COHMOHHBALTH OF PBNHSVIiVAHXA HODSB OF REPRESENTATIVES COMMITTEE (XI APPROPRIATIONS bgat Request - 1983 - 1984 ito Education Pundlng-lnpaot of Eeonomle Recession

• * •

'batlm report of hearing held la m 401, Bouse Majority Caucus m, Barrl8burgf Pennsylvania, on irsday,

March 3, 1983 lOtOO a*m* JSVSKY, CHAIRMAN Evlkl, Vice-chairman i M* Heeffel, III, Secretary ,11am DeWeese, Chairman Subconmlttee on Capital Budget M* Molntyre, Chairman Subcommittee Health and Welfare Pratt, Chairman Subcommittee on Education MBBRB OF COMMITTEE OH APPHOPRlATIOHS on Arty Hon. Joseph C. Manmlller i Armstrong Bon* Richard A* Nedatehy i a* Caltaglrone Hon* Oerald F. MeNonagle 8* Cappablanca Hon. George Hlseevlch D. Clark Hon. Nicholas B* Moehlmann Cornell Hon* Howard F. Mowery, or* I R* Covell Hon* Frank Plstella too Deal Hon. George F. Pott, Jr. i Evans Hon. Carnal Slrlannl m Frelnd Hon. William J. Stewart Kukovloh Bon* Ted Stuban i Levi, ZZZ Bon* Edward A* Wiggins in B* levin Hon* Peter a* Vroon Reported byt Jerry Heck

DototJ>4 M- Malone [

SENT* tative Joseph W. Battisto tatlve Ruth B. Harper tative Paul Wass Bershook-Bxeoutlve Director Democrats olan-Staff im-Staff Willey-staff INDEX Page r W. Knade, Jr«» Superintendent 51 89 99 port Area School District 66 90 109 74 91 110 75 93 112 81 94 115 84 95 116 85 96 117 86 98 rt J. Cercone, Superintendent 52 95 Area School District 58 97 68 105 69 109 77 110 79 118 86 Id M. Carroll, Jr., Executive , Pennsylvania League of Otban 55 76 103 58 87 105 59 98 107 72 100 110 74 101 114 rt F. Kelly, Superintendent 52 65 rg City School District 59 113 60 119 62 120 64 121 2

SEHT tative J.A. Gallagher Barsbock, Executive Director (D) Rosenstein, Executive Director (R) willey - staff blan - Staff im - Staff

INDEX ~~ Page enblick, Director, Education 185 Center

Hughes, PSEA's Assistant Executive 192 215 • for Technical Support 199 216 210 217 212 220 214 222 skine, Deputy Executive Director 199

Harlow, chief Lobbyist

Itman, Assistant Research Director if Economist

>ng. Education Lav Center 186 198 205 188 200 206 189 202 207 190 203 208 194 204 209 2a

Continued lard D. Kost, Superintendent 51 91 >rt Area School District 53 107 67 108 70 113 86 ran E« Mole-Secretary-Buainess

*—i r-« : . , . 3

CHAIBKMJ PIBTSKXt The hour of ten o'clock having

# ladies and gentlemen, this morning the Bouse latione Committee Is beginning a one and one-half day a of hearings to take testimony on the Basle Xnstruc- bsidy. This subsidy is the single largest subsidy to avernmont and has, z believe, the single largest

»f any state expenditure on local property taxes as

the level of local education services.

Recent events have occurred which give me grave

that the objective of equal educational opportunity lly built into the formula has been significantly

, if not completely suppressed. If, in fact, it was ere* I'm speaking specifically to changes in the

formula and recent economic recessionary forces ave had disastrous effoots on our employment in vania.

In that vein, the testimony that we are about to lay and which we will pick up again on March 10th has ruetured to address two issues. First and of more te concern, to what extent does the instruction

and therefore this budget address potential financial developing at those school districts throughout the hat have large numbers of taxpayers who have been 4

-ed for extended periods of tine and who simply cannot

» pay their taxes. I would like to add on the side tope representatives from the Department of Education i to observe today. When they testified before this ie last week, they were unaware that a problem

to address this issue, we have asked three school a to relate their individual circumstances and ions on the subsidy to us. Additionally, we have

'. Donald Carroll of the Pennsylvania League of Urban to share his wealth of knowledge with us.

The second issue which we will address is one

. educational opportunity and whether this budget r that objective. Because this is such a complex

it is my desire to make this an educational process we may begin to truly understand the concepts and id how we may apply them to Pennsylvania and relate the budget.

To aid us, we will have testimony from the in Commission of the States, PSEA, the Education

»r, the Pennsylvania School Board Association and

Lsylvania Economy League.

While we will make no decision that this or other 5

••— • .—,^1. . . — ••..——. r hearings** I urge the members to absorb as much of rledge as possible that will be presented to us in

: two weeks. We will be asked in the near future to ly decisions that will impact the crucial problems

Ms Commonwealth. As these critical hearings begin,

'aula is at a crossroads and we are in a position to rhat its future and quality of life will be.

At this time* X would like to call Dr. Oscar W. rr. Oscar W. Knade, Jr. is the Superintendent of the

(port Area School District in Lycoming County. Be ichelor's degree from Westchester State College and ite degree from Temple University. Dr. Knade has

LB a teacher and principal. He was the assistant to trlntendent of the Philadelphia School District and r of the Philadelphia Intensive Learning Center. He itate level experience while serving as Assistant m Director of the New Jersey School Board Association. le, you may proceed.

DR. KKADEs Thank you, Mr. Chairman. Chairman and members of the committee, I am Oscar Knade, indent of the Williamsport Area School District. I thank you for this opportunity to offer testimony tatter of school subsidies as part of your considera- 6 the Commonwealth's budget for fiscal 1984. I am red, as are my colleagues, that this committee is information about financial conditions in urban listriets and other school districts and suggestions le possible role the Commonwealth might play in

:ixtg our special economic difficulties.

Thettilliamsport Area School District, with a enrollment of about 7,500 students, X through

>ne of the €0 largest school districts in the Common- tnd among its top twenty urban school districts. As

old city (once the lumber capital of the world), we

Lcrocosm of the large metropolitan areas, with some complications. Our community is characterised by

:ial personal poverty! cultural diversity; declining

Lon; declining school enrollments; loss of industrial ifacturing jobs; "middle class" flight; a shrinking

»; a high level of tax exempt real property; obsolete leteriorating buildings, including school buildings;

Lon density and, in our case, sparsity as well.

As an "area" school district, we are made up of r the City of williamsport but five rural townships,

One of those townships, in fact, is dedicated to state forest and game lands. While we experience 7 ••,— <•• •••' ••"^—«^^—^ i •• i •• •• •— 'i ••••••— • ii i i ii •

>blems of both city and country, density and sparelty,

Lify for neither subsidy supplement.

Zn the almost eleven years that I have been itendent of the Williamsport Area school District, we

>st 33*5% of our pupil population. Not only have we

•pulation, but that population has changed as well.

The middle elass flight from cities to the t continues, with only slight moderation brought about lating commuting costs. Successful redevelopment s have attracted mainly people with limited income. r people and the people who have remained in city districts more and more are those who require and use y health and social services provided by state and

agencies. School age children in our district ingly are those who are entitled by state and federal extraordinary educational programs and services.

Let me give you an example. In 1971-72, 2.5% district'8 total enrollment consisted of special on students. In 1982-83, 5.7% of the students are in special settings, usually small classes, often with teacher and an aide.

students eligible for participation in federally- supplemental education programs amount to 16.2% of 8 al pupil population* About 20% of our students are

Bailies receiving aid for dependent children and about

eligible for free and reduced price meals.

In 1S72, we had a budget of $11 million; today ver $22 million. The "cost of living," however, has ed 117% in the same period* Besides inflation, the g character of urban school districts has added new, demands for education and related services.

Inflation and new programs are only a part of cal dilemma. Xn 1972, state contributions to t expenditures were 52%. local support equaled 45% eral aid was 3%. By 1982, the state share was down and federal aid at 2%* Local effort now supports the district's budget.

Our district has been in the top 100 of all 500 districts in local tax efforts for years, ever since uperintendent. Currently we are 94th in local tax as measured by equalised mills on market value of tate. Largely because of either strong tax bases or parsity aid, our neighboring districts in Lycoming rank 259, 304, 375, 450, 471 and 473. Yet expendi- er pupil (1980*81) in the county range from $1875.02

9.19 and Williamsport is not the highest. Rather, we 9

12291.40 and rank 222 in the state for expenditures >upil.

As most be obvious, our school board and xatlve staff have had to face the reality of diminish- tl resources and a declining proportion of state by adopting budgets which, at tines, can be described "austere." we have had to balance carefully main- of educational programs and services at a reasonable I quality with what our taxpayers can afford. I am » say that we have done this very well. I think that xlct has maintained quality in programs, we have take some cuts but we have maintained essentially the t required to transmit the basic skills and related re. t am also happy to say that our educational rs are highly rated by district residents and non- :s, while at the same time we have managed to avoid icy, I think as you know from your own experiences itate level trying to maintain the balance between Lations and reasonable services and the funding plan i Commonwealth can afford is an experience no juggler rformed in a more complex arena.

TO accomplish this balance, we have reduced our saff from 950 to 787 (17%) since 1972. During this 10 riod, our teaching staff was cut from 506 to 434 id our administrative staff from 46 to 36 (22%) •

We closed one middle and seven elementary reducing the total number of school buildings to rtunately, five of those buildings were built between I 1920 and had long since past their period of use. By remodeling one 1926 building, we have been absorb all students from three obsolete buildings* mately. state formulas for participation in school .on projects are woefully out of date and bear little lahip to actual costs of construction or the deslrabil- irban areas of refurbishing old buildings rather than ig them with new buildings on new sites.)

We have managed to find ways of making resources ter. For example, we now seek bids for investment of rily surplus funds to increase interest earnings. We indardised supply items and centralized warehousing re inventory levels. We have opened "sero balance" founts to earn interest on the "float." We have average dally balances in non-interest bearing i by having township tax collectors deposit receipts Ltement savings accounts, and we have reduced tax irs1 commissions by 38% since 1978. 11

By dropping most contracted transportation i In favor of district-owned vehicles, wo have saved is of $60,000 a year* In the area of educational programs and services, eliminated the eu-the-soad portion of driver eduoa- •ing the school year and now offer it only in the aumu ir iharge to students for the fuel and the car lease He gave up our dental hygiene program entirely! it L a foil-time dentist and three hyglenists* We have ;ed most low-enrollment courses and most study halls* agar provide general fund support of the food ser- ograai it is run like a business and is self-sustain*- nmer school students pay registration fees and i must contribute to their travel expenses* The High land Parents Association contributes about $130,000 r to support the marching and concert bands* Staff AS been reduced and our district has dropped below point among districts of smaller else and salaries Sessional staff*

Despite these economies and a high level of pport, the outlook for the next several years is Contributing to this prospect mre the following 12

1* Continued high unemployment. In December te jobless rate in our area was 17.1%r the highest it i since recordkeeping began in 1956* In 1978-79 ment was 10.7%. The outlook for next year is for a

13-16%* In the past several years, the Williamsport i loot over 3,000 manufacturing jobs. Since every luring job supports a number of service and related is* our total job loss is even more staggering. ir major employers, Avoo-Lycomlng has only one-third workforce on the job. Bethlehem Steel and other wire kufaotuxers have furloughed many workers and those kg have taken pay cuts. GTE Sylvania is in the same i. Other major companies in our area have experienced sale layoffs and they include Grit Publishing Company,

Power Products and Koppers. Xn addition, several inufacturers have closed their doors permanently, the area hundreds more job opportunities. These

Boise-Cascade, Montgomery Hills, Ray 0 Vac* Jim Walter id Capital Housing.

2. Increased support for training and retraining

: the job market is tight, post-secondary training

:ions experience significant increases in enrollment.

Llamsport Area Community College, which is predominant: .y 13

.cal/vocational institution, has had a 23.5% growth ralent full-time students since 1978, During the riod, costs to sponsor school districts, of which the iport Area School District is the largest, have risen 14 to $1238 per student* This represents a 50% i. Because of the state's dollar limit on its share community college student's tuition, our district to make up the difference from local taxes between a j-third of the actual cost and the state's allowance* fference per student has risen from $82 per student to $156 for 1983-84. Presently our district budget i $377,605 for community college support. With expenses increasing at over 9% a year and state remaining static, our district will have to increase ipport another $70,000 next year through higher local

3. Lack of private Investment in new construo- rust about every major construction project in the reral years has been non-tax producing. Over $20 has been spent for new buildings and renovations at Liamsport Area Community College and Lycoming College, local churches, hospitals and government buildings. r construction, while providing additional jobs, 14 raises the level of tax exempt properties In the :, vhieh now stands at 36% of all real property. We iriencing a declining rate of tax collection*

4. Declining rates of tax collection. Unemploy- I poverty have had an alarming impact on tax collec­ ts and tax exoneration levels. Our school district in occupation tax under Act 511. This generates about rth of our local revenues. Since 1973, the rate of Lous' has dropped from 86.9% to 69.8% in 1982. Per sax collection rates have dropped to a similar level. sate collections have dropped from 94.$% in 1978 to irrently. Delinquent tax collections for real estate rose L% in 1978-79 to 8.8% in 1982*83 which means that it in a matter of four years. Act 511 delinquencies id from 19.3% to 28% in the same period. Personal tax exonerations have risen from 549 in with a dollar value of $27,986 to 3,355 in the year, with a value of $167,750. While real estate dons have actually decreased in number during the :iod, the dollar value is about the same, $24,512 in

Because of the falling rate of tax collections, 13 molds and exonerations, we project a decrease in tvenue receipts of $403,524 in fiscal 1984* That epresents a 3*5% revenue loss* It is not offset by alstratlon's current proposal for additional basic Ion subsidy for the williansport Area School District,

5. Disequalising elements in the subsidy formula* ling, equity in. state funding of basic education t adherence to the principle of equalising educational ilty fay equalising the financial burden. The aid ratio A the current formula, while not perfect, goes a ' to providing equity in the subsidy system, unfor- V however, the formula and the equity principle have promised over recent years* Supplements for density rsity have been in the formula for some time, and a fcably can be made for density aid but not sparslty i examination of measures of local effort, such as id mills on market value, indicates that districts ig density and sparslty aid generally make lower tn ef&wts than other school districts.

"Bold harmless" provisions in the formula, while illy attractive, are anti-equalisation elements. Introduction last year of the "Equalised Supple* r Student Learning" and its proposed use for dlstrlbn- 16 new dollars in 1983-84 further damages any equity J. in the existing formula. "Equalised" as used in thn simply a division of dollars on a pupil basis without or local districts* taxable wealth. If the trend to disequalisation continues, more i needy school districts will find themselves in dative financial conditions than their neighbors ilthler tax bases and/or special subsidy supplements. iome to the point where one or more of these "disad- l" school districts seeks court assistance in restoring so the subsidy formula. Chairman Pievsky and members of the committee, i been very, very kind in accepting my testimony and itient with my description of the problems faced by rhool districts, particularly my own. Despite these .ties, the Williamsport Area School District School idminlstration and faculty have been fortunate in >le to offer sound educational programs to our ehil- 1 see our efforts result in success. X have brought copies Of our most recent report to the community, i are highlighted some of our achievements over the lade. But we need your help to continue our work and 17 ther a dismantling of our school system or fiscal cy. I propose your consideration of both a restore- equity to our subsidy formula and special, emergency ce to school districts facing funding difficulties g from economic depression. X suggest that the y aid be structured in such a way that it not become t and rely on the existence of specific indicators cial burden/need in a local school district. The y aid should be phased out when the burden/need rs diminish*

The indicators might include the following* 1. Proportion of handicapped students to total nt.

2. Proportion of children eligible for free and price lunches to total enrollment. 3. Proportion of children in families receiving total enrollment. 4. Rate of increase in market value of real elative to the state average* 5. Percent of unemployment in a district service atlve to the state average. 6. Tax collection rates and tax exonerations* 7. Proportion of tax exempt property to total 18 alue.

Again, I appreciate your attention and hope my y will be of value to the committee in its budget tions. CHAIRMAN PIEVSKYt Thank you, Doctor. At thia would like to call Or. Robert cercone. Dr, ceroone uperintendent of the Freedom Area School District in ounty, Be is a graduate of Bnmgstown University and Onivereity of Pittsburgh. Be has more than 22 years ce in the education field in such positions as endentf curriculum Director, business manager, * 1 and teacher. Dr. Cercone, you may proceed. DR. CBRCONEi Thank you, Chairman Pievsky. X ke to thank you and this committee for the opportune ppear here and testify on school subsidies and some roblems facing the schools in financing. As my back* ndicates, I am a jack of all trades. X have done a it of everything in relation to schools. As part of ntation, X would like to give you a little background istriot. He are located in Beaver County, Fennsyl- bout 25 miles west of Pittsburgh. We are comprised of ughs of Freedom, Conway and New Sewickley Township. a population of about 13,000. We cover 35 square 19

Ninety percent of our 2240 students are bossed. We Loally a blue collar multi-ethnic community* We are urge district in terns of students.

As I listened to the Chairman address the group and he started to talk about some concern about int and especially the people now not being able to Ir property taxes. Before I left home, X picked up a the local newspaper. This is in Beaver County. It L3 school districts In the county. It tells us what ming in Beaver County and gives us a little insight shool district* - As you know, we have developed a : position paper on school financing to show what is ig to us in our district. Our district is certainly le in this area. There are many other school district! urea and in Pennsylvania on a whole that are in dire more financing on the state level. This paper shows » unions are trying to keep the town and the plant id open. It has a circulation of 175,000 and it shows have had crucial closings in the recent past. J&L t off thousands. American Bridge has laid off almost their force and it doesn't look too good on when or if M>ple will ever be recalled. There are two other Ln our area which are considering closing their doors 20 dng many thousands of people out of work* As you rough this paper, it pretty well fits in with what i Pievsky has stated earlier in his opening remarks*

With so many thousands of people out of work, it lurpriaing that mortgage foreclosures have been on irn and also delinquent taxes* As you all may have the newspapers recently, a group of concerned resi- ire out protesting the Sheriff's sales at the County

»use* They were protesting their fellow citizens'

>eiiig sold out from under them because they just

>t afford to pay their taxes* This is a very grave concern to us and it should be to all of us* The

>f delinquent tax notices is rising and if something me to help these people* it will continue to rise*

LOW just beginning to see the tip of the iceberg here* ir there were 1200 properties turned over to the

Hireau for being delinquent. Now that figure that i talking about will reach close to 5000* I thought fould present this to you just to give you some idea we are faced with.

X would now like to proceed on our school dis­ position paper on school financing and the 50% funding id the potential districts going bankrupt* 21

X will try and summarise to you as briefly as i what our survey revealed* X would just like to talk > bit about what the effects the school financing had Teedom Area School District. In 1978-79, the percent aoyed in our school district was 5*1% In the years , it was 21.9%, The projected unemployment rata for rs 1983-84 is 23.4% which is an Increase of over i matter of just four years. Between the years of I 1980, a number of things have happened to us and teep in mind that this period was called the good First of all, the state decided not to fund at the a. What that means to a district like the Freedom

IOOI District is, number one, we have a very poor i. We have no property or shopping centers where we Leot a mercantile tax or privilege tax. Without that Kvenue, there is onl y one other area to recoup that id that is property taxes. But how can people afford property tax when they are unemployed? There were a •f other things that we examined in our position i addition to the 50% funding. Right now though X Ike to speak on the 50% funding level. The state has tonslbillty to equalise educational costs by funding 10% level. The school subsidy formula should be 22

I to distribute the state 50ft share equally to pro-

* wealth districts with greater state support* The

formula places unrealistic demands on property taxes a school districts and is, therefore, inadequate as revenue generator for such schools. The school formula should also promote fiscal responsibility* be financing should provide each child with equal

>nal opportunity and not based on their ability to it* State aid to local school districts should be

\ all local wealth factors* As I said previously, Z the state has the responsibility to fund at the 50%

The state has consistently developed formulas to

* educational costs among local school districts*

2501.12 of the School Code support this contention* bive Acts 580, 96 and 59 also support this concept.

Ltion paper shows that when the state is not funding re at the 5Qft level end due to the limited way the

>asures local school districts9 wealth, districts ledom Area School District with a tax base less than be average, have a greater tax burden on property i a revenue generator* Due to this method of financing, increased our property tax by 28 mills in the last

»ars and this is not enough even now to provide an 23

'A school program. So X believe that it just shows ion the state does not fund the school districts at t level that smaller and less wealthier districts i the Freedom Area District are going to have a hard oviding an education to its children* Z would like to speak a little bit on the ability present formula to measure the local wealth factors. sent formula measures school district's wealth in a ictory manner. A dichotomy exists. Xn essence, there methods of measuring wealth. The first one is by io. When determining the percentage of state aid the chool wealth is measured by real estate and income each child. Any of the local wealth factors are and X am talking about Act 511 in particular. The ethod is by the base earned. The amount a school t qualifies from the state based on its local tax . When determining the base earned* the definition of bhanges. Real estate values* income. Act 511 taxes, nnsement, mercantile and other local enabling taxes Ated as wealth. This method of measuring local tax places certain school districts at a disadvantage due oik of these wealth factors. Due to this method of ig local wealth, the burden of local tax effort for 24 triot is placed on property tax. We have increased terty tax from 82 mills to 110 mills in three years, i the third highest in Beaver Oounty. Yet, under 59 formula, we are 13th out of the 13 school district] i I tax effort. If income, property, 511 and other tabling taxes are used to determine the base earned mount that districts qualify from the state, then the Los should be based on market value, income. Act 511 id other local wealth factors or property tax relief k over-tax burdens should be given to school districts tot have these local wealth factors. A compensation for limited wealth like super poverty, super density, ', et cetera, which is recognised in the present and tool formulas. Limits are imposed on income as part idt 59 formula, when income was included in the Act 59, the assumption was made that local school is should realise this income potential to support ret. However, there is a limitation of one-half on local income tax* When the formula included it dropped our aid ratio and redistributed state or financing schools from one district to another. ice, the formula forced us to increase property taxes nsate for the loss of state subsidies due to this 25

change. The only problem with that is, is when you many thousands of people unemployed how can you ' ask them to pay higher property taxes when they [ford to make ends meet now. In summary, the Act 39 i have placed our school district in a position of be residents more with property taxes which they Lfford.

The present formula on the base earned rewards m who raise taxes and increase expenditures. Our istrlot qualified for $1*138 per student but only #111 per student for the 1979-80 school year. As a school districts who try not to raise taxes and try their expenditures under control are penalised. ore, wealthy school districts have an advantage over Ithy districts in levying taxes under the present I don't think that it is very hard to see that the formula just does not lead to sound budgetary s» The structure of the present school formula does ide critical financial information tor sound g procedures. This information is not available to a istriot until one year after a budget is adopted. As t of this practice, budget revenues may be guessamatic. pie of my past remarks, I would just like to state 26 that our district does not spend a lot of money. It » that we do not have a lot of noney to spend bat we

} our expenses down to the minimum level that we Ly can. Our central office consists of only myself > and a half secretaries. Our school district's itures have not exceeded the budgeted amounts and ucpenditures over the past five years have been held to i five percent a year increase in times of inflation of )%• So you can see that we have been doing our best

> our expenditures to a minimum. During that same tar period, local real estate tax increases have id over 10% a year. You can see why our people are in ted of some help, we have been cutting bade in every at we could. The number of our regular classroom s in 78-79 was 135* The projected number for the ohool year is 102. The number of our school buildings has dropped from six in 78-79 down to four in 83-84. had a 20% reduction in non-professional staff. We osed a school swimming pool that was built along with h school 10 years ago. We included that swimming r the kids in the summer. There is a project nearby vas used by the children during the summer months. got to the point though where it was costing too much 27 ind so we had to close that. We have also reduced the : activities and also their text books, supplies and int. 80 in essence it boils down to what ara we doing : children? You do the best yon can but sometimes it >esn't seem like it's enough. This is happening not 1 the Freedom Area School District but in other school *s throughout the state. Uke I said before, we have our property tax from 82 mills up to 110 mills in ree years to try and raise some additional money. in, how can people who are unemployed pay higher y taxes? We have had an 80ft increase in property taxei 1 ve-year period, we are now trying to make up for the

state sharing which was at 65%. We received a n from the Auditor General because we were in deficit g for the year 79-80 of $164,000 and $204,000 for the 1980-81. Even the cost of our school lunch program bled. So X believe that X have made a strong case for Id. t do believe that the state must meet its iMlity of 501 funding to equalise educational costs Thool districts. They must restructure the present to measure a district's true ability to pay. They ilso include market value, personal income. Act 511 id other local wealth factors. Due to the limitations 28 in as structured in the present sohool subsidy formula. m should be made to realise this wealth at the state wslbly through the current state income tax. We do tort the proposed legislation to Increase the wage die local level from one-half percent to 2% as the i to this problem. The state per pupil reimbursement school district should be calculated on a preceding financial statement* The school subsidy formula reward efficient use of resources and not penalise Lot when they spend less* Dropping of the base is part of the school formula and a return to a : per pupil reimbursement as provided in past i we believe is the beat method. Also, a complete wing of the method of financing schools with an i on income and a movement away from property tax. ild be indexed into state and local Income growth on ig scale* Property tax relief should have the

priority in any new subsidy formula for current kxpendltures because they are far outstripping property rth* The present system, with all its components, is ling the problem of financing public schools as id by;the difference' of per pupil cost among school :s* Xn Beaver County in the year 1979, the cost of 29 g a student among 15 school districts ranged from o $1*800. Hot corresponding with this data was the nt of property tans vhich ranged from 85 to 126 ; the same districts* We are carrying a deficit in : audit of $204,000. There are two districts around are exactly identical in else and they are carrying n dollar surplus. So in summary, realising that the State Legisla- the only political body who can change the subsidy effort should be made to communicate to them this change. If the present method of financing schools change, real estate taxes for some districts will to escalate to the point where it will be an unbear- d for taxpayers and will result in strong oitisen on. This will, mostly likely, lead to a limit or urn. on school spending and will also increase deficit • X would like to thank you, Mr. Chairman and of the committee for allowing me to come here today you a little insight on the problems of my school and some of the other school districts in the alth. Thank you very much.

