 don't believe it makes any sense to reduce the number of rhool districts.

Now the regionalization of school finance in the case

Du're talking about would work, but in some cases, especially ti rural areas, and I'm sure you'll hear about that this fternoon, it wouldn't. I mean you can take 3 or 4 poor

Dunties, put them together and you have 3 or 4 poor counties

Dgether not able to fund schools any better than they were

2fore. But, yes, in Allegheny County, I think in Lancaster, sbanon, York, kind of out in the areas where you have some

Dckets of school districts that are poor right beside,

Senate of Pennsylvania 147

;rtainly down in Delaware County, where you have 1 or 2 poor

.stricts and some really wealthy ones, it could make a

.fference to go to regionalized taxes.

Philadelphia, one of the studies we did at the jystone Research Center looked at the Philadelphia region as ir as regionalization of taxes for funding of education, and

: does seem to provide more equity. Whether or not we will rer reach the point where anybody would vote for that is lother issue and that's one of the problems. One of the ungs we need to deal with is what we have. And right now lat we have are 501 school districts and we have over half of iem having tremendous difficulty in providing equitable or

[ual education opportunities for the kids.

REPRESENTATIVE STURLA: Thank you.

CHAIRMAN RHOADES: Representative Platts.

REPRESENTATIVE PLATTS: Thank you, Mr. Chairman.

Thanks very much for your comprehensive nature of your sstimony and the history.

The numbers you shared and the level of funding, and

»u pointed out the 10 year difference going from 46 to 36, I

Link makes the point when we talk about tax reform and the

:isis with local property taxes, it's very much driven by our ivel of funding through the formula or whatever you need to in through for education. And when I compare your chart to ie chart here as a portion of the total budget it well

Senate of Pennsylvania 148

>rrelates from the last time in, you know, early *70s when we

;re at 55 percent of the total cost for the State formula and

; were at 42 percent of the total budget, and it kind of

>rrelated and it makes a pretty clear picture of what's riving the tax reform crisis out there is our lack of inding.

One specific question, and I appreciate that data jcause it helps make that case in a pretty comprehensive ishion, the two equity acts, Act 580 and Act 59, I gather

:om testimony that of those two, although both were affected

I trying to drive out funds in a fair way, that the changes

Lde where we went to the personal income is something that

>u will continue. If we were trying to better fund an

[uitable formula having that factor in there is critical, and

: that is accurate the way I'm reading your testimony or taring your testimony, what balance should it be, 60/40,

)/50, from the property values to income average? Do you ive a suggestion?

MR. HUGHES: I don't know the best mix at this point.

think what you want to do is probably, you know, we have mderful computers and we can run it out. In the mid-s70s len we put it at 60/40 that was the mix. I suspect that's langed slightly, that income would be a little higher in the

.x, maybe even as close to 50/50. So one thing, it should iflect what the State, what we have.

Senate of Pennsylvania 149

Secondly, we would support the idea of continuing to

3 to equity using both property and income wealth, because lose are the measures of the wealth that are most readily mailable. Property doesn't go anywhere and it's there in ise something bad happens to incomes, it's pretty steady and icome of course can take care of inflation and offset other iditional costs as income goes up. So both of them are retty good measures of wealth and would work okay in the

>rmula.

The key thing in the formula is to somehow give rerybody that same chance, the same opportunity to provide an juitable education. The easiest way is what Paul Mort lggested still stands. In fact his system is in place, we lid for it, by the way, and about half the States use it, but

» paid for it. His system is simply to make sure that rerybody gets the same amount of revenue from a mill of tax, latever the mill is, 60/40, 40/50, 50/50, whatever it is they

L11 all get the same amount of revenue. And if they want to send a little more than that, fine, it would still be the ime amount of revenue, but there would be some minimum sending because you would want a minimum program put in place s the legislature to continue whatever scheme you have in

.nd to make sure we have the best possible economy, we have le best quality of life, we have the greatest percentage of irticipation in our system. So that scheme you put together

Senate of Pennsylvania 150

DUld need to be funded. You would require it because of your institutional requirement. So the easiest method is simply lat or, of course, you'll hear this afternoon about virtual

:ate assumption and that's another method and that would work

DO, where the State would pay virtually all the costs of

Deal school districts, at least for those things that you squire. Any of those things would work. If the State did it len it would be a mix of broad-based State taxes, you know,

: would mix the business with the income and you have a

Lttle bit of property tax when it comes to utilities.

REPRESENTATIVE PLATT: Thank you.

Thank you, Mr. Chairman.

CHAIRMAN RHOADES: Bill, I'm going to give you one lance, because we're listening but we've got to put it

)gether, if you had your chance to put a formula together, lat would your formula look like?

MR. HUGHES: I think I just said it, Senator. Well, le best system is full State assumption, but I don't think lat will ever happen, but maybe it will and I think PARSS has

wonderful proposal. I like their proposal. But I still link that we need to allow local school districts some

Lexibility within the system. Some ability within the iructure to do a little better or make some decisions

)cally. I firmly believe that this is driven at the local ivel. I firmly believe that, and in our report on democracy

Senate of Pennsylvania 151 e show some of these school director positions unopposed, so any people turning over in those positions, so many people unning for office where no one is running against them, I irmly believe you need to change that. And the better ducated the population is the more likely they are to look round and say, hey, I can do that better, or, hey, I don't ike the way that's being done, why don't you do this. We eed to get people to the point where they can do that.

Now, in each of the local districts a system where unding would not have to be the mam concern for curriculum r the implementation of systems that deal with children that re a problem in the classroom dealing with violence, where istricts could concentrate on those kinds of issues and ither regionally or statewide would concentrate on the andmg, that system to me seems to have the best promise for stting this to the kind of system we want to. In the interim ive every district the same amount of money for a mill. It's imple to do. There's nothing to it. Even if the amount of aney doesn't get to the median, at least everybody is going

D have the same chance to spend something. Do that. You tarted in 1993-94, 1994-95, it's already there, bring it ack. Whatever the median, $5,000 it is today, if it takes 19 ills, if you spend 19 mills you have $5,000, and we're going o make up the difference. It's a simple system. It still

Hows the wealthy to continue to spend more if they want to.

Senate of Pennsylvania 152 lat probably is a right of Commonwealth, and what the word

)mmonwealth means is just what it says, a common.

William Penn was very progressive. I've heard people ly if you go back and read anything, William Penn was very rogressive not only at allowing all kind of different sligious beliefs, he was very progressive in his viewpoint of le economy. He was very progressive in wanting public

:hools for everybody.

We have a Commonwealth, but when it comes to education

2 need to be progressive. We may not be progressive on some

:her issues, but when it comes to education we should be

.ght out front there. We should be very progressive. We lould be doing what we can do in everything. We should leave lr mark as a legislature, as a General Assembly, that made le difference and that was very progressive but really did jmething for our kids, because then they'll do something for leir kids. So that's what I would do.

CHAIRMAN RHOADES: I think I'm going to add to that,

)o, there has to be a will, though, a continuous will of the meral Assembly to continue to fund that formula no matter lat the formula is at the level, as we say if it's 50 percent

: 60 percent, or whatever we would set, because I think lether it is ESBE, or whether it's PARSS, or whether it's any

>rmula, if you're not putting the money there it doesn't much itter where it's going to go. I mean we have to look at

Senate of Pennsylvania 153 lat. We just went through all the different formulas that

:e there and it still comes down to there's a smaller jrcentage going out than what we had, and we say, well, we're lttmg more money into it, there has to be that will, to be lat commitment to make that happen.

I thank you for being here. We appreciate your jstimony and I'd love to continue the dialogue. Thank you.

MR. HUGHES: Thank you.

We will recess to 1:45 and we will start hopefully romptly at that time.

(Afternoon session.)

CHAIRMAN RHOADES: We will call this forum back to

:der again. I'd like to try and at least work within the

.me schedule that we set, so you will see other Senators and spresentatives coming in and out as we're going. Some of

Lem just finished a press conference. And I also know that reryone appearing here has schedules that they have to implete, too, and I appreciate that.

Our next panel of presenters are going to give us some issible solutions to the problems in school finance. Dr.

•nold Hillman, Advisor of the Pennsylvania Association of

Lral and Small School Districts. Dr. William Hartman,

:ofessor of School Finance, Penn State University. Dr. Jim

»odhart, Executive Director of the Pennsylvania League of

:ban Schools. And Dr. Jay A. DeFlaminis, Superintendent of

Senate of Pennsylvania 154 le Radnor Township School District.

Gentlemen, when you are ready and whoever's going to

3 first and so on, please.

DR. HILLMAN: Thank you, Senator Rhoades, and to all

\e other people that are sitting with you. I'm sure they'll

5 in shortly.

We really appreciate this opportunity to present what

2 believe to be a possible solution to the problems that

)u've heard about this morning.

With me today are three people who have worked jgether to create what we're calling the PARSS/PLUS as the

Lan or the Fair Chance Act. To my right is Dr. John

LFlaminis, superintendent of one of the lighthouse school

Lstricts in Pennsylvania, the Radnor School District. And to

{ far right is Dr. William Hartman, who is a nationally known cpert on school finance who helped us work out the plan. Dr.

Lm Goodhart, former superintendent of the Reading School

Lstrict and now the executive director of the Pennsylvania aague of Urban Schools. And I'm Arnold Hillman of the annsylvania Association of Rural and Small Schools.

I would like to remind everybody here in this room lat about 3 years ago Senator Rhoades, Senator Schwartz, then aairman of the Education Committee, Ron Cowell, and then Jess

:airs, and I'm missing somebody else. No, that's all four. le four chairs developed a set of priorities in terms of

Senate of Pennsylvania 155

E work they were going to be doing over the years on academic

:andards, pre-school programs, and also a couple of things ley haven't done yet and that is parental involvement and

:hool funding equity. I see this as a very, very natural rogression from those years until now to get some of the ungs done that we need to.

I'd like to switch the agenda a little bit just for le sake of explaining what we hope will be an overhauling of le school funding system in Pennsylvania. I'm going to ask

:. DeFlaminis to give us a little background on how we got

>gether and what is the bases of the formula that we're going

) present. You can see here that there are a number of

.fferent charts. The one to the right over here, the nteria for the funding system, took us a year to do. The

>rmula itself took a much shorter period of time. Dr. jFlaminis will give us a background of how that came to be, len back to me to explain the first part of the formula tiled Tier 1. Dr. Goodhart will do Tier 2. Dr. Hartman,

.er 3. Then back to Dr. DeFlaminis for the easy part and lat's Tier 4. So at this point Dr. John DeFlaminis.

DR. DeFLAMINIS: Thank very much, Senator Rhoades and smbers of the Senate Education Committee, and Representative

:airs and Members of the House Education Committee.

