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Answers to common questions on Philly funding needs

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

Doesn’t Philadelphia get a huge share of state education aid already?

House Majority Leader Mike Turzai made the point when he met with District Superintendent William Hite in August that the city has 12 percent of the state’s school population but receives 18 percent of the state’s basic education subsidy. But Matthew Stanski, Hite’s finance director, says that these numbers alone don’t capture the reality. He gives several reasons. First, Pennsylvania chips in a smaller share of education funding than most other states, so there is less state aid to balance out inequities between districts. But more important, he said, Philadelphia educates more children from low-income backgrounds than any other district. More than 80 percent of Philadelphia students are eligible for free or reduced-price lunch, almost twice the statewide average of 43 percent. Such a high concentration of poverty comes with added costs to a school district.

Shouldn’t some of that money be going to charter schools instead?

Actually, more than 30 percent of the School District’s operating budget, about $750 million, goes to charter schools, which educate about a third of the city’s students. This, however, is not a neat tradeoff. For instance, when charter students come from private schools or from outside the District, the District still has to pay for them, an additional cost. And when students leave the District for charters, the District’s costs are not reduced proportionally: Because students don’t leave in neat bundles, officials can’t just close one school for each charter that is created.

For these reasons, charters have been a financial drain on Philadelphia and other districts with large charter sectors. Until 2011, the state reimbursed districts for part of this cost, but Gov. Corbett’s education cuts eliminated $100 million in charter reimbursements to Philadelphia.

Doesn’t politics play a role in this?

Yes. “It’s easy to beat up on Philadelphia,” says Phil Goldsmith, who served as interim CEO of the School District in 2000 and 2001 and as the city’s managing director from 2003 to 2005. “No one in another legislative district is going to lose their election because they didn’t give money to Philadelphia.”

The city is heavily Democratic in a state where the governorship and both houses of the General Assembly are Republican-controlled. Philadelphia has only one member in the House Republican majority caucus, Rep. John Taylor, and no one in the Senate majority caucus.

Goldsmith speculates that the General Assembly has little incentive to change the state law governing charter schools in a way that would ease the financial burden on school districts because it is considered mostly a “Philadelphia issue.” Philadelphia has half the charters in the state, and few other districts have as large a percentage of the school population in charters.

Does it matter that Philadelphia is both a city and a county?

Absolutely. Counties in Pennsylvania are responsible for court and prison costs. Because Philadelphia is both a city and a county, it must bear the entire burden for supporting these expensive systems without any help from its suburbs. Compare that to Pittsburgh, where the suburbs of Allegheny County share the cost for courts and prisons, freeing up more city-based taxes for education.

Why can’t the School Reform Commission levy taxes?

First of all, it isn’t a school board. It’s a state agency, and states can’t levy local taxes. But the city school board that the SRC replaced in 2001 didn’t have taxing power, either. It was appointed by the mayor rather than elected, and under a 1936 state Supreme Court decision, only elected bodies can levy local taxes. Why has Philadelphia never had an elected school board? That custom goes back so far into the 19th century that no one alive today can be certain.

Whatever the reason, this unique governing situation is a big problem for the schools. In other districts, if expenses outstrip revenues, elected school boards can decide to raise taxes and risk the consequences. But in Philadelphia, the school governing board must go to state and city elected officials and persuade them to risk the consequences.

Doesn’t Philadelphia spend a lot more on education than other districts?

In an absolute sense, it obviously spends more, because it educates 12 percent of the students in a state with 500 mostly tiny school districts. The next largest district, Pittsburgh, is about one-eighth the size, with just over 25,000 students. But on a per pupil basis, Philadelphia’s spending is nowhere near the top statewide. In 2012-13, the $14,361 it spent per pupil was $256 below the average district expenditure. That ranks it 214th of 500 districts, and its rank has been slipping.

In comparison with other big cities around the country outside of the South, Philadelphia’s per-pupil spending is relatively low – about the same as Chicago, but lower than New York City, Detroit, Boston, Baltimore and Milwaukee.

Why does Philadelphia use so many different taxes to pay for schools?

Most districts rely heavily on property taxes to fund schools, but Philadelphia’s property tax base is quite small compared with its population and the number of students in public schools. Plus, much of that tax revenue goes to pay for other city services. So a variety of other taxes are pieced together to help fund the schools.

The District does get 55 percent of property tax revenues, almost $666 million in the current fiscal year. It also will receive $34 million this year from the school income tax (see Glossary, p. 24), $135 million from business use and occupancy taxes, $59 million from a liquor-by-the-drink tax, and additional non-tax revenues from Parking Authority and stadium agreements. And this year it will start receiving revenue from the city’s 1 percent sales tax surcharge and potentially from a $2-a-pack tax on cigarettes. The District gets no funds from the city wage tax.

All told, the Mayor’s Office of Education estimates that the city gets more than 41 percent of its local revenue from sources other than the property tax.

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