CBftXRMMr PIEVSKTI Thank you. Doctor. At this would like to call Dr. Richard D. Xbst. Or. Kost is 30 trintendent of the MaReesport School District in iy County. He is a graduate of the University of rgh and from Westminster College. He is currently

Lng his doctoral studies at the university of Pennsyl- t Pennsylvania. Dr. Host has more than 28 years in m in such positions as Superintendent, Assistant

:ondent, high school principal, elementary supervisor

:her. Dr. Kostf you may proceed.

DR. KOST: Thank you. Mr. Chairman and members louse. X think some of the facts that are being pre-

>Jiis morning tend to be boring and I would wish that

.d listen to some of the things that myself and the i manager might say this morning as parents and id people for children. Some of the statements that it hear that education in Pennsylvania is not in are erroneous. When I speak to you about the McKee* rea School District, X am talking about a district i a third class city and about the sixth largest in iy County. When X speak about our trouble, X am about the schools in Allegheny County that have things in common. The schools are in trouble.

X will attempt to spend a little time to look at iristlc roles of schools and what might happen that 31 your responsibility as well as ours and those who

(erned with the children of Pennsylvania. When talk- it unemployment, we all know this is a concern that f night not remain with us* Our unemployment is about we all know what that means in terms for people in a listriet. They just cannot afford any more taxes.

! them cannot make ends meet now and a raise in taxes school district would have disastrous effects on them

*nent has reached 229 and that is because of the steel i the Hon valley closing down or laying off many, tusands of their employees. Our tax millage has mm 43.5 in 1977 to 69.5 in 1982. So the people can

; afford to have the millage raised any higher on roperty taxes.

Over the last three years, we have had a very big in our free and reduced lunches, we are at the point

I we don't feed these children, they are not going to

Aing to eat that day. We have to keep our lunch going no matter what it costs.

Many families are also in jeopardy of losing

>mas> People work tor years in the same steel mills jr manufacturing plants and now are laid off with many having no hope at all of ever being recalled. So it

» •" ^.—.. m .», • i. i.. i — i .. i. i • 32 to see what is happening with these unemployed

We can't collect taxes* As a natter of fact* if we raise taxes this year in our district, it could tbly decrease the budget because these people are not iheir taxes. We are seeing a decay in the educational

Whan I speak of the MoReesport School District,

K> speaking of the other surrounding districts* Those are in trouble* One school district had a $2 million and one which is across from us had a deficit of million. So when the state talks about reimburse- id this is only one of the many things that you people deal with* The fact remains that you must consider y serious because we are in a position where the will be going down the drain* There is little promise loonomio recovery in less than a year or two if it

: all* There are no available solutions when you tise millage and can't cut any further. If you can't in the state for increased revenues, I don't know

> are going to turn. We are now having problems with

Lai programs because of the social agencies being cut lans that we now have to serve as social agencies to ise kids* With the high unemployment and with not 33 i hope in the future, there is an increase of child id of people going hungry. In our free and reduced rogram, in the year 1981-82 the children receiving inches at a reduced price was 5.15%« It is now 4.6%.

.dren who received a free lunch in 1981-82 was 56.3%.

•83 it rose to 64.94%. Somebody has to feed these i. If they don't get a decent meal in school, they're ig to get one at all.

When you talk about unemployment, you're talking i McKeesport an unemployment rate of 22% and in m it is 17.8%, in West Mifflin, it is 17.2%, in wn it is 13.3% and in Erie it is 13.9%. You can

: on the times, but it is still a problem that is not

> go away in a short period of time. If you want to what the state did for our district, we received

I in the last three years from the state. In that riod of time, we taxed our people $2,177,000. So I

'. shows that the state is not doing their fair share the problem at $168,000 when we taxed the people who unemployed at $2,177,000 and anyone who says that in is not in trouble statewide and that the state is

£ fair share, better reevaluate the statistics a

•it. Believe me, I am not coming here to condemn any* 34

: am just saying that we do need help. We have ad 511 taxes. That is the only way that we had to Litional money. We raised taxes in our district i 1980 and 1983 by 23-1/2 mills. We have out 59 teaeh- litions and saved $1,003,000. We have also closed five ary buildings. When we closed down the neighborhood that was probably the biggest mistake in Pennsylvania i when we closed it we had kids walking three and four o school. We also cut secondary transportation for 83 year by $680,000. so people did have a legitimate We also cut five administrative, three maintenance ee and aides and out back on athletic costs by 15% and on costs by 15ft. What all that means is that if we get more state help and if the economy does not pick ools in Allegheny County are going to have a debt of $3 million. We are going to have to increase our i ise which might affect the quality of education being 9 our children which in the long run will only hurt Le country. The fringe benefits that are offered to s will also be affected, some of the problems that we ace in trying to increase the class sise is that some teacher-union contracts say that you cannot increase 1*6. So down the road you may be looking or we may be 35 a get concessions from the teachers9 unions. I know inds like a rash statement, but it is a very important

Lt because if things keep going the way they are now,

.ons may very well hit the educational community in

; 18 months. X know that some educators think that

1't happen but I am saying that if we don't cut back itaffs, that we are going to be faced with concessions.

Llready stated that there are contracts that now i the books that say we can't do certain things, but ig has to be worked out between the teachers' unions administration because if it is not, everyone is

> suffer. I know it sounds wild, but just remember did say this*

80 Z believe that we are going to have to ite the curriculum area especially in the vocational il schools to meet this challenge* It just doesn't if we can afford it* You talk about high technology

A the very foreseeable future and we need to train tie, especially the unemployed, in this field but it

HUB as if nobody wants to provide us with the money* might be to float a bond but the courts have dis- t that and we are at the point where we just can't isces any more because people can't pay what their taxei

•. 36

and they are losing their homes and people are going ind believe me concessions will come and Z promise : Allegheny County will be in financial trouble if t't found somewhere within the next 18 months if the doesn't pick up* If something isn't done soon, you ig to have a worse problem than you have ever seen

What is now only a suggestion may very soon become :y if something isn't done. X realise that I am r a vmxy bleak picture because I believe that unless & through reimbursements or however you do it come a plan, that this reality will happen not only in >rt but other communities throughout the state. Z r ask our business manager to state a little bit of inoial problems because X think he can paint the a little bit clearer than X can. Thank you, Mr. t, for allowing me this time to speak to you. X will t it over to our business manager who can give you the additional facts.

CHAIRMAN PiEVSKYt Please identify yourself, sir* 1 capacity. MR. MOLSt My name is Steven E. Hols* X am the i manager from the MoKsesport Area School District. X m with the District since May of 1980. Previous to 37

was the Fiscal Manager for the Intermediate Units 1 5. I would like to thank the members of the Latlons Committee for the privilege of appearing rou today to present testimony on some problems faced ichool districts. I would like to present my test!- way of several charts that have been concentrated on problems in our community. Bach member may view this rhlight the contents of each chart. Chart #1 shows ist unemployment figures for our community which con­ ic be among the highest in the state. Among municipal-- per 25,000, McKeesport continues to experience the tbless rate in September at 22% which is up nearly a rcent from August when it also experienced the highest Lon of unemployment. This increase has had a direct m the Act 511, earned income tax collection, of the listrict and undoubtedly the percentage of real estate .ection. Since our area has such a large reliance on idustry* a turnaround In the economy will not have an & effect on the area.

Chart #2 is an attempt to follow the property tax Lon percentage of the school district over the past years. Please note that tax Increases have been iled by a lower percentage of collection. We have a 38

>neentration of older citizens on fixed income. who have worked their whole lives for their property > have never failed to pay a bill in their lives are red with the inability to pay their taxes. Oar distrlc : iched the saturation point and with every tax increase id more homeowners will be unable to pay their taxes. •lease note the increase in the lien tax docket of the district in recent years.

Chart #3 depicts the effect each one percent L property tax collection will have on the MoXeesport hool District's 1982-83 fiscal year budget. We are ce agency, with few means of obtaining revenue. Our s are vital to the community, especially the youth. Chart 44 illustrates what has been done on the evel as a means of stemming the tide and increasing

or reducing expenses. We have enacted the following taxes* Per Capita, Real Estate Transfer, Business ge Taxes, Mercantile Taxes, Occupation Privilege Taxes. also hired a professional tax collector to collect ant property taxes. Our user fees for buildings has ad. Tax revenue anticipation borrowing has been under* We have converted our bank accounts to NOW and SDPER mnts. We have sold excess property and equipment. 39

only an abbreviated listing which can be added onto tore time*

Finally, Chart #5 attempts to compare local tfith state effort in the HoReesport Area School Dis- ver the last several years* The resolve of the Board etors and staff of the School District has been to i the high quality education historically provided by seaport Area School District. We are hopeful dwindling

»s will not stop us from providing the service in the

Over the last three years in basic subsidies/ we solved $168,000 on the local level increasing property i excess of 2*1 million dollars. Our appearance here i to present the facts of the matter for your review lidetation* I will be most happy to answer any ques-

»at you may have*

CHAIRMAN PIEVSKYs Thank you, sir. Mow I would call Mr* Donald M. Carroll, Jr. who is the Executive r of the Pennsylvania League of Urban Schools. Mr* is also an educational consultant who has served for i with the Pennsylvania Department of Education prior

.ng state government* in 1975, he was Commissioner

,c Education* Mr* Carroll is a graduate from Westmin-

.lege and the university of Pittsburgh. Be was a 40 • — • If I—— III - »••• I.. I • I 111 • | •••!.• • •—^^—^—.

' in the Pittsburgh public school system before coming Isburg in 1961. During the past six years, he has with more than 100 Pennsylvania school districts on projects, many of them related to school financial s. Mr. Carroll, you may proceed*

MR* CARROLLt Thank you, Mr. Chairman and members committee. I am here to speak today specifically to oerns of the urban school district. With me today I • Robert Kelly who is the Superintendent of the org School District and President of the Pennsylvania of urban Schools.

"The League is made up of 13 city school districts »ho are active members and five who are associated aembers. We educate one of every 4.5 children in Pennsylvania's schools.

"Our districts have suffered disproportionately because of high unemployment and declining real estate ralues, By closing schools, furloughlng teachers, rotting valuable programs and raising taxes we have >een able to get by. But just getting by is not rnough. It is our responsibility to educate the ohll- tren in this Commonwealth and that cannot be done by iloslng down schools, letting teachers go, cutting the 41 urograms down and then asking their parents and other eople to pay higher taxes when a lot of them are out f work and can Just about make ends meet. 2 don't hlnk that we can continue to do this, however. ithia the next two years, our districts will have efiolts that simply cannot be made up if current conomic conditions persist. Our people simply don't ave the money to pay Increased local taxes* We can else local tax rates but exonerations and dellaquen- ies will reduce the money we collect. People cannot ay if they don't have the money to pay with. The ajority of these people have paid their taxes on time very year for many, many years. But now they find hemselves without a job, a mortgage payment, utility ayments are constantly on the rise and all the other xpenses that go along with raising a family and they list cannot possibly pay all of these taxes. "Let's look specifically at the situation faced by ennsylvania's urban schools and by many other school istricts, although I do not speak for them. "During the period from 1970 to 1980, urban enr­ ollment declined at a rate 1.6 times greater than in ther districts. This has meant that we have had to 42

Lay off teachers, consolidate schools, raise class ilse and eliminate needed but not mandated programs.

Schools serve larger attendance areas and lose sommunity identity* Transportation costs increase* tore important, we lose programs that are needed to lerve the unique needs of urban students.

"For the last years, we have been asked to raise in increasing share of the needed dollar locally. A tajor source of our revenue is the real estate tax. tf our market value Increases in proportion to our losts, then we can hold our own. This increase has lot happened. We are falling behind our sister dis­ tricts in our market value, thereby proportionately reducing the amount of money we can raise from real sstate taxes. During the 1972-81 decade, market value

Ln urban districts Increased by 161% while the total increase for the remaining districts increased by 231%

Kir share of the state *s total market value has tropped from 27% in 1972 to 20.5% in 1981. this would tot be catastrophic had the state continued to equalise t ild through changes ln the state aid ratio. The mrrent system of state aid* however, does not equalise aid as you have heard before from the other 43 gentlemen who have testified before me. 10 the con­ trary, B*S.S.L. creates greater and greater inequities rhich X will not go into again since you have heard that I would say from one of the other gentlemen >efore me. "All children deserve to attend schools that are lafe, healthful and educationally up-to-date. Our ichools have an average age of 46.7 years. They are core than 12 years older than the average age of ichools in other districts. While we have performed linimum maintenance, we are falling behind. The money .s not there locally to renovate our schools to bring ihem up to current standards. "Pew educators would disagree with the idea that children who come from economically deprived homes teed more help to achieve academically, we in urban ichools have no control over the economic status of •ur children. We must* however, provide unique pro- rrams to overcome poverty. These programs cost more oney than regular programs. "In 1981, 64% of the students whose families eeeived annual welfare grants in excess of $2,000 ere enrolled in urban districts. In the same year, 44 urban schools served 36% of all free and reduced price lunches while serving only 17% of all student lunches statewide. Poverty is a way of life for us.

"Urban schools have a store diverse population duua non-urban schools • This diversity must be recog- ilsed in our educational programs. Providing for this Liverslty costs nore. Our educational programs must provide more personal education to be effective. Let ae cite several examples of this diversity* Urban ichools provide bilingual programs to 67% of all children enrolled in such programs yet we enroll only t3% of the statewide total. Because of economic con- lltions and motivational problems, over half of the Lnnual school dropouts are enrolled in urban districts [against a 23% statewide enrollment total) • We have ixcellent examples of programs to teach English to ton-English speaking children and to prevent dropouts tut without adequate financial support these programs luffer. "I have not attempted to be exhaustive in this isting of some of our problems. What I have attempted o do is to give you a feeling for the problems that ur educators face daily as they carry out the mandate 45

Fiven to the General Assembly for a thorough and ifficient system of education. We are asking yon to Kmsider a more equitable system for financing basic tduoatlon. There is a definite need for Immediate ihort term aid to prevent some Pennsylvania schools from going bankrupt, but over the long haul, we need 30 develop a more equitable system.

•We define equity to mean that all children will receive an education appropriate to their needs regardless of where they live, lb say it another way, 'he quality of a child's education should not be an iccldent of geography* It is the Commonwealth's duty so insure that adequate funds are made available to Aose districts who, because they are poor, cannot raise sufficient funds locally to provide a high [uallty of education. Well meaning people can and wii:, Liffer on what are sufficient funds. We are content :o accept the current definition established by the leneral Assembly that equity occurs when the state and tehool districts share basic instructional costs on an tqual basis statewide. Equity i* further promoted Aten unusual overhead costs such as those caused by xansportation, special education, school construction 46 od reaovatlon# povery, and cultural diversity are elmbursed by the state. "If we can accept the General Assembly's definit­ ion of equity, then we have seen an erosion in this tquity from an equal sharing; of basic instruction oats in 1975 to our current level of approximately 0% local, 40% state. Shis situation has placed eeponsibility for funding the schools increasingly on . restricted local tax base, with unemployment and a aelining tax base, the ability to fund schools with ocal taxes has reached its political limit. People anaot pay with what they do not have.

•We would like to speak in ideal terms knowing all well that any long term solution to our problem ill be the result of political compromise.

"ISO begin the discussion, we propose that limita- ions on local taxes be lifted permitting boards of chool directors to levy any combination of wage and eal estate taxes needed to raise the local share of chool financing. We are aware of the General Assembly*a oncern that school boards may run amuck under this ystem.

"He believe that our most open form of government

_•______-> _ BIB I __ >..,..-•. • • |a II ••••••• I 47 iccurs at the school board level. School directors tee their constituents frequently• They are close to the people they govern and this closeness is the best Jisurance we have that local school taxes will be fair ind appropriate. This proposal also recognises that ill school districts in Pennsylvania have different romblnations of income and real estate wealth to tax. in addition, we would propose a drastic reduction of ict 511 taxes.

"At the state level, we suggest consideration be riven to returning to the subsidy formula that was lapped and updating it to meet current state and local riscal realities, tte suggest that in the updating, eligibility for density he changed to include those itudents living in the inner city of a standard metro- >olitan statistical area or in a city classified by die Commonwealth as cities of the first class* second slass, second class A* and third class, we further suggest that incentive for receiving more state aid by Increasing local taxes be eliminated from the formula.

•Finally, we suggest that overhead costs that are the result of geography and unique situations be sub­ sidised by the state at a high level to insure equity 48

Ln instructional expenditure* "We said earlier that we would discuss future financing in ideal terns. We are ready to make specific recommendations if this committee wishes.

"Officials of urban schools are realists. We enow how hard it is to raise the taxes immediately required to fund our "ideal" recommendation. While die final form of long term school financing is being forked out, we suggest the General Assembly establish criteria and a temporary fund to assist those school listrlots facing bankruptcy over the next two years. Ihen the economy improves, this fund could revert to >ther state use* Again, the League would be delighted so work with the committee to develop such an emergency lid program,

"Let me summarise by saying that many school dis­ tricts are facing deficits over the next two years dtrough no fault of their own. They have done their »st and lost. The state has not been helpful in recent years as characterised by some of the testimony iresented by the gentleman before me. For example, Lf the current equalised subsidy formula had not been :ampered with several years ago, our 13 urban district* i 49 rould receive 5.2 million more dollars next year than ;hat proposed in the current budget* This would inable them to keep their heads above water until the iconony turns and people go back to work again. ieoauae this has not happened, our members are at the ind of the line and must turn to you for help*

"On behalf of the Pennsylvania League of Urban Ichools, we want to thank you for permitting us to tppear before you today and testify." CHAIRMAN PXEVSmrt Would the three doctors ipproaoh the table* please* MR. CARROLL*. Dr. Kelly wants to know if he can itatement at this point?

CHAIRMAN PIEV8KY1 Yes, go ahead. DR. KEZiLYt X happen to have been the Superin- of Schools in San Francisco when Proposition 13 hit. kaased on. the 16th of June. And the first of July;

Igets are prepared and ready to be given to the board9 !.4 million dollars. I find now moving to Peunsylvanii ,k to the members of the Urban League and other super** its, that we are getting closer and closer to how X in and they are feeling now. In Barrlsburg when X X had no idea of the circumstances, financial cir- 50 res, of the Harrisburg area* We have gone from itudenta to 8,900 this year. The M Hoc Committee ir night recommended to the board the closing of two iry buildings, the selling of the administration r and the adjoining elementary building. We have done b all elementary guidance. They have recommended ray with the E.C.E. Program. The Department of Sduea- re is the finest in the state. We are faced with i financially* Yes, we do have problems bat from the .nt of the Urban League and being the Superintendent School District, z would like to say that good educa- still going on. we are working hard to make that When I arrived in Harrisburg three years ago. our ice was something like 78%. As of a month ago. it is

Our vandalism is down* I think there are many jigs going on that I would feel amiss if I didn't say ling from California/ coming from a state where .ng suffered when 13 hit, that I also get that uneasy in the pit of my stomach that that is what we are ng in the Urban League. Thank you, Mr* Chairman. CHAIRMAN pXEVSKTs Thank you. Dr. Kelly. Bepre- re Deal* REPRESENTATIVE DEAL* I would like to ask each 51 she superintendents to respond to this question* How bink the schools will affect the possibility of

'ennsylvanla an attractive place for industry to t?

DR. KNADBI Representative Deal, to repeat, Z

; is indisputable that industries need wherever it some assurance that people who will be employed by istry are educated and capable of specialised training the needs of the industry. If school districts tanded properly, they will not be able to provide the

>nal programs that will make industry attracted to rania.

DR. KOSTt I might respond by saying that curric- the schools have not put into practice what it

The industries in our town are critical to McReesport, re consider soma kind of tax relief for industry and ig relationship with the people being employed, it tact the school system* It is almost impossible that ixist or co-exist together. I think we have to be

>le in the same area in talking about training people, jag people, and work programs. I think the programs

Lne but people 50 years old in the steel mills have to lined. We have to define what area to retrain them in 52 ilop a thing called community school relationship and intal relationship and talk to state elected Ls and combine forces to solve some of the problems :han just raising taxes and patting people in

An example ls that city school districts raise m taxes and worry about their own budgets while ire paying both entities and they have wound up in the

He are taxing people out of their standard of tnd they are losing their homes* Luckily, we have (had the point where there is no direction to go* i a solution to the problem if we can just get every- rerned, and believe me everyone should be concerned. to come up with an answer to this problem because we tep asking the people to pay higher taxes* They just ifford it*

DR. CERCONEc Education is a growth process* I that if we let education grow, the state would also Lch would in turn give everything a chance to grow* i a lack of funds* the schools and the education rill not grow and in turn the state will not grow*

DR. KEL&T: I have no doubt in my mind that eduea* I industrial growth go hand in hand. X have had many Lai leaders come into my office and ask very, very 53

! questions about the educational process in Harris* L the ratio breakdown of the number of teachers with legrees and the number of students going to college. add that they are all amased when they hear the

They are very Interested in the education of our >r the future. They have to be because the future of h is also the future of industry. He at times do r enough about the educational system in Pennsylvania. down about ourselves. That is the hardest thing that tad to do in Harrisburg is to get toy people to talk talk good about the school system and not to downplay ' of Harrisburg. X have no doubt that the educational t Pennsylvania can — excuse me. That the economic >n of Pennsylvania will suffer immeasurably if we do i good education in the Commonwealth*

REPRESENTATIVE DEALt Z WOUld like to ask the indents then, what is being done in the educational ID better prepare our young people for what is going market here in Pennsylvania and do you have any td a statewide curriculum to deal with that area?

DR. XOSTi Z would have to be honest with you and ; Z think the schools have to reevaluate their roles i of relevancy of what is going on in the community anl 54 state In general as wall as many other people who are d in different walks of life in Pennsylvania. I

that the schools have to reevaluate and reassess the f things that we are training our kids for in the hools, particularly what we are teaching then and g them for when they leave that school. I think it is realistic that we teach the basics* which are very ntr but we are not teaching in schools the realistic nd the things that the kids are going to face when adnata. I think the same thing is true in the voea- f ield and X understand that some of the representative) i

state board are talking about that. They do serve a i but we are now at the crossroads in technology where to reevaluate our curriculum of what is being taught students before we are left behind. The world of the is going to be run by computers and we have to ate and change course if necessary in midstream to ur programs to that end. We have a long way to go in ools in terms of some of the problems that we have and lieve we have to change them before it is too late. REPRESENTATIVE DEALs I want to command all of

in particular the Superintendent from, X guess* the urg area. X do agree with you that something is 53 tg in Pennsylvania. I do not hear enough of public is trying to talk about upgrading public education Ling public education to the eoanunity because X that if we make a mistake and if we allow public m to be destroyed in this state and anywhere in this that we are in trouble. X will be looking forward Lng from you gentlemen if there ie anything that X ible to help you with* We will be looking very hard i Secretary on down because there has to be a way that loll public education here in Pennsylvania. You m have the kind of tools to do the job that needs to and with everyone's help X just pray that the job can to help educate our young children in an equal

CHAIRMAN PIEVSKYt Mr. Carroll, X have a couple

£ons for you. WAN PIEVSKY TO MR. CARROLL* ) The Legislature recently passed a law which pro- ibsldy relief to districts that have substantial bate losses but that really doesn't help with this problem, does it?

I Xt does not. You heard from these people what lation is. The situation is so critical yet that law 56

ace, 80 ay answer to that question is that it was a ort but that it did not work.

I Under the laws that currently stand* what would f a school distriat declared bankruptcy and became ted, what is the solution?

Hell, as you know the school districts would 1 the court to be declared bankrupt and at that point tonwealth would appoint a three-person board of con- it in fact would be a super school board over the looted officials and that board would have the power any action taken fay the local board and encourage and e them to become solvent* There is a nudging process iase taxes. You have heard today that the Commonwealtl so participate in some of the reclaiming of the debts a fund. Vb my knowledge* there hasn't been an ation behind it for a few years. Maybe it has but . paper tiger appropriation. What would happen is d would probably have to be substantially increased. rtment would give some money to the district to meet yroll and the payment of the teachers after 90 days payment of current debts. Meanwhile, the Department ol would sit on .the officials and ride herd in terms fing them back to solvency. We have had some experi- 57

& that* There were some concerns after World war XX : recently In the mid-601 s to early 70's. We had six school districts, most notably General Braddook, (all, being the last one that the Board of Control, toesn't exist now, but they did bring them back to r within two years. They were bankrupt again and that of the reason that the court ease joined those » in Allegheny County* What yon have done is that > said in effect to those local people is that you mage your affairs and the state will sit on top of dl you had to do it* You have lost substantially mtrol under that system and X don't think it's .ate for the circumstances we are facing now because, vn't have the money on the state side of it to pay the id we don't have the local tax base to raise taxes* r thing they can do is continue with the restricted aires and X believe the school districts have done :t is an inappropriate remedy to do that. CHAIRMAN PXEVSKTs Thank you. Mr. Carroll. itative Stewart* REPRESENTATIVE STEWARTs Xt doesn't really matter vers this question* What do you see in the Governor's woposal that addresses the problem that you are lay- 58

here today?

MR* CARROLLt The answer to that ia very brief. i money but to distribute it as it is proposed will i the effect of either taking care of the economic Lties of the special nature that you have heard here >r will it contribute to equity in the program.

DR. CERCONBt B.S.S.L. eould help us depending they do with the money. To answer your question, telped but to a slight degree. That is not a real [uestion. You have to choose. You either consider >lam now financially and be realistic about it or you ig to be down the pike later on and face a worse

we are not here as mongers but rather we are here rate to you an honest and truthful picture that we problems in the schools and whether the Governor has : that addresses itself to that or not, sooner or nneone has to face the problem and come up with a L to it. The General Braddock solution is the worst go down. It creates a financial problem but it also Jie real turmoil in district control because they are tr able to govern themselves and the reassessment is for years after the Department of Education leaves.

REPRESENTATIVE STEWAMi Do you get a sense in

• m*" • ^.» i ••! ^M~" • •—• • " —^ —— ii ™ 59

at that budget proposal that the Governors office lepartment of Education knows what is happening out i these difficult educational times or is it just more i as usual with just a few more controls?

MR, CARROLL* It's pretty much like sitting with . board. They're so many items on the agenda that is we get carried away with those that are not the tortant for the State of Pennsylvania. X am sure that ropriations Committee and the Governor have many i which are greater or as great than the ones that we tenting today. But X don't think the budget can be LC in the way it is going with the economic recovery .stic in terms of asking school districts across this

• continue the things they are doing now which is As people during times of high unemployment. Xt is > put people out of their homes when those people have r their homes for as long as 30 years. I don't think realistic budget in terms of what the Superintendent .sburg said. If the educational system goes down the Lt will affect Pennsylvania severely.