I'm here as president of the Association of School

.stricts in support of excellence and equity. Our group has

Senate of Pennsylvania 156 sen involved in the equity since its very beginning. When we

;came part of this lawsuit many, many years ago we did so jcause we were opposed to the alternative solutions that were

;ing proposed at that time. They bore a remarkable

'semblance to what happened in New Jersey, which in our

>inion was not an effective solution to the problem. msequently we intervened in a lawsuit and have been part of

: ever since.

As the lawsuit proceeded, we met with our colleagues

1 the urban and rural schools and agreed that our overriding mcern for children was and should be our primary focus. In ir attempt to find common ground we agreed that we would work

>gether to find a solution that would be equitable to all

:hool districts and would have the best interests of children i mind.

I am here today to support the proposal alternative, ie which has resulted as a consensus process that included

^RSS/PLUS and the organization that I represent, ASDEE. My

>le in the equity supports me and other superintendents in

Le suburbs by necessity to look at the financing issues in

:hools in Pennsylvania, and to view those issues in the

>ntext of our environments, and according to the needs across

LIS large and diverse State. In fact the guiding principles tat we have agreed upon as mtervenous with both the rural id urban school districts confirm the following beliefs and

Senate of Pennsylvania 157

:e important to state.

That the Commonwealth has a fundamental obligation to md an adequate and equitable level of educational sportunity for all students. That the funding system should

)t depend on either the property or personal wealth of the

:udent's local community. That the quality of the student's iucational opportunity should not depend on the place in nch he or she is educated. That such a system must be mancially neutral so that the funds available for students' iucation should be substantially equal regardless of wealth, lysical capacity, location, and size of the school district

1 which the student lives, and that local educational rograms should be based on local priorities.

From these beliefs we framed some additional udelines which helped us to look at the issues. We worked

>r several years to do this because we found across our roups a commitment to an alternative that might constitute a

>re equitable tax structure in an apolitical effort to find

>mmon ground and the best solutions.

It has been said many times that educators always resent problems but fail to solve their own. We entered into us believing that if we could come to common ground and find

proposal that met all of our needs and interests, that such

proposal would be meaningful for this great Commonwealth.

5 we struggled to do this we were constantly reminded of H.

Senate of Pennsylvania 158

. Mencken's admonition that for every complex question there s a simple answer and it's wrong.

I was encouraged in 1997 when it seemed that the snnsylvania Tax Blueprint project would be funded and would

Lve us the capacity to predict the impacts of legislative roposals and even perhaps our own statewide. It would have ad the capacity to link dynamically to a regional economic

^recasting model in order to predict how tax changes would

Effect broader demographic and economic conditions. ifortunately such data bases have not come to pass and as my

Lrst recommendation I would urge the legislature to do aatever it can to further such ends since they are istrumental in determining impacts of whatever models are lggested, including our own.

Some context issues I think are important to frame scause they frame one of the reasons why equity becomes an acreasingly more difficult issue for all school districts. sarly every textbook on education finance written in the last

3 years includes the observation that education is big lsiness. With over $200 billion being spent nationally it's

3t surprising that the expectations for education and the sliticization of that process have increased over the last sveral decades. Harold Hodgekinson, the noted demographer,

^served that the future is a combination of age, births, and amily status, combined with immigration to create profound

«——^—«—i^^———^•^—————^^——»^^—

Senate of Pennsylvania 159 nplications to schools in terms of mission, pedagogy, roductivity, and funding.

When my grandparents came here to become part of a new and of promise, as immigrants they had high expectations for hat would happen for their children and grandchildren. They ere willing to sacrifice for the future of their families and y generation was the most direct beneficiary of that dream. et never before has the nation faced such formidable hallenges and never before has any generation had reason to xpect less from the future than its parents could expect. or many Americans, Hodgekinson maintains, a declining lfestyle faces the nation because the demography does not ontain a majority equipped to prosper in a postindustrial ociety. The schools, the implication is clear, we've not radicated social and economic differences among people and ur student populations consist of those whose social history eaves them at a disadvantage.

There are many advocates of the belief that ducation produces human capital and that education and rosperity are inexplicably woven in a spirit of regionalism.

believe that many of us support those beliefs, which are easons why in many parts of the State where a common ground as been sought, organizations like the Chamber of Commerce in y community have sponsored programs that have tried to ncrease awareness about the problems that exist across the

Senate of Pennsylvania 160 rtificial boundaries that separate us. Whether it's city, uburban, rural, suburban, the boundaries are all the same.

Unfortunately, at the very time that we understand nose issues in too many suburban communities we find urselves embroiled in a battlefield over school funding. any examples can be found in even my local newspapers in slaware County, and to some extent I've experienced them, and

will continue to experience the pressures to solve icreasingly complex problems with the same or less money.

'm fortunate because my community has been willing to fund le solution of those problems consistently, and consequently

'm privileged. My father always said to whom much has been

Lven much is expected, and I believe that that issue and bher issues that we may face as a State is one that we really aed to think about.

Other factors which affect the context, but which I

L11 not discuss in any detail today, are the following. I link these are substantial problems.

The idiosyncratic nature of the expectation and tandards which underpin our separate systems, and the lack of jreement on what students need to know and what new skills re essential for competing in an international economy is an ssue which looms large over all of our heads.

Funding shifts and changing commitments both ationally and statewide.

Senate of Pennsylvania 161

The increased politicization of education and roliferation of mandates which constantly erode a district's oility to control costs and limit taxes.

Increasingly negative social conditions that children i America face, including the changing makeup of the family ad the increased childhood poverty across the nation.

The frustrating fact that planning and prevention in nerican does not exist to the point that we can attack issues arly and move away from more costly interventions. We tend

D be intervention-driven rather than prevention-oriented.

These context issues are very important and I'm just bating the backdrop for what we face in the cities, the rural istricts, and the suburbs.

At the heart of the equity suit and our issues of iequacy and equity, it is our belief that the system is not iequate because there are not enough resources to provide for nldren's educational needs, and that it is not equitable scause a fair and just method of distributing resources among lese same children is not in place.

Do understand that equity is not blind equality and

?ual spending does not make education the great equalizer of le conditions of men, as Horace Mann suggested in the last sntury.

It is clear that additional supports must be provided lere substantial problems exist. This is true for the

Senate of Pennsylvania 162 aburbs as well as the cities and the rural areas, where the

Dntrasts and demographic differences create different types t problems in schools. That is one of the reasons why you se disparity in educational spending, since I would maintain lat one of the advantages that I have in my school district

3 the ability to address those differences through small

Lass sizes and support systems that have been put in place

3r those purposes. It's the reason for Part 4, which I'm sing to present later as well.

However, I would also maintain that I could probably

D more at a lower cost if I did not have the ever-present and rowing mandates which press on the system. I'm going to jturn to that issue in just a moment.

On September 17, 1997, our combined groups presented a roposal for equity and adequacy for funding Pennsylvania

:hools. While not perfect it presents a framework for the jgislature to begin to look at an alternative that the iucation system believes would work. PARSS/PLUS and ASDEE ive worked together for almost 4 years to try to develop a fstem that would benefit all children in the Commonwealth. le system even includes an accountability component since we

:e eager to have a system that is accountable to the ixpayers and the children of the Commonwealth.

The proposal I believe is consistent with the theories

: Locke and Smith - and I probably am the least expert

Senate of Pennsylvania 163 mance person on this panel but that was the first course in inance that I took, and so I went back to it because the rinciples are simple and I think they make a lot of sense - tiich were integral in shaping the nation's basic tax relief rom the outset. Smith argued principles of representative axation by pleading for a tax system based on four vital triteria: equity, certainty, convenience, and economy.

According to Smith, equity demanded taxes in troportion to a citizen's ability to pay. Certainty demanded lat the taxation must fall on each citizen with clarity in le amount, manner, and time of payment. Convenience demanded lat the tax systems must accommodate taxpayers wherein the atural and inconvenience of taxes would not be worsened by svernment itself. And economy demanded that the government at bloat itself with unneeded revenue, taking only what was seded to efficiently conduct its affairs.

Well, time limits my ability to discuss each of these aparately and in any detail. I do believe that if nplemented as we described this system would meet Smith's 4

Ltal criteria. Briefly, the equity criterion would be sached since it would be based on more progressive tax which

Dcuses on income and the ability to pay, and consequently it reatly reduces the reliance on property tax. Certainty would i achieved by giving the State a more efficient and mvenient single body taxing an individual rather then all of

Senate of Pennsylvania 164 lie collectives and others who are in place across each

Dinmunity in the Commonwealth. The process would allow every immunity to cut administrative controls and local expenses or tax collection. Convenience would be achieved because a arsonal income tax is already in place, thus eliminating the sed to pay a second tax, unless heretofore it should include

property tax, which is an option. Economy would continue to

2 achieved since the common school budget process and local

Dntrol does provide a valued opportunity for the community to iput into what it believes the community needs. A portion of

Deal control and funding beyond equity and equality remains i place in the joint proposal.

Finally, public accountability measures are there to isure both efficiency and effectiveness. In the equity suit

suburban group has argued that in addition to adding asources to the system, another alternative that must be jnsidered to meet needs and rising costs is the issue of sduction of mandates or removing burdens from the system.

In 1993, the Harrisburg Patriot published the fact lat there were some 943 laws and regulations which presented rograms mandated on school districts by the State. In fact

/ own local - Senator Tilghman actually commented on it in an rticle in the local press saying that mandates must be inded.

Of the 943, only 8 were fully reimbursed, another 112

Senate of Pennsylvania 165 sre partially reimbursed, and the remainder were

^reimbursed. The districts of Delaware County completed a

:udy with the Pennsylvania Economy League of the Pennsylvania

:hool Code which identified 449 mandates embedded in the

;hool Code alone— this was two years ago, so those mandates ay have increased— with 63 costing over $100,000 a year. le example is that over the last 9 years my budget has lcreased by over $3.8 million in a net loss for special iucation expenditures which are mandated but not funded.

I believe that this is the unspoken and unaddressed ssue in thinking about the future funding of public schools.

publicly testified that if released from the mandates I

)uld save my taxpayers several million dollars the next

>rnmg in changes that I would make that would not lbstantially affect the quality of education in my school

.strict.

I believe that they are changes that would not sgatively impact the quality of education. We would, of

>urse, protect health, safety, civil rights issues in making ich changes. This might also be the right time to consider l idea that Representative Robert Flick introduced many years jo, to recognize academically autonomous school districts.

>r those of us who achieve consistently at high levels and

10 would be affected in a negative way by this proposal, we

)uld ask that you give some of the same considerations for

Senate of Pennsylvania 166 ur proven results over many years with those who would ropose to create new settings and have yet to prove anything.

We believe that the idea of the academically itonomous school district operating under strict State

^countability standards could afford and would be able to do

Dre with less if we leave some of the burdensome mandates lat don't contribute to the quality of our children's ongoing iucation. Flexibility in addressing some of those issues ill provide some of the needed revenues to make up what is scessary to fund the needs of our rural and urban neighbors.

