This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.
As president and CEO of the Greater Philadelphia Chamber of Commerce, Rob Wonderling says that improving public education has become one of his group’s “top priorities.”
Where the chamber once focused primarily on things like summer internships and literacy programs, it is increasingly engaged with questions of leadership and finance. Wonderling served on the search committee that brought Superintendent William Hite to town. The chamber advised on the nomination and confirmation of School Reform Commission members Feather Houstoun, Pedro Ramos, Bill Green and Farah Jimenez. It has backed local property and sales tax increases. This summer it advocated on behalf of the proposed cigarette tax.
And now, the chamber has joined a coalition that will advise on a new funding formula. But unlike many, Wonderling is not convinced that the District faces a fundamental problem of underfunding.
Instead, he sees the formula discussions as a chance to rethink service delivery.
“You only get one shot to modernize core functions,” he says.
We asked Wonderling to share his thoughts on the business community’s interest in education, the prospects for funding increases and shale taxes, and the coming debates over what should be spent and how.
Before we talk about the education system as it stands, let’s talk a minute about where the economy’s going. What are the regional growth opportunities that the chamber’s members want to capitalize on?
Everybody talks about the overarching employment drivers – eds and meds, hospitality, and tourism. But the real secret sauce for job creation are nuanced sub-verticals of the regional economy. You need a reasonably educated workforce to serve those verticals – but they don’t all have to be Ph.D.s.
One, we see significant opportunity in health-care technology. Two, the abundance of natural gas is driving the price of electricity down, and that’s created an uptick in the prospects for manufacturing. A third opportunity is financial services. A whole lot of regional banks and financial institutions are growing.
Those are just three places where there’s growth opportunities, not just jobs.
Given that, what’s the cost to the region of instability in such an essential service as education?
Even the phrase you’re using requires a bit of a modern reset. For instabliity, I’d substitute the word uncertainty. Organizations that strive to be excellent in this modern, globalized, tech-fueled age need to embrace uncertainty and become as adaptable as they can, all the time.
You want fiscal stability because there’s a fiduciary obligation.
But when institutions and special interests cling to status quo because they don’t want to adapt, over time, customers, parents, make choices on their own. Why do we have such large charter populations? Parents and guardians began to choose with their feet.
We’ve heard the phrase “creative destruction.” Is what we’re seeing a healthy level of disruption?
I’d be careful of taking terms used in different venues and for different purposes. You just have to wake up and recognize that the basic elements required to deliver a product or service are changing. The people delivering them are changing, expectations are changing, wants and attitudes are changing.
Makes sense in theory, but in practice, we recently saw headlines announcing that Moody’s issued a warning about the District’s bond rating, saying that it wasn’t investing enough in schools to keep customers from seeking alternatives. Is that a warning sign of something structurally wrong with the way we fund schools?
It’s a significant warning sign, but you need to put it in context. People see a downgrade and say, "What happened?" In this case, what happened was 40 years of denial. The cost structure has fundamentally changed. No one adjusted it to complement the decline in population.
Advocates for charter and traditional schools alike have said that the system is flat out underfunded. Does the business community agree? Does this system have enough revenue to deliver a quality product?
That’s a difficult question to answer.
Two years ago, after the significant cuts made by the SRC, and the school closings, and the negotiated give-backs with all but one union, and the downsizing of the central administration, the facts, as we understood them, were that to be fiscally stable the District still needed $300 million.
That’s how we ended up with the property tax and sales tax becoming permanent [with chamber support] and with our advocacy for the cigarette tax. That’s our focus. Anything beyond that, as far as underfunding, we can’t make a judgment.
You’re part of the regional coalition that’s debating what a formula could look like. What needs to be discussed from the outset in order to make that conversation as fruitful as possible?
You need to do a couple things – you need to step back and do a forecast. What are the needs required? What are the changing demographics?
Then you need to think about how you’d modernize the system to make it work better. What would you improve, what would you eliminate? A lot of things become obsolete.
The third is, what’s the desired outcome for someone graduating high school in Pennsylvania? There we’ve been working with McKinsey & Co., who are studying the cost of achievement gaps. We’re trying do our own Pennsylvania analysis by the end of this calendar year.
You’re able to have a better discussion than "What taxes should we raise?" [if you’re also] having a conversation around altering the system.
So you see this as a chance to not just talk about funding, but to rethink the way the District does business?
You only get one shot to modernize core functions. The key to doing what I just described is to do so practically, pragmatically. If you’ve got a real right or left ideological view, you’re not going to get political consensus.
Right now, those with very narrow interests are in full voice because they’ve got to get their bases out for the election. We’d rather get through this election and do some practical work in the spring. … No later than the following year, we’ll have finished this and modernized the funding formula.
One thing we hear constantly from advocates is that funding increases could be supported by a shale tax. Under what conditions could the chamber support taxing shale?
It’s way, way, way too early to comment. It’s easy for advocates to throw a one-liner out and energize the base.
If you do some research, you’ll learn two important facts. One, what’s currently in place is an impact fee from which the city of Philadelphia benefits, along with 57 other counties. The wisdom of the General Assembly would be, Well, if you raise taxes to fund one thing, we’re going to take away the impact fee that funds something else. You’ve got a political conflict from the outset.
Second, a pretty important state Supreme Court decision puts significant uncertainty in the whole statutory scheme of that industry. Until that gets resolved, then I’m not seeing a real substantive conversation moving beyond the impact fee currently in the law today.
Having said that, there’ll be a point of time where there will be political consensus to look at that impact fee, to move to a new structure that funds a lot of uses, not just education.
You’ve said that the chamber supports the District’s request for $100 million in savings from the teachers’ union. Does that mean you think it’s essential for the teachers to take a pay cut?
At a minimum, there has to be a recognition that the way their pension and health-care plan is organized is now out of step with all but one other school district in Pennsylvania, and 10 years out of step with the way the rest of the world is moving.
I’m going from memory, but I think those result in about $35 [million] to $40 million in savings.
That’s well short of $100 million; one way or another you support getting to that number?
Right. But our job is to continue working on the short-term funding issues. We have no standing or influence on labor negotiations.
We know the city has raised taxes to support schools. Is it inevitable that the state must do the same? Can Pennsylvania improve education without boosting state revenue overall?
I think you get to that question by modernizing the funding formula. You can’t just say, Let’s raise taxes for schools. You can’t just look at new revenue – you have to weigh, What’s the use [i.e. how is the money spent]?
And don’t forget, Pennsylvania is a very slow-growth state. You’re going to have counties and districts that are losing population – unlike Philadelphia.
So whether its Democrats or Republicans, if legislators go to their constituents and say, We’re going to raise taxes [to support a formula], and they say, What’s changing for us? and the answer is, Nothing, well, that’s not going to work.