DR. KELLYs In meetings that I have attended she state, X can speak for them when X say that they tally understand how that amount of money got into the 60

It is really not adequate enough to do the things

*y know that have to he done in order to support m school systems. I think there was a feeling that there was an amount of money left over after all lings are tended to. You asked the question of a tnd I am trying to summarise my meeting with these

They don't feel that there is a reason, just an tf money divided up on a head count basis.

REPRESENTATIVE STEWARTI Thank you.

CHAIRMAN PlEVSKYt Representative Mcttonagle.

REPRESENTATIVE McMONAGLBt Dr. Kelly, since you te from California« there are a couple of questions raruld like to ask you. I don't know of all the i in California, but I think there is one where a

\ would actually go to the local high school and tell it they would need and they would donate money to the tnd they would get a tax credit. Is there a program it in California that you know of?

DR. KELLY* Yes. The banking industry got into ry heavily. A lot of the money that the bank saved of the taxes when Proposition 13 was passed was back to the school districts. South San Francisco

I a $100,000 grant from one of the local banks to 61 as In the performing arts center because when blon 13 passed, the school districts lost some of

3ney and when that happens some of the supplemental s or frills are cut out. I believe there are no rograms because students need every program that we

Ly have in Harrisburg. When you cut a program* it children out into the streets. One of the things that in California and I am going to meet now with a number

Le in my office to try and work out a way to have the

Lai officials of Pennsylvania,especially around org* adopt a school to help us financially and to help

equipment and to help us with support services. We ne large corporations in this area. They could adopt, bancs, the Vo-Tech Center and when they renew their at they could' give their old equipment to the school ts and that way the students could work on it and more up to date on the equipment that they are using

That is one of the main problems that we have with

Fech Centers. The equipment that the students are

on right now is already obsolete in industry. So e learning how to operate equipment that is no longer sed in industry. So when they get out into the real the skills that they have learned on the equipment in 62 x>ls today really doesn't do them any good because

Lll do not know how to operate the newer equipment being brought in to the industrial marketplace in age. There are a lot of things that we can do with side groups. We have certainly not tapped all of the

98 that are open to us. It is going to take a lot of tion and an awful lot of meetings and convincing of sidents of the firms in Barrisburg that our future is

» be their future. We have to convince them that if b put out the product that they need, they will suffer s Representative Deal said, then all of Pennsylvania because they will go somewhere else if they cannot s people that they need to run their industry.

REPRESENTATIVE McMONAGLE* Dr. Kelly, since you

California when Proposition 13 paaaed that lowered as and we are having similar problems with unemploy-

3 also losing taxes, do you see a relationship between

school systems, how it hurt them in California and is hurting us here in Pennsylvania?

DR. KELLY* That is a difficult question to

In California we had those people who believed that ools were spending too iruch money on the frills and

Proposition 13 passed the schools would not suffer 63

Governor Brown had millions of dollars in reserve

; he would help us out. Yes* he did help us out in

.zmlng but it just wasn't enough to make up for the iey that we incurred, X just returned from Atlantic ire I attended a National School Association of xators meeting and those people are beginning to lore and more because those millions of dollars are she reserve. Maybe I haven't been long enough in rania to answer that question, but I do see some

Ltles and some reactions from the citisens of the irg area that we better look at where we are going i more in line with the money that we have available ight face a proposition 13 right here in Pennsylvania.

REPRESENTATIVE McMGNAGLEi Thank you.

CHAIRMAN PIEVSKYi Representative Miscevieh.

REPRESENTATIVE MISCBViCHt Or. Kelly, you have ixcellent track record. However, we realise that it localities have different criteria for sending college and vo-teoh schools and different industries that you have a different type of school district in ta. Dr. Kost has a highly industrial area and I'm

.ot of his people will go to tech schools rather than ige. It is amaslng to me that there is a lot of the 64

Lum that is forced down the school district's throat, peak, from the state that might not be relevant at ne to basic education. This building, for example, m a foundation and without that foundation we wouldn't building standing here. I feel the same about kids in vhen it comes to basic education and here they get up

?h school and they can't read or write. There's a

somewhere, we are lacking something in our schools udents reach high school and then it is shown that

Lll cannot read and write. I seen a figure somewhere

Ld that you get 48% of your kids into college and yet see other figures that say that these kids still cannoi; write I feel that that is just an amasing figure.

think that your kids are any different than the kids

>ther county around the Commonwealth when it comes to and writing. Maybe I'm wrong, but I don't think icational system could be that much better than any* ie's. Would you care to try to explain that?

DR. KELLYt I don't think X intimated that

If I did, that wasn't my Intention.

REPRESBITATXVR MISCEVICHt Do you agree that

the curriculum has been thrown down your throat and oe of it should be done away with and more attention

— •••'••• »^—^»• •• • —^— —.. .in. i i, ,,. i ii —- • -'— 65 to reading and writing and arithmetic and the basic

DR. KELLYt X will answer that question by saying appears to me that there are the needs of some i that have to be met* If you are saying that some igency will pick up the programs and help these t out* I really don't know the answer to that. For

, as was stated before* the lunch programs* Some of lildren if they didn't get a decent meal in school ildn't get one. They go to school without eating it and if they didn't have a decent lunch who knows ly would have when they got home. Yes, there are some i that we can return to basics* X think when you talk le elementary level* you are talking about basic m there. When you talk about the secondary level* t to remember that not all of -the students wish or lire to go to college* Therefore, there is a need on

: of educators to give them a skill that will make rketable. X think there has been a change in my i of education from a desire on the part of parents this country about college to the point that they she students to have some sort of a career possibility ly leave school. As you know* not all students are 66 of doing college work but on the other hand those tdents oould go out and do a job in industry to the degree possible. I have always believed that basics ' important. Yes, indeed there has to be a foundation thing crumbles.

REPRESENTATIVE MZSCEVXCBt X agree with your thy, sir/ but this has been a problem with ne for d years and years and X see it still happening in 1 this is one of the few tines that we can get five tished guests like you gentlemen together at one tine re really concerned about this* Maybe one of the ntlemen could expound on your answer?

OR. KRADBs Representative, the curriculum tents laid down in both statute and by the Board of A gives the school districts enough flexibility so i programs essential for training youngsters in a skills of reading* writing, arithmetic and so on displaced by activities not considered relevant. The it thing that we need to remember in this day and age

the diverse industry of job opportunities is that ITS need a broad education and to simply limit their » to certain communication skills or mathematic ould be severely limiting the education for them. 67 igsters need to have exposure to and experience In » and practical arts. They need to have exposure Lgn languages and a number of other things that some night call frills but that I would regard as being an

of a good basic education. DR. KOSTi Representative, I don't share many of bios' opinions that kids aren't learning the basics »1. X have been in five school districts in Pennsyl* tid I can assure you that they are learning the skills* blem is when they get to the high school level, many B adults have evaluated superintendents and school on the basis of the percentage of kids that go to . Now, we are in a technology world today where the nal schools and career educations should be blooming. son that it isn't is because we do not want to face

that many of the kids are facing that college as are not going into education and they are not out of college — going to college now alone. They ng into the other fields because they are smart to recognise that you can't get a job. That might because we are going into shortages of math and

teachers. But I am saying that it is a status that was applied to schools that discouraged the voce- 68 ind the career development* Everybody had to go to to be successful and get that image and the super- its were judged on the percentage. One school dls- at to me that sends 85% to college and I would say to littee that schools that project that kind of image ig kind of foolish because I would estimate that when

I 85% to college, that possibly 50% should be going other 35% are going because of their parents' i or because public opinion decided that that was the

Lng to do. This is a world of technology right now re is a lot of money out there for students who can the proper field and come out and do a better job

»y can in going to college in many cases.

DR. CEBCONEs I do think that you have a point,

Lrman. we do have a problem of kids in terms of

we have a lot of kids that can read and write and ccellent job. 1 think we have to address ourselves ire are groups of kids who take the National College ind the National Assessment Test and there are some

>r us to improve on. X don't know if that is where coming from. We do have kids in school that we are

> have to look at who do an excellent job in reading tathematics and multiplication and the whole bit who €9 sellout basic skills and how do they learn the skills do they achieve them? But X do think that we have meat that we do have somewhat of a problem and there for improvement* REPRESENTATIVE MZSCBVXCHs Or. Cercone, some of where I am coming from, yesterday z happened to be Lngton, D.C. and they passed a bill down there for ft science teachers and there is a bill floating in Pennsylvania to recruit math and science teachers* a of these people that I am talking about. Dr. Kost, mple, was talking about the technologies. Well, there se people who are going to be the technical writers a programs and without them being able to read and orreotly and to be able to assimilate this information, 11 never be a good technical writer because neither I will be able to understand what they are writing they won't know what they are writing themselves. DR. CERCONEt Nell, if you read the Gallup Polls community^ wMt's the public state at large, they king two things. They are talking discipline and they king basic skills that we get from industry. Z am that to indict the whole education system is not fair we do have kids that do very well in basic skills. 70 re is a group out there that do not and I think we are i have to take a hard look at that and find out the why.

REPRESENTATIVE MISCEVICHt I would like to say i thing to you five gentlemen with the great minds i have there, that we have been at a lot of meetings

>t of hearings and we keep on hearing about technology, re going to be two computer repairmen in my estimation

, of the testimony that I have heard for every

' in this state* There is still going to be a need mobile mechanicst plumbers, electricians and so on* i not put all of our eggs in one basket and just say are just going to have high technology. Dr. Kost, like to make a suggestion since you have five

;ies in your school district* Save you ever gone out d to make it like a vo-tech school, like the Steel technical School System?

DR. KOST* Yes* As a matter of fact, that is an

:ing topic because I have checked with the vocational across Pennsylvania and I find that most of them are g in enrollment at a time when they should be growing* xea of the vocational schools, the problem is that

L take students from surrounding districts but the 71

.sn*t there for them to come to our schools. One re that ve have is that we have no quota system there. kids who want to take cosmetology, they can get into se. But we cah*t seem to pick up the demand for come into the school. The surrounding vocational are not increasing their enrollment* They are jig. That is true of the New Castle area and that is one out in Monroeville and that is true of ours and r towards the South Hills. That is a strange kind of tm.

CHAIRMAN PXEVSXYt I would ask the members to i questioning to school financing. Representative

REPRESENTATIVE COHBUii Thank you, Mr. Chairman. oil, on page 5 of your written remarks, the middle h suggests that the Legislature give consideration xning the subsidy formula which was capped. At the hat paragraph though you suggested a very significant nd that is to eliminate that provision of the formula supposed to

;ion and some of us felt at that time and have felt lat that instead of acting as an Incentive or a tor school districts that would increase their taxes* le provision in effect acted as a penalty for school

:s that were able to or were forced to economise and their taxes relatively low. Could you elaborate on rticular comment that you have made and perhaps to my observation?

MR. CARROLLt Nothing more except to say that X

Lth what you just said. I thought it was a little she time that this General Assembly would pass

;ion that would encourage taxation and not encourage

:y but yet they did and it is a difficult thing even with because we know people who are making out who were playing Russian roulette with that question. re making calculated guesses on where the taxes would

Lat they could get some more money from the state and ipared to raise taxes just to get up into those rackets. That just doesn't seem to make sense to me.

\ should be the other way around. As you have heard i tax high and we have low costs* Maybe that ought to of the incentive than the other thing. So X

; agree with you more. X didn't hail it at the time 73

>rtainly don't now.

REPRESENTATIVE coWBLLt Again, in your comments link what I have heard in terms of responses to other is basically suggests that from an urban point of m need to do away with that B.S.S.L. There was per* aore cautious remark from the gentleman on the end* him say that sometimes it has helped or may have

* bit* But the message that we are hearing is that

»S.L. is not acting in an equitable fashion* My t is that B.S.S.L. was used for political reasons or because there was a need to allow all 501 school ts to get a little piece of the action, to get a few noks. without B.S.S.L*, we simply would have used the nula and would have used the amount of money that was

Into the pot last year and would do it this year. a the amount of money that the Governor proposed to to the pot and not use the B.S.S.L* We have a very tial number of hold harmless districts just using that nula* If we would do away with the B.S.8.L., does the ave any suggestions about how we deal with that

of hold harmless districts at a time when Z suspect

are not likely to dump a half a million dollars into

? 74

MR. CARROLLs Remember when Z talked about doing h E.8.S.L. z also commented on redefining density* iur members, for example, the Pittsburgh schools they are not eligible for density and what have you i by B.S.S.L. They would benefit, I think more, if t go back to redefining density. Dr. Rnade has a t to what you just said.

DR. KHADEt Representative Cowell, just dropping

is only a partial attempt at restoring equity. If

> keep hold harmless, that is juBt about the same t keeping B.S.S.L. Hold harmless is a disequallsing than the subsidy formula. It has no relationship table wealth in the district or that district's to pay.

REPRESENTATIVE COWBLLt You recognize though your group doesn't have to deal with the political is quite the same way that we do. To drop hold harm- t go back to 150 school districts, perhaps, in this id say that although we may ask your taxpayers to pay toy in state income taxes or some state taxes so that mmp more money into basic education, your school

; is not going to share in that additional pot of

In fact, you may get leas this year than you got last 75

DR» KHADEt Representative, there is a way to A that problem. REPRESENTATIVE COMBLLi Would yon please share & us then? DR. KRADBi It will cost some bucks though. If te the existing cap on the basic formula sufficiently* not going to have hold harmless districts and you led E.S.S.L.

REPRESENTATIVE GOMBULi But we are talking then .tentative of pumping a good bit of money and dropping >it of money into that pot?

DR. KNADBt You* re not going to do it on $119

REPRESENTATIVE COWELLt Okay. My last question ranted to ask you about, the statement speaks of the Leeds of the urban school districts and that is ily one of the considerations of this Legislature deal with the school subsidy formula. We got things isity and poverty and as a response to that, a number i ago the Legislature created this sparsity factor. re all pretty arbitrary kinds of things and the idea tys been that we will come up with some artificial 76

— ' V - *• ...... —- — '

dump money Into certain districts. In your case, ileally urban districts. Somebody mentioned the Braddoek district a little while ago and I couldn't : think that General Braddoek was in a bankrupt situa- I General Braddoek was receiving some of these extra* ' funds, if you will, through some of the special Lea. General Braddoek at the same time that it was in tpt situation was, in fact, spending more dollars Lent than almost any other school district in ly County. I think that was only with the exception !ity of Pittsburgh and they still went bankrupt getting all of that extra money. A lot of us wonder, able to demonstrate, to document, and perhaps to :e a direct relationship between the density dollar give you and what you are able to do with that dollar or more importantly, poverty dollar, and what able to do with that poverty dollar for the poverty r in your district? What do you do with those extra and can we be comforted with the knowledge that in iy are dealing with those specific needs or does it 9 up the amount of money that you get?

MR. CARROLLi The League will be glad to do that >r you and have it in three weeks. One of the things 77 rould suggest that we just don't look at density bat at what happens with sparsity. TO me, and X was raen all o£ those things wane happening, X remember i that we thought we could have one subsidy. We lild everything into one subsidy, special ed and rtatlon, et cetera. He prepared legislation to that ind wo broke it out to four and then what happened is decided in order to get the votes for the density is X was cruising around here at the tine, we had to te sparsity thing. To net it was a lot like E.S.S.L. I to get enough votes to pass and we all understood were doing. X think at the tine that we knew we promoting equity. What X would like to do is to get cerial in a precise fashion and not wing it up here id see that you have it but X would like to include felty thing. We are not against sparsity but we are Lty. Maybe sparsity produces equity but X doubt it. DR. CBRCOHBi All districts have stress in terms th. Wa don't get density and we don't get sparsity* reak in 511. urban schools have generally strength in > my concern here is that you look at all schools in ranla. There are maybe 150 districts like ours and small districts. He are trying to work with the gen- 78 wire. Any approaches, we would hope would look at jriota like ours with sparsity and poverty* So X r approach to subsidy would Include all of us. REPRESENTATIVE COWBLLt Thank you very much. m, Mr, Chairman. CHAIRMAN PXEVSKYs Representative DeWeese. REPRESENTATIVE DeWEESEt I have just one question rone, during your testimony, you commented that your and your property tax revenues from your local rare increasing at an alarming rate and that local rs were paying a lot more and the state was paying a 3. x heard the captious whisper of the Lady Sirlannl tbottom (phonetic) and she said, "That's the way it's 1 to be." That wasn't monitored by most of my t but X would like you, sir, to tell the lady from m why that is not the way it is supposed to be and Commonwealth of Pennsylvania should have been over t four years, the Republican Administration, producing ling for schools at the local level, would you answer ration, sir? REPRESENTATIVE SIRIANNIi wait a minute, before aro. What did X say? X would like to know what he uring* 79

REPRESENTATIVE DeWEESEt The gentleman was ig to the way that local people in hie school district ireasing their efforts at funding the schools and the is paying less. In a very quiet moment, I overheard .spar and you said* "That's the way it should be."

\ embraces your philosophy on government as X have it from my seven and a half years of stewardship Harriaburg. So what X am wanting in this hearing t have this educator share with us why he believes Ling is appropriate. REPRESENTATIVE SXRXANNXi Just don't forget that educator too. UNKNOWN SPEAKERS Mr. DaWeess, at that very time ter that my wife is controlling my household and she At is the way it should be. DR. CERCONBi The state has the responsibility .ise educational costs to poor districts. You can the New Jersey case. Because a student lives in a itrict doesn't mean that they should get less educa- l the state has the responsibility to equalise educa- »sts and they have a responsibility and they are not that responsibility. That is the gist of the whole to equalise. 80

REPRESENTATIVE SIRIANNIi I think it Should be *d, too. X don't know what he ia talking about, X > been having another conversation but X don't know is talking about* REPRESENTATIVE DeWBESEs The point is, and then tease to comment, is that the Commonwealth has not id its commitment for 50% funding and X think that is : one of the myriad of reasons why we are all here Xf as we heard that one school district was getting m the Commonwealth and X think that was the Initial tn's response from north Central Pennsylvania, Xf redicaments had not taken place over the last several die situation may not be as crucial, we have all of iher things brought into the unemployment, et cetera, • want to affirm my own personal commitment and X te commitment of a great number of Democratic members lauous and I'm sure some Republican members also for ling. Mr. Chairman, X have no further comment. CHAIRMAN PlEVSKYt Representative Pistella.

REPRESENTATIVE PISTELLA* Thank you, Mr. Chair- appreciate the qualifications that someone made te to the City of Pittsburgh school district density. at times being from the City of Pittsburgh pointed 81 teing an example of super density by toy colleagues • r for a sonant about the situation that occurred in ty county, the Wast Mifflin School District, to just outline the situation with the Board of Assessment, t a built in mechanism for appeal to a property tax- r they feel that they have been unduly assessed that i appeal that. In a particular ease in the West School District, a rather large industrial business L their property tax assessment at which tine the : believe, ruled that they would then be paying on a i assessment which was in fact lower and I was wonder* ; the impact would be of these kinds of eases to your Listricts? Are you faced oftentimes with large al companies being a portion of a base of property g in and appealing their property tax assessments that ties into the example that you have illustrated king tax bases?

DR. XNADEs That has happened, sir* Companies e appeals to, in our case, the County Commissioners consideration of their assessment of their industrial '• There are firms, law firms, that specialise in t of thing* If the value established for assessment has diminished considerably, we have lost a large 82

\ taxable real estate. DR. KOSTt X think we have somewhat of a same O.S. Steel had an adjustment made and X think we ted to cut back on their taxes in the future and in

: whatever they would receive back but our school Like most of the school boards here, sits with a »f readjustments to the assessment and it might be i long, AS a matter of fact, the school board really have the time to evaluate every one of those. Unless involved at the county level when the assessment >, you really almost — it's an automatic thing for K>1 board to just go along with it and we see, for if when you are building your budget you have to salculate a large sum of money in there for what they ig on the assessments* So it poses another one of coblsne. Xn terms of money, X think Representative mentioned on the hold harmless and different means of ig schools. One thing is evident, that we do have a Ibility and if you reduce any schools, it will pose a whether or not unemployment is 10« or 22%. So we are .ooking to maintain what we are doing and try to get iey because the responsibility of the state is not :*s not 50. I'm sure it's not 40 or 41 but all of the 83 not being able to collect taxes and the reassessments escalation of contracts and that's why I talked tnoessions which nobody wants to hear about but these

.ities of the future and X again come back to one

.nt in summary* Onless you cross the problem now nirsement, you are going to have worst problems down i 18 months from now and Z am talking about the people sitting here representing the Bouse.

REPRESENTATIVE PISTELLAt There has been an td incidence then historically within recent history businesses coming in to appeal?

DR KOSTi z would say that is true.

REPRESENTATIVE PISTELLAt Thank you very much, m. Z have no further questions, Mr. Chairman.

CHAIRMAN PXEVSKYI Representative Clark.

REPRESENTATIVE CIARKi My question is about the between financing and the methods of financing

.arly the property taxes. The gentleman from Harris* itioned Proposition 13 in California, we get a lot lure from our constituents also about finding an

Jive method of financing and] Z believe since the talth has walked away from the 50%, it has compounded ilem with property taxes and with businesses closing 84 ring factories idle we are going to see less and less fcrty tax revenue* Do you folks have any ideas for rives on the local level or recommendations that we from the state?

DR. XNaDS: Z think most of us have been offer-* vnttendations as we have been going along* Just for sake, let aa suggest that there is some need to move 50% sharing of the instructional costs* Z know much i made about 50% of all education being funded, but X fc should be quite clear* if it isn't already, when we rat 50% we are talking about instructional costs* not magical* We can go to the 50% level and still iquity in the formula unless some modifications are thin it* We have alluded to those in the past through iy* The other things that the school board needs is, re, what Mr* Carroll suggested earlier and that is ucibility in the tax mix that may be levied* Xf the xrarse the district has is to increase their property that tax continues to fall in the same places, on iss, and Industry, on people with fixed incomes and »• Xn times of an economic recession, it is not lesirable to try and tax income at higher levels the income isn't there to be taxed. So we need the 85 sy that the property tax represents bat we do need ay to move towards more taxes whloh are based on the to pay and that, obviously, is income or wages. The roent limitation presently in the statute severely :hat flexibility of the boards* needs.

RBPRB8ENATXVB CXARKi With the economy the way m9 the problem that I see if we move to a formula i income and we have an area where we have a large >f layoffs or people just losing their jobs completely, a complete reduction in the income so your tax is also going to be impacted. My concern is your to collect taxes as well as my constituents* ability Jsem.

DR. KHADBt Well, whether it is income or ft if the individual taxpayer's out of work, he can't ier one of those taxes.

BBPBBfifiNATXVB OASK* That's right and we*re at a mix. If we know it is mixed, we are going to i same problem down the road. Nov, my personal feel"* &at the money should come from the state level down nales like this in an effort to lessen the local tnd in my local school district* s cases in Allegheny we have seen higher and higher property taxes just 86 ha lesser amount of money coming in from the state observation that Z would like from you is, if we were go to the 50% funding level, would that permit your a to reduce taxes on the local level? DR. KKADEi Offhand, I would say yes, in our

DR. CERCONEs Any amount of money received would y reduce the property taxes. DR. ROSTs May X respond in terms of reimburse- th some statistics?

REPRESENTATIVE CLARXi Please do. DR. ROSTt I referred earlier in the presentation had increased our reimbursement from the state while we have taxed people $2,177,000. If you look percentage relationship, the state is wrong whether a with state support or not. In looking at a voca- ohool, it costs us $1,400,000 to operate a technical n our district. In looking at the state support of

is about $300,000, but yet you hear people say well, oing to support the vocational school, you do all of ne things. So to go further, if you look at trans- n, we receive about one-fourth of what it costs and t this too, and I think it is going to come to pass 87 are getting phone calls since we dropped secondary rtation from districts as far oat and even as far as c in talking about how do you do it? X would suggest ibably what you are going to hear in the future if we it the funding is that transportation will go by the

First secondary and then it will work its way down. lunch programs and many of the social services out td that will cause real problems for the school dis-

So I guess what X am saying is whether it is 50% or m you start receiving money and taxing people in tship that X have just mentioned to you, it is * itic and X don't like percentages. I'm saying we have at this thing. We can't continue to operate schools lents of this Commonwealth unless the Department of n and the State Board and the Bouse and the Governor istic and consider this a priority, the educational

I'm sure we talk about highways and everything else to need them, but certainly education has to be worth ig in this state.

MR. CARROLLt X am glad to be on this side of the ther than on your side. X know what the problems are

L face. X think that there are two things that you look att X appreciate and agree with Representative 88 on the definition of equity at 50%. I know that it

:ed well. With the money in the system, it does

.1. But that is a -definition arrived at in a public

\ this General Assembly. You might arrive at a

.on of equity that says it is 45 or 55. Whatever you

Z think we need to decide that and fund it and right ire never sure. It keeps creeping down and down and

I there is no certainty in that. That is going to tublic debate and a lot of time. My suggestion would debate should be engaged in just as soon as possible it will be next year or — well* with the school code hope that It wouldn't take that long. I know that it lot of time. But you have an Immediate problem. i limited dollars available to you and yet we have roing under next year in the budget that you are f. So I am suggesting a two prong thingi One, in a depression era type legislation that is emergency

Listricts who are maybe in some of the positions that in who need that help. At the same time, a long

>ate producing an equitable subsidy formula that will

.y take this turkey off your back in the future. Z lere are really two things that you have to deal with

: property tax has to be real to you. They have to be

* • i 11 • .• i• • ii i• in . 89 to you about that back home*

REPRESENTATIVE CLARK* Thank you very much.

>u, Mr. Chairman.

CHAIRMAN PlEVSKYt Representative sirianni.

REPRESENTATIVE SIRIANNI t Thank you, Mr. Chair- would like to ask the gentleman who said that density but not spars!ty, to explain that.

DR. KNADEi I am the gentleman that said that.

A my testimony that I thought a case could be made lity aid. The reason that I said that is because of i of problems related to the character of school on in an urban community. Large numbers of special lldren, large amounts of tax-exempt property and

* of thing* The reason that I did not say sparslty be justified in my view was because the largest that sparse districts have it appears is that of ting children over great distances to schools. We have a formula to cover that expense. Now, admittedly, tation subsidy is probably not adequate but there are s in my own immediate unit, for example, who make it every route over which youngsters might have to declared hazardous because when the cost of trans-

•n exceeds, I think it is a half a mill of market 90 transportation is reimbursed at 100%, Now, that seems

> be double dipping* Sparsity on one hand and trans*

>n reimbursement at that level on the other hand, fhy I argue the way I do about the differences sparsity and density aid.