Finding solutions to the problems of school finance

111 require both leadership and courage. The key to finding sod alternatives to tax reform is showing various populations lat any change that would be made would be equitable and lequate. In order to accomplish this I believe, as I sntioned earlier in my comments, we need a far better data- ase than we have in place and ongoing public dialogues about lr need to accept responsibility for many of the issues that

2 face, and how we can do it fairly. Those of us who have ifficient resources must be aware that the tides of history

Lght one day make us less wealthy.

We must be concerned that we belong to a Commonwealth id we are all children of William Penn. As such we need to

;cept responsibility for many of the issues that must be idressed on behalf of our children, and we must be

Senate of Pennsylvania 167 ssponsible to do it fairly.

Finally, addressing this complex issue and the andates issue concurrently would make us not only more fficient and less expensive, but would allow us to meet the

=al needs that we see in all of the school districts in snnsylvania.

Thank you very much.

DR. HILLMAN: Thank you very, very much, John.

I'm going to take the first part of explaining the sur-tiered system. If you would look at that chart over iere you see that what we are suggesting has four parts. And

know that Dr. Hess believes that every time she's in a room id hears the word "tier," t-i-e-r, she believes that either

:. Hartman or Dr. Hillman are in the room. Then when she sars t-e-a-r she knows that both of us are in the room.

Tier 1 is rather simple. If you line up all of the nldren in Pennsylvania, 1 to 1,887,000 and go to the middle lild, I think the middle child actually resides in uladelphia, and take a look at the actual instructional

3,031. It means that the instructional expense that we're

Drking with throughout all, or 3 of the 4 tiers, is $5,000.

Tier 1 is very, very simple and it requires most of le money. In your school district if you have 1,000 kids or

Senate of Pennsylvania 168

00,000 kids, or whatever, you take that $5,000 and you ultiply it times 80 percent. We are saying that at least 80 ercent of the instructional expense, the median instructional scpense in the State, the middle instructional expense, is hat we need for a base for all of our children. In this case t will be $4,000. Take the $4,000 and multiply it by the amber of children in your school district and you get what's n the first column, or I should say the second column, in hat chart that's in here. Multiply $4,000 or 80 percent of le median instructional expense per kid, and you have the tiount of money in Tier 1 as a base for everybody, even adnor. Even Lower Merion. Everybody gets it.

Tier 2. Dr. Goodhart.

DR. GOODHART: Thank you, Dr. Hillman.

Tier 2 is the partnership tier. It makes up the alance of dollars between the $4,000 that Dr. Hillman was alking about in an effort with the Commonwealth to the artnership approach to make up the difference, in this case

L,000 for the proposed actual instructional expense, it would

2 divided by a school district being a partner with State inding. The dollars which the school district would be ssponsible for would be the difference between their aid itio and the dollars that the Commonwealth would provide. As a example, let's assume an urban school district had an aid itio of .75. The school district would make up $250 and the

Senate of Pennsylvania 169 ommonwealth would provide $750 to bring the total then up to tie median instructional expense of $5,000. And you can ee that it is a true partnership between the State and local

Landing, and it does provide that balance of 20 percent etween the median to the actual instructional expense rovided by the ADM. So it is the ticket then, if you will,

Dr local funding from district taxes. For those districts aat have a significantly lower aid ratio their contribution len would be proportionately higher.

DR. HILLMAN: Thank you.

We haven't snowed you yet, have we?

CHAIRMAN RHOADES: No. We're coming back after you're mished.

DR. HILLMAN: Okay. I just want to make sure you're

Lth us at Tier 2, because the more complicated one is the iucational needs of the individual school districts that you sard so much about this morning from the three people who sstified.

We're basing what we're doing in Tier 3 on some nlosophical groundwork done by Professor Bill Cooley at the diversity of Pittsburgh, and we have with us today Dr. Bill artman who is going to go through that with us.

DR. HARTMAN: Thank you, Arnold.

Tier 3 is, as Arnold said, the most complicated tier it it's also dealing with the most complicated problem. This

Senate of Pennsylvania 170

3 the problem of adequacy. And what we have done is build lto the formula a component that recognizes some districts ice a greater educational task than others, and for those

Lstricts the formula provides additional resources. And the

2ed for this represents factors over which districts really ive no control but they affect the costs that the districts ive, and these are the characteristics of the students and imilies in the district.

Now, I'd like to ask you to turn to the testimony soklet because I'm going to be going through some of it, lere's some tables in there that we can't project, in just a

Lnute, but going through with this the basis for this, as mold suggested, comes from Dr. William Cooley from Pitt, and

: you have a Penn State professor citing Pitt you know that

: is probably pretty good stuff.

Bill Cooley did a very, I think, important piece of

>rk looking at the indicators of poverty or indicators of iucational need and related those to how well students jrform, to student achievement. And he found that there were

primary indicators: the percentage of children in poverty, le percentage who were not high school graduates in the immunity, and the percentage of single family homes. Those 3 ictors together he found explained over 60 percent of the iriation in student achievement statewide. So you have those

>mbination of factors explain a substantial portion of

Senate of Pennsylvania 171 tudent achievement. He also found that the cumulative effect f all 3 factors together is much stronger than individual actors alone. So it is the combination because if you are igh on one of the factors you may have other factors that can ompensate for that, but when you have a concentration of all

of those then you have some serious difficulty. So as the

Dtal percentage increases the difficulty of educational task he district faces increases as well.

The 3 factors are ones that we have found data on that s available by school district. The poverty factor, we've sed a percentage of poverty which the scope of that would be tie schoolwide figure. Educational factor, we've used the srcentage of nonhigh-school graduates, which is a community actor. And the family structure component is a percentage of ingle parent families, which is another community factor.

Now, the trick that we faced was translating these actors into funding, and that's what the Tier 3 is all about. ae procedure is you take all 3 of the factors together,

Du're looking at the combination of all 3 factors, add those ogether and you get a total percentage of educational need nount for the district. That percentage then is translated ato an index number, and I will go through that in just a

Dment, and that index ranges from 0% to 20%. That percentage actor is applied to the median average instructional expense sr student to define the Tier 3 funding per student. Now,

Senate of Pennsylvania 172

>oking back over prior formulas, this is really a more

>phisticated version of a poverty supplement in the prior

5BE formula. We have different percentages. This takes not ist poverty but two other factors and had a little more

>mplicated way of getting there.

The next page in the testimony book has the index and lows how that works. Districts that have less than 25 jrcent of a total of the 3 factors have an index of zero and

;ceive no additional funding. There if you don't have a very

.gh educational need you don't need anymore money according

) this.

From 25 percent to 50 percent you have a factor of 5 srcent, which translates with the median actual instructional

:penditure to $252, from 50 percent to 75 percent, a 10 srcent index or $500, 75 percent to 100 percent, .15 is $755. id then finally over a hundred is 20 percent and just over

.,000.

The distribution of how these funding amounts occur rer the school districts I think is very interesting. It lows I think that this really represents where the need is. lere are 48 districts that have a combined total of less than

3 percent, or an index of zero. So 10 percent of the school

.stricts are sufficiently without the educational need ictors to receive additional funds. The bulk of the school

.stricts, something over 70 percent of them, receive some

Senate of Pennsylvania 173 anding, a 5 percent index value or $252 per student. sventy-three districts, or just about 12- 12.5 percent, have i index value of .1 receiving $500. Only 9 districts have an idex value of .15, meaning they have a combined set of actors of between 75 and a hundred, and only two districts in le State have a combined total of over 100 percent of those iree factors and receive $1,000.

Now who are these? Well, the next page shows you the

Lve highest districts with the difficulty of the educational ask, and I think you will probably recognize the districts nong them. The highest district is Duquesne City, having a

Dtal index value of 112 percent, and you can see where this jmes from. Over half the students in the school are in jverty. Thirty percent of the district are nonhigh-school raduates and almost 30 percent of the families are single arent families. That's a district that has a lot of

Lfficulty.

Chester-Upland, another well-known district with its jcumented problems, 105 percent.

Philadelphia, 99.7 percent. In previous years uladelphia was over 100 percent as well. It dropped

Lightly this latest year.

Farrell Area rural school district and Harrisburg, jam 90 percent.

The sixth district was down in the low 80 percent. So

Senate of Pennsylvania 174 hese are really the top five outliers and we think that it rovides a substantial amount of face validity to this formula ecause you can see these districts, see what needs they have, nd I think it corresponds to a lot of what people understand bout school districts.

The other point I want to make, and I'll show it with he next three slides, is that this doesn't happen in just oncentrated areas. There is educational need throughout the ommonwealth. And I have three more slides to show you the istribution of those needs. The first are the urban istricts, and I've listed three, York City, Pittsburgh - or 5

Erie City, Lancaster, Wilkes-Barre, and you can see that ork has a combined total of 78 percent and it qualifies for a

15 index. The other three are between 50 percent and 75

=rcent combined educational need percentage and receive $500 gr student. Most of the urban districts are in this kind of ange, not all of them but they tend to fall there.

The next slide shows rural districts, again, not a urprise here. These all show rural districts that are all ithin an index of .15 and they have a combined need srcentage of from 50 percent to 75 percent, and all receiving

105.

You can see the variation across here. If you look at saver Falls, for example, with 18 percent poverty, 29 percent

Dnhigh-school graduates, about 20 percent single parent,

Senate of Pennsylvania 175

^mbined with Northern Potter, the last one shown, which has ily a 7 percent poverty rate but a very high nonhigh-school raduates. They're not quite as high. Still relatively high

Dr single parent, bringing them to just over 50 percent.

Now, the surprise of this for me was the last slide i which it happens not only in urban and rural districts but i suburban districts as well, there is substantial need lere. Here, and I have selected these to show you one

Lstrict each, the first 4 are from suburban Philadelphia

)unties. These are shown, these are districts from Delaware,

>ntgomery, Bucks, and Chester Counties, in order.

Southeast Delco, a fairly high percentage of students

I poverty, nonhigh-school graduates, and single parent, lalifying for an index of .10 and a $500 per student factor.

Nomstown, Bristol Township, and Coatesville, similar

.nds of numbers, although slightly less, giving them a laller index.

And the real surprise to me is Upper Merion. Yes,

>per Merion is if not the highest in the top two, it is the

.ghest spending district in the state and it is consistent jar after year. So if it's a wealthy district, it spends ill, its students do well, but nevertheless embedded in that

.strict there are some students with need, and you can see it

>esn't come from poverty, that's clear, but it comes from

>nhigh-school graduates because not everybody in that

Senate of Pennsylvania 176 istrict will graduate or went to college. More than 10 ercent of the families there are single parent families, hich again creates further need. So they would qualify for n index value of .5 with $250 per student.

The point that I really want to make here is that this s a statewide issue, not a single district or single type of istrict issue, but it occurs in urban districts, suburban istricts, and rural districts as well, and the distribution hat you saw earlier sends funding to - 90 percent of the istricts in the State will receive funding under Tier 3.

