Researchers examined what happened last time the state used a formula
Jeff Frantz, Penn GSE Assoc. Director of Communications
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Many education advocates are praising Pennsylvania for joining 47 other states and enacting a basic education funding formula. But new research from the University of Pennsylvania Graduate School of Education suggests that without more guidelines, the formula could ultimately provide property tax relief instead of additional school spending.
A paper published this month in the National Tax Journal examines the impact of Act 61, a law designed to provide adequate funding to all Pennsylvania school districts and reduce spending inequities between districts. Researchers Matthew Steinberg and Rand Quinn, of Penn GSE, Georgia State’s Daniel Kreisman at Georgia State, and Penn GSE doctoral student J. Cameron Anglum found that while 90 percent of school districts received additional aid under Act 61, the spending disparities between rich and poor districts remained largely unchanged.
This research suggests the funding formula signed by Gov. Tom Wolf in June — which does not consider what an adequate level of funding would be for a district — will still leave many schools with less money than they need.
Act 61 was in place from 2008 to 2011. During those years the state’s poorest districts, which tend to have the lowest per-student spending levels and the highest property tax rates, received the largest percentage of Act 61 money. One goal was to close 50 percent of the total statewide adequacy gap through a phased-in allocation of state money.
Act 61 didn’t require districts receiving extra money to increase overall school spending. They could either use money to increase classroom spending or as a way to avoid increasing property taxes. School boards were making this choice during the financial crisis. The highest-taxing, lowest-spending districts, on average, chose to prioritize property tax relief.
“That’s a key lesson of the Act 61 experience,” Steinberg said. “Unless lawmakers require districts to use new money to supplement rather than replace property taxes, many districts whose taxpayers already feel strained will choose property tax relief.”
“How districts spend money matters,” Quinn said. “We should recognize that increases in state aid matter only to the extent that districts spend that money well and that it leads to improved student outcomes.”
Steinberg and Quinn also found:
The 92 districts with high tax rates and adequacy spending shortfalls received the most Act 61 money per pupil, on average $479 per pupil in the 2010-2011 school year. These districts relied more heavily on state funding, receiving an average of 36 percent of their budget from state aid, compared to districts without a shortfall, who received 20 percent of their funding from the state. These 92 districts educate 20 percent of Pennsylvania students and often serve urban and minority populations. Typically, they are lower achieving than higher-spending counterparts. Because these districts have less per-pupil property wealth, their residents face higher property tax burdens.
In contrast to high tax shortfall school districts, those districts with low tax rates and an adequacy gap shortfall — which educate 72 percent of Pennsylvania students — did not lower property taxes relative to districts not receiving the extra aid, the researchers found.