REPRESENTATIVE SIRIANBIt Sir, that might be true district, but my district 1$ fighting the Department iportation to stop declaring routes hazardous routes they don't want to spend all of that money on that rtation and they do not want to go on those routes. if you go to the Department of Transportation and toard of Education, you would find that my district i fighting the declaring of hasardous routes. I think

Ld find a file on it.

DR. KNADEi We are doing the same thing. In our

:, it is precisely the same, we have 110 square miles which does not include the City of Wllliamsport but nmships* so we have that sparsity problem as well ire not anxious to have additional haaardous routes

REPRESfcNTAMVE StftlANNIi You talked about the

?ped child. Sometimes we have to transport one handi- shild 70 miles a day. Do you know how much that costs 91 ir, one obild because of the sparsity? OR* XRADBi I have exactly the sane problem* It Ag us right now $7,000 a year to transport one hear- ilred child from one place in oar school district to sohool where the only class for hearing impaired

\ is in existence.

REPRESENTATIVE SIRIANNIt BOW far is the SOhOOlT DR. KNADBt It* s about 17 miles*

REPRESENTATIVE SIRIANNIt I said 60 miles* It's

I miles in our case* DR. XOSTi Nay I respond to you, Representative? REPRESENTATIVE SXRXAHNXl Tea.

DR* XOSTs When we dropped secondary busing, i a letter ~

REPRESENTATIVE SXRXAHNXl HOW can you drop y busing? DR. KOSTt The school code says that you may. k*t aay that you shall bus* The reason was and X : is very important for the Souse to understand this you are going to be facing a transportation problem We have 1800 kids going to a secondary sohool of to live beyond three miles and up to five miles* We secondary busing* How, the reason that it is dropped

I.-•••... !•! «l II » I— V 111 •! ll II I I - .11.1 - - I 92 cause we wanted to, but it is because the law under for transporting students will not allow a district ny student beyond two miles. If it would allow us at, we would be glad to bus anyone beyond two miles a mile and a half if that were the criteria. So the ructure of the transportation laws need a complete i because with Act 372, hazardous routes, if you bus ent that lives five miles away from your school you

any student that lives even a half mile if that

hazardous* You must bus all of the Act 372 students. gesting and I did write a letter to PennDOT and we n in litigation on this, that the transportation laws ermit the school districts to bus those students who ihould be bussed. That really live a distance away i help* The result is that we are spending probably ban a third of the transportation money to bus kids

•Q no business to be on those buses* Until PennDOT

Department of Education become realistic and change

\ of transportation, school districts are just burning

> and the carriers are wise enough to realize that i a monopoly out there* You have to bus them* You ly have one or two bus companies located within ten

' your school district. So that is a real problem in 93

DR. KNADEi Representative, you and I have a uroblem and perhaps there is a solution that will

;. Public Law 94-142 requires an appropriate educa- all handicapped youngsters. Not only the education provided but related services* Interestingly in rania at least, transportation of handicapped youngsters i distances that you have described and which I have id are not considered a related service to special oi and therefore it does not come under the excess

>vision for special education funding* But that is, tave pointed out, we have experienced a very serious in our district.

REPRESENTATIVE SIRXANNIs You gentlemen sit here

: and at least this is the impression that I am getting, i think if the state — if the money comes from the

:'s different than coming from you people.

DR. KHADEJ It is.

REPRESENTATIVE SXRIANNXi The money is all coming

> same place whether it is from the state or whether rom the local level. I always felt that if you kept tey on a local level and use it you are better off iding any of it to the state because you know the 94 s going to get some of it before they send it bade to think the leas you send to the state, the better off

•

DR. KNADEi That is absolutely — that's probably that we are going to have to straighten out.

REPRESENTATIVE SIRIANNIJ Are you the one from iport?

DR. KNADEJ Yes, X am.

REPRESENTATIVE SXRXANBXs I was at a seminar f with your County Commissioners from your county and rroundlng counties, and they were asking for us to

Law to change the tax base so that eaoh county can

Lta own taxing base. They want to decide how they ig to collect taxes in Lycoming County and in all of rrounding counties up there in order that they may be keep all of their money and implement the kind of lat they want.

DR. KHADEi The difference between state money il money is the difference between regressive taxes jressive taxes. It's at the state level where the lity lies to tax on a broad base which is progressive than regressive. What we are stuck with in the local- ick home are regressive taxes that impact the hardest

• i <•• •••••••. • •- •••—• •••—— 95

.e not with regard to their ability to pay but to the Lp of property which has no relationship in all cases r ability to pay* That is the importance in having :e collect broad based taxes and return it on an id basis to local school districts so that the educa- tpportunity is fairly offered throughout the Common- >r where any youngster might live and local school :s are not unfairly burdened by different requirements >rt that educational program. That's why the state is

\9 for the equity purposes. DR. CBRCONEs Rich districts provide more for dldren than poor districts* That is why the state ie business of equalising* REPRESENTATIVE SlRlANNlt The rich districts are us* The rich districts are helping the poor dis-

DR. KNADBt Through the state process of equalisiig. the whole argument* Some poor child in a poor school : versus a district with a lot of wealth* If you ibsldise the districts who have less wealthy you are an education to the children* That's why the state le business* Fifty percent of our students live from IS miles out* If we did away with secondary trans- 96

>n as was discussed this morning, I would have kids on hazardous roads for up to 15 miles and that is fc realistic in ay opinion*

REPRESENTATIVE SIRIANNIt What would you think in of each county implementing the kinds of taxes

*y need throughout the whole tax system and let eaoh solleet the amount of taxes that they need?

DR. KNADBi Representative, the Constitution of nmonwealth says that the state shall provide for a

1 and efficient system of public schools* That makes be responsible to guarantee thoroughness and ImplementatIon icy and by / • > i of equity and financing and counties*

REPRESENTATIVE SIRIANNIt The state could give ities the right to do it*

DR. KNADEi I think the state would have to have lurance ~

REPRBSENTATIVE SIRIANNIt You better talk to inty Commissioners because they are pushing for it.

DR. KNADEt I have talked to my County Comraia-

REPRESENTATIVE SIRIANNIi I'm not for or against lis point, but you better talk to your County Comnis- 97 because they are pushing it- One of you mentioned taxes as the means of getting your funds* Which one nentioned that?

DR. CERCONEi I said if you are looking at a tuse you did it when you changed the formula you

I income and the aid ratios as an alternative to look

REPRESENTATIVE SIRIANNIt On whom would VOU lis income tax?

DR. CERCONEi You are already using the property

» determine the base*

REPRESENTATIVE SIRIANNIt Are you fellows who ting up there today willing to go around the State of rania and back your legislators ao that they can raise xme tax one percent? Are you willing to make a around the state?

DR. CERCONBt I have done that in my own local

: already.

REPRESENTATIVE SIRIANNIt That is not enough*

DR. CERCONEi Well, Z can't get out and go all

:he state as you are saying. I have done it in my own

REPRESENTATIVE SXRXANNXf If Mr. DeWeese is will- 98 . , ; lubmit the bill, X will vote for it.

MR. CARROLL i The whole problem that we are ng does center around revenue raising as much as it lenditttres. I admit that that is quite a dilemma but icnable revenue raising would be supported by our lip* Whether it is 1%# I am not sure of the exact

I would like to see what that raises* It would

• raise a lot.

REPRESENTATIVE SXRXANNIt It has to be supported is other than in this room*

MR* CARROLLi Yes, ma'am, I understand that.

REPRESENTATIVE SXRXANNIt Even if you have to go ision and go to town meetings all over the state in

get that. X want to know who the income tax would at you are talking about.

DR. KNADEt Anyone who earns an income.

REPRESENTATIVE SXRXANNIt You mean across the d not just local?

DR. KNADEt That's correct.

REPRESENTATIVE SXRXANNIt You're not talking about ate?

DR. KNADEi We're talking about income tax, a tax id income or in some oases on unearned income. "

REPRESENTATIVE SIRIANNII Id just put it into lent formula? DR. KNADEi Of taxation or a subsidy?

REPRESENTATIVE SIRIANNIi Qf subsidies* DR. KNADEs We already have an income based as the reimbursement subsidy. REPRESENTATIVE SIRIANNIi You're talking about an extra income tax or provide extra subsidies as toross the state? DR. KHADBs That would be a state responsibility, : increasing state funding. REPRESENTATIVE SIRIANNIi I have one more thing mid like to ask. You mentioned basic education. X ichool for 23 years and X quit in 19S7, X think the districts could save a lot of money if they would go the basics. When X finished teaching school* X was ig then that they had forgotten the basics and were r their money on other things and neglecting the Xf you teach me to read, then X can learn another on my own. Xf you teach me mathematics, then I can le problem but if you don't teach me to read, X can't irn those other subjects that you are trying to throw X think that maybe you could save money if you would xoo to some of the basics In a little stronger field.

CHAIRMAN PXE7SK?s Representative Vtoon.

REPRESENTATIVE VROONt This is to Mr. Carroll* first page of your testimony, you made the statement, the next two years our districts will have deficits ply cannot be made up if current economic conditions

" 1 have two questions* You aren't really of the that current economic conditions vill persist in the all the good news that we are hearing today, are you?

MR. CARROLL* Two years ago, I was of the opinion ty would not persist. They have. I am not in a i to comment on it. 2 have a tendency to think that persist longer than anyone thinks. Twenty-five to iployment must be called a nagging problem.

REPRESENTATIVE VROONr Let's take the first part statement. Our districts will have deficits that iannot be made up. Now, I have in mind that you are tting urban areas and the biggest urban area, of course,

>ig city. We in the suburbs who live around the big re been very distressed to see how weak an effort has

Le in the city to raise their tax money for schools

' are constantly coming out to the state to ask for 101

* I - • ••• — ley and even after all of your poverty, super and density and super density, these are all flat ts plus your very favorable subsidy which incidentally is up when your assessed value goes down. Don't hat. MR. CARROLLi In equalising it does, but we are Using so it really doesn't have that effect.

REPRESENTATIVE VROOfft Well, we do statewide. ate, we are saying to you that we certainly don't td we can't understand why you persist in saying that •ly can't raise your money. You certainly don't with us and as far as your facts reach is concerned way across the board and then to add Insult to « find ourselves paying that non-resident wage tax 6% and then you're going to soak us more for subsidiei

Come, come, come* How much do you want in the eas anyhow and how much are you going to penalise us? state does say that we are to provide a good system tion. It says nothing about how to finance that. the years# we have financed that locally and we were polled because of certain court decisions to start

the wealth program called a subsidy. Now, that's amounts to* Our obligation is 50%. How much more do 102 - - -i • - .. • • — — fc? We give you 53% now and I don't care which way

3© it. REPRESENTATIVE DeWEESEi Balderdash (phonetic).

REPRESENTATIVE VROONi This is 53% that you are from us. Bow much more do you want from the state? lave to ask you, please, Mr. Carroll, would you please is what would you do in our areas to raise that lal amount of money required which is something like .lion to bring us up to that 50% basic instruction Pray tell, where is that money going to come from and i you fellows are so willing, even you fellows who dng school districts, to pass the buck onto us in :hat we can't raise it or that we are afraid to raise lon't know which applies. And you are going to put it is and that is going to result in an income tax i and I would just like to tell you that we are not > sit here and do something like that. Now, where is »y going to come from?

CHAIRMAN PXEVKSYs It could cone from this year's Representative vroon, if the Governor didn't have a .lion deficit.

REPRESENTATIVE VROON t We need $450 million to

that raising to the 50% subsidy level. That's what I 103 lug about* Where is that going to eone from? This i a question*

MR. CARROLL* X thought I made ay point clear le this thing as a two stop effort* One* is to prevent icy and the second is to then engage in a discussion tat is a fair and equitable system* that will take »• Zf you are asking us to sit down with this m and work out something like that* I have already tred it* Vfe would be glad to do that* Z donvt want lore and say what it should be because X would like to i out more carefully than sons of the proposals in : have been thought out*

RBPRBSEHTATXVS MoMOHAGLBi X think WO also have 10I districts that have a surplus donated back to the ihool systems* REPRESENTATIVE VROONs X have yet to see that* MR* GARROLLs One of the fun things about being ylvania is that you can pick on Philadelphia and lone that good naturedly* of course* over a nunber of cause they seem to accept it pretty well. They are aired about being picked on* You cited a 33% figure last tine that X saw that* that is correct* That is of help* Philadelphia received some help* X am

" • • I I •! • • —^—•••«•.. I —^-^—• • III..! —-.Ill .Mill I "™™ 104 r for urban schools generally and I am suggesting to : that is not the ease, X can go down the line on t also hope that yon will realise that Philadelphia > some extraordinary efforts in the last several years r their system In line with other realities. Z have a feeling that Connie Rlaton (phonetic) will continue tort. So I think you have to look at what we have Lng as well as the history of the thing and still •JbB fun of picking on Philadelphia*

REPRESENTATIVE VROORl Let's go to the subject Of for a moment* You criticised this B.S.S.L. and Rapre- m Oowell mentioned that this was a political fix up »body. Actually, 1979 what we did was go to that srcent arrangement. Sixty percent on property wealth percent on income wealth and that was rather an ey division. There was nothing to base that on. ft the revenue is raised 70-30 or something like that. ire taxed or associated with that division, I would might have some excuse for it. But in the process j to 60-40, then you further accentuate the plight of Ladelphia suburbs because we have so much of that that is derived from the city and it is already being b 4-5/16% in the city. How can we say that we are IPS ilitical by going to this E.S.S.L* which is only an to correct to some extent, only to a small extent,

; you, what the suburban areas in Philadelphia are get- way of subsidy is just bringing us up again to the 154

i

MR. CARROLL* To alleviate that problem, you are also about equity issues and I think that those are

:ors that need to be considered in this proposal that talking about, of getting an equitable formula. X rod exactly where you are coming from and X donvt is solution is E.S.S.L. at all. That's just an honest ice of opinion* X think if you deal with an adequate

for example, an aid ratio, €0-40, may be incorrect* want to look at some other combination of that. But you have to do a more thorough study than what has te in the past.

DR. CERGONEi X think it has to incorporate the reas and the suburbs because we're in it here. Really, you need input from all factors.

MR. CARROLLt This equity question, you represent i deserve to be educated the best that we can do it. lot here to say to you that we want it all in the

We want to educate all of our children in the state* 106 tinly feel a broad responsibility to the students of ate and X think that it can be worked out but X also tat it will take time.

KBPRESBB&&XVB VRQORs Let's go back to the basic for our being here. We are talking today about the nstruotion susbldy and the impact of the recession on baidy program. As X have heard all of the testimony is morning, X cane away with one conclusion basically your big problem, the main problem that we are facing is the economic recession and that, of course, is of ry duration and consequently if we were to look at d then look at our subsidy program and say because we a recession we should tamper with our subsidy formulas subsidy payments and change that to accommodate those lar districts where there happens to be a lot of ry unemployment, don*t you see what we are doing? going to give a distortion to the whole picture of as and wouldn't you rather — this is a question that tting to all of you* Wouldn't you rather see some a temporary financial relief given from the state if to give anything from the state? What X am saying is should be temporary relief, should it not, and should »ona broad scale and not just aimed at school 107

but aimed at all of the other dislocations that from a recession In your particular localities? MR* CARROLL* Speaking from the school point of ist was one of oar two proposals that we do look at tdiate problem and when that problem is relieved that ley be kicked back into some other kind of program i stronger over the long run* So X think from what i said my answer to you would be yes, that is what we cing at*

DR. KOSTs Representative* you know, when you cing urban and suburban schools* you are not talking rent problem* I happen to have been in a suburban tefore X went to urban* In any school district* if ibursement is cut back from what it was last year* going to have a problem* The suburban schools for ; five or six years have had the same problems as the >hools* They haven't been happy with the reimbursemenl;. kver you have done up to now still hasn't been the things they should have done for schools whether k urban* suburban or out in the rural communities* i all in trouble* Some more than others* Xt is true i unemployment is higher in the urban settings* but »lems of the type of students that you have in the 108 atting* you have to provide a little bit of different i. X guess what I aa saying to yon is whether your » whether your finance for the suburban Softools, it's i bad for them right now as it is for us. they have ts and unless you heap the reimbursements, you're o raise those problems. It is going to get worse for oo« They are not going to be financially any stronger

oases than some of the schools in the city, REP8SS3N3ATXVE VBOONi I am glad to hear yea say am certainly in full accord with what you are saying* faced with huge tax burdens in the suburbs and in my lor school district our tax burden comes to over on the average per taxpaying family and that is pretty A the amount of the subsidy whieh we get is a minimal

of 13%. That is awfully low* Ma are dosing schools a we can't even turn to the income tax to give some to our people because we have all of these people who are getting sooted 13%, DR. KOSTt X think that X Indicated to the M that we raised 23-1/2 mills in two years. X think equal to what the suburban schools are probably faced

HBPBBSBHMXVB SXRIAHBI* M»St districts had that 109

REPRESENTATIVE VROONi One final question. Would responsive Instead of tampering with our basic re -** would you be responsive to temporary loans ide to the particular distressed areas from which you r purposes including schools but including everything it is dislocated right now? Wouldn't that be a better live than to fool around with the instruction subsidy?

DR. KTODEi I'm not sure what the impact would either the long or the short run. I think that is ig that needs careful consideration. I wouldn't Lt out of hand nor would X jump on the bandwagon* I Lke to take a long, close look at that. DR. CBRCOHBt That was one alternative. REPRESENTATIVE VROOHt Wouldn't it be more Late to address the whole picture rather than just the schools? DR. CBRCONSs Yes. REPRESENTATIVE VROONi X know you are biased in K>1S, of course. There are other causes* too, that ft very serious. Thank you* That's all that X have, Lrman. CHAIRMAN PiEVSKYt Representative Manmiller, 110

REPRESENTATIVE MANMILLBRt Getting back to the Ate tax. In Dauphin County the assessed value here >f real estate. What would it be in the various t represented here today, can you tell us? DR. CERCONBi we just changed from 30 to 50, REPRESENTATIVE MANMILLER* You just changed from I? DR. CERCONEt Right, in Beaver County,

DR. RNADEI Lycoming County is at 33 and a third rill go to 75% this year. DR. KOSTt I think it's 25%. REPRESENTATIVE MANMHiLEUt Would it he of any the local school districts if the state would adopt TO assessment figure?

DR. KNADSS X am not sure that it would make a isl of difference at the local level. The school » that are assessed at 33 mills and in our ease 33%, ix rate of 72 mills. When it goes to 75% assessed of >n July 1st, we simply drop the millage to 32. So it :hing that has meaning to the local people. As far Ldy is concerned, it doesn't really have an impact the subsidy is based on the market value. MR. CARROI*Li I do think it would make it a heck Ill t easier to explain to taxpayers what is going on* places and people say we are being taxed 125 mills Bk them what is that on and then they tell me. That ibly lower than someone being taxed 80 mills in county. They can't understand that. They think once nat we are playing phony with them because to them a a mill. So Z think it probably won't make a whole lifference except that maybe people will start to md our taxation system a little bit better. They iw«

REPRESENTATIVE MAHMILLERi It appears to me that been painted with one big brush here as the villain of the problems that are confronting the school ;s today. But, is there any possibility that perhaps wo or three or four of these districts may have ihemselves into some of these problems? What X am r about is looking over the years, looking back when & not a question of anything whatsoever. The green is falling off of the trees and I can think of one i in particular that had a self-supporting athletic with the exception of transportation. When I say porting, I am speaking in terms of coaches1 salaries ything else. But because we were self-supporting at 112 ie and because we could do what we were doing, they Epandlng, expanding, expanding and began getting out

And now that athletic program, X would say, is 1% tax funded whereas before it was self-supporting. DR. KNADBt There is every possibility that some ttoblems that some districts have including our own iwn doing, at least in part. But not wholly* He had supporting athletic program, too, until we added lots urograms* But why? Title 9. we equalised the number sports and boy sports. I'm glad that we did it but torts are not self-supporting. So we have an expense > general fund to support them. Sure, there are times incurred probably long term indebtedness because .ty looked like it was going to last forever. Now have that long term indebtedness, prosperity is i the reverse is true. Sure, we have gotten ourselves te difficulties, we are not coming to the state and that you are the villain. It is obvious that the i already putting a lot of money into the school dis- What we are suggesting, and what the testimony has kd, is that there is presently a crisis due to the \ situation in the state and that's meek. Over the il, we are saying that our state subsidy formula needs 113

^examined and restored to it some of the equity ins that were In It at the outset. DR. XELLTt When you put a program in, whether sponsored by the Title 3 program or N.D.B.A. or what- i federal programs and the money flowed into the llstricts, once you put that program in and the money off, the program stayed because the parents wanted it Yes, maybe we need a restructuring of education of back and looking at what we were like in the beginning i we good then and let's take a look at then and then >• He don't tend to do that. We tend to add. We take on all of the programs that were federally* knd as soon as the funds go, the taxpayers of the lalth pick it up. So, yes, maybe we do have programs tat we didn't have in the beginning. DR. XOSTt In response to your athletic question, make something clear, athletics can be self-supporting rant to abolish the educational philosophy that they rfay they exist. X can go out and produce professionally kg football team where the gate receipts will support >rt if that is your philosophy of education. Zt happen to be when you're out there as an activity and not a professional team* As far as the districts are 114 id, this Is a real problem* We didn't add a lot of It's where you set your priorities and X think we .ng that the state has a priority and a requirement latlon. It would be the sane if a school board to spend 50% support of an athletio program and i for the academic. X think you have to take a look That is what X am saying. MR. CARROLL* x think. Representative Kanmlller, I agree that the state should continue to put whatever it can on the school districts for prudent manage- o : think you have that obligation because you are way other peoples' money. You need to hold us > accountable for that. We will respond to it but if tot in business we are not going to be able to respond. iow there has to be a mix and help from you in order us get the long look on what we need to be as as we possibly can* You also have to remember that ooally controlled and there are times when perhaps is are made that may not make sense but they are is made by the majority of the people elected to make iclsions. So it will never be even. But we would what you are saying in terms of prudent management lave out and we will continue to cut. Next year, if 115 d give us $200 million more la subsidies and we i that amount of money, you would still find cuts i In our school districts because we still are not

• be In balance.

REPRESENTATIVE MAHMILLERt I have another question

L to wllllansport* X see that you closed one middle

When was that building erected?

DR. KKADEt 1926. That Is also the building renovated and turned Into an elementary school that us to close four older buildings.

REPRESENTATIVE MANMILLERt And then I see here i are now charging registration fees for summer

Z can think back 30 years ago when they were charging in for summer school.

DR. KNADEi There is some question about whether re can actually charge tuition for summer school. be registration fee has not covered the total cost i afraid that if we try to do that we could get into fficulty with the Department of Education*

REPRESENTATIVE MAHHILLERt No, no. What I am though is, here you have a school district that is in

County that has been charging a fee for many, many id athletes contribute to their traveling expense. 116 . — you determine that?

DR. KNADEi We simply do not give an allocation

Is for away trips. We provide the transportation but team has a meal on the way back from a game or a

the way to a game, they have to pay for that them-

Formerly, the athletic budget paid for it.

REPRESENTATIVE MANMILLBRi Thank you. Max.

CHAIRMAN PIEVSKY: Representative Harper.

REPRESENTATIVE HARPERs Thank you, Mr. Chairman.

like to just support Dr. Kelly in his comments here are no frills in education. X have fought that

years with some members Qf the Bouse of Represents- ho call the arts frills. I believe in a rounded educa-

need the academic schools and we need the commercial.

a rounded education and I just resent the word frills aduoation. Also, I think that the state and the lucators as you gentlemen are, should have a summit and come up with a formula to support the schools illy need our support, especially during this great, a depression. Thank you.

CHAIRMAN PIEVSKYi Representative Battleto.

REPRESENTATIVE BATTZSTOi Representative Harper isked my question verbatim. First of all, let's assume 117 adhere to the principle of hold harmless. What you

.ng is that we need for certain school districts of

we need some kind of emergency funding. For some

,B it might take three years or four years and some fo years. I'm not sure. I'm not sure how many of the

.d need that kind of funding. I come from the east i trying to be very open minded. The district that X m doesn't need this. Thank God. Bowever, some do

some need it bad. The important thing, X think per just struck it, is that we make sure that those really needy get it. There is no magical formula luld like to separate it from its present subsidy* iple, certain things have an amount of money raised age. Certain things like the amount of money avail**

• pupil, x know certain districts have a great deal

' available per pupil. I've spent 25 years in eduoa-

: have just come out of it. I don't have a magical and you said, Mr. Carroll, that you can't work it out it you are willing to sit down. Do you have some criteria, any of you, concerning how to make sure we cato some emergency funding to those of the 501

Astricts that truly need it?

DR. KNADEJ Representative Battisto, in my testi-

- i - • «.. • — -.——— —» • ...••••• . . . i .. —..— ..-•., i. 118

page 9 and 10, x indicated possible indicators of si burdens and financial needs that relate to this Lar fiscal crisis that we are going through right now districts. X think it would be possible with the ice of computer technology to get some data for all Sistrlets in the state and aake some runs which data that show sons trends of where there are peaks » and where there night be critical indicators of C think that is possible to do. X am just suggesting isible indicators. There might be others that the of this committee or the staff might have. DR. CSRCORBs We have had lagreement on the two i mentioned, per pepil cost and the amount of money Le. That would be two facts with the unemployment

KBPHB8BHTATIVB BATTISTOt Thank you, Mr. Chairman. CBBVX8MAN PXBVSXTt Representative Mass* RBPRBSEHTATXVB wASSs Thank you, Mr. Chairman. tg of a member of the Appropriations Committee but a »f the education committee, X am really pleased to be to ask some questions. First, X would like to con- :e you and the panel. X think this has been a very, formative, a good open discussion about a problem. X 119 specifically ask Dr. Kelly a question though that is for me and my taxpayers to understand and that is tell me in your presentation that you have reduced ollment from 15,000 to 8,900. Can you tell me in terms how I oan answer my constituency when they are we hairing such an additional cost in education enrollment is going down and we anticipate that it tinue to go down? That is so hard for them to nd.