MR. HILLMAN: Thank you, Bill.

DR. DeFLAMINIS: Tier 4, which is the enhancement of tie education program, is a local option. This is the implest one I think, and it provides the local school istrict the opportunity very much consistent with the whole lea of local control to provide additional programs and srvices beyond the basic support levels provided by Tiers 1, r and 3. However, if a community were to choose to do that, id an example would be reduced class size, as the class size a my district is substantially lower than many around us, it

Duld be fully funded by local taxes with amounts left to

Deal school boards and no cap on local revenues. This would covide the opportunity - and it is the heart of the reason we itered the lawsuit - it would allow districts and communities

10 want to fund specialized programs that really are

Senate of Pennsylvania 177

)nsistent with their values and beliefs the opportunity to do

:. It would give the Commonwealth an opportunity to see iboratories and get excellence, as well as equity, in the rocess of addressing the needs of school districts in mnsylvania.

If you would just bear with me in terms of the first ige of the printout as John Myers, he calls it in his State

)methmg different, we always called it printout mentality.

> legislators everybody looks at their own school districts' nntout. When you look at the first page, and we'll go irough it rather quickly and start in with Bermudian Springs

1 Adams County, the top one, what we did was we re-created,

Lth Dr. Hartman's help, the 1997-98 school year in which jrmudian Springs, and this is reported in numbers, not stimates or budget, it's the actual amount of dollars spent,

L3,071,506. If this program were to have been in effect then srmudian Springs in Tier 1 would have gotten the $8,275,400. l Tier 2 the State share, because of their aid ratio, would ive gotten $1,190,424, they would have had to have supplied

377,398 from their local dollars. The difficulty on the iucational task would have given them $518,112. They would

)t have needed any Tier 4 money, so the only local money they

Mild have provided was $877,398 rather than the $6,411,000 ley actually spent in local taxes.

We have not touched special ed, nor have we touched

Senate of Pennsylvania 178 transportation, nor have we touched anything else but the asic subsidy formula. In that year we could have reduced

Deal taxes in Bermudian Springs by 86.3 percent. The average i the State is 70 percent. And the question is always how do

DU pay for it? Well, when the NCSL report came out in 1992, ie same questions came up as came up this morning of John

^ers, and John Augenblick, and Terry Whitney: Would the

:ate tolerate a statewide property tax? The answer, frankly,

:om the legislators was no. According to surveys done by insfield and Millersville by Dr. Madonna, Federal taxes are sspised most, real estate taxes are despised second most - lere's a third one I don't remember - and State taxes fourth.

We are suggesting that a 2 percent increase in the srsonal income tax be placed, which would give us an iditional $5 million dollars to pay for the 70 percent iduction in local taxes across the State. You have to figure it on your own individually from your own income how that

L11 affect you. The AARP and the senior citizens ought to be ippy because we don't tax pensions very, very much. People

10 are angered by real estate taxes, we have such horrible roblems now with the PURTA tax taking money away from local

.stricts, the Clean and Green, municipal overburden, rural rerburden, that real estate taxes seem to be going down the ibes. We should leave a little bit in there for local people

10 want to do. But as we see it now this plan will give what

Senate of Pennsylvania 179 lve what we think is equity, predictability, stability, and a ap, because we are also suggesting that the instructional xpense or the cost of living, whichever is lower, be the tandard from year to year. That will be the cap. You can't

D above the increase in instructional expenses or the cost of iving, whichever is lower, making things really predictable i terms of what can possibly happen.

I'm going to stop there because I'm sure there are

Ding to be some questions.

CHAIRMAN RHOADES: As long as we're on the chart, turn

D page 11 where it has Schuylkill, that's my home county.

DR. DeFLAMINIS: I wasn't familiar with that one but

'11 take a look at it.

CHAIRMAN RHOADES: In other words, if I start from

Lue Mountain all the way down to Williams Valley and I look

: the percentage reduction in local taxes, that will be all ie taxes, property taxes, occupational, whatever is on the soks right now?

DR. DeFLAMINIS: Yes.

CHAIRMAN RHOADES: We go anywhere from 80.3 to 88 and

5, that would be the reduction?

DR. DeFLAMINIS: That's correct.

CHAIRMAN RHOADES: In terms of determining what gets

»duced do we build that into the legislation or do we let lat up to local control?

Senate of Pennsylvania 180

DR. HILLMAN: I think you heard from Van Cain this jrning where he gets an awful lot of his money from, and lat's that odious occupational assessment tax, which treats

2ople the same way no matter how much money they're earning. f you're a lawyer earning $20,000 and a lawyer earning $5

Lllion, you still pay $250. I'm sure that they would like to

»duce that particular tax. But this is on all taxes. We ist lumped all the local taxes together. We do believe very, sry much in local control and in Dr. DeFlaminis's district id the district that I've been associated with, there are

Lfferent priorities. In the Pocono Mountains there's a big lusement tax thing. Bristol Township has a mechanical device ix. There are all kinds of choices that people made through

:t 511. I would say that would be a local choice.

>solutely.

CHAIRMAN RHOADES: My favorite question: In terms of us money all the time it looks like, you know, if I'm going

) have a reduction of 80 percent or 70 percent across, it

)pears someone's going to gain and someone is going to iffer, what kind of thresholds do we have in here? Because

> I said, I want a sheet together, you put the numbers down id say am I going to be paying more, am I going to be paying

JSS?

DR. HILLMAN: I think what we need is something that i produced and that is where you are now, what you're paying,

Senate of Pennsylvania 181 id what is 2 percent of your personal income in your family?

5t's take somebody in Dr. DeFlaminis's school district. He slls me in his district, and I'm sure he'll allow me, that a

LOO,000 house isn't worth very much.

A cottage, you told me?

DR. DeFLAMINIS: There are very few houses that are

LOO,000.

DR. HILLMAN: Well, let's assume then that if you are irning $100,000 in the Radnor or Lower Merion School District

>u are paying somewhere in the order of maybe $3,000 or more.

don't know, Representative Williams, if that's a good number

: not in terms of what people might be paying. Stack that

), plus the earned income tax that you pay there, plus the

:cupational assessment tax which you may pay there, plus the

:cupation privilege tax that you may pay there, or in the

Llson School District, where you pay a gross receipts tax at le Berkshire Mall, you add all these taxes together and see

>w much you are paying now. Then take 2 percent of your irsonal income, and whatever percentage you have on these iges in terms of reduction, and see where you stack up.

I don't think you can say anything but that there's

)ing to be what you talked about, winners and losers, but lere will be individuals. I think older people and poor jople who don't pay personal income tax at all if they don't

:hieve the threshold will be winners if they own property.

Senate of Pennsylvania 182

CHAIRMAN RHOADES: Another concern I have, from the

:andpoint of, let's say, property tax reduction, when we sduce that we reduce that for everyone. Of course we did ive the homestead so we could probably make exceptions. But

;t me put it this way, I'm going to pay 2 percent personal, a ibehapter S will pay 2 percent personal, but then I have

>rporations that will not be paying the property tax. How do

; begin to address that in terms of fairness?

DR. HILLMAN: I think that that question can only be lswered by an individual who might be working for that

>rporation. The largest corporations reside in some of the salthiest areas. However, if you look at that chart with the

10 is wealthy and who is poor thing that I had up this

>rning, I think this will be a boon to economic development

I poor areas because it will reduce taxes there. The very,

>ry large corporations will have their real estate taxes iduced no doubt, but also you'll have a lot of the workers id people who work for them.

There are 90,000 "S" corporations in Pennsylvania who

.11 pay the 2 percent tax. In some of the wealthier

.stricts the reduction in taxes will not be 50 percent or 80 jrcent, they'll be more like 35 percent. I guess we're going

) get it out of individuals, Senator Rhoades, who are making

I awful lot of money.

CHAIRMAN RHOADES: I just put that down because I

Senate of Pennsylvania 183 tiink that's something that we have to consider.

DR. HILLMAN: It has been a criticism since we began lat we're giving big business a break, and yet when I make my resentations in front of big business they'd like to break

CHAIRMAN RHOADES: I'll get to you. As long as I'm on

roll I figure now is my time.

The issue of fluctuation, as I say the property tax is sgressive but we also know that it is always there. I mean

L's one thing that's solid, it's continuous, we can count on b.

Moving to personal income, I can go into the economic

Luctuation so that if I say 2 percent this year may be

2ttmg me X amount, and let's say $5 million but next year it ay not give me $5 million. The plan is how do we address lat particular variation because it's the same thing as the ay we fund right now. It's up to the will of the legislature id the administration how much money we put out. But if we

Dok at the economy and the economy is good and the money is lere we would be in a better position. If we go into a scline or recession it's not going to bring as much in. Are lere any avenues in terms of addressing that?

DR. HILLMAN: I think you're going to see the low in le marketplace. If you take a look at teacher settlements id increases in school district expenditures over the past

Senate of Pennsylvania 184 amber of years, there has been a diminution in the percentage ncreases probably the past 4 or 5 years because of frankly ack of funds from the State. And I think that that can appen again. If the economy has a downturn I think you will md it will affect everybody and they just won't be spending s much money, therefore the instructional costs will either ncrease very, very slowly, not at all, or may even reduce in

Dme cases, and we've had that I think one year. Also, the

Dst of living is not what we're going to get. It will be the

Dwer of the two. I think that is kind of a self-containing ung. And you still have Tier 4 if people really need to.

We've had funding formulas for 40 and 50 years in the tate, as Bill Hughes described. We may have to at some point c another take a look at some other things, but this is a way f getting everybody an adequate amount of money to begin with id not putting people in the position of having to kill lemselves with tax effort. Fifty-four school districts make le highest tax effort in the State.

CHAIRMAN RHOADES: I guess one of the other things I ant to add to that, too, is I thought because uust as we put

percent on the economy may even go higher, which means I

Duld have actually an excess, and one of the things I think

5 should possibly look at as part of this, we have a Rainy ay fund, we have a Sunny Day fund, we have this kind of fund,

2 have that kind of fund, it might be necessary to put an

Senate of Pennsylvania 185 iucation fund in there that if there is an excess it goes lto that particular fund.

DR. HILLMAN: Well, Senator Rhoades, we have that

Ltuation right now. Including the surpluses and the Sunny ly Fund, it seems to me we have $1.6 billion or $1.7 billion.

think it would be nice to have that and I think you ought to

:art that tomorrow and we have an education fund from the resent surplus of dough that we have. And it won't be too ich different. People will find a way to do something with

:. I'm not sure what it will be.

CHAIRMAN RHOADES: My last one before I pass this on. le issue of, I'll say the PARSS proposal versus ESBE, what's le difference between both in terms of cost?