DR« KBLLYt I can give you one, I hope, succinct nd that is the City of Rarrisburg furloughed 93 lastyear on the basis of declining enrollment, we we made our ease. The mediator disagreed and said did it on financial reasons and financial reasons tate of Pennsylvania is not a valid reason. He e declared that 50 of those teachers would return. ave 25 of those full time that were not in the hat we are trying to make up for. That will be in r's budget that we never anticipated would be in r's budget. So the cost of education in the cities er and greater and greater and we also have alterna- grams because we have students who need alternative \ and I would be the last person on this earth who 120 ty that every child should not have a good education. you would most likely agree with me. It is a very re education but I think the alternative is worse.

REPRESENTATIVE WASSs Forgive me, sir, but in i terms, try it again. What would you say to a lenoy when they say, Mr. Wass, why are we asking for ley in the educational area when we have such a and forgive me for this, such a decline in enroll-

DR. KELLYx Energy costs, transportation costs, rvice costs, teachers* salary increases over the tf time, additional programs that we have assumed federal government has dropped the program itself. finding it difficult to have lower teacher class ratio because of the large number of poor children t coming into the schools and the large number of its that migrate into the cities. Those, I think, are mowers as far as I am concerned. I'm not sure that i talking to someone with a olosed mind whether that i an answer to them. If they had an open mind, I tey would see some valid instances and others might ley might say, as we heard before, go back to basics.

• left basics. We are still teaching reading and we 121

.1 teaching math and we are still teaching science ire still teaching social studies. The basic jon that schools across this country have given up is and have gone all to frills is hogwash. It never it never will be.

REPRESENTATIVE WASSx z appreciate your positive t about education and X want to stay with that also

I really do believe that an educated society is the pensive in the long run. Forgive me for this. I am wing a hard time understanding how you can go from x> 8,900 and your cost is increasing so. Evidently, my problem and not yours.

DR. KELLYi We are talking about an 11-year cycle.

REPRESENTATIVE WASSt Thank you. That's all the is that I have, Mr. Chairman.

CHAIRMAN PIEVSKYt Gentlemen, I would thank you

: testimony today. Zf there were any individuals that optical about the kind of job that you people have jxg under such adverse conditions, they should not be

.Btening to what was said today. I do not see any- t the Governor's budget proposal and you have rein- ty feeling that it addresses neither the potential jsmediacy of the problems that you have outlined for 122

% While the Department of Education, apparently, head buried in the sand on this issue, please be that I do not. It is overwhelmingly apparent to me lething must be done to help these school districts i in this dilemma and it is my intent to have this te delve into ways that will help the school districts i faced with this adverse condition. Thank you very r coming here today.

(The hearing terminated at It00 for lunch.)

(Hearing resumed at It50 p.m.)

CHAIRMAN PIBVSKYt The hour of recess having

> we would like to call the Bouse Appropriations

»e Budget Bearing back to order on the Basic Education and the impact of the economic recession. At this would like to call Mr. John Augenblick. John Augen-

Ae Director of the Education Finance Center of the m Commission of the States. John has a B.S. from and M.A. from Columbia and a doctorate from the

Ity of Rochester. Before joining the Education

Ion of the States* he was a teacher in Connecticut and rith the New Jersey Commission on Financing Post y Education, fie is the author of numerous articles, ind reviews. Mr. Augenblick, you may proceed. 123

MR. AOGEHBIiICKt Thank you. It is a pleasure to

• today. X coma from the Education Commission of the

X want to make sure that you understand that. The on Commission of the States is a group of 48 states

members of a consortium which is designed to make think about education problems* You are one of its

and we are pleased that we can help you today. The on Finance Center which X direct at s.C.S. is a unit s looked at school finance in a number of states the country in the past six or seven years. What we ry to keep up with what is going on around the country, s trends are, what states are doing. We don't claim

perfect knowledge about every state. We try to have f knowledge about all of the states. Over time* we

lot of time in specific states working with them on s issues.

This afternoon, we are going to have a little at approach then, X think, than what you probably his morning in that X am going to be focusing on some basic conceptual issues of school finance equity. vant to do is focus on three kinds of questions. >

I all, what do we mean by equity in school finance?

>f all, how do different states approach equity? 124 ow does Pennsylvania look in comparison with other

So, let me begin with the question, what do we equity? As you probably know, over the past 15 years iany states, more than half of the states* have d to improve the equity of their school finance

In part, the efforts were stimulated by the courts gan in 1969 to say that some of the systems were tutional and had to be changed. Our estimate is that ts were significant in getting people starting to out the issue *but# in fact, many, many states dealt i issue without having to be stimulated by the courts

•

If you look at the history of who has done what changes, many, many more states have actually changed own initiative than have changed because they were to by the court. The problem that we identify as at the court's decisions and the activity of the past , is that the courts have never really identified y what they meant by equity. They have declared to be unconstitutional, but different courts in t states have responded differently to the systems afore them. Some claim that one system looks uncon-

• - i r -••• i 125

>nal and the very same system in another state may bo be constitutional. 8ome have indicated what Is not but have not often been very clear about what La. That leaves people in kind of a difficult i to understand what it is that they are trying to Lsh when they say that they want to have an equitable finance system. States have different values, have different il cultures, different values* different economies Lr education systems have developed differently.

of all of that* the states that we have worked with states that we know of have different definitions roaches to school finance equity, in fact, X would be to say that there are no two states in the country 9k at equity in precisely the same way. There are variations among the states in the way that they h it and what they mean by equity. In fact, the to not in any case define equity explicitly. It is re that a state will sit down in a group such as r in any other kind of forum and actually try to out what they specifically mean. But yet their

indicate that they have some kind of underlying rk that they think about when they try to make a

r - — — - - — . — 126 i about equity. Essentially, our view is that the policy makers answer to three questions. They are fairly simple is to answer if they want to come up with a definition >1 finance equity. The first question is, for whom iquity be provided? The second question is, what ihould be distributed equitably? The third question : principle of equity should guide that distribution? san deal with those three questions, then generally well on your way to being able to deal with the >f your school finance system*

What we have also found is that because policy ihange and because the education system changes and of the fiscal condition of both the state and the ihool districts change, definitions of equity can wer time. Our experience is that no state has a Lefinltion or simple approach which isn't subject to four to five years after there is some agreement about

Let's go to the first question then, for whom ichool finance equity be provided? Now, there are at tree prominent answers and probably lots of others to of the Stat®* consider* The prominent ones aret 127

taxpayers and teacher a. Those are the three that tally see being discussed. Most people toons on leeause, obviously, they are the consumers of educa- I because the state benefits from their participation

> from their becoming taxpayers and so on. In the much of the school finance around the country was »d by attention being paid to taxpayers and an awful their form that took place* Many of the changes were t explicitly trying to improve the equity of tax

for taxpayers, xn part* because everyone recognised > property tax was a particularly unpopular and some regressive tax system. Xn a number of other states, particularly those i teacher salaries drive the amount of money that's the state to the school districts, there's a real about the equity of the salaries paid to the teacheri • i question is given those different groups that yon loose, and you might choose all of them, what object, jiga, do you want to assure are distributed equitably te school districts. Of course, this depends in part rroup that you choose.

let's take the group *or * moment and assume that ipils. Take that group and there are three objects 128 ites tend to choose whan they are going to provide The first and most popular one is money. The second resources that money purchases. By resources, I mean if supplies and so on* The third is the education tent that resources are designed to produce. Those .fferent things are generally the things that states i if they are thinking about pupils as their group th they want to provide equity. Most of the states :h the money issue because money is the thing that is to control and interferes the least with what is i in local school districts'. It's a thing that x>rs deal with and it is the easiest thing to write formula to deal with all of your school districts* iw states, and maybe many states, are concerned about •ureas. There are an awful lot of states whose school systems are driven by numbers of teachers, pupil- ratios. salaries paid to the teachers and so on. ihose states, the resources* not just the money, or it money buys* is of great concern* There are very tes* but there are a couple, that would like to see nation of funds based primarily on the principle lievement can be equalized* outcome can be equalised die districts* When you think of that one. in order 129 ire that pupils on average in every district would at approximately the sane level, that would require ition of resources far different from any that most ok at whan we look at the states* X think lly it would be difficult. Nonetheless, it is a ,t a number of states have explicitly stated* New s a one that has tried to look at that goal and X uld like to be able to assure that their resources ributed in such a way that the ultimate use of the is that pupil achievement be more equal across the ilstricts*

Obviously, if taxpayers or teachers are the group h equity is to be provided, then something other than nds of resources are the things that will have to be >th* Normally, when you are dealing with taxpayers, i are talking about tax burdens, how many dollars per . dollars of personal income or something like that ng those equal or making tax rates, making sure that >erty tax rates across all districts are equal* Xf dealing with teachers, then clearly salaries are the thing that you are looking at, or the total compensa- kage, salaries plus the fringe benefits* There are n all of these cases that look at these various 130 is the objects that they would lite to provide equity

The next question is, what equity principles >e applied? There are really three basic ones* In u>ry of school finance, we have kind of bounced around is three. The simplest one is equal treatment of all The second one, and a'slight variation to that, is i should treat those with similar conditions in the t but be allowed to treat those with different ms in different ways* The third is the principle of iportunlty. How, the history of school finance is illy we have moved from the first equal treatment of » equal opportunity and then back into the similar it of those in similar circumstances. There has been a historical development. But, again, states have lifferent approaches in terms of both groups, the and these principles.

Equal treatment of all, implies, for example, if ire the group that you want to provide equity to and i the object that you are focusing on, then every i the state should have the same funding backing him tp regardless of what school district that pupil is in. 131

If taxpayers are the group that you are focusing i you want the same tax burdens to face all citizens r community in the state. If teachers are the group i are focusing on, then you would require that all i have the sane salary across the state.

Now, many people have thought about these things ictively feel that that would be an absurd situation r but if you think about the California situation > Serrano case was passed, what it was calling for illy was that the funding backing up every pupil be .y the same across the state or very nearly precisely

Now, if you choose the second principle, which similar treatment for those in similar circumstances* i allow the state to vary the funding for different particularly those with different needs and those i high cost education needs and, of course, many today are geared to try and recognise those kinds of tees and to try and get more money to those children facing high cost special programs. Equal opportunity really implies that the dis- >n of an object not be related to some illegitimate tristio such as the wealth of a school district or the 132 i child or race, any kind of Illegitimate eharaoter- ? pupils, school districts or teachers. For example, mie one is that the spending of school districts m related to the wealth of those school districts. i anantioned here this morning. That is the commonly I principle that came out of the Serrano decision. states, however, equal opportunity is provided by r that every district has the same right to spend she same ability to spend money, but allowing them to i different rate at which they spend the money. So >ple would claim that that also promotes equal oppor- lecause two different districts could have chosen the e rates. The fact that they didn't is their choice.

Now, once policy makers have answered the various w, it's possible to assess the equity of the school system and in the work that wa have done in other to determine what aspect of the system is becoming — Lng the problem, is causing whatever inequity is said l in the system. X felt it was more important that ild know that E.C.S. has undertaken those kinds of and a number of studies that are not easy to do and i't necessarily point to one answer but it is possible se policy makers focus on those questions to begin to 133 r whether or not a system is equitable or not and that level of equity has changed over time or not ; the cause of the change might be. I think that is premise that a committee like yours needs to deal

What I think you need to recognise is that .s not something that you can easily determine. You i*t sit around a table and decide what it is going to involves value judgments, it is not easily quantified, » be discussed and there are going to be differences jon. X think the biggest problem that faces us when with a state is that two or three people in that ting the word equity don't necessarily mean the same ten they use that word. That is a problem that you be on the watch for because when one person on one the room stands up and says* X want school funding to able and another person on the other side of the inds up and says the same thing, they often mean it things. They are focusing on different groups or it objects or they are using different principles. >solutely necessary in our minds to clarify that so : the gentlemen on one side of the room understands is the person on the other side of the room is talk- 134 ut« The final thing that I think is important to a is that equity is not the only object of a school system, A lot of attention has been paid to it and y states have focused an awful lot of time and money o make their system more equitable and that is a ng. The fact is that they have to balance the level :y that they provide against other things that they .ng to accomplish both the adequate funding of the lystem which is of dire importance today and the pro- if appropriate levels of local control* Definitions . control vary from state to state dramatically* X y that X am familiar with what local control means state, but X certainly am familiar with the fact that introl in Wyoming is not the same thing as local in Florida and it is a legitimate objective of the > provide some type of local control consistent with sory. How, the question is* how do different states t the funding of schools in order to promote equity? itate aid systems are very similar in a lot of basic •or instance, we can look at your system and say that ke those of other states in the fundamental structure, r are usually very different. Sometimes in fundamental 135

I oftentimes in very subtle ways, tost states pro- le kind of basic support of the schools that Is m to the widely varying wealth of school districts. i became a given In almost every state. Approaches the Foundation Program, the guaranteed tax base k, percentage equalising, which Is what you have here, : power equalising or some combination of those it approaches are used by the 50 states. These ies differ In how much control over district expend- svels Is exerted by the state and they differ In the >f the sensitivity In such factors as school district is and district wealth, not every system deals with L range of wealth variation among the school dls- Not every system deals with the full range of aire variations and depending on which of these it approaches you choose, the state will have more or itrol over any number of factors. Zn some states, ictors are left to local decisions, tax rate decisions mdlture decisions. It's Important as you set up your to know the Implications of what It Is you are doing. Most states also try to sensitise the allocation » aid Into factors beyond the control of districts.

SB widely among them and It can cause vast cost , , 136 ices. Typical ones, and this does not include every- lat every state doesr but the major ones are, the schools and school districts, that is a known factor foots particularly in very small districts and in very Lstriots, the amount of money that is necessary to » provide a similar education* The second one would Liking enrollment which over the past three, four or irs, has been very large in elementary secondary m. There was a discussion this morning about why can or cannot deal with that problem. Zt is generally ted that if they can deal with the problem, they can't ih it as quickly as it happens* so many, many states i kind of an approach to deal with the declining nit, the fiscal implications of declining enrollment. •d one is price of education variations. Host people states recognise that the cost of the purchasing of tular education service, the northeast corner of the i not the same as the cost of purchasing it in the item corner for any number of reasons. But almost >1 finance systems around the country recognises that* re four that currently dot Florida is one, Alaska is .o is one and Missouri is one* Those four states to deal with the problem that regionally there are 137 variations for purchasing similar education services. & concern in most states is teacher qualifications* L major concern in states where declining enrollments 'ere all around the state because some districts are *g to find that all of the teachers are at the ; paid level in the system and that is making it very ve for them to provide a service* Some states are ve to the fact that one district will have teachers e lower paid than others solely because their cations are different* A major characteristic that ates are sensitive to is the number of pupils in , high cost education programs and finally* there is rn about the concentrations of economic disadvantaged coming into this state and you should pay some atten- that*

In order to deal with both the wealth problem and the special factors* state aid systems are becoming ly complex almost to the point where very few people and every aspect of it and it is a constant cry of tors that the systems need to be more simple and yet sxtent that you make them simple, they probably don't c all of the problems that you typically find* Laxly* if you have 500 or more school districts* 138

The other thing that I think is important to Lse, this is something that is just beginning to he I now> is that state aid systems provide incentives 100I districts to behave in certain ways. When you a system that gives out money to a school district, i giving it incentives to behave in a certain way and kceatlve to behave in a different way. Those incen- ilght be, Include sons of the following s 10 spend more > money. Depending on how much money you give out and i give it out, it* s been shown that you give incentive riots to spend more or less money. Depending on how e money for special education, you may give an inoen-

distrlcts to classify pupils properly or to mis* y them solely because there is a fiscal incentive d. To employ or retain teachers with certain kinds acterlstics or to follow practices designed to the following* The fact is that it is because a y system, you can design a system that will give you late incentives and minimise the disincentives. Now, s no system that I know of that will do everything ly. ft> system is going to be 100% efficient. But it ctant as you look at your own system to ask yourselves, sentives you are providing for peoples1 behavior out 139 i those 500 school districts and to sea whether or ' are behaving in a way that is appropriate to meet Is and objectives. The object, obviously, is to efficient system in which the school district and « are working together to provide the highest of education. The state is a partner with its local ;s in the state aid system. The state must deal «ly with the relative advantages and disadvantages Listricts and with their widely varying needs. That itty tall order for any state to deal with. With the last couple of minutes that Z have, Z Dee to look at Pennsylvania in comparison with other 1 should preface that by saying that it is not » for me today to talk very easily or, obviously, [uity in the Pennsylvania system because one of these don't have good data on is the equity of school systems in different states. In order to go in and ie that, you really have to do far more studies than around here has done. There are some statistics but

Furthermore, it is difficult to look at equity tasis of the statutes only and I should say that my ;ion for today's session was based solely on looking 140

of the statutory language and it is simply insuffi- > look at that language and determine What level of nm are providing* You have to look at the actual ,on of money and the complexity of the allocation :ion between your basic aid program, your special i and all of the little frill programs before you can le whether or not together you are providing equity. difficult. What X thought would be interesting would 10k at the comparison of some of the statistics about tool system to those in some of the surrounding

What I have done is to look at Pennsylvania irison with Delawarer Maryland, Michigan, New Jersey, :, Ohio and west Virginia. X have just very quickly it enrollment, staffing patterns, revenue and expead- rvels and school finance systems. Oust let me give lick rundown of what X have found. First of all, rania, as you know, has about 500 school districts. in line with some of these other comparative states Michigan, New Jersey, Hew York and Ohio have more tware, Maryland and west Virginia have far fewer, far .strlcts. xt is much easier in terms of providing JO deal with a system that has 50 to 100 school die- 141

:han It Is to deal with a system that has three to lorse, 700 to 1,000 school districts. Between 1975 >, Pennsylvania*s population increased slightly, about : between 1977 and 1982, it's pupil enrollment id by nearly 16%. How, as it turns out, Delaware had r decrease in enrollment and West Virginia had a iller decrease in enrollment but the other states that I at had comparable decreases in enrollment. So i% sounds high, relative to neighboring states, it's oarage* Zn 1982, Pennsylvania's pupil-teacher ratio was 1* That is, there are 17»4 pupils in all programs to lachar. This was comparable to the ratio in the other Llthough if you look at Michigan they had far more pu- 1*2 to 1 while new Jersey had only 15.9 to 1. Between I 1982, that ratio declined in all states that we it in part because of declining enrollments*

In 1982, the total current expenditure per pupil itate was $2639 which sounds high. In fact, it was ten that of Ohio and west Virginia by about $300. ma lower in the other states which Z compared it by > to $800. Between 1977 and 1982, per pupil expenditures in 142 ite increased by $3%* That sounds like a lot but it r of an increase than any other of the comparison rhlch generally increased their expenditures in that ir period by from 59 to 95%. So daring the past five »ha rate of increase of expenditures per pupil has rar in this state than it has been in some of the Ling states.

In 1982, the average teacher in Pennsylvania was >#270. This level exceeded the average levels of t, Ohio and Wast Virginia by as much as $2,000* it was lower than the average in the other states by 500 and $3,500. Between 1977 and 1982, the average teacher salary icreased by 43-1/2% in Pennsylvania* Higher than that »ther states with the exception of Delaware and West L to which yon have the situation in which your teacher salaries have generally gone up at a faster in your neighboring states although your spending J. has gone up at a slower rate than any of those mparison states. Our figures suggest that Pennsylvania provided ill of the revenues to public schools in 1982. That : the same level as 1977. Z should preface that by 143 that that includes federal revenues. I'm not just state and local now. I'm talking state, local and • Now, that level, 45%, was slightly higher than the donate support provided by five of the other eompari- tes. So you are slightly above most of the states in gioa. On the other hand, you are lower than the level* • e provided by Delaware at 68%, West Virginia at 63%. hool finance system, the structure of it, is different ways from those of the surrounding states. The has certainly not spent as much time in court as any neighbors. In fact, you may be in the most highly ed area of the country. New Jersey, Maryland, west * have had their systems declared unconstitutional. k and Ohio have been in court where they have been 3 constitutional. Somehow in that period of time L of those states around you going into court, you b gone into court. Your basic aid system is a age equalising system. That is very similar to that 1 in new Jersey and Hew York. Delaware uses what they two-tiered system. That is, it has a foundation that is driven by pupil-teacher ratios and teacher* a and on top of that program, they have a small per-

equalising program that operates like yourB. Marylandr 144

I West Virginia use foundation programs* Maryland »fs programs are based on a per pupil foundation West Virginia's program is based on teacher units. i uses a guaranteed tax base system* All of those it states, because they use those different approaches) ffevent equity concerns that they are raising now*

Pennsylvania, Maryland and Hew York are the only unong the comparison states that use both income and r wealth to assess the relative ability of districts >rt schools. Hew York uses its factor in only part lystem* You are one of about nine states in the that uses that approach* Some of the comparison ise a kind of whirlpool approach to fund programs for in special needs as you do* Your program for special Lons is outside your basic aid programs. But other letually include funding for special education in tc aid structure* Per example, Delaware* Mew Jersey ; Virginia and to some extent, New York use what they > as pupil-weighted approaches which either give an tal weight to pupils in particular programs to reflect Ltional costs or which vary the size of an eligible un unit depending on how the program of students Wte in it* 145

Pennsylvania and Ohio provide additional aid to to with concentrations of low income students* vania and Maryland use a density factor in their id formulas* Finally, Pennsylvania and Maryland

far more funds than the other states do for capital etion/ capital outlays and debt services expenditures. , around the country almost half of the states have rams to fund capital outlay expenditures, so you are ad of many programs, many states, in that regard. X think it is clear that in many ways Pexmsyl-

school finance system is a leader. It has certain of it that are way ahead of other states. On the and, one can question whether or not the results that

getting from that system in terms of total expenditure!, aacher ratios, the differences among the school dis- ure what you expect or what you want. I think you ask yourselves what you are trying to accomplish in stem and then see whether or not the system is doing i think it should be doing, not just in terms of iting money among the different districts but in terms education that it is promoting and the equity that it Ldlng. Thank you. CHAIRMAN PISVSKYs Thank you. 146

At this time, I would like to oall Mr. William Mr, Hughes is the Assistant Executive Director of to has a B.S. from Indiana University of Pennsylvania, from the College of William a Mary. He has been with L since 1971. Prior to that, he was a physios teacher kltoona School System. Mr. Hughes, you may proceed,

MR. HTOHBSi x have with me today Roger Brskine mr Deputy Executive Director in charge of all areas nmeat relations and agency relations. Wilbert Iphonetic) our chief lobbyist. Dave Feltaan (phonetic), .stent Research Director and Chief Economist. Today, taking on behalf of our President, Jacque Angle, more than 130,000 members, we wish to thank the Ations Committee for this opportunity to present our iy on the Basic Instruction Subsidy.

The Basic Instruction Subsidy is the major system i the Commonwealth finances the constitutionally- L thorough and efficient education system. This is t Article III, Section 14 of our Constitution. Since iie expenditures of our schools districts are directly to the instruction of children, the system by which ise educational opportunity to guarantee that every 11 have the same chance, regardless of the wealth of 147 il school district is immensely important not only to era of P8BA bat also to every taxpayer in this talth« We intend to demonstrate that during the past irs, a combination of underfundlng and an inequitable procedure has compromised and virtually destroyed the dements of the Basic Instruction Subsidy, we will 'ate that'xich districts have uniformly become richer r districts poorer in terms of their relative ability de an equitable education. Once we have demonstrated the severe impact of irfunding and the inequitably capped Basic Instruction we will make specific recommendations to improve the system and reduce the severe inequities that .y exist. HB CURRENT BASIC INSTRUCTION SUBSIST SXSVHN The Governor's proposed 1983-84 budget distributee tasio instruction monies under the elements of Act 41 The elements of Act 41 which were designed to equity, relate to expenditures and tax effort as u Act 41, as Act 59 of 1977 before it and as far back as the very first school finance system, 148

established the Oomaonwealth aa an equal partner in funding Basle Instruction. This equal part­ nership was to be achieved through a 50% funding of the total instruction cost on a reimbursement basis. Act 41 of 1979 Included a specific state* nent which set forth that until the 50% equal sharing was achieved, the Legislature intended to increase Basic instruction Subsidies by a minimum of 7% each year* This minimum annual increase has never been achieved. i i. The thorough and efficient level of spending, in order to provide equity, was established as the median expenditure per reimbursable pupil. The estimated 1982-83 median expenditure per reimbur­ sable pupil is $1,841* !• The allowable maximum variance on expenditures per pupil was established as $200 below the median. >• A school district spending $200 or more below the state median, while taxing within 15% of the state median, was reimbursed at a level deter­ mined by their tax efforts. This "bootstrap" provision was intended to equalise spending to 149

within $200 of the median per pupil expenditure level. B. The system was designed to support an average of 509 of a local school district's spending up to the median expenditure in the state. Reimburse­ ment was based on a combination of the individual school district's relative per pupil wealth on market value, per pupil wealth on personal income, and tax effort as measured in mills on market value. F. A school district spending above the median supported those expenditures from local tax effort. Act 41, as with Act 59, did not control or support expenditures above the median. The equity elements contained in Acts 41 and 59 arlayed on a system which had evolved during the >f 1921 through 1975. This system provided a way of j pupils for reimbursement which weighted secondary is costing 3tf« more than elementary pupils. This specified expenditures related to the instruction of i* This system contained a number of add-ons* These were as followss 150 -' « !•' • '» • ••»••••*••• • HI ill — •-•• ••••••-••••— II II I

L* The poverty payment. The poverty payment was established during the middle 60 • s and was based on federal legislation contained in the elementary and secondary education aot. This payment provided additional funds to help educate chil­ dren from poor families. Monies designated as poverty payments were based on a combination of the I960 census count of children from families with income less than $2000 and the count of children from families on welfare.

>• Sparsity payment* The sparsity payment was established to reimburse districts with a popula­ tion of less than 50 per square mile and modified for those with less than 100 per square mile. This state payment was to compensate for factors which produced increased cost in relatively small, rural districts.

!• The density payment* The density payment was established to offset additional costs in highly*- populated urban centers* Districts having more than 10,000 population per square mile received a flat amount per pupil times their aid ratio. Philadelphia and Pittsburgh received money to half

I I I I—••-! II * ' • >• • •-——• - I • • «—• • I I I -^ 1 —I • . i . _ t Mil •- II • I

compensate for both cost differences prevalent within large urban centers and municipal over­ burden, This was designated "super-density" and amounted to 21% of total instructional expendi­ tures.

The add-ons for poverty, sparsity and density i a framework by which the state could reimburse at a thorough and efficient level and still compensate ; factors unique to certain school districts. The n of these add-ons was a political process and at Itially they were based on accepted standards of

1982-83 FORMULA CHA86B in the early morning hours of May 5th, 1982, ast minute budget considerations/ the school finance ihich had evolved over sixty years was abolished* It aced by a new system based only on the number of table pupils and a district'e aid ratio. Act 115 of E enacted without public hearings, without input from mal organisations and we believe, without the necessaty inding of legislators as to its long-term Impact. Since the first payment under the new system will tade until June of 1983, the Impact of eliminating the ^ 152 nefnt for equity In expenditures and tax effort Is ly impossible to evaluate. However, understanding the method by whioh the new Equalised Supplement for Learning, ESSX,, works should allow us to project the The new subsidy system works as follows t L The new system freeses all school districts at their 1981-82 payment level. This accounts for $1,568 billion or 91% of the proposed 1983-84 Instruction Subsidy Payment. I. The hold harmless amount grandfathers for all

time the 1981-82 payment. This payment was based on expenditures Incurred during the 1980-81 school year. It was based on the 1980 market value per pupil, 1980 personal Income per pupil, population per square mile from the 1970 Census, poverty pupils based on the 1960 Census, and the number of children from welfare families In 1980. :. Within the current budget proposal, the BSSL would provide $150 million of the total $1,719 billion available for Instruction subsidy. incredibly, $13 million of the proposed $91 million Increase in the Basic Instruction Subsidy 153

for 1993-84 funds an increase for Philadelphia based on their 1980*81 expenditures, this leaves $78 million in new instruction subsidy for the 1983-84 BSSL increase. The new system is inequitable* In order to md why the new system will cause an even greater » in the spending variance and a reduction in equity, first examine the impact of Act 41 not being funded.

In 1979-80, the state reimbursed 46% of the >78-79 instructional costs* The current proposed — excuse me* The current budget will reimburse 41% 1983-84 proposal 40*9%* Act 41 was capped so that triots received 82 cents of each dollars to which they titled* As Appendix "A" sets forth, there was a sent increase in expenditure variance for the 1976 1982 school years* The blue section of the testimony« r first page, is a summary of Appendix "A". As you looking across, comparing the highest with the lowest, five to the bottom five, the 10th percentile to the reentlle, 20th to 80th, 30th to the 70th, 40th to the every case the variance on expenditures increased percentage and by dollar amounts regardless of the ? looking at the low spending and the high spending 154 fes* Now, befelnd that of Appendix "A" we have the year breakdown designating the top five and bottom itriets and the specific percentile rankings 10th 90th percentile for the comparison. Let's go back sestlmony now.

The range of expenditures per pupil progressively *d from $1,273, 162%, in 1978 to $2,033, 190%, in low, understand, just in that four-year period between iest and the lowest spending it went from $1,273 up to .000 difference in expenditure per pupil. The i in variance of per pupil expenditures demonstrates ilthier, high-spending districts uniformly increased pending much more rapidly than the poor school dis- >f Pennsylvania*

Information in Appendix "BM demonstrates that at i time the spending variance was increasing, the > expenditure per pupil in Pennsylvania plummeted from J> the nation for 1978-79 to seventeenth In the nation .-82.

Tho impact of declining state support of instruc- l the failure to fund Act 41 was not only large is in the spending variance but also large property reases in the poorest districts. Table I sets forth a 155

of all Pennsylvania school districts which had more .00% increase in property taxes during the period from through 1982-83.

Now, if you look at Table I on the left-hand side forth the county and the school district, the r tax collections, the increase, the percentage i and the relative state wealth. Remember, 50% is the Aid Ratio. Above 50% is lower than average wealth. 1% is above average wealth* Not one district that their property taxes during this time, not one, had :han average wealth. They were all the poor school ;s of Pennsylvania.

The percent of state aid set forth in the column :ed "Aid Ratio" in Table I indicates that in every tool districts that had more than 100% increase in ' tax had an aid ration entitling them to more than 501 ipport. Not one school district in Pennsylvania which t than average in market value and personal income tad its property tax Increased by 100% during this

In fact, 30% of the poorest districts in Pennsylvania, .th aid ratios above 70%, were forced to double their ' tax. The variance in spending between the wealthy and 156 itricts was increasing at the same tine the poor bs were substantially increasing their property taxes. sample, yon will note the Harmony school District had Increase in their property tax through 1982-83, yet 3 the lowest expenditure per pupil in the Commonwealth • (Appendix "A1*). The overall state reimbursement of basic instruc- pendltures was 46% paid in 1979-80 and is budgeted at this year's payment, The method to reduce a district's in line with a capped appropriation was a straight age reduction for the 1978-79 through 1981-82 payments. 2-83 payment is a combination of the capped 1981-82 plus the district's portion of the BSSL. The percent reduction was based on the ratio of get appropriation to the amount needed to fully fund torn. This caused all districts to receive 82% entitle- gardless of wealth, tax effort, enrollment or spending. act of this reduction method on the five poorest and e richest counties in Pennsylvania is set forth in X. The impact for all districts in Pennsylvania is sel: n Appendix "C". Now, if you would, look at Table IX. On the left the five poorest counties in the state based on their XS7 of state aid. Juniata, Potter, Pulton, Bedford and ion. In 1979-80, they were receiving an average of

>ut 79% from the state. For this year they will be

\g an average of 66% from the state. That is a of 12.3%. Sow, look at the wealthiest counties in

:et Montgomery, Pike, Chester, Sucks and Delaware*

), they received an average of 24% from the state. ir they will receive 21.7% which is a change of only

Although the average reduction in state support arcentage points* the reduction for the five poorest averaged 12.3 percentage points. The reduction in ipport for the five wealthiest counties during this riod averaged 2.3 percentage points, with one county r receiving an increase in percent of state support.

Appendix "C* sets forth the ranking for all i in the Commonwealth in terms of reduction in percent ipport during the last three-year period. It is clear analysis of this data that the reduction in state had a greater impact on poor counties than on wealthy

To understand how the reduction factor being based raight percentage works to the disadvantage of low- 158

U poor school districts and to the advantage of > high-spending districts, we will compare the highest lowest-spending districts in Pennsylvania. First of all, the lowest-spending district which larmony School District. Xt is a small, rural district >ut SOD or so reimbursable pupils. The Harmony )istriot has market value wealth of $18,794 and per- icome wealth of $16,119 in support of each pupil* L on market value raises $18.79 per pupil and one- l 1% of income tax would raise $16.12 per pupil. The School District spent $1,072.75 per pupil in 1980-81 ibursement in 1981-82. A fully funded Act 41 would wided reimbursement totaling $884,933 or $1,098 per »fore reduction. After the reduction. Harmony i $898 per pupil.

In order to make up the $200 per pupil reduction, lony School District needed to either raise 11 mills it value or the equivalent of 1.2% on local personal In terms of their local assessed value, the total of I loss in state support was equal to 62 mills, or an rease over the 1981-82 70 mill levy.

You know what they did, folks. The Harmony )lstrict went to court and the reason that they went 159

: is that they just had a re-assessment. They went : and they got permission to raise their levy 58 mills tor this year. With this huge increase for 1982-83, idget demonstrates that they have been able to increase mditures per pupil by 5.2% up to $1,128.

Now, let's look at the other extreme, the highest* r district* the Jenkintown School District. This is district. It has 661 reimbursable pupils. It's Little bit smaller than Harmony. The Jenkintown )istrict has a market value of $112,217 and a personal realth of $122,000 per pupil. One mill on market lises $112.22 and one-tenth of 1% of personal income Lisa $122 per pupil. The Jenkintown School District 1,105.81 per reimbursable pupil for reimbursement in A fully-funded subsidy system, 50%, would have 1 reimbursement of $212,158 or $321 per pupil.

Jenkintown should have received 82% of entitle- i other schools, for a total payment of $173,605 or

: pupil. However, the hold harmless provision, teing that no district receives a reduction, provided

I or $280 per pupil for Jenkintown'a 1981-82 reimburse-

How, in order to make up the difference in loss 160

>er pupil, of what they vera entitled to and what reived* Jenklntown either needed to levy .36 mills »t value* or .03% on local personal income tax. In I assessed value, the loss was $27,390 in state would require 1.8 mills of local property tax equal icrease of ,1.3%«

Jenklntown did not raise taxes for 1982-83, but they used normal growth and a surplus to increase bures 9*3% per pupil to $3,394, This Harmony-Jenkintown comparison applies to Ly any comparison of poor and wealthy districts in rania at this time* A district entitled to 80% state r in other words, a very poor district, in order to a thorough and efficient expenditure per pupil within the median receives 82 cents on the dollar or a net state support. On the other hand, a wealthy district only 15% state support to provide this median tore also receives 82 cents on the dollar for a net of be support. The poor district must make up 14% on a aly small tax base while the wealthy district makes a a large local tax base. This system of straight taction and hold harmless is now frosen into place suit of Act 115 of 1982. PSBA believes that it is 161 tly unfair, Inequitable and unconstitutional. Act 115 of 1962. The subsidy system contained L15 of 1982 is truly without merit. All school fcs are held harmless on their 1980-81 expenditures Lth data and all districts receive an increase each bhout regard to tax effort, expenditures or need. rsis of Appendix "D* demonstrates the 22 counties of rania which will receive a larger portion of available under Act 115 of 1982 than they would under Act 41 of > generally wealthier than the 45 counties which will less* The 10 counties having the highest reduction live state support under Act 115 all have aid ratios

The fact that education is a fundamental itioaal right requires that the state provide equal x> education regardless of the wealth of a child's and the local school district, we believe the follow- namendations will move Pennsylvania toward a system rery child will have an equal chance for a thorough Lcient education.

PSEA's recommendation #lt Immediately Inplement at statement of Act 41 of 1979. Table ill sets forth Aum 1983-84 appropriation of $1,918 billion, or $199 162

more than proposed by the administration, If you will, gentleman, and ladies, take a look at Table III. At the beginning of Table XII, forth the intent statement from Act 41. That is a nt which said that until the school system is fully the Legislature Intends to provide an increase, a increase, of 7% per year. The table then sets forth ould have occurred during the last four years. In •462 billion was appropriated. That was the base year 41. For 1980-81, the appropriation should have been ft or 1.565 billion. Instead, it was a 1.494 billion t $71,million of the 7% increase. For next year, it have been a 1.565 billion. An increase of 7% would wided 1.674 billion and by the time the process was b was short $119 million of the 7% increase. Follow* s through, the proposed appropriation for next year wre to be increased by $199 million just to implement oised 7% per year minimum increase of Act 41 of 1979.

Based on expenditures estimated at $4,198 billion 5-83, a Basic Instruction Subsidy appropriation of >iUion for 1983-84 would provide 45.7% state reimburse* Phis 45.7% state reimbursement is virtually the same 16% provided by 1979*80 and demonstrates that Act 41, 163

Inimum 7% increase per year, would have maintained e support level. While we would prefer an immediate 50% funding, the decrease la support of instruction lie current administration has been inequitable and able. FSBA's recommendation #2t Since 46% state would reimburse Act 41 at approximately 90 cents on ar, reduce the subsidy payment by reducing the median ore support level by 10%* If* for example, the median ure per pupil for the 1983*84 payment is $1,841 as id, the fully-supported level would be $1,660 or 90% ledian* By funding at this level, low-spending « will receive full reimbursements, enabling them to i their relative expenditure level. By capping the lupport level instead of the total payment, we will e the severe inequities which have occurred in the Ithy school districts as a result of the current he-board percent entitlement reduction* PSBA's recommendation #3t Immediately eliminate of three and four year old information for payment of x portion of the Basic Instruction subsidy by updating rmation used for Act 41. FSBVs recommendation #4t Increase state taxes X64 antly to fund the recommended $200 million increase 2 to implement the legislative intent of Act 41* a understand the promises were made by an earlier borer we believe the reduction of unfair property id the equalisation in spending which will result increase in broad-based progressive state taxes is

PSBA's recommendation #5i Allocate sufficient > fully Investigate the current school finance system a objective of equalising educational opportunity* in effort and upgrading the technical skills of our u Some of the concerns which should be addressed are

VWSI U What minimum local taxing effort should be required? U Bow can the Commonwealth best provide for the additional costs inherent in educating children in large* urban centers? :. What type of special support* if any* should be provided to children from poor families? >• What legitimate response should the Commonwealth

make to provide an equitable education for children living in small* rural* and mainly poor 165

school districts?

B. What is the allowable variance to compensate for differences in cost factors between urban, suburban and rural school districts? P. What mix of progressive state and local taxes will best support the ongoing equity requirements of our educational system? We have appreciated the opportunity to provide stimony. We look forward to assisting you with your to provide a more equitable funding system for eduoa- aaaylvaaia's children-. Thank you.

(Chairman frlevsky was called away. Representative ti is now Acting Chairman.)

ACTING CHAIRMAN KDKOVXCHs Mr. Hughes, thank you 3h. Would you be able to keep yourself available for is? We have one more speaker and then we are going to istions of all three of the presentations at that

MR. HDGHBSs Certainly, sir. ACTING CHAIRMAN KOXOVICHi Thank you. As soon are able to move, we will have Mr. David long from satlon Law Center. Mr. long has a B.A. and M.A. from rersity of Miami and a Juris Doctor from the Chicago RODRIGUEZ: THE STATE COURTS RESPOND

by David C. Long ong, who has played a role in nearly every school hbiiit in the U.S. during the past decade, examines the f progress and neglect*' thar has followed the Rodriguez e should not be considered an immutable precedent, he says, : time is not yet ripe for a return to the federal courts.

mi- simistic. Across the nation the major SUM systems. And, if they did not always en- the constitutional issue of the decade became dorse the status quo, they allowed it to San whether state courts should strike down continue, unchecked by constitutional re- f v. inequitable statewide school finance sys- straint Many state legislatures, lacking a one terns under provisions of state constitu- constitutional mandate from the state >urt tions pertaining to education and equal courts, let the inequalities among school tess protection. And many state courts — even districts continue, while inflation caused me- those without any previous history of the poor districts to fall even further her grappling with complex constitutional is- behind thar affluent neighbors. Some erv- sues — held school finance s> stems un- legislatures provided property tax relief to me constitutional, because thcv discriminated the voters, called it school finance reform, ina- against children in low-wealth school dis- yet left existing inequalities in educational op- tncts or failed 10 insure thai all children resources untouched. dis- were provided the educational opportuni­ st ties mandated by state constitutions. Fol-

MARCH 1983 481 uonal opportunity mandated b> ihe siate serious doubts about the constitutionality constitution of the West Virginia school finance sys- Allhough the first response b> a state icm court to the retreat of the federal courts Plaintiffs have not succeeded in all from school finance issues tjnie quickly, stale supreme courts, however Since school finance litigation in state courts 1976, plaintiffs have suffered major testes unfolded slowly during the three years in supreme courts in Ohio, Colorado, following Rodriguez During this period Georgia, and New York plaintiffs did well in state trial courts Between 1973 and 1976, trial courts in A Idaho, California, and Connecticut lound Jjft Ithough the outcomes of school school finance systems unconstitutional /"^\ finance caw in stale supreme However, supreme courts in four western JL £&» courts have been mixed, 11 of states followed the lead of the US Su- the 12 courts that have conducted trials { premc Court in Rodriguez and found that dealing with school finance inequities inequalities in state schoolfinance system s since Rodriguez have found statewide resulting from the disparate fiscal capaci- school finance systems discriminatory and ' ties of school districts did not violate state unconstitutional Trial courts have struck constitutions4 down school finance systems in Arkansas, Beginning late in 1976, plaintiffs' for- California, Colorado, Connecticut, Geor- tunes in state courts changed dramatically gia, Idaho, Maryland, New York, Ohio, _ for the better. In general, the cases that Washington, and W est Virginia.* ~~ reached state supreme courts during this It is particularly sinking that the trial er period were tried aficr Rodriguez and judges in these cases have come from ev th profiled from the lessons learned from tremely diverse backgrounds. Some were n earlier losses Factual records were gerter- from large metropolitan centers, such as e- ally more extensive. There were more wit- Los Angeles, Cincinnati, Denver, and Se­ ll- ncsscs and documents, and ihe trials took attic Others presided over courts in small u- longer. Plaintiffs meticulously document- towns in rural Arkansas and Georgia In ed ed how state school finance systems dis- New York, the trial court was in suburban criminate against children as a result of Long island Most of these judges had not a the fiscal capacity ol the school district — previously conducted lengthy trials in- i id a Factor that has nothing to do with edu- voWing constitutional questions; nor did ex canon They also documented the ways in they spring from a single ideological mold to which inequalities in financing resulted or from a single political party. Is in unequal educational facilities, staff. What distinguishes these trial judges is u- course offerings, equipment, and insirut- simply that ihey took the time to undcr- m tional materials stand how school finance systems operate. :h In late 1976 the California Supreme Two conclusions were inescapable: that e Court reaffirmed us 1971 decision in Ser* these systems allocated educational re- a ratio' In declining to follow Rodriguez* sources among school districts on factors li- the California Supreme Court asserted the that have nothing to do with education n- "independent vitality" of the equal pro- and that educational opportunities are the or tection provisions of the California con- result of the happenstance of where a in stitution The court held that wealth- child lives.

related inequalities in educational cxpen- At bottom, 1 believe the trial judges or ditures are unconstitutional under the were convinced that the school finance ol equal protection provisions of the state systems they reviewed were simply irra- ly constitution, unaided b> the Mth Amend- uonal As a matter of law, education in •w ment Although the U S Supreme Court nearly every state is a function of state, v had found that education was not a fun- not local, government In this regard edu- ol damental interest under the U.S Consti- cation is unlike sewer, police, or fire de­ ar tution, the California court held that edu- partments In virtually every state, school lie cation was constitutionally fundamental districts are considered legal agencies of n- in California. This meant that wealth-re- the state, whose function is to assist the •f- lated inequalities were subjected to strict stale in carrying out us constitutional " judicial scrutiny to determine whether obligation to provide a free public educa­ te they were justified by a compelling state lion to JII children Yet, in carrying out >n interest The court rejected the concept of this obligation, the state compels children er local control as a state interest justifying toattend school districts having vastly dif- to discrimination against children in low- fereni levels of resources More than any n- wealth school districts other factor, the irrationality of school n- Following Serrano //, stale supreme finance systems allocating funds fortui- ig courts in Connecticut, Washington, and touslj appears to explain the nearly unan- se Wyoming found their school finance sys- uncus conclusion of those trial judges In terns unconstitutional, and the West Vir- closest to the facts that these systems are id gima Supreme Court, in sending back a discriminatory and constitutionally un- ,i- school IIIMIICC cisc Inr in.il, cxpusscd I citable

MARCH 1983 453 tVMrtm unuHiMHHiioiul have IM»I en- local control as a "cruel illusion" because dorsed these system* as desirable Justice poor districts "cannot freely choose 10 tax Potter Stewart, concurring with the ma- (themselves] into an excellence which jonty m Rodriguez, nevertheless conclud- (their) tax rolls cannot provide. Far from ed that the Texas school finance system being necessary to promote local fiscal was "chaotic and unjust "" Justice Lewis choice, the present financing system ac- I'owcll. who wrole iIK majority opinion tuall} deprives the less wealthy districts of in Rodriguez, also noted that the funding that option."'* of public education ha< relied "too long Serious treatment of the extent to and too heavilv on the local property tax" which the states' interest in "local con- and called for "greater uniformity of op- trol" justifies inequitable school finance portumiy "• systems would require the courts to con- Stale supreme court decisions that sider whether alternative methods of have refused to strike down school fi- funding could eliminate discrimination nance systems have also stopped short of without interfering with local control. In endorsing the inequalities. For example. Rodriguez, Justice Powell could argue the Georgia Supreme Court found that that such nondiscriminatory alternative the conclusion was unassailable that the systems were untried. Since that time, state school finance system provided un- however, reforms in many states have equal educational opportunities to chtl- demonstrated that methods exist for chm- drcn in low-wealth school districts; never- mating discriminatory funding and pre* ^__ thcless, the Georgia constitution afforded serving local control Indeed, information no relief The concurring justice on the on nondiscriminatory alternatives it con- have Colorado Supreme Court, who cast the tained -in the records of most cases in The deciding vote in Lujan, found that the which state supreme courts have asserted de of Colorado system "barely meet[sj const)- "local control" to justify the constitu- tures tutional standards*'* The New York tionality of inequitable school finance sys- ihcsc Court of Appeals, though it denied the terns.

Juca- plaintiffs claim, conceded that the New There is another reason that local con­ front York school finance scheme produces trol is not a sufficient justification for limes "great and disabling and handicapping unequal school financing systems- dis- con- disparities in educational opportunities criminatory school finance systems often across our State." "> affirmatively bar school districts from ex­ ercising local control. For example, poor A districts in Georgia were at the maximum side from the simple unwilling- property tax rate that school boards could ness of certain stale supreme levy, yet they still remained poor In other courts to become involved in states, such as Colorado, state statutes ie is school finance issues, the major reason cap the annual amount by which school J in- offered by these courts for sustaining in- boards can increase their budgets. These his is equitable financing schemes has been the caps lock current spending inequalities in equal preservation of "local control." The issue place. To obtain relief from these caps, imize of local control was disputed in Rodriguez school districts must petition a slate agen- able- as well. Justice Powell relied heavily on cy Furthermore, most states impose inda- this justification to sustain the Texas limits on indebtedness that frequently pre- lon is system, while Justice Byron White, in dis- vent poor districts — but not wealthy ones st in sent, found no rational relationship be- — from providing adequate school faali- ating [ween the Texas system and the state's as- ties Other restraints on local control also sdif- scried inicrcsi in the promotion of local exist For example, in Arkansas nearly :hool control, because the system effectively 80% of all incremental state funds re- equi- denied local control to property-poor dis- caved by a district must be used to in- >nsti- tricts " crease the salaries of existing teachers, that This dispute has continued in state even if the number of pupils in the district pro- courts Local control has been such a con- is increasing and new teachers are needed ourts \ en lent justification for courts because it The local control argument is more an items is an extremely nebulous concept Courts assertion of an abstraction than a rea- to lo- that have chosen to rely on this rationale soned response to the inequalities of other have seldom explained how it justifies school finance systems This very hollow- ourts prevailing inequalities This glaring omis- ness provides reason to hope that this |uah- sion ignores the fact that, in most cases, argument will not have power to justify is of patterns of unequal spending among such discrimination very much longer. y re- school districts stem from unequal tax In the long run, the local control argu- 'gen- bases and not from significantly different mem is likely to lose its appeal even for *ade- tax rates Indeed, poor disincts typically those in charge of local school systems. s tax residents at higher rates but obtain less School boards and educators, even in clud- revenue than their wealthy counterparts many wealthy districts, have grown weary have The California Supreme Court in Serrano of a "local control" that too often is lance /referred to the purported justification of simply a euphemism for a taxpayers' re-

MARCH 1983 483 nd tional have condemned the resiling in- n- stitudon forevermore. The doctrinal un- To the extent that state courts and state derpinnings of Rodriguez may already be legislatures do not deal with these persist- shifting Rodriguez held that education ent inequalities, U S Supreme Court in- *a& not a fundamental federal interest, tcrvcntion becomes more likely However, or consequently, the Court applied the ra- a number of state courts have thorough)* in tional basis test used to review classifies- considered these inequalities and found of nons in which constitutional interests of them unconstitutional Children subjected en no special importance are involved Re- to inequitable school finance systems .n ea- cently, the Supreme Court in P/yler v these state* will not have to wait for a ive Doe struck down the denial of educational more sympathetic High Court to obtain tu- opportunities to illegal aliens.13 One rea- relief

nance Cases Cited in Text . «_ A , , . e. . . tl-allt. k.. ei.*.i * Sm **"•• Independent School Dotnet v tlcally, by State) j»«r>w«. *u u s i uvui I Tin rdiKJium CiHnttmsKHi or ihc Suics (I CN) h hT 0,,,Ja, ,t 68,515 P.2d 590 (1973) ^J1 r ?"* «£ 'J* ***?**? 'ZL? 1 ^ vhnol finance reform Set Tor example Allan Odden - n o—. b.i. ^^^AAIAW ** _ *_ •. u and John AugenMKli School / imtnce Reform m the t DuPne. No 77-408 (Chancery Court of Pulaaki SuKS t„, ^^ ECSi m„ 1 I ull uutiom IO Male ia»c* meiitKHud m ihe tcxi aie Istcd alphabencally in Table I (opposite) «M, 487 P.2d 1241 (1971) (Serrano [), Subsequent 4 Arizona. Idaho Oregon and«a*hin^.jn(\onA 1976) {Serrano II). short School District > Kmnean < In Smumi t ihr California Supreme Court wni mrd of Education, ^____ Col __^ (Supreme '** *« baU io a lower state coun for irul In 1974 he District Court of Denver County (CA No ,h*»"»' coun held ihe California financing svuem un- tunMuuiioiul after a lengthy trul andil was this deu- won ihtt ihe California Supreme Coun affirmed in

mty Superior Court, 1974) ot RIMimuez Rodriguez created uncertain!* beeauv Sernno I had been bated large!) on the (round of ir Court in Polk County, No 8275, decided 7 federal equal protection. which evaporated with Rod­ in part sub nom McDanMv Thomas, 240 Qa. wuez. 6 The onh state coun that did not find an inequit­ able ihool finance wiem uncnmniutmnal afier trul 793,537 P 2d 635 (1975) •* • °n»oa 7 Hndrutuez. «l 59 Education v. Hombeck, Docket 119A, Folio 159, s lbad «M (more City 19 May 1981) * Lnjon v Colorado Stow Board of Education ' (Ju»mc Lmkvm special)} honiumng, Slip Opinion I 473,303 A 2d 273 (1973) * " , , ...... _ -*.,.»,., .. , . n. School Darnel \ f/yquai. Slip Opinion, p 21 (N Y own Union Free School District v Nyqulst, 94 ClHirI „r Aw—1 gfa • «p- . • i County Supreme Court, 1978), aif'd, 443 N Y S ,, aodrmm.- ,, M TO Op Slip (N.Y Court ol Appeals, 23 June 1982) 12 WmM)> lt» iUit ,;« ^ riwhni ^ mt finned in Serromi II M «2¥. 9^) Chool District, Etc v Walter, 58 Ohio St 2d 368, ,3 The unwillingness of ««ers 10 support the public 14 US 1015(1980). in theOhw and Washington {Seattle School Damn » tor of r4 P2d 139 (1976). H4nAnutriM)M.rHwl finance MM^HHighi ihc atJuf the toum let v. Klnnear, 84 Wash. 2d 685, 530 P 2d 178 "The "wxpovm «voh." iw» KNimhat Mowed J 0/ King County. Washington v State of beuiuie of the dc.hne in «rhuon h» -ho rod d 71 (19781 another effect that may uliunaieh; be positive for (lbVOJ school finance equalization tl has reduced the pro- _ AH portion of school revenues that come from local prop- It Court of Kanawha County, 1982); on remand entu«eNj»drormiihc«iAicMiimaeascitH,irsiurcs I West Virginia, Pauley v Kelly, 255 S E. 2d 859 A* HW pn.pnn.on of «»ic fund* increases, oppnf* luniiies to eliminate dMnminator) fundine puiierm >ihi> iiKit is* UstrtctNo /v HerscMer, 606 P2d 310 (1980), » V)UbL» 46MX15 June I9U) in 449 U S. 624 (1980) >» Ib*d at 4635 onmannnnnm—^^man^anm^—m^mnmoan^nm^^ I7 I*KI U«.<* l) 166

>ol. Currently, Mr. Long is a partner in Long and »in* a Washington-based law firm* Prior to that* he Director of the School Finance Project for the Committee for Civil Rights Under Law. Be is coming day from the Education Law Center where he was involved in the New Jersey case in which the court lown the State School Finance Law* Mr* Long, you may

MR. LONGi Mr. Chairman and members of the Bouse atioas Committee, X feel a special responsibility sernoon in large part because of the hour. School is a very vital subject, but a whole day of dlscussioi rhile X can say there are many more interesting things about, although probably few that are as Important children of this state. X also bring to this — ust recovered from the flu* so X am functioning at >%» So X hope you all will bear with me. X appreciate the opportunity to discuss concepts y from the lawsuits which have challenged inequitable inanoe systems across the country. X profess no particular expertise in the Pennsyl- stem, x have reviewed some materials describing its e and X have some thoughts of what appear to be grow* 167

»lens. Bat it is Important to know at the outset ire is no single acceptable way of addressing problems >1 finance systems. Bven in states where the systems in declared unconstitutional, the courts have taken pains to give the legislators additional discretion lise that discretion which is the legislative ;lve. The courts have been sensitive to not encroach- Aat. As John Augenblick has indicated, there are i variety of different ways to address problems. I'm tg to say that there is only one way. There are ways to deal with it. But X will try and identify the problems as X see them.