DR. HILLMAN: We replaced the actual dollars spent in

397-98, but we shifted where the taxes came from. If you

>ok what Bill Hughes described as the instructional expense,

5,031 times the aid ratio, times the number of children, I link it's about $2 billion more, or $1.5 billion more. I link it's maybe somewhere between $1.5 billion and $2 billion

)re and $3.7 billion that we're spending now.

CHAIRMAN RHOADES: So you, in essence, aren't jending additional moneys, you're—

DR. HILLMAN: Not unless somebody wants to. We're

^placing where the money comes from. It's not equalization

: the equalized mill that Professor Mort did. It's a

Senate of Pennsylvania 186 ifferent way of doing it and it's based on, as Bill Hartman aid, some pretty significant data about why kids don't chieve and what they need, and I think you heard it from the uperintendents. The practitioners can tell you what it is hat they need. The local people can tell you. I'm out of it

or 9 years, I can't tell you anymore.

CHAIRMAN RHOADES: Last one, too. In terms of the oney, does it come from one particular area of the State or oes it come from across? I mean, I've got to be honest with ou, I have the superintendent of Radnor sitting here and I'm aying that's probably where some of the money is and am I

Ding to be taking more from you? Because that will become a olitical question. I mean I've got to be honest. If I'm in n area where my people are going to lose money or it's going o cost me more, I have a tendency to say time out versus if

'm going to get more money and say oh yes, I'll take that. hat's just the mindset as far as that goes.

DR. GOODHART: The reason I mentioned very early in my estimony the Pennsylvania Tax Blueprint Project is because I on't think the State has a database that can make it very lear who is going to be affected, how businesses, for xample, are going to be impacted, which parts of the State re going to be negative, because it would require a very omprehensive database to make those kinds of predictions. So o some extent the proposal isn't complete until that database

Senate of Pennsylvania 187

On face value, sure, I would expect to whom much has

2en given much is expected and that happens. You know, I link some of my communities around me would say that they're rime exporters of tax dollars now. Whether it's an earned icome tax or a property tax, it's the same, but you've got to s careful. We did a Pennsylvania Economy League Study and it lrned out because there has been reassessment— Now it's just ippening in Delaware County. When we were going to think sout an earned income tax in my community it hit new young imilies twice because they were going to be the most heavily ixed for earned income and they were also in the biggest and

)st expensive houses, so they were paying double. So I think

>u have to look to be sure that that doesn't happen, and the ly you deal with Part 4, because I have to make up msiderable dollars in this proposal, the way you deal with irt 4 would need to have a predictable basis for anticipating lat to find a fair way to do it.

Let me also go back to something that Bill Hughes was liking about. There was a time in our Commonwealth when uladelphia was the wealthiest part of the State. They at lat point realized that they had to help the other parts of le State and they actually gave willingly, publicly, in the igislature. In 1979 Venango County had the same median per ipita income as Delaware County, Venango being very far west.

Senate of Pennsylvania 188

'm sure Representative Colafella can tell us about when a kid ant to work at the mill and he made double the amount of

Dney that his teacher made at that time.

The vagaries of the economy change. Lancaster was at le time an extremely wealthy city. Clairton, only 21 or 22 aars ago was wealthy in market value of their property. US teel was wonderful. In 1979 you could earn $40,000 in illman Standard in Butler County. So you never know, when b's not going to be one part of the State, it will be the bher part of the State, and this proposal takes care of that scause it gives everybody a lump, an adequate lump, and if adnor should get more - probably not in my lifetime - we

Duld be doing the same thing for them from Tioga County, nch then will have the highest personal income in the State.

CHAIRMAN RHOADES: Representative Williams.

REPRESENTATIVE WILLIAMS: Thank you very much.

I think that this is an interesting proposal that arrants a lot of investigation as the superintendents have sfined and discussed, Upper Merion for instance. One of the ungs I was struck with is that the better our schools are id the more engaging they are, the less high number of

Dnhigh-school graduates we'll have. So, you know, going

Drward with that we might be able to get many more people raduated from high school and that will certainly add to the

^onomics of this Commonwealth. Because there are also, I'm

Senate of Pennsylvania 189

Llling to take Upper Merion as an example, those taxes that

>u say are nuisance taxes are the reason why property taxes

1 Upper Merion are substantially lower. If we were to get

Ld of that, even if we were to, that decrease in property uses would be non-existent because of all the business taxes

1 the community. There are boroughs, the Borough of West mshocken has very low assessed value on their property right

>w and not very many people. But to take away the taxes that

:e in existence in that borough would be devastating to the

>rough to offset a school property tax for Upper Merion area

:hool district. So it's not at all a simple explanation of lat we should do, but it is interesting and I hope that we in continue the discussion.

DR. HILLMAN: Well, I think the question that you are

>king, the local people would have that choice. If they inted to keep that tax that you're talking about, they'd keep

:. If they believe that that's what they need in comparison

) reducing the property taxes, sure, they would keep it. So ley would have an opportunity to make that decision on their m.

REPRESENTATIVE WILLIAMS: The only other big concern

> the fact that the people who are earning incomes, the inters, the people who rent, in many districts there are

.enty of apartment houses and people who rent that are not roperty owners, and it's the same since the Act 50.

Senate of Pennsylvania 190

DR. HILLMAN: Well, we had talked about making it mdatory, as Governor Casey tried to in the late "80s, that lere would have to be reductions to people who are renting as

result of reductions in property taxes. That's another

>mponent. I don't know how you may be able to do that but lat was a suggestion.

CHAIRMAN RHOADES: Senator Schwartz.

SENATOR SCHWARTZ: Yes. A couple things. Just to be

.ear on that, this is not mandatory so we don't have to

;duce the property taxes, the idea is that you could. But

>u are looking primarily at shifting the responsibility of le local taxes to the State to create greater equity. You're

)t looking at more money necessarily at all.

DR. HILLMAN: No.

SENATOR SCHWARTZ: In fact, it could be less, leoretically.

DR. HILLMAN: We think it's equal.

SENATOR SCHWARTZ: In fact many will be less because

>u're assuming that the local property taxes might have to

>ntinue on some level to make up what the expectations are, id I think in general we have to look at to see where there ren is in terms of some middle range and you may end up

)sing and you still have to keep up quite a bit of the roperty taxes because we're used to $7,000 or $8,000 per

:udent enrollment and we're getting into this $6,000. So

Senate of Pennsylvania 191 ren in a more modest, not even a range of $12,000, you're sally looking at any school district that pays, you know, istructional costs of around $7,000 because you're getting

>ss money per student under your proposal probably.

DR. HILLMAN: Yes. I think one of the difficulties

.th looking at this is that we used actual numbers and this

; a retrospective look at things. I hate to deal with jtimates. These are actual dollars.

SENATOR SCHWARTZ: Well, there's a couple of issues, le fact that you used - I very much appreciate it, but we

»ed to have the State take over the responsibility of funding iucation and to relieve the burden on property taxes and reate greater equity completely. I agree with you on that id I'm looking for solutions as well. My concern is that you

:e using a point in time and an amount of money in time, and

>u are basing it on money only and not adequacy. So you're iking assumptions about adequacy without actually looking at lequacy, only looking at funding. So that there hasn't been

.rst a definition of what is it that we expect the school

LStricts to be able to do. What, for example, is a high

:hieving school district? What does it take to create that

> a base even if it's adequacy and not excellence, and then ly what does it cost, rather than taking a moment in time in jnnsylvania and saying this is what we're spending across jnnsylvania, so it is quite inadequate, some of quite

Senate of Pennsylvania 192 lequate, and just picking an amount of money, and then on top

: that locking us in forever by creating a cap. So in case i're wrong we are locked in and have to go back again to

>cal school districts and say this isn't adequate at all. us isn't what we want our schools to be. And yet the sgislature would be locked into a cap, which I'm assuming you

:e going to reassure the public to some extent that they're

>t just seeing a growth in the PIT, which is reasonable. But think the flaw with the proposal is the question of what we

:pect from our schools from the point of view of adequacy and lality, and performance. And I think there are ways, as you

LOW, to build that into the formula and to not just take an lount, because I think that is dangerous potentially in

Lying somehow we've decided that $5,000 is the correct amount scause it's the median rather than decide that $5,000 is the

>rrect amount because it does the job.

That's very serious, and I think it is again extremely iportant to put on the table to see what it would take just

) shift the burden to the State. It doesn't do the job from r point of view. It could be improved by the discussion

>out what we expect in the way of performance, particularly

.nee we now have a standard, and we do have accountability id expectations, and the quality is very much a point of what

Lis discussion has to be.

I raise that. I also would say that because we are

Senate of Pennsylvania 193 aying local- and I do support this- I think the local immunities should be able to add on, there should be a

:andard that no one has to add onto, but they could add onto f they wanted to. But particularly by locking it in you

:eate a potential 10 years from now to look back and say how

Duld we possibly have done that, it's so inequitable, because

2 still have the right of spending $12,000 and maybe $15,000, ir student and we haven't provided other school districts

Lth an adequate amount of money to educate their children.

So, I would ask you to respond to that now and to jpefully consider it as we— I would love to have this

Lscussion continue. I mean I think we are at the beginning of le discussion and this proposal moves us forward dramatically

I that discussion, but there's this extra piece which is not

small piece in my mind, it's a very major piece, that I

>n't want either parents or these children who are going to it educated under this to come back and say to us, how could

>u have done that in 1999?

DR. GOODHART: I think you made a very valid point. le reason that the median AIE was selected was a practical le. For one thing, it says that we have the data, all

Lstricts collect it, and it represents what districts have losen to spend under whatever constraints they are operating ider. Some have few constraints, some have a lot of mstraints, but it does represent what districts choose to do

Senate of Pennsylvania 194 o that's our base starting point, and that gets us moving on nd we can take that and move from there. But on the other and, what adequacy means, you could well be right, that oesn't necessarily mean that adequate means we're actually oing it. There are ways of getting at that, there's some ethodologies to look at that and you can define an adequate rogram in several different ways. You can look at what chool districts, the high performing school districts are

Ding, or you can define it m terms of the resources that go nto a program, the resource costs of model methodology, which

have done some work in the past on, and you can look at

Ddel programs and things like that. So there are ways to do lat and I think that's probably a useful thing to do. And if s would push that research side of it and define adequacy in arms of programs or high performing districts, and so forth, len we can translate that into dollars and then replace srhaps the median AIE with an adequate dollar amount. But as

starting point we are looking at what districts are doing nd where we can move and improve from there.

SENATOR SCHWARTZ: I think your intended solution here is a good one, which is to look at high performing

=hool districts and see what it takes. And I think it was jggested this morning by Mr. Myers that there also are lements you can define, programs, and our Chairman talked x>ut research base which does go in to good educational

Senate of Pennsylvania 195 ulity. We learned different things at different points in

.me, but I think there are ways to take a look at this.

Let me ask one other specific too, I think again

•obably from a practical point of view, TANF is a way to lasure poverty in that situation too because TANF has changed i dramatically and people after 5 years, regardless of how ior you are, you can well be off TANF, and it again would be itdated - if there is such a thing - an outdated notion that tat defines poverty in this country because there will be my poor people who will not have access to TANF if they have sen on it for 5 years because there's a lifetime limit. So ive you looked at other measures for poverty? I assume you

.ve.

DR. HILLMAN: Yes we have. We spent a year scussing what you're talking about and came to the inclusion we could not decide on what the measurements for iverty were, other than what Dr. Cooley said. I understand iglish as a second language is one of the things that we ilked about. The vast problem with transiency in places like irk and Reading, and Philadelphia, where 75 percent of the

.ds in a school leave and come back during the year. We

.dn't feel that we could get a good handle on that. For istance TANF really doesn't apply to rural areas because only ie WIC program does. A lot of people in rural areas do not

>ply for it. It gives you some measure that is a popular

Senate of Pennsylvania 196 jasure that people can understand.

During the middle of the trial when we got Judge sllegnni, he asked us to sit down with the other side, then

guess Governor Ridge, and define adequacy. And we spent I

)uld say 5 or 6 meetings with the Judge going over adequacy id doing copious research. It was thrown off the table icause nobody could agree that that's what it was. And you iard John Myers talk about the two different tiers of iequacy. One of the ways that Curt Alexander described it is monetarily by going to 80 percent of the highest spending

:hool district in the State. That's another way that they

Ld it in Kentucky I think. But we did talk about it, we

>uld love to get into adequacy, it will probably be way jyond my lifetime I think. That's what scares me.

SENATOR SCHWARTZ: I hope not, and I raise these lestions because again, I think this is the beginning but I

>pe it is a discussion. Obviously the Philadelphia suit has me on long enough. It's back in our laps and we should deal

.th it. I think that the Chairmen of both the House and the mate Education Committees are willing to tackle this in a ly's hearing is in itself remarkable, you might—

DR. HILLMAN: Yes, it is.

SENATOR SCHWARTZ: —want to say that we are hearing us discussion. I hope it is just more than just a hearing, id all your testimony gets filed in not a circular file but

Senate of Pennsylvania 197

/en a square file and doesn't get looked at again, it's not

=ry helpful to the children of Pennsylvania. I, for one,

3el it is time to tackle this, and they are hard choices to ike. And there will be decisions that have to be made and we ly not get it perfectly right, but I think many of us do jree that we have to tackle the issue of adequacy and to do le best we can in defining performance and helping to raise le standard in many of our school districts. Even some of lr good school districts know they have to do better and srtainly in our poorer school districts we have to do far itter, and I hope we will be able to do it in my lifetime in le State Senate as well.

So I hope that we can get to do some of this serious

)rk and if what we're talking about is hammering out the itails I think we could get there. We do have to, as the lairman said, tackle the will to do it first. So I would icourage you to take a look at some of these issues I've lised and hopefully make it even better.

My last comment, I did want to just speak to the issue

: special education, and Representative Williams did raise lis before as well. When we look at the issue of mandates, id it is remarkable this year there were 943 mandates. We've jen looking at this and talking about this now for several jars, not many years, and the fact of the matter is the most ipensive mandate that you are not adequately reimbursed for

Senate of Pennsylvania 198

: special education, and so we have to tackle that. And we obably have to tackle that in its own right because that's me through its own shifting in formula and reimbursement. i're hearing that from many, many school districts, and I

Link that is both separate and a part of this discussion. t I think we ought to have that discussion, it's true for isolutely every school district in Pennsylvania that the ate is not maybe doing its share. And I would contend that ybe the Federal government is not doing its share in terms

special education, so maybe we will have a chance to tackle

.at together as well.

DR. HILLMAN: Let me respond to that, the last thing out special ed. I am old enough, gray enough, and bald ough to remember scenes in the mid-'70s with Federal ficials who told us when EHIP was passed in 1974, and then idone in 1977, that there would be a 40 percent or 50 percent imbursement to the States for the cost of special education.

I personally do not believe that the answer to special lucation funding lies primarily within the Commonwealth of mnsylvania. It's my own personal point. I believe we

.ould get our congressional delegation together and get down iere and make them fulfill their promise. That's where all

: the money is. It's Federal regulation. Talk about

.ndates, that's where the money should come from.

CHAIRMAN RHOADES: I would add to that, too, that it

Senate of Pennsylvania 199 s actually in IDEA that they admit that they will supply it. kay. They put it in print, you can find it, because they ave it.

DR. HILLMAN: If I may add just one point to Senator chwartz's earlier question as well as to this issue.

I believe that any system that you put in place if

Du're going to be contemporary with the research has got to s a dynamic system, which means you've got to have a way of

Dnstantly re-examining what you're doing against research or jamst findings, some of which are really long in the tooth. ne that isn't, for example, is that we do so much. This bate mandates often as part of the special education law, tiich is unusual for Pennsylvania. That is driven by IQ. If

DU read Daniel Golden's book on EQ, he maintains in the atest one that it's 2 to 10 times more addictive of success tian IQ. Now why are we driving our definition of an outcome

/ something that isn't as effective as something else. Now, tiat's a researchable question. I don't know if we should tiange it, but I think we should always be examining it, and tiat's going to be the problem that you have with any proposal ike this. Finding common ground means accepting data at a lven point in time, and accepting some limitations in what

DU know and what you don't know because the reality is our xpectations, as I said I think in my testimony, and standards hat underpin what we do are very idiosyncratic. And even if

Senate of Pennsylvania 200

?u take the high achieving district and try to find out what le key elements of their success are you may not get to the recise points that will drive your proposal. And that means lat perfection optimizing may not be possible. You may have

3 satisfy at a point m time. And that isn't all bad because lat you've got in place now is something less than itisfymg.

CHAIRMAN RHOADES: We've run over.

Representative Sturla.

REPRESENTATIVE STURLA: Thank you, Mr. Chairman.

A lot of my questions and concerns that I had were sked by Senator Schwartz.

How do we get to a point where we sit down on a mthly basis and look at some of the information that you resented in the suit that then got disregarded, so that we in start to fashion this and get to some of the concerns that jnator Schwartz had about making sure that we don't just lock irselves into something that really isn't reflective of, you iow, ESL and poverty, and transiency rate, and high srcentages of special ed, and things like that, so that we in tinker with that, and perhaps if we get enough of our

>lleagues sitting around the table saying, okay, we've got iople here from rural, suburban, and urban settings, and, you low, we'll give a little bit, you take a little bit, should lat be something that we initiate, or do you want to initiate

Senate of Pennsylvania 201 hat and say once a month you're invited every third Tuesday o, you know, sit down and—

DR. HILLMAN: You're all invited to my home where all tie information is sitting in my office in large boxes. epresentative Kirkland will be more than happy to drive you ver, and Representative Platts, every single month and set lie date right now, and we'll be ready for you no matter what snue. We have resources and research people that we've been ailing on for the past 9 years who can fill you with every ind of little tweaky piece of information you want. We could ake John Myers look like an amateur. But we really do have tie information. You can argue over how you're going to do t, but I think John DeFlammis has been saying this for so

Dng it's getting boring, you've got to be researched-based. on't tell me want you think. Here is the way it works. ill Cooley's portion of this. Bill Hartman's work. This is tiat's here. Let's use it.

REPRESENTATIVE STURLA: I guess the reason I asked tiat question was because I think we all have to be sitting m tie same room, because I know you have presented this nformation to us individually for the last 5 or 10 years, and le person interprets it one way, and the other person nterprets it another, and we come together and we say, no, o, no, that's not the way it really is. I believe it's this ver here, even armed with some of that information. I think

Senate of Pennsylvania 202

:'s really imperative that those of us that are concerned

>out education actually sit in a room on a regular basis and

>rt of hash this out.

DR. HILLMAN: I believe that if these 3 portions of le State, which represent well over 75 percent of the nldren in the Commonwealth of Pennsylvania, probably more lan that, could sit down and do it that we should be able to

> it with the legislature, because our discussions were -

.scussions - arguments - were quite thorough. We brought jsearch stuff and threw it on the table and pulled it out, id we came out with this. We didn't do the adequacy part icause it was really so hard to do it.

SENATOR SCHWARTZ: We can do the hard stuff.

DR. HILLMAN: If you can do the hard stuff, that's

:eat. We'll do the easy stuff.

CHAIRMAN RHOADES: Let me just add to this, too, icause I think we probably could sit down and propose jmething and put it together and agree on it here. But the iequacy as it's going to be determined, the mandate as it's

)ing to be eliminated, modified, or whatever, is still going

) come down to 26, 102, and the Governor to sign it. And lat's the practical reality of it, whether it's theoretically jsearched-based, which I kind of prefer to see, or versus lere the numbers are at, and I mean, that's the practical ling. And I think what we have to do is convince the people

Senate of Pennsylvania 203

I the worth and the merit of the research, the adequacy of le mandate, with or without it, and I'm looking at that issue id I'm going to just leave it go from there.

I'm almost going to have to put the people in a room,

)ck the door and don't let anyone out until we come out with

)mething, because if you take it out from there it uust won't

.y. Been there, done that, something else has to be done.

DR. HILLMAN: May I suggest that the first step that I

»t from my bag, the bill that represents these things, we put

; out on the table and let people start chewing on it.

.lton Shapp got elected by propounding a 1 percent personal icome tax.

In a meeting at St. Mary's with Dwight Evans as chair

: the Appropriations Committee then, I was reamed up and down

' a member of the legislature who turned green telling me tat this would destroy the workingman and working population ten we were up m St. Mary's. I sat down and Dwight Evans iid, thank you, Dr. Hillman. I got a standing ovation from

10 people. I think we have to take a pretty careful look at lat people really want. We ought to be out there in front of tern, but the personal income tax is something we should lally take a look at. I don't think we will ever get an tcrease in the sales tax across.

CHAIRMAN RHOADES: Well, as I said, I think what we ed are the sheets. Each one is going to have to look at

Senate of Pennsylvania 204 heir sheet, put it down and say, well, I like this or I don't ike this based on the numbers that are with me. And in turn hey have to reflect back and let us know whether they think t's good or it's not good.

I like the concept. I like the role. As you know,

've still got questions but if we don't talk about it and we on't start to continue the basis of talking about it, we're

Ding to be in the same spot we were 20 years ago, and I think here's changes that have to be made and hopefully we're going o initiate those changes.

I thank all of you for being here. We've gone over, at your testimony was much appreciated and very well done.

Thank you.

We will have our second group dealing with possible olutions to the problems in school finance. And I have Tom entzel, Stinson Stroup, and Mr. David Helfman.

I see there are 4 there. Who am I missing?

MR. HIMES: Jay Himes.

CHAIRMAN RHOADES: Okay. Jay, I'm sorry.

Tom, do you want to start it off.

MR. GENTZEL: I will. Thank you.

CHAIRMAN RHOADES: Okay.