First, X would like to Outline briefly the .es of equity that underlie the school finance suits -e been brought in various states. At the outset, tay that in general, the cases have dealt with two tt hut closely-related problems in school finance

The first is the problem of unequal fiscal capacities. is called the Fiscal Neutrality Suit. Xt relates to llama of unequal expenditures resulting from unequal rapacity of local school districts. Some school :s have large tax bases and others have small. Bven le addition of state aid, typically wealthy districts 168

•go tax bases tend to spend substantially more per urn poor districts with below average tax bases. i Supreme Courts in California, Connecticut and

these kinds of tax base inequities which result in aires, disparities have been found to violate the otectlon provisions and education provisions like isylvania Thorough Deficient Laws* The second broad type of case argues that the is a direct responsibility to children and it has a Obligation to ensure that children are not dlscrini- rainst in the education expenditures or the education J.ties that they receive. This theory is closely to fiscal neutrality but under this one, it doesn't rhether the reason for the discrimination is lack of capacity or disinterest or inability of local school

M to fund education. In these cases, the Plaintiffs ie state still has the responsibility for ensuring cational opportunities are made available on a aatory — in a non-discriminatory way. Cases in the states of Washington, West Virginia Jersey* I have been involved in the latter two and ild tend to be in this nold. X would like to now discuss some of the underlying 169 ions abont the state's role la financing education Inequities In financing which these cases seek to • X start with the prohibition side because the > to this point have probably been more Important . they have prohibited than what they require. That • are in the mold of discrimination cases saying so you don't discriminate along these lines, you can do i want. Xt is a way of trying to give legislators nun discretion so long as they don't overstep what My the constitutional grounds. The first principle derllnes school finance litigation is that education to constitutional responsibility. This is a legal

This is perhaps obvious since education is explicitly s a constitutional responsibility in virtually every institution. So what do X mean by responsibility? duaatlon is not a local function. School districts te agents for carrying out the state's constitutional ons* Plaintiffs take the position that when school :s levy taxes for education, they are carrying out constitutional function and not a local function. icm in states is sometimes to the contrary* X haven't msylvanla law research, but typically there is both ttienal history and case law often revolving around 170 st between parents who in the early part of the didn't want to send their kids to school in school ts in the state where these kinds of legal documents reloped. In these cases, the state is considered Lble for the allocation of funds raised by local listtlcts in the same way that it is responsible for to that it appropriates directly. So the issue is : what the state provides but the result of the mix i and local funds that is at issue in school finance This is an important point because I found that Kutetlmes view their constitutional obligation in ft as only relating to a much lower level of expendi- torne kind of basic minimum* Well, needless to say i not been what .the school finance cases have been Because what happens when you only focus on the Aimum is that everything above that level is con— a local function and that justifies fantastic dis- :ion due to the different sixes of tax bases. Another underlying equity premise of school litigation is that factors unrelated to education lot govern the funding of the public schools. As X d, the foremost discriminatory factor challenged in

LSOS is unequal local tax bases which all too often 171

Ine how much school districts can spend on their an* This is a factor which has nothing to do with ftte's educational obligation* It has nothing to do lucatloa at all. Local tax wealth is determined by its within the state of people and industry and s in property value. None of the factors, these I* determine — which determine whether a community is r poor in their tax base say anything about the amount mrces needed to educate the children who happen to be districts* X would like to say that school finance on this point and others have had mixed results in Lppellate courts. But a little known fact is that lave been about 12 major trials in school finance* In tose trials,the trial court judges have found school i systems unconstitutional* Some of those have been d on appeal* These judges have been extremely . There have been rural judges in Arkansas and Georgia, udges in Colorado and a small town judge in West a and a suburban judge in New York. I believe that or reason that this very diverse group of judges that der no single political party or single predilection constitutional issues, no known propensity to hold s unconstitutional before these cases. X think the

, . 17Z

—•" •• i * -i •••••• • ••• i^i re hove been able to convince trial judges to hold rams unconstitutional is that they simply cane to that after being Immersed over and over again with licult, complex facts of school finance, I'm trying 111 that down to its essence of what has really I in the systems, is that they came to believe that finance systems were simply irrational because the of funds that the children received had nothing to .1 with education. They dealt with tax bases, they .ated to sise of the tax efforts and sometimes called il overburden. Children were discriminated against children needing high intensity services have to be rated in certain districts for that resource, and of .y-nilly funding without much rational basis.

Mow, in these cases, the sise of the tax base illy been measured by equalised assessed valuation 1 because the property tax is the major tax available >1 districts and the local income taxes are used and te tax base also figure in the local wealth.

Now, let me turn to state aid systems themselves while they are frequently equalising as far as they ' often do not go very far and many states' finance like the Pennsylvania Foundation or percentage 173

Jig system, regardless of how you characterise It, you can characterize it either way, systems that only i up to an average or a median expenditure in the any such systems have been challenged. Because, as I Llcated, the substantial Inequality that results above il of the state equalisation.

Now, particular diseqoalising or irrational ( of state aid systems have also been attacked directly i cases. The two that have most commonly been I are minimum aid provisions and hold harmless pro- Minimum aid provisions are those mechanisms In t that truncate the equalisation formula to give high Listricts money under the formula even though if the were allowed to operate the districts would not for such funds because they don't meet the criteria the formula. The effect of minimum aid provisions is x> the already substantial advantages of wealthier » either by pushing up their expenditures or by r their taxes and sometimes doing both. Another thing ise provisions do is that they reduce the amount of mds available to help close the gap between the low high-spending and the low and high wealth districts.

Hold harmless provisions have also been attacked. 174 m that I tried several years ago In Arkansas, the > of funds was distributed by the state. They were in hold harmless requirements which was lite land 1 been developed from the sea year after year and it ting bigger and bigger. 80 by the time the ease was felon was in the late 70's, the effect of these as was in some very striking oases to give more aid 1 to some rich districts who no longer qualified for y other reason than did some poor districts. In ie prominent district which has a nuclear power plant, • used to be a poor district, was getting a tremendous f aid because of this rather than giving it to s that had tremendous need based on their current titration and their current number of children. It take into account how children change around the Hold harmless provisions when they continue for very ,s one clear Implication on the school finance systems, ttroy them. They offend an important principle of ig education which is that funding should be based rent needs. After all, we have a formula because we to be dynamic, at least we say we do. Hold harmless os run counter to that. They deprive districts whose mts are increasing or whose relative wealth is 17S ling from the aid those districts need to educate shildran and given to districts who need it less.

Mow, the argument sometimes is made that hold is provisions are needed to cushion declining enroll* But, in fact, there are ample mechanisms such as Jig enrollment decline over a few years such as some do that you can take this into account and it gives lodest hold harmless for a year or two. But you do thout gutting the whole formula with the hold harmlesf on*

Another issue addressed in several school finance s the inequalities in funding caused by some eonmnl~ o won't or can't mate the tax effort for education. have argued in several cases that they are disabled king the same tax effort as other districts because of Iready extremely high total tax rates and high cost -educational services. Cities have argued that these cation drains on the local tax base should be taken Bount in the financing formula.

The kinds of factors that I have discussed up to Lnt are those that keep the school finance system from ng in a non-discriminatory way. These are factors auld be eliminated. We have not discussed what affirm* 176

should be the goal of a school finance system. As X td, there has been leas of that but there have been tea that have turned affirmatively to what a school system should be* These cases have been, for example, it Virginia, where the State Supreme Court held that rd and efficient education provision, which is .y identical to the one in Pennsylvania, requires that titles be available for high quality education tut the state* Not simply some basic minimum* but piality education.

NOW* at its broadest, X would describe an affirm-* sandard for what a school finance system should be as r that equal educational opportunities are available >ut the state, now, you can state the obvious* that a highly abstract concept which needs some flushing let do X mean? First* it doesn't require a uniform .urn or a .uniform level of services* Xt doesn't require >Uars per pupil* one dimension of this standard and illuded to by John Juigenbllok is tint similarly situa- Lents not be'deprived of appropriate educational titles because of where they live* For example, chil- » have serious reading problems in two different ;s should both have appropriate reading programs avail- 177

then and not one district be able to provide it and other because of the resources* The same would be & special education, with vocational education* There i that the states, particularly those that have what ligh foundation programs, have sought to ensure that .nds of opportunities are available through the school system without talcing these decisions away from local Listricts*

Now, it's coming back to the issue of basic programs* This is often a defense used by states in finance cases* While the states have had ample ilty to define what it is in these cases, X have never i notion of a basic minimum program defined in any jtory way* It always seems to be defined as whatever le state has available for it and that's it* The rhioh have ruled school finance systems unoonstitutiom 1,

have not seen programs like music, art, physical n, health services and foreign languages as frills* lew is that when they are considered frills, it means that while they may be necessary for my childrei i frills for somebody else's who I would rather not A school finance system should take into account tool districts are not all in the same situation as 178

Indicated* Some like urban districts have concentra- l children who require more intensive services. Some Miter instances of handicapped children, Sone have proportion of students who are or would like to be I in voo-ed. other districts have high transportation When these are not taken into account, they cut into Lc Instruction Subsidy. There may be districts that ited in high labor market cost areas, sow* in attempt" equalise the ability of each district to serve its x as well as another district serves its children* Z iggest that these are factors that the state should r. An attempt should be made to recognise legitimate ices among children and among districts.

Finally* in discussing the principles from school cases* X would like to talk about facilities which I i a much neglected area of school finance. In fact* r of the cases have dealt with facilities and said i state1 s obligation goes to that as well. In my rf school finance, systems and educational opportunitiei »se systems translate into in actual districts* it is iption that school facilities is a serious and id problem in many states. In some districts* it's a of overcrowded facilities* However, probably in more X79

:s with declining enrollment it's a problem of nriate facilities. Facilities that are old and have ar-used and under-maintained because when funds are deferred maintenance sets in. That is the first > go. I don't know what the facilities are like in rania, but my experience in other states when X have ry surprised, frankly, at how bad facilities are. tally not a problem that has surfaced in the same way r problems, is that typically I have found that in .stricts and in low wealth, low-spending rural dis- the facilities are frequently abysmal* We worry Lgh tech competition, we should. X frequently found labs that looked like they should have been sent to Asonian. There are vocational educational facilities i 20 years out of date. There are business programs ren't seen an electric typewriter or a word processor. re special education classes that are meeting in

\ or in closets next to boiler rooms. Maybe Pennsyl- >esn't have any of that* X would hope that it doesn't. raid encourage yra to look closely at the facilities icauee in my experience, much of what does or does ten in schools is because of the availability of .es in spite of the research that says that it doesn't X60

The fact is, if you don't have a lab, you don't glance. If you don't have voo-ed. facilities, you nre voo-ed. So, facilities don't necessarily make It rat Ian convinced that if schools do not have the Late facilities, it's Impossible for then to have it.

How, this has been a brief overview of sone of >r principles involved in school finance litigation* like to turn briefly to the Pennsylvania Subsidy . My comments should be considered very preliminary, re indicated, X reviewed materials and described the .-e. X have not seen a recent analysis. X have seen i Education Association put together and frankly X am by it. X don't know how other than that how the funds interact with local funds nor do X know the

JO which it in fact equalises for local tax wealth. know to what extent districts make high tax efforts ITS don't. X don't know what kind of children attend xicts in Pennsylvania other than the suburban dis- rhere in years past X have worked. X don't know there are lowspending schools, for example, that * rge concentrations of low income, high need children result of low expenditures aren't able to provide illdren. X don't know what the opportunities look X81

&t these dollars translate into and, in fact, they do be into and X think it is important to have sons t what that means in the real world* I don't know ^portion of the cost of special programs or services* nple, special education or transportation, state Leal programs paid for* Do districts have to supple* »se in order to transport* to provide special eduea- rvices. These are all key issues that should be it in terms of the Impact of the system* I want to » answers to some of these questions before X venture re than a preliminary suggestion* But a review of icture can give a glimmer of the problem and X would t comments at that* So with that disclaimer, let me give you a few sions* Pennsylvania at this point may be the nation's school finance hold harmless program* X have already id to some extent the evils of such provisions and X > through them again* X would remind you of the i example where it turned equity on its head and if to continue it is almost foreordained that it will in any etate* The minimum aid provision also to detract from the equalisation of the current aid The proportion of reductions mechanism which the 182 m Association has flashed out and just one of the A just reading a brief description of the system, it highly flawed and perverse to take more money away t districts that are most dependent on state aid and i greatest needs and the lowest expenditures and the tealth, the lowest ability to make up for those losses, more money from them than from the rich district is irverse. There are plenty of other ways of doing it* e not things that need to occur. There is no tech-* ason for any of these problems to exist. A fundamental problem which is of a long-term it really goes beyond some of these, the other Issues, it only equalises at a maximum to the median expendi- 1 pupil in the state* XAdeed, it doesn't even go to ause that is the maximum if you are at the highest i in the state, it would appear. Thus, it appears i effect of the present formula is that the state ts eyes to inequalities* to expenditures that occur ie median expenditure which if Pennsylvania is like tates, that X am familiar with that rely heavily on xes, it results in some fairly dramatic inequalities low-spending and high-spending schools* The actual »ns of that* X don't know the current data but since 183

Le data would indicate that it was done by the

>n Commission of the States is that Pennsylvania on teral gross measures is right up there near the top in

\ levels of inequity. Whether that has gotten worse, i't say. X suspect it has because the more that you local wealth, the more those inequities grow.

X don't want to leave you with the idea that all oughts about the Pennsylvania formula are critical. trvation that X could make from the structure is that formula appears highly attentive to the needs of

.striata and their children. X see this in the and other similar provisions. Because of the undeni- tater needs and higher cost of urban districts, X the focus on these districts should be maintained iss of what changes are made in the formula. Sut even in factors appear to have an element of caprice, good which is the locking-in of the poverty counts of ues and they have a legitimate objective but it seem to make any sense in a system that should be rather than static.

X would just add aa a total outsider to the i of school finance in Pennsylvania that its school formulas to be too much of a political football. Xt 184 shat one of the reasons is the formula by being id with features over tine such as the hold harmless ins and others has so lost sight of the objective i to educate the children of this state that it is ffioult to do anything but play political football i formula where you can't keep in sight that it r has a dramatic impact on what the children get from

:B* Thank you.

CHAIRMAN PIEVSKYI I thank you, sir. Would the

» gentlemen, Mr, Hughes and Mr. Augonblick, return to

.e, please? I might add that one of the gentlemen at

.e has to catch a plane at 4x30. Also, I might want id the members to keep the questions to the issue s the Basic Education Funding and the impact of the i Recession.

Let's start off with Representative Cowell.

REPRESENTATIVE COWELLt Thank you, Mr. Chairman.

L couple of questions here. First, for Mr. Augenblick. id on page 5 a number of points how Pennsylvania com- i one way or another with other Btates in your study.

LS one issue, one variable, that I don't believe you d and that ls Pennsylvania's factor in our formula, i earned for reimbursement. Is that common in formulae 185 t have studied? Do other states have such a provision:

MR. AUGBNBLICKt let me make euro that I under- te part that you are talking about. That sets the

»r reimbursement? That's that median —

REPRESENTATIVE OONBLLt Yea.

MR. ACGENBLICKs Most states have some way of that kind of figure. I have not seen many that have

:em that you do where you go 200 below and then gear ta tax rates. Although, X think Kansas has a system in like that. But almost every state has some way of ihing that level.

REPRESENTATIVE CONSUL* What about that provision is attempt to take into consideration the taxing level

.ocal school district level and effectively reward or ird school districts for their tax efforts?

MR. AUGEHBLICKt That does vary dramatically to states. There are some states where there is no whatsoever with the tax level other than that there limum tax rate geared to the minimal level that you ting about. In other words, you set that level as a if all districts and every district needs to have the sax rate or something like that. There are states

:hat have a second tier on a program which may provide

- • • 186 j state aid if the tax rate is above that level. It toes vary from state to state. X would say about half lave a system though that allows for some recognition rher tax base for which there is more state aid given.

REPRESENTATIVE GOWELLt My second question is for f. Mr. Long, you spoke to the issue of things like variables, density and sparsity. Early in your or relatively early in your remarks# I thought Z

>u comment about some variables in the different

\ around the states that in your own words, "had to do with education." I .thought you were talking lings like poverty-density factors and some of those

Lai tools that legislators use to spread the dollars

But near the end of your remarks, you seemed to somewhat favorably about Pennsylvania's system and will quote you. "It appears to be highly attentive leeds of urban districts •" It seemed there as if you taking favorably about things like poverty-density is. Gould you clarify that for me, please?

MR. LONGi Sure. I was referring to factors that ling to do with education. I was largely referring to

>alth as the preeminent factor. Now, the further you t from something that is representative of higher

- - • — - —* i i 187

He greater problems that you have, I might choose totors than density* tor example. I think in a more I system you would want to say that kids who have a amount of learning problems might get twice the bore or half the pupil-teacher ratio which might come »e exactly the same amount of money that you are But what you have is a proxy. Xt's not a bad jy the way, at least the poverty proxy is one that is septed as the basis for distributing Title X of the iry and Secondary Education Act, It has been accepted f, many years. Density is really surrogate factor Lcipal overburden. There may be some others. But 5 proxies, They are just that. As X say, X would In a more rational system to try and get as close to Is of the children by identifying what children need jtly as X could, X would probably cash in those for other factors but X would say that X laud the >r taking seriously the admitted problems, Xn spite problems that the city has, X don't know that anybody ig that they can get along with the same amount of i a suburban district. They do have different kinds Leas,

REPRESENTATIVE CDWELL t x think our dilemma has X88 i that we recognize through special problems or the leads* if you will. But we have always been frustrated extent in an attempt to link those needs to a .ar solution. So we have come up with these variables* .* states that you have worked with and studied, that :ter fashion are able to link and guarantee that the •liars that go to that urban school district, in fact* te dollars to meet the unique needs of that poverty

MR* LOKQt John, correct me if I make an error on : think Florida has a waiting list for certain kinds ams Including compensatory education which links or t that 85% of those funds be spent in the categories ly are generated for even though they are general aid That ia, they are like the weighting that you have. i nothing conceptually inconsistent with having that reneral aid formula and saying that a district has to : money or a certain percentage of that money for the of which it is obtained. Frankly, X would just, in ! personal values* I would like to see some targeted I think it is a good accountability method and I ; ensures that school districts in fact use funds for toses for which they have them for. X don't see any 189

with that kind of accountability.

RBPKBSBBT&SXVB COWBLLt You also spoke to the } of facility needs. Wo, and X guess lots of states, extra funding to help with the construction or the Lon of buildings. Bat that is outside of our Basic approach. Do other states try to include that issue c Basle Subsidy approach, or do most basically do what

MS. LGHGi BO. Xn fact, when you include it in lie Subsidy approach, it usually becomes inequitable there are differences among districts and the need ULities. Xn ny own view* X think the Maryland approaol nest rational approach in the country where they have f^de capital construction program and they have a needs criteria and they wholly fund the facilities. i talk about waste, it avoids more waste than any other ' sytem there is because you don't overfund. You say, this criteria we are going to deal with our safety first and we are going to deal with the lack of loarn- LLlties in science and the like second and we are going we your plan. X encourage you to take a look at the 1 program if you are seriously interested la that it*s got to be a model. As well as take a look at the 190 sey inventory which is probably the best facilities ry that has been done in the country. Yon put New i inventory together with Maryland's funding program clearly have, z think, the best facility funding tountry. REPRESENTATIVE COWBLLt Finally, you are by Ion one that has been one of the lead people in ring the constitutionality of some of the systems that Lsted in other areas. Do X correctly understand you urpret your remarks to be that at this moment you have Bed an opinion about the constitutionality of renin's current law and the Implementation of that

J6t. LONGi —Ito. Well, X formed an opinion, yes. i forming my opinion in the abstract, X would say i happened recently with the hold harmless is that X lallenge it. But there are a lot of other variables into that including the receptivity of the court to and the impact of the finance system* When X do a finance case, it involves almost the same kind of i that E.C.S. or somebody else does when they look at fcive proposals. In reality, to challenge a suit, you know more about it, even than a legislature has to 191 in they make changes; I'm just saying that X know ot a great deal about the inpaot which is what I i the real issue, what is the impact of that system? me, is the key in deciding whether it is ultimately Ltlonal or acceptable. By that I mean, does it offend dons of equity and adequacy*

REPRESENTATIVE cowELLi Let me direct my last i to Bill Bughes then* Bill, you said definitively remarks that this is unconstitutional* Why hasn't it illenged? Will somebody challenge it?

MR.HUGHES i Well, there are about three questions Number one, the abolishment of the system, Act 41 rurred last May, eliminating all of the equity elements retting spending, it's gone. Forgetting anything i to any kind of tax effort, who cares. Eliminating

sparslty, density, super density, modifying sparsity* tg density* All of these things were put in for As fallible as they were at the time, they were all i and they are all based on compromise* At two o'clock torning to just willy-nilly abolish' that system that with Edmunds in '21 and worked its way up through tr and put in place something that doesn't react to r, to simply a straight percentage or whatever is 192 le for the state without regard to any problems la strict or wealthy districts* The end result of that rly unconstitutional. That is not a thorough and at system. That is not going to give anything relative oing a variance which has already increased uniformly a the wealthier districts of the state much wealthier B of spending and relatively low tax efforts for that gr* We looked at the poor districts in the state and cmined that the bottom 50 poorest districts, if they

tax four and five tines the highest taxing in the stater aid not get up to the spending of the highest spending IB. It's impossible. Harmony raises $26 a mill. It's t>le for them to get there. Now, we were working on 3, the reduction factor was terrible, we needed to that and we've talked about that. Tesr funding at 41% item designed to be supported at 50% is terrible and ible* We're working on it. The response last year, r was to say that it is too bard to work on this thing. icld everybody harmless and give everybody an Increase they have lost 100% of the kids. Do you realize, i could now have a district with no kids? Let's take in (phonetic) • Brenatmen has seven kids and they are paid for 20 poverty pupils. They have seven kids. 193 y are getting money for 20 poverty pupils. They are rmless. They don't have any taxes at all in that t. None. You look there at the bottom, they don't y taxes. They don't even operate. They can send ids on a tuition basis to the best districts in the nd have no taxes and get paid for 20 kids that haven't ere since i960 and that's equity and that is thorough leieat? Incredibly, it was being worked on. it was ad last May. I think it's tremendous that you are

at it. *bu have to know, Ron, that we're looking at have attorneys looking at that. It's a big decision. very costly decision for an organisation to decide to to court, xt costs a lot of money. We have not tecision. But X can tell you that we have had our fB looking at it and we will make a decision in the ur future.

BBPRBSBHTATIVE COMBUs There is one other number i might provide us with. If we would implement the ?estion, X forget where it was numbered there, basically

increase taxes by $200 million and fund that, X think, 16% level, implement that 7% increase factor, if we &t that amount of money into the pot, new money, how stricts for the next school year would have to be dealt 194 a bold harmless fashion or would everybody be In a i of getting something?

MR* LONGi It depends on what yon do with the

>n factor. I wish this were simpler, but it isn't*

Fere to return back to the same level as 1979-80 with

>nt being to implement the intents statement of 7% tnd in one swoop get back to that level —

REPRESENTATIVE COWELLi Let's assume that we r raw formula and kick it in —

MR. LONGt And you also were to go a different reducing the payment* X would say that the hold i districts, X would guess* it's hard to get printouts, guess that the hold harmless districts would be

>, a handful of districts* We have looked — when we funding, if X remember correctly, it was a handful of

:s that were held harmless. It was only as the fund*

>1 declined * the percent of state support, and we o grandfather everybody — we had to hold them harm- h year because of the declining enrollments in districts and they were districts that were in lly-sensitive areas of the Commonwealth and we had to m harmless in order to get any money, even the little

; we got in percent of state support* Returning us 195 ud changing the redaction fraction, we would still me districts that would be entitled to less money. ecause they — west Streams (phonetic) is an example* hange in the assessed market value of the district. a huge change, doubling the market value of the dis- Other districts have had big declines. Allegheny has had huge declines in certain districts in the of students being educated. On the other side of the e have had districts in Beaver County that used to be and now they don't have any income wealth. There is Le working in some of those districts right now. Our tern doesn't react to that, for the money being sent 3er the hold harmless for 80-81 expenditures. Xt i saot at all to what's going on in this Commonwealth. b the old system, it took a while but ultimately, a ?hool district could go out and borrow money on the xt because they can't collect any income tax, people working, or the homes are losing their value, they t will have the state catching up with that in a year md they could get revenue anticipation money and make r, a district can't even do that under the new system. i*t know what would happen, Son. I can tell you it i better and I would guess that there would be a hand- 196

Listricts left that are held harmless and those dis- Leserve — take and calculate the aid ratio for Lower >n a straight aid ratio* It's a minus number* Now, want to insult Lower Marion. They are great people. i fine people. They spend a lot on their kids' eduea- tause they recognise that they are educated and they .ot of money and they recognise that is how they can Lr kids in the same circumstance. But they have a t tax effort and they are guaranteed 15% state

If we throw this all in there. Lower Marion is ' going to end up deserving less money. That1 s what A be. The same with Jenkintown. Jenkintown deserved ley last year and they got more under the hold harmless. In't need the money. They had a big $450*000 surplus iy# little district. 80 they were going to have no ease and increase their spending 9.3% and still have test -spending education. After all, the people living e spending that money because they know what it did u They have the best education in terms of expendi- * pupil & this Commonwealth and they have it without icrease.