MR. GENTZEL: Senators and Representatives, thank you.

On behalf of the Alliance for School Aid Partnership, e want to thank you for inviting us to give testimony here

Senate of Pennsylvania 205 us morning.

I just want to start off by telling what the ASAP

)alition does. This is a group of, we have about a dozen

:atewide basic education groups that organized back in the

.d-s80s, and the purpose of the coalition was to bring

>gether the education groups to talk about and work together

1 questions of school funding.

We have an obvious shared interest in this subject, it we did not always agree, and we don't always agree. But I

Link one of the values of this discussion, the coalition, and le discussion you're having today is to have the very forum tat you're having and to bring various interests to the table

) talk about how public education in this State should be mded.

Our coalition over the years has worked on basic ibsidy funding, which is funding for instruction and

>erating schools on a daily basis, special education, and

•cal tax reform.

What we would like to do this afternoon is spend just

few minutes reviewing some criteria that our coalition

:tually developed a number of years ago, points on which we

.1 agree should guide the discussions of the legislature and

:hers in terms of looking for an appropriate school funding rstem. So we'll talk about that a little bit and be glad to

Ltertain your questions when we're done.

Senate of Pennsylvania 206

I'll turn this over now to Dave Helfman who will tart.

MR. HELFMAN: I would like to thank you also for this pportunity. What you have listed in our handout are a set of

D criteria for evaluating a school subsidy system, and I'd

Lke to address the first 3 of them.

The first is student equity. We are very, very proud

£ many of the things we're doing in public schools across us State. We're proud of the fact that 8 out of 10 high

-hool students plan to continue their education in college.

: is the highest level ever. We're proud of the fact that

/er 9 out of 10 are graduating. That's one of the highest raduation rates in the country. We're proud of the fact that

/er 70 percent of our public schools are offering advanced

Lacement courses that enable kids to earn credit in college. lat's in contrast to about 4 out of 10 in the private and arochial schools across the State. But we're concerned that

2 don't have student, proper student equity in this State.

:udent equity that all students in the State should have an aportunity to participate in quality education programs.

More of the discussion needs to shift to those itcomes, the results that we're getting in the schools. If

)u look at the chart, you will see, and I've handed this out

) those in the audience, you will see this is a distribution ised on wealth at the school building level. And what we've

Senate of Pennsylvania 207 jne is we've grouped school buildings by poverty level. And i combined all of those with the poverty level of between 0 id 9 percent in the first bar here. In the second bar, 10 to

3 percent. And as you move to the right of the chart the jverty level in the school increases. And what you see in

\e red bars are the percent of the student body in those

;hools who were performing on the PSSA test in the bottom jrcentile Statewide.

When you look at the buildings with the highest jverty levels in this State, you see 49, 59, 73 percent of le students are falling in the lowest percentile statewide. nat is simply not acceptable. And in fact I'd like to note lat that is after we apply all of the equalizing effects of ir current system. That's even with the subsidy system irrently in place providing more resources from the State to

>w wealth school districts than it's providing on a per pupil isis to the wealthier districts.

That really addresses the issue of student equity and sally points out perhaps the need not to merely equalize but

5 provide greater resources to those in the poorest areas of le State.

The next principle is taxpayer equity. Does an equal ffort on the part of taxpayers in different districts ranslate into equal available resources? Or, worded more roperly, if two taxpayers in different districts want to be

Senate of Pennsylvania 208

)le to generate an equal amount of money to spend on iucation, can they do that with paying taxes at the same jvel?

What we have done, instead of projecting a model of

>me sort we've gone into the data and said, okay, let's look

: the median spending level on total expenditures. This is it just instruction but includes building, transportation, salth care, and so forth.

Now total spending of just over $7,000 in 1996-97. lat districts across the State are spending right at that jvel? And there are 6 of them. And it's amazing when you

>ok at those 6 districts that one of them is able to support lat level of spending at 25.6 equalized mills. The 71st

Lghest taxing district in the State, and that's Penns Manor, id the other district, East Penn, is able to support that jending level, taxing it only 17.7. So you have one at 25.6, lother at 17.7. The 17.7 is the 404th out of 501 school

Lstricts. It's in the bottom fifth. So the taxpayer, the lrden on local taxpayers to generate a set level of funding scause of the inadequacies of funding at the State level, is

3t equitable in our current system.

And finally I'd like to comment on adequacy, and I link Senator Schwartz earlier was right on point. Funding ist be related to cost and special education is the one area i which it clearly is not. And that has resulted in program

Senate of Pennsylvania 209

Dllars being shifted away from basic education. It has very aavily burdened the local taxpayers across the State, not ily in the low wealth districts but in many of the suburban

Lstricts where you have high incident rates as folks move to

Dtain services, and that is why we as a coalition have reused so much of our energy over the past couple of years in lr efforts in support of the special ed reforms that have sen co-sponsored, the proposal is co-sponsored by spresentative Stairs and Senator Tomlinson.

MR. GENTZEL: Dave has talked about the equity issue

Dr students and taxpayers and the adequacy question. Another

:inciple is fiscal neutrality. All of the education groups slieve as a fundamental principle that there should be no

Efect in the quality of education based on the wealth of the seal community. And that is to say that the State role, the indamental State role is to help equalize and neutralize some f those differences.

This is a critical question. It is a critical lestion for vast areas of the State that have difficulty using funds locally to support education. That leads to lother principle which deals with responsibility. The lestion here is who is ultimately responsible? In this

:ate and in many States, public education is a constitutional nperative. As a matter of fact, in the Pennsylvania snstitution it is one of the few if not the only public

Senate of Pennsylvania 210 srvices required by the Constitution, and that requirement is

Laced and vested with the General Assembly/ which in turn, id I would add in its wisdom, has turned to local officials, i many cases, to operate those schools on a daily basis and rovide a school district, school boards, with some funding ithority, the ability to raise some money locally. But that

Ltimately traces itself back to the role and responsibility f State government to ensure that there is in fact a thorough id efficient system of public education. And so underlying us whole discussion is this understanding that State jvernment, and particularly the General Assembly, has the

;sponsibility to ensure that an adequate funding system is in

Lace.

MR. HIMES: As a follow-up to Tom's comments, I want

> address the principles of State and local partnership and isponsiveness. This is a criteria on pages 9 and 10 of our resentation, and obviously while there is a State jsponsibility for funding of local education, it is just not

State responsibility. We certainly recognize that.

Local tax effort will and should generate a

.gmfleant contribution to total educational funding.

>viously our ability to generate local revenue, however, is a mction of the local tax system. And whether we're going to ilk about the current local tax system or an Act 50 local tax rstem should we experience any implementations, we obviously

Senate of Pennsylvania 211 sed to have resources available in terms of both real estate id income taxes to generate a healthy mix in terms of local avenue. So while we may be addressing State responses to the anding system, the local contribution effort needs to be part f the equation as well to assure that we achieve all these actors and criteria we're talking about at the State level irough the local tax system as well.

We should have a responsive State funding system as all. Any funding system should be flexible enough to

:commodate changes in district/ demographic, and economic editions, and that needs to address several factors,

:onomic dislocation obviously being one. You've heard some smments about steel-generated local economies and the

Lgnificant transitions they've had to face. Many of those

Lstricts where you find low wealth and high costs are in lose kinds of situations. I think you have also heard about indlocked urban districts where there's no growth, where lere's no opportunity to address a growth in the tax base nch allows you to generate more local revenue.

The State system I think needs to also be responsive

3 the fluctuations in other State program areas. You've sard mention of special ed, a continuing source of fiscal lrden at the local level. We need to look at how we address inding in the basic subsidy, but also through these other rograms where a disproportionate local cost may be imposed to

Senate of Pennsylvania 212

)cal school districts, special ed being one.

We've got to also look at the PURTA program. We're sing to see a reduction in at least 50 percent of available mding that went to school districts through the changes in le PURTA program.

We also need to look at in terms of responsiveness to

Lstrict needs. Growing districts obviously have different seds than districts that are not seeing growth, building instruction, renovation of systems. All those factors jviously have a disproportionate impact where you have growth

3 opposed to where you have slow, if any growth.

We need to also address the fluctuations created and le responsiveness to high poverty districts, for example, lere you may have specialized social programs that need iditional funding, and again, through economic dislocation or latever means, is responsive in providing that State level of mding.

Those are the two points I wanted to cover, and I'll iss it on to Stinson Stroup.

Thank you.

MR. STROUP: The ninth criteria that was identified

)r a funding system is that it be stable, that the revenue

:ream to school districts should be predictable from year to

»ar and allow school districts and those making the cpenditure decisions to plan not only for the current year

Senate of Pennsylvania 213 it for future years.

This would suggest that a funding system should have lown factors that the data that it used to drive those ictors is computable and understandable, and that funding be

: an expected level.

Clearly one of the issues that we had was the ESBE fstem. As much as we appreciated the formula itself, the mding did not maintain at an expected level. In our

)inion, schools can be much more efficient in their planning id their expenditure decisions if they can expect a stable ish flow.

The ninth criteria is accountability, and we have as a roup of organizations supported your efforts to try to drive

>me of the money to school districts through measures of leir performance. We think that that should be a marginal lount of money and not the primary means by which money is ilivered to school districts, but that it is important for le system to acknowledge those high performers within it.

We also believe that the State has a role in itervening in those individual schools that are not jrforming, that if the Commonwealth is funding all school

.stricts at a level where they can meet the State standards, set performance objectives, and an individual school building

5 not performing to meet those objectives, then we think lbstantial oversight is an important State tool and that the

Senate of Pennsylvania 214 tate ultimately needs to intervene in those districts or lose schools that are persistently failing and reallocate ands and reallocate decisions that drive a stronger irnculum and a better instructional program.

Again, this doesn't go to the heart of the istribution system, but it seems to me that all schools need

D be accountable at some basic level for the performance of lose students. Again, if the State is accountable for mding at an adequate level for those districts to perform.

And finally, efficiency is a criteria for any State andmg system. The funding system should encourage districts

D allocate resources that they receive for the maximum asired education outcome. And we think, frankly, that the lared system of funding that's been described in some of the

:her criteria promotes that kind of efficiency, because when

:hool districts have to raise and spend money as a share of iat the State contributes that they will be more wise in the pending of all their money.

And we do support and have supported the

Dmmonwealth1s efforts to try to encourage innovations and laring of resources to promote efficiency, and certainly the itermediate units are a primary source of trying to provide

3me of those opportunities for sharing of resources in order

D save money, and we continue to support those efforts. ideed many of us are involved in an effort that is not

Senate of Pennsylvania 215

Dvernment funded, but an effort to try to save insurance ealth costs by developing a trust that is a consortium of urchasmg districts to get a better price on health insurance rid other insurances for schools.

CHAIRMAN RHOADES: Thank you. We appreciate that.

One of the things we talked about is stability. Dr. ansour, whom I believe is superintendent of Brookville, came p in the break between sessions and with an aid ratio at a srtain point he was told he would have X amount of money. len the number came out it was like a fraction below that, he ided up losing $135,000, which he has to figure in product. id that's why I think it is important that there is stability lilt into the system so that it is predictable. I mean I've ften said, we haven't done it recently, but there's times len we're doing the budget June 30 and you're supposed to ave had your budget passed and you don't know how much money

3 coming from the State. I still don't know how you can put le of them, how you can put a budget together without knowing lat the real numbers are.

Let me ask, and I think I know the answer to this, in arms of the spending you have to do, have you had to go back ore and more to the property owners, and has that become the ay source of funding that you have to use as a percentage of

Dur total education spending?

MR. HIMES: It's the major local source obviously, and

Senate of Pennsylvania 216 tie only available resource by rate that we have to adjust in erms of additional budget needs, yes. Half of the local icome tax puts us in the situation of unless you have natural

^curring growth or the additional revenues needed, it is irtually impossible to recognize any other source than real state taxes.

MR. STROUP: And the data I think is pretty clear and

think you've seen it. Over the last 20 years the State's

Dntribution towards the basic instructional cost has declined com just over 50 percent to about 35 percent. At the same lme you've changed, or the State has changed, the formula for mding special education so the increasing share of that irden is falling on individual school districts. And in

Edition, the State has moved from an advanced funding of

Dcational education programs to the current funding of those rograms, which is indeed another fiscal impact on school istricts and therefore on local taxes.

CHAIRMAN RHOADES: Those do create problems, but lat's understandable as far as this.

I want to talk about ESBE, because that was talked

Dout before and then you've seen the PARSS I think you've ast heard about before. But we want to get into ESBE right

3w and level out to where I think we should be and it will

3st us around $2 billion to do that. From a practical tandpoint of doing that, I think legislatively you think

Senate of Pennsylvania 217 sgislatively you think there's no way we're coming up with

2 billion. Is there a way that you can see that we can radually work our way into getting back on track where we lould be?

MR. GENTZEL: Number one, I think if we look at the ssources that are available currently certainly State

Dvernment has some ability to fund schools at a higher level lan it currently is. We're realists, I think all of us.

5're idealists and realists. We want to see State government

Lay a larger role. We want to move the fulcrum so that we're

Dt relying so heavily on property taxes. And before I finish lat response, I do want to say that it does make a

Lfference. We get asked this question frequently, well, iey're all taxpayers, what difference does it make whether

:*s being paid at the local level or the State level?

It is important, as we said, that there be a local ay-in for this that there be a local sharing of the cost of iucation. On the other hand, it makes a great deal of

Lfference who pays, and particularly as we load up more of lat burden on property owners, particularly those on fixed lcomes, that is a huge problem that we're all concerned

DOUt.

I think, Senator, there are a number of ways to get lere from here, but not the least of which is to have a

Lpartisan agreement on how to do it. This goes back to the

Senate of Pennsylvania 218 unding system, and a number of others, was that they didn't ast very long and there wasn't much ownership m them, even ome of them that were very, very good, and I think we're ookmg for that as a first step to make sure that we have a onger term commitment to adequately fund education. I think here are a number of ways to accomplish that.

CHAIRMAN RHOADES: I have to agree. For the time

've been here it seems, you know, we have the basic formula ad then you end with the density, then you end up with the oarsity, then you end up with transportation, then it's for

Dnpublic transportation, then it's for something else. We ave a tendency to keep tweaking with the system all the time.

In essence, what is a good formula and if properly mded, and I've got to say that I don't care where the

Drmula comes from or whose it is, if it's not funded roperly, it's just not going to work. If we keep playing round with it, 5 or 6 years later it doesn't work because

='ve done everything to it except what we should, and I jree.

If we don't have, what I'm going to say is a consensus nat holds and will hold for a period of time with a smmitment to fund properly, with accountability. And that's le other issue. And I think that's a key thing we continue

3 look for. There has to be accountability in the system or sthing is really going to work around here.

Senate of Pennsylvania 219

Questions?

Representative Platts.

REPRESENTATIVE PLATTS: Thank you, Mr. Chairman.

The question that came to my mind with the PARSS and ctually here again on the issue of taxpayer equity that I aven't been able to figure out how you address, is if we chieve the goal of having all of our schools have that same uality of education program and the tax burden being more qualized throughout the State, how do you address the equity ssue from taxpayer to - and I'm going to use York County as

Q example - you have a home on the south side of Rathton sad, which is the dividing line between York Suburban, the ealthy school district, and York City, which is a more poor chool district, that will sell for $50,000 more. And so the erson who buys the home on the Suburban side of Rathton Road as invested $50,000 up front, one, to have lower taxes over he course of living there for the next 30 years, or whatever, ad if they have children for either what they think is an ctual or at least a perceived better opportunity for their hild in the Suburban district versus the city district.

If you do away with the boundaries, and I don't mean hat you combine the school districts, but do away with them n the sense of the benefit that they pay that $50,000 and inanced, which means it's a heck of a lot more money, how do ou deal with that from an equity standpoint? That's the one

Senate of Pennsylvania 220 art of taxpayer equity that I've not heard anyone address and

'm not sure how you can address that. I was wondering if you ive any thoughts?

MR. HELFMAN: I spoke about student equity before.

;'re looking to pull up the schools and the school srformance in many areas of the State. We're looking to aprove the performance and lower the taxes in some urban

:eas/ and as we do that taxpayers in those areas should find lat the values of their properties start to rise.

If you look around Harrisburg city, there are many

)mes in Harrisburg city that don't turn over quickly because

: the high taxes. And if the school had the resources to lhance programs so that more folks would clamor to move into le city to take advantage of those school programs instead of it of the city, and at the same time not have to pay taxes lat are twice as high as they are in the suburbs, that should i reflected in an improvement of the value of those roperties. We see that as progress.

REPRESENTATIVE PLATTS: Within that urban district, I jree. And that's a positive goal not uust for schools but le community as a whole. But that doesn't address the

>mebuyer in the Suburban district who has made that xbstantially more, because it's right here, you can see in le districts I used, two neighborhoods that abut, identical

>mes.

Senate of Pennsylvania 221

MR. HELFMAN: Are you suggesting that the property ilues of those homes are artificially inflated because ley1re in the suburbs?

REPRESENTATIVE PLATTS: Well, I don't think rtificially, but they are inflated because of the school

.strict they're in.

MR. HELFMAN: Are they inflated because we tolerate le underfunding of urban schools?

REPRESENTATIVE PLATTS: Well, I think they're inflated r the market and the buyers putting a higher value on that

>me, and because they believe they want their child in a

.strict that can have 20 kids in first grade instead of 33 id has those resources, and my goal is to get the school that is 33 to be maybe a 20 to improve that school. But the ixpayer aspect in trying to find a way of shifting the cost,

Ld that's what it comes down to, a shift somehow, is there a ly to address those who have already not made their tax rate it for their outlay and their mortgage are paying a fair lount more, you know, to be in that school district, so maybe teir tax rate is lower, but they pay a lot more for their

>use, is there a way of trying to incorporate that? I don't tow that there is any solution.

MR. HELFMAN: I don't see one. I don't see that it

.11 have a drastic overnight effect. I think perhaps snator Rhoades when he talks about phasing in a system, those

Senate of Pennsylvania 222 ipacts will be very gradual. But I think that the cost to nldren in the districts that aren't being provided with iequate resources is intolerable.

REPRESENTATIVE PLATTS: And I agree. And my question i/ it's not at all that the need isn't there. Absolutely. id in the basic subcommittee in the House and the hearings i've had, the disparity we see, you know, the children who

•e starting behind the 8-ball simply by where they live and te education opportunities that are available to them versus

:her children who live in different districts is not iceptable and we need to address that. I was looking at more ie fiscal side from the taxpayer standpoint.

MR. HELFMAN: I guess I would ask where are folks who e living in those homes and selling them going?

REPRESENTATIVE PLATT: In which homes?

MR. HELFMAN: The higher value homes. Are they illing them to move back into the cities?

REPRESENTATIVE PLATTS: Right now, no, the flight is it of the city. And your initial answer I think can help

Idress it. If we improve the cities, the quality of life in ie core services, and the interest in living in cities you snefit the suburban areas as well because of improving the

Lole area. But there is an issue there, how do you address ie equity from the financial investment is one that I haven't sard any discussions on, I think because I don't know of a

Senate of Pennsylvania 223 iy you do address it.

MR. HELFMAN: It's a tough issue.

REPRESENTATIVE PLATTS: But I very much agree that we innot tolerate the inequities we have, and as Chairman toades has identified the $2 billion shortfall, we need to ive a fair formula, but bottom line, we need to fund it,

Latever the formula is. And if you look at the numbers that s've heard from some of the previous testifiers, if we were inding that formula fully as we should be, that $2 billion, id having our priorities more appropriately in line as to tere they should be instead of where they currently are, I

Link we'd have a much lessened burden on our local property ixpayers and not have the crisis with the local property txes we currently have, and we would have a much broader, or ich stronger range of educational programs for all children

L the State.

MR. HELFMAN: We share the commitment that you have rought before us today. Trying to look at all aspects of it

» the focus of my question, Senator. I appreciate the effort

) address it.

REPRESENTATIVE PLATTS: Thank you, Mr. Chairman.

CHAIRMAN RHOADES: One thing before we adjourn. From le standpoint of the definition of adequacy, I've heard some

.fferent things during the day, and I think it's all iportant that when we look at adequacy, and it was said here,

Senate of Pennsylvania 224 lat we want to enhance programs, not expand programs. I link the end result is the accountability of getting the nob

:>ne, to get the kids to learn, but I think we have to define lat we want them to learn and then be able to put that in as le adequacy, and then make sure of what they're doing.

Gentlemen, I would like to thank you for being here.

2 appreciate your input and your testimony. We look forward

3 working with you because it's going to take a lot of work

3 get this done.

To the Members of the House Education Committee, thank

3U for being here. We appreciate your presence, your aestions, and I look forward to doing this again. I think it

3 good for us to do this and hopefully we'll be able to sntinue it on.

Thank you all. I appreciate your being here and your

:tention.

(Whereupon the hearing was concluded at 3:40 p.m.)

Senate of Pennsylvania 225

I hereby certify that the proceedings and evidence are mtained fully and accurately in the notes taken during the taring of the within cause, and that this is a true and jrrect transcript of same.

/? Janice L. Maulfart

THE FOREGOING CERTIFICATION DOES NOT APPLY TO ANY

^PRODUCTION OF THE SAME BY ANY MEANS UNLESS UNDER THE DIRECT

)NTROL AND/OR SUPERVISION OF THE CERTIFYING REPORTER.

mice L. Maulfair mrt Reporter snate of Pennsylvania >om 644, Mam Capitol Building irrisburg, PA 17120 717)787-4206

Senate of Pennsylvania