RBPHBSBNTATZVB COMEX&t I would be remiss not to that the hold harmless issue is of major concern to

1 • 1 197

L lot of us from Allegheny County. X understand that aula was predicated on 50% funding and we haven't Lshed that. 80 that has exacerbated some of the i. In each of the last several years, there has been portionate number of school districts in Allegheny fho have been in that hold harmless situation. This year, if we would not have held them harmless or gone » BSSXi. In prior years* there appeared to be a dis- Lonate number. Out of a hundred school districts in se, it seems that 25% of them come from Allegheny fhereas we've got 10% of the school districts in the state located in the county. Twenty-five percent of rmless came from the county. It is a major concern. 388 of what additional money we pump into the system, > back to the taxpayers and ask them to come up with 1 two-tenths of a percent to raise $200 million, as X Ls morning, to Dr. Carroll, to go back to these same :s in those districts, for instance, in my district, I Hills, which has b6m involved with the school merges, is had its taxes forcibly increased by a substantial ige over the last year, go back to those same people despite the fact that you have increased your own tespite the fact that yon are going to pay more in stat a 198 i well, you are atUl not going to gat any additional iney, is simply not acceptable and politically it is >le.

MR. LONG: change the redaction formula. Wood- Lis is a relatively poor district. They get the same t across-the-board reduction as the wealthiest dis- Ln the state. Change the reduction method and then Look at it.

REPRESENTATIVE COWBLLi Thank you very much. m, Mr. Chairman.

CHAIRMAN PXKVSXXt Representative Deal.

REPRESENTATIVE DEALS MT* Hughes, though X am jh concerned about the procedure for funding basic >n» I also raised another question with the Secretary ition the other day and that was in regard to that 1 new Chapter 5. X think that although we are con- ibout funding* X for one want to make sure that X it X am funding. Xt appears as though there is a icy against public education and it is coming from rles and x wish that you would share with us your % Chapter 5.

CHAIRMAN PlEVSKYt Mr. Hughes, X wish you would ir remarks brief because Representative Deal is off the 199

Till i I

MR* H00HB8s Actually, Mr. Chairman, X was going roar permission to allow aoger Brskine of oar staff Lsooa daily basis directly with Chapter S issoes Z am not as qualified to answer Mr. Deal's question trskine is.

CHAIRMAN PXEVSKTs if he can do it briefly, x haw Lem. MR. SRKSXNBi Very briefly. Chapter 5 concerns le do think that it is related directly to the under-* of the schools by the state in the years gone by* X 1 is a general move on the part of some in the it least, to try and reduce the connnitaent of the location both in terms of dollars and in terms of :e's responsibility to ensure that nlnimum standards re already been set and that those minimum standards itained and where they aren't penalties extracted from aricts that vary from the set standards. 80 we are td about both issues. X think you are correct that 1 interrelated. You can rest assured, at least from utisatloa1 s standpoint, that we will do all that we see that the current proposal is rejected and we will u> what we would hope to be a strengthening of the 200

La along with the strengthening of the financial intsof the state. So that we do have the quality of >n that we all talk about*

REPRESENTATIVE DEALi Thank you, sir. CHAIRMAN PIEVSKYi Michael Hershock of the staff Ations Committee. MR, HERSHOCKs Mr, Long* can you tell us from terienoe with other states, lawsuits on this issue, or not the question of equity centers around a Basic >n Subsidy formula such as we have in Pennsylvania or it includes that plus categorically the school dis- Xn Pennsylvania, we have categorically for construe- i transportation, for special education, for food \m When a court looks, or when a lawsuit develops .s, does it center around the basic formula or does it all elements of educational aid?

MR, LONG: Typically, it includes all elements of ie of the reasons for that is that — let me just take la here as an example* One of the things that I in California after Serrano was that the wealthy is began to lobby for categorical aid because they it was outside the equalisation requirements and cally funds grew, which X have no problem with

11 • • • i r ••— i • i •-- •••"-• • • ••• *— * ™" 201 leal aid. My problem Is that If they become a sub- for equalising everybody's expenditures to do all £ things. I think that is a basic reason why it is d, There is some fungibllity between general and id. Another issue, and we are dealing with this in Bey, is that frequently you have categorical aid B which appear to be excess costs based but, in fact, te doesn't contribute the total amount of the excess So you really can't in reality at the school district - X believe somebody this morning said money is money re is a lot of truth in that, because at the school t level, when you are spending money on a handicapped r on a reading program, you may not be making fine tions about whether that is categorical aid or whether your own money, You may have to spend what you have 1 whether that program is good or bad, Tor that ultimately it's what the school district provides the-board and the mix of state aid and local funds > to bottom is what is at issue because we want to it is the full range of difference in the educational i, programs, facilities and curriculum offered by it kinds of school districts.

MR. HERSHOCKt So the additional effect of our 202 education formula, our school transportation formula, e gamut to the extent that they flatten or cause more y between the districts would also be part of it? MR. LONG* It's not simply a matter of flattening * bating. If, for example, the formula was a higher on formula, maybe like New Mexico's, where it was - actually, in Hew Mexico X think it*s up to about he total cost of education in the state. There, I i less concerned about inequalities of expenditures as there was a rational education basis for the ces» That is, do those differences reflect differ- i the needs of the children in the districts where spent? X would venture to say that a system like aula's, which is like virtually all of the systems ave dealt with in school finance litigation, is that sparlties with the exception of perhaps the larger hich are above median spending and probably don't an educational judgment about the higher cost of g certain kinds of children. They may make preferences. d maybe a higher tax rate. In a large part, maybe roduct of a much more lavish tax base. Yes, it is ties in expenditures which in a state like Pennsyl- would be very concerned with. I don't want to mis- 203 t into thinking that the issue's some kind of mindless .ar Perstotal (phonetic), it's not. The issue is rational judgments about what is educationally Late-and there is no single answer to that. But the it wo can't agree exactly on what children should isn't mean that we can't came reasonably close. The : is as wide as this roam. Unless you engage in that : and try to get it down to that level of agreement, going to continue to have disparities which are i any educational judgment.

MR. HBRSHOCKs Thank you. CHAIRMAN PIEVSKYt Representative Kukovich. REPRESENTATIVE KUKOVICHi Mr. Long, one legal i which I am trying to understand. You were involved taon vs. Cahill? MR. LONGi Yes. X can't say that X was involved xial though.

REPRESENTATIVE KUKOVICHi Well, the legal — MR. LONGt x was involved in the appeal, we had is on appeal there. X am now representing students in srsey case.

REPRESENTATIVE KUKOVICHi Well, according to i vs. Cahill, they struck down the school finance 204 not based on equal protection but on the educational e. Bow familiar ere you with the Pennsylvania ution?

MR. XiOKGs The Pennsylvania Constitution is ly identical,

REPRESENTATIVE KDXOVZCHi It's very similar to — MR. XOKQt They both require the maintenance of ugh and efficient system of free public schools*

REPRESENTATIVE KUKOVXCHt So in your opinion, nstitutional standard that was upheld and struck down ool finance law in New Jbrsey would have a similar here in Pennsylvania?

MR. U)NGx if adopted by the Pennsylvania courts, d. It is not a federal standard. These oases are Bought to the state courts. REPRESENTATIVE KUKOVXCHt But in light of the as case, that would be the way to go in this state, your opinion? MR. I£NGi That's right* I have recently written ale which Indicates that if states neglect school issues and they got worse, that I think constitutional a way it evolves, will give us another chance at the Court, with this Supreme Court, we are already see* 205 us movement in the Supreme Court's doctrine in the tase which is the GUaagle Dalian case (phonetic) she court said that education really wasn't as insig- it as they indicated in Rodriguea. They said that it fairly important right, at least for that purpose. I te surprised if inequalities continue, let's say for 's, and here X am drawing a very long perspective, X feat they would be subject to challenge again with a nt court. The history of constitutional developments Supreme Court is a whole series of losses. What you do is rub the court's nose in the problems that its decisions created.

REPRESENTATIVE KUKOVICHs So you are saying that t of the increased problems, a Fourteenth Amendment t could be made in the Federal Court? MR, LONGt not made, it could be made. You t have any chance of success, but sometimes in the ay constitutional law tends te tell me that there is a lity for movement if the states ignore these problems.

REPRESENTATIVE KUKOVICHs Thank you. Thank you, Lrman.

CHAIRMAN PXEVSKYt Representative Vroon* REPRESENTATIVE VROONt Mr. Long, you are a member 206

Law firm that was involved in the ftodrigues case? MR. LONGt No. At that point, I was with the Committee for Civil Rights Ofcder Law which had a dealing with school finance litigation and my role in I to write some appellate briefs for amiol in iz and coordinate the efforts of other people*

REPRESENTATIVE VROONt But in your activity as a Ln this kind of work, have you been on the side of the If in most cases?

MR. LONGs Actually, in all but two cases. She IB were, one, in Wisconsin and one in Montana where irney General was defending the system against claims *y districts, that the system was too equalising. irked with the attorney General in those states.

REPRESENTATIVE VROONt BOW, is it safe to say i do come here with some prejudice along that line?

MR. IONGI Yes, sir. X come with a definite te for equalising educational opportunities among t. REPRESENTATIVE VROONt now, on the New Jersey rasn*t the real nub of the question something lite lot the wording of the Constitution which is similar but the degree of dependence for raising school 207 i the local school districts and its property tax rather than the degree of dependence which should be *d between the state and the school?

MR* LONGt No, not at all. As a matter of fact* i nothing in Robinson vs. Cahill which directly says r particular proportion of funds has to be raised by ». The sole object of the How Jersey decision was mtered. The issue was whether children were receiving lucatlonal opportunities and so long as the state that, it wouldn't matter under the Robinson opinion some districts were in fact paying higher taxes than Lstriots. The Robinson decision has virtually nothing Lth taxes.

REPRESENTATIVE VROONs What about Serrano vs. tnd Rodrlgues? Weren't they based on that prerogative? the dependency on local tests? MR. LONG* Yes, they certainly were. Those were fiscal neutrality cases where the inequalities among i were caused by the inequality of the local tax basis ren in Texas. The Bdgewood District was making a much »x effort than a rich district and there was still no ; it could be. REPRESENTATIVE VROONi Would you say that in view 208 fact that our state does contribute 93% of the cost ation, are we in danger of running afoul of that a court?

MR* LONG* I don't see where that has much to do

•

UNKNOWN SPEAKERS i hate to interrupt you but alking about Basic Instructional Subsidies. REPRESENTATIVE VROONt That's all right. Let's k to that because I have a question on that, too* MR. XiONGt I would say that there are two basic In school finance. One is how much state aid you put ise if you don't have state aid* there's no opportunity Lise. The other issue is how you distribute the aid. seen some states which put a fair amount of money into listribute it very poorly. Arkansas puts in a higher ige of aid than Pennsylvania and its equalities are f as great as Pennsylvania's because it has been tied hold harmless for 30 years. It's a terrible system.

REPRESENTATIVE VROONt Mr. Long, you say that of our hold harmless provision, we have no formula j? MR. LONG* You do have a formula for new money, rely you have gutted your formula. 209

REPRESENTATIVE VROONt Would you say that it is

the formula when the old formula is 91% effectivef ft hold harmless payments are minimal in phasing out hie time through inflation would disappear and then heard that a $200,000 contribution this year to the aid eliminate all but about 10 or 15 of those hold at? REPRESENTATIVE LEVZNt That's $200 million. REPRESENTATIVE VROONt Two hundred million r all right* in taxes would practically eliminate the cmless? MR. LOKGt Maybe if I saw some numbers, X could four question* REPRESENTATIVE VROONt But, apparently, you are re of all of these special, extenuating circumstances state and you probably don't realize, too, that this i about as a result of a rather arbitrary change in nala and we had to concede some of these bold harmless in order to offset some of the inequities that were by this rather arbitrary fund.

MR. LONGi Well, hold harmless provisions have K>se which is to preserve the status quo. If in fact Lslature judges the formula as inequitable, it seems wt tha way to do it would ba to change the formula look in tha inequities through hold harmless • I have ten a hold harmless that comes to any good result. terally a way of avoiding dealing with a tough issue. REPRESENTATIVE VROONt Mr. Hughes. First off, ies, we all realise that you are in the employ of I that you don't came here either as an unprejudiced

MR. HOSHESi I do work for PSEA, that's right* REPRESENTATIVE VROONt And as such, your ition does have a very direct involvement in this lestion, correct? MR* HUGHESj we teach the children, right* REPRESENTATIVE VROONi Obviously, if we increased rala to accommodate the 50% Basic Instruction Subsidy > you would benefit tremendously, would you not? MR. HUGHESi Well, X think in terms of ~ it's ling* Mr* Vroon, that during the last few years U salaries and benefits have been increasing relatively Ly throughout the Commonwealth regardless of the fact t very poor districts have not been able to maintain ition* In the terms of where the money comes from, it is local property taxes or if it comes from 211 xlatlons of state and local taxes, oar biggest concern t every child has an equal chance. Now, In providing hication, in teaching the children, we are going to r equitable salary and benefits whether or not that ig to take an increase in local property taxes which m to be progressive or some sort of broad-based islve state tax. ire are going to demand equity for toers regardless. So X think in that sense* we are o demand equity for our members in Jenkintown the iy as we are going to demand it in Altoona or pa and that equity is not necessarily related* What i, however, if you take a district like Harmony and own where they have a third fewer pupils in Jenkintown

Harmony, the Jenkintown budget is over twice the else ony's and teacher salaries in Jenkintown is three he sise of Harmony. The text books in Jenkintown are ice the text books in Harmony • tt> get right down to d of issues that you are talking about, the kids in

or for that matter in a hundred very poor districts, aren't getting the same kind of education. The money being spent, in the sense that PSEA represents s in all parts of this conuonwaalth, we could never Core this group supporting any kind of a system which 212

>t be equitable because if it wasn't equitable* our in Jenklntown and in Lower Marion and Appleton would upset with the staff and leadership that would come tposing an inequitable system.

REPRESENTATIVE VROONt But when it comes right brass tacks, wouldn't you very much prefer to see the ming from the state because wouldn't that expedite rgaining with the local school districts?

MR, HUGHESi Hot at all, X think if you look at iple of California, the California system in 1976-77 "oximately 33 to 35% front the state. It is currently i the state. However, in the interim because of the at the local level, we have had huge increases in tacber ratios and huge increases in class slse and MBvere inequities of some relatively poor districts A Serrano Z and XX revisited. The point is that just the state provides more money as a percent doesn't it we are going to be necessarily providing better in. what happens, however, is that we have a funding tredioated, designed, around a 50% state support. X do this, but when you go back to 1796 when the first ind was created to provide an education and then you 10 1834 when the first money was allocated. That 213 ind had $1 million in it and the state allocated my district that wanted to provide an education. jn't required to provide an education in those days. fou wanted to have an education* as early as 1834, rst $1 million that grew in the trust fund went out riots on the basis of paying half the cost. So when c about 50% state support in Pennsylvania, that is a that has been around for a very, very long time. The so try and make a 30% support system which does in lallse giving every kid an equal chance and equal regardless of the wealth of that local district. That intent of Act 41 up to median. Which really wasn't ition. It just said, let's keep every kid's spending F200 of the median. That wasn't a lot to ask to get 1200 of the median. But it was a first step to get some equalisation. The Impact of the state support ig, however, and the reduction fraction the way it was on the appropriation, exacerbated the circumstance lead of getting more equitable, the system has become ich, much more inequitable. REPRESENTATIVE VROONi if z was a member of a ward and you were looking for an increase which $200,000 and if X knew that Z was going to get that 214

> from the state, X would be a lot more inclined to to you than I would otherwise if 2 had to turn around te it locally.

MR. HUGHES» I think you're right, Mr. Vroon. itriots that are low-spending, poor districts under i of a system to provide equity would get what some light consider a windfall. They would actually get tey back for people than they spent under designs of

In places lite Harmony, West Branch (phonetic) ly Mountain (phonetic) and Albert Gallitan and on and >n would have more money to spend than they had spent 'lous year on their reimbursement. What the intent would be is to have those very low wealth poor * with relatively high property taxes spend that i instruction to equalise expenditures* So on that lor the very poor high taxing districts, you are tly right.

REPRESENTATIVE VROON* Well, isn't it going to just as strongly in an area that is on a minimum, 15%

and they have a large school budget and that means h& cost has to come from local taxation. Don't you tey are going to have a lot more pressure on them to m teacher salaries in every other part of the budget?

• •••-••••——••—• • —.... —. • • •«!• i •——• i •• i — • i • II 215 i not just the poor areas. It, obviously, has to be t areas as wall, don't you agree?

MR* HUGHESi I'm not sure that X follow that. .s true that the rich areas are getting 15% state regardless of their percentage entitlement. Some of ttively wealthy areas do have high taxes. Some of the areas such as Lower Marion have very low, well below, idian taxes because their market value wealth and .s so great in comparison with the rest of the state. there is going to be pressure on all of the school ;s and our argument, our local members, are going to assure on all of the school districts for better t and better benefits for the teachers for the kinds rs to attract the teachers that we need in this talth. There is always going to be that pressure, Mr. I just think the pressure is much greater now and .ties are much greater in the districts that couldn't an equitable education regardless of their local tax tecause they just don't have the local property and realth.

REPRESENTATIVE VROONt Mr. Hughes, on page 13 .te what the intent of the Legislature is and then fron .nt on you go ahead and refer to the promise of the 216 sure. Z intend to mate 91 million this year and X wife doesn't consider that to be a promise because Z do it. i think it is a big leap from the word •JO the word promise and I for one declare very ily that the Intent was good and it is still good and :ill oar objective to do this. Bat the extenuating sanees regarding budget and the raising of funds is nrents us from doing that. Secondly, we come to the i of what constitutes a subsidy? Mr. Augenbliok to us that by comparison with some of our neighbor* :es, that we are among the highest with our subsidy. -caparison with some of our neighboring states, they the categorical subsidy with the Basic Instructional >s and then when you start comparing that with these .go, you will probably nee that Pennsylvania's just te highest of all if you compare our categorical plus Lc with the other states around.

MR. HUGHESt X have that data. We were 15th in the nation using total costs. We are currently 29th > been 29th in total costs, in percent of state total ill costs of education, we have been 29th for the last Murs. If you go back even earlier ™ REPRESENTATIVE VHOONt X only refer to the neigh* 217

states.

MR. HUGHESs Well, again, you said In the whole We are 29th In the whole country on aid support.

REPRESENTATIVE VROQNi X didn't say the whole

MR. HUGHES i The other thing is on your intent ntr Mr. vtoon* it said very clearly for the purpose act it is the intent of the Legislature for the Impropriations shall be increased by a minimum of 7% a prior year's total appropriation, it's true, we at as a promise.

REPRESENTATIVE VROONt Don't you agree that there «f erence between the meaning of the word intent and ?

MR. HUGHES i We. still view it as a promise* REPRESENTATIVE VROONt I think you have to feel t but, obviously* from the point of view of grammar cy other point of this whole thing, the intent was ag then and X wouldn't sit here and pretend to be in 3e of these people who expressed an intent. But X tjat I was one of those that voted on that particular tie very reason that we use those words is that we «ant to be held to that in dollars and cents and X 218

» should be very careful not to constitute that as a I think that iff entirely wrong to tell us that we 1 to do something that we didn't promise, CHAIRMAN PlEVSKYi Representative Vroon, would Id for a moment? Mr. Augenblick has to catch a plane* i any member that would want to direct any questions Uigenbliek before he is excused? Thank you, Mr. Lok for your testimony today.

REPRESENTATIVE VROONt I notice that in your ition, Bir. Hughes, that you were very liberal in your percentage of comparisons and as we all know percentage s f deceptive in making comparisons. It all depends on i are basing your percentages on. This is very impor- -Jh respect to your presentation because some of your iges are based on very low bases and I am referring Lly to your comparisons between the amount of dollars percentage of being with the BSSL, the rich district the poor district. Tou look at those dollars and you LI talking about dollars but the percentages look convincing. I disagree with the way it is presented 1 the whole idea of stating that this BSSL has dis- >ignif icantly the intent of the distribution of the because the amount of dollars and dollar amounts of 219

a received by our rich school districts are still i and believe me I want to emphasis that word because in that kind of a school district and Z don't get nefit out of the subsidies. Now, X will turn around you this question. Isn't it true, Mr. Hughes, that u talk about the rich district vs. poor districts and a little bit of a benefit that we get from the and the little, tiny bit of a benefit that we get e hold harmless, isn't it true on the other hand that two bad features to be considered — CHAIRMAN piEVSKVt Representative Vroon, please microphone because X believe the stenographer is haviig time hearing you* X can see by expressions on some peoples' faces sitting around you that they are having time hearing you. REPRESENTATIVE VROOHi Isn't it true that to that, the rich areas that we are talking about because a rich they contribute an extraordinary share of the ay that supports the subsidy program in the first Secondly, these rich tax areas that you are talking and they are all in suburban Philadelphia, are also bias of this very Inequitable tax arrangement with the Philadelphia whereby we pay 4-5/16% right off the top 220 ark in Philadelphia and henoe we are being penalised arbitrary formula that we passed in 1979, the 60/40 and in addition to that* we get penalised for that ible tax base and then on top of everything else, we that we are contributing a tremendous amount of tax • the state with which to pay formulas all over the Are you going to deny us yet that little hold ham- L the other minimal features?

MR. HUGHESt We have had this discussion before, >n. I think if you go back — I have a copy of the Luring the Constitutional Convention of 1873 and that \ of the debate. The issue was* should wealthy is, should wealthy areas of this Commonwealth send ly to Harrisburg and have it go to the poor? The for the inclusion in the Constitution as the only L service of this Commonwealth, the reason that educa- i included and from the debate which I will give you a was so that the wealthy areas of this Commonwealth ind tax money to the Commonwealth to educate the i from the poor areas. Why? Because in 1872 and as c as 1796, it was a consensus of the people in this talth who were making the laws, the leaders, that >n was something that affected the whole state, the 221 ommonwealth. That it was something that every person s going to live in this Commonwealth would have to they were going to contribute. So as fax back as go in the debate on this issue to the point where we in the Constitution the first time to the first time u put together a trust fund for education that was issue. That is the issue, should wealthy areas of te give their money so that the poor areas of the an provide an education? Up until now, up until now, orlty of the people that voted on the Constitution and state government have said yes.

REPRESENTATIVE VROONi Mr. Hughes, I never had ument with you on the concept. My argument with you

particular case is in the formula that we Instituted and than the correction of the formula to some extent s most recent adaptation of KECL (sic) and with the lea of how far are you going to go in applying this te and z maintain that because of the other unorthodox

that were made, we were compelled to retaliate and oe other supposedly unorthodox changes. That's really at. You and X are in one accord when it comes to the districts paying for the poorer districts. We are plaining about that although it is simply a share the 222 program, nevertheless, we are not complaining. We that. We have for many years. We say, please don't BO us when we are trying to react to an arbitrary which you were very instrumental in getting passed

»

MR. HCGHESl And '76.

REPRESENTATIVE VROONi That's all. CHAIRMAN PlEVSKYt Representative Gallagher. REPRESENTATIVE GALXAGBERt Thank you, Mr. Chair- wry briefly, I just want the gentleman, Mr. Long, to is Commonwealth with the complete understanding of going on. Representative Vroon said that the state *g 53% and we are not. That is something that the r used during his campaign. He was putting everything : in one pile and saying that is what we give to the listricts, 53%. That includes the transportation,

Ltalv the whole gambit but nothing about Basic :ional Subsidies. The law of Pennsylvania says that ill give 50% for Basic Instructional Subsidies and i other act that they spoke of just recently in this (cussion, this is the Act of '79 of 7% every year. : a promise. It says shall. The word shall is in Shall means that you have to do it. Not that you 223

» it or that you plan to do it or that you promise to Shall in the law means that yon will do it. X want ro away with that complete understanding that the ly this morning from MoKaesport, from Freedom Area •istrict, from Lycoming, Williamsport School District, » of the 50% funding that they are not getting it • they are entitled to it and they are in need of it r are getting no more than maybe 39 to 40% of statewide state funding, for Basic Instructional Subsidy. I ited you to understand that what you heard earlier ueous and was political rhetoric of last year's i. The Governor has gotten elected, inaugurated and i and now he admits that there is a $200 and some dollar deficit in the whole Commonwealth and that is > need is in the commonwealth. The money has to come teplace whether we go to Chester County, the rich and ask than — REPRESENTATIVE VROONt Bucks County is richer. REPRESENTATIVE GALLAGHERS Bo, Bucks is not one richest. Chester, Delaware and Montgomery are the >h counties and ask them to help the poor counties ; of the money generated into the Commonwealth treasury sd in the City of Philadelphia from the sales tax and 224 tonal income tax and the same thing in Allegheny All of that la distributed around the whole state -ekes care of the sparsity areas, the poor rural » well as the poor city and urban areas. So, it is a oration of sharing the wealth from even the poor urban lere most of the sales tax, if you look at the sales one, coming into the State Treasury, most of it, lounts of it, comes from the urban areas where most lales are made. Thank you* CHAIRMAN PlEVSKYs Thank you# Representative at. Gentlemen, the Appropriation Committee thanks you r testimony this afternoon.

I hereby certify that the proceedings and evidence - me before the House of Representatives, Committee on .ations, is fully and accurately indicated in my notes ; this is a true and correct transcript of same.

Jexry Heon- Reporter/slg