Where’s the Money?

Governor Corbett seems to be having trouble finding the money to pay for our children’s education. So we’ve put together this helpful list of potential state revenue sources to help him out. Because there is money that could help us restore the devastating budget cuts to our schools (now totaling $2.3 billion), but it’s just not going to our kids.

Possible State Revenue Sources

• Close tax loopholes: the Delaware loophole costs our state $500 million in missed tax revenue every year and more than 20 other states have already closed it. The “89-11” real estate transfer scheme cost Pittsburgh schools alone millions of dollars before it was tightened last year. What other loopholes can be closed right now? [See “Corporate Grinches”]
• Impose a severance tax on Marcellus shale: most states with major mineral resources like ours have a severance tax, not just a mere impact fee. This could yield $334 million per year. [Post-Gazette, 12-27-13]
• Get rid of the new bonus depreciation rule: the Corbett administration adopted this federal tax incentive in 2011 and it quickly cost far more than the $200 million it was anticipated to drain from the public and now could cost up to $700 million. [See “We Have a Priority Problem”; PBPC, “Revenue Tracker” report, 3-9-12]
• Keep the capital stock and franchise tax: Gov. Corbett wants to eliminate these by next year as a gift to corporations. But if lawmakers freeze the tax at 2012 levels, the state could raise around $390 million. [PBPC, “Budget Analysis,” 5-29-13]
• Eliminate sales tax exemptions for millionaires: helicopters and gold bullion top the list of hard-to-swallow exemptions. [PBPC, “Kids or Tax Breaks,” 3-19-13]
• Tax cigars, chewing tobacco, and loose tobacco: unlike other states, Pennsylvania does not tax these products. Doing so could generate $56 million per year. [Post-Gazette, 12-27-13]
• Cap discount to businesses that remit state sales tax: a Post-Gazette analysis suggests that “big stores like Wal-mart, Target and other would be most affected” and would save the state $44 million. [Post-Gazette, 12-27-13]
• Rescind the new Voter ID bill: it solves no actual problem in the state, has been declared unconstitutional by a Pennsylvania judge, will be expensive to legally defend, and will cost taxpayers an estimated $11 million to implement. [PBPC report, 5-10-11]
• Fix the cyber-charter funding formula: Taxpayers and school districts could be saving $365 million per year – that’s $1million per day – if cyber charter schools received funding based on what they actually spent per student. [PA Auditor General, “Charter School Funding Special Report,” 6-20-12]
• Shut down the EITC programs: they cost us $150 million per year by funneling corporate tax money that should have gone to the state for our budget needs into the hands of private schools instead, with zero accountability to the public. [See “EITC No Credit to PA”; Keystone Research Center, “No Accountability,” 4-7-11]
• Reduce high-stakes-testing: The new School Performance Profile system, largely based on student test scores, cost us taxpayers $2.7 million to develop over the past three years and it will cost an estimated $838,000 every year to maintain. [Post-Gazette, 10-5-13] This does not include the five-year, $201.1 million contract Pennsylvania made with Data Recognition Corporation to administer high-stakes-tests to our students. [PennLive.com, 12-1-11]
• Stop the charter-school “double dip”: due to an administrative loophole in the law, all charter schools are paid twice for the same pension costs – once by local school districts and again by the state: by 2016 this double dipping will cost taxpayers $510 million. [Reform PA Charter Schools]
• Stop handing money to international giants. The new sweetheart deal with international giant Dutch Royal Shell will cost taxpayers $1.675 billion. That’s billion with a “b.” [Post-Gazette, 6-4-12]
• Make choices to fund schools, not prisons. While the state has slashed funding for public schools in 2011 and 2012, it has not done so for prisons, and has actually increased the 2013 Department of Corrections budget by $75.2 million ($63 million of which is for correctional institutions). [PBPC, “Final Budget Analysis,” 7-9-13]

There you go. I think we just found hundreds of millions, if not billions, of dollars to adequately, equitably, and sustainably pay for public education. You’re welcome.

Two Steps Forward, One Back

This is how you make progress. One step at a time. Last week, we saw two steps forward, and one giant step back for public education. The good news first:

On Thursday, Governor Corbett signed a much-needed new law that will help to fix the state’s special education funding formula. Sponsored by Republicans Rep. Bernie O’Neill and Sen. Pat Browne with strong bi-partisan support in both the House and Senate, House Bill 2 creates a new commission that will develop a formula taking into account actual numbers of special education students and their needs. Rhonda Brownstein, Executive Director of the Education Law Center, called the legislation “historic.” [Education Law Center, 4-26-13]

The Education Policy and Leadership Center explains, “The current formula assumes that the average daily enrollment of each district includes 16% of students with special needs.  A new formula will aim to reflect actual costs incurred by districts and distribute the money accordingly.” The new commission will also make sure that school districts don’t over-identify the number of eligible students, and will take into account geographic variations in costs. The commission must make its report by September, and any formula they develop will not go into effect unless the General Assembly acts on it – and even then, the formula will only apply to the distribution of any increased funding. [EPLC, 4-26-13]

In another step forward, the House Education Committee last week held a public hearing on bullying and suicide prevention. [EPLC, 4-26-13] This is a significant issue that needs to be addressed as part of a larger conversation about school climate issues, with a particular focus on equity.

But just as we saw these forward steps, the House took a giant step back, approving a suite of corporate tax cuts proposed by Governor Corbett. Once in place, the tax breaks will cost us taxpayers hundreds of millions of dollars – that’s hundreds of millions in lost revenue for the state and money that won’t be available to fund our public goods, including schools. While these tax cuts are defended by the Governor as necessary for creating future revenues, according to the EPLC some estimate “that there will only be $1 dollar of new revenue generated for every $7 of tax cuts for some businesses.” [EPLC, 4-26-13]

Speaking of revenue, the state took in slightly less than they projected in March, but the Pennsylvania School Funding Campaign tells us that overall, “for the year total revenues remain slightly ahead of what was projected for the first nine months.” We haven’t heard much from legislators about the budget because, “Most lawmakers are anxiously awaiting the end-of-April report before deciding to move forward with legislative budget proposals.” [PA School Funding Campaign, 4-22-13]

The school funding campaign – a coalition of 30 education groups – will be holding a press conference in the capitol rotunda tomorrow morning at 10AM, telling legislators and Governor Corbett that they need to prioritize funding for public education. The proposed plan addresses the nearly $1billion cut in 2011 (and locked in again in 2012), by restoring $270 million each of the next three years. Now that would be a huge step forward.

Pizza and Silver Bullets

This governor is full of metaphors. He’s very fond of comparing the state budget to pizza, saying helpful things like, “we had an 8-inch pizza and now we’re down to a 6-inch pie, but we … have an increase in demands.” [Delco Times, 5-30-12] Back in March, he explained to an unhappy audience of University of Pittsburgh students that public education accounts for 40% of the state budget: “Pennsylvania looks at education as its No. 1 priority … When the pizza pie goes from an 8-inch pie to a 6-inch pie, you still have that percentage, but not enough money.” [Pitt News, 5-31-12]

And in perhaps the most ironic twist on his folksy analogy, Gov. Corbett stood in front of a Porsche at a Lehigh Valley facility and repeated the gastronomic comparison. The Morning Call reported, “Corbett said the recession has reduced the size of the state’s economy from and 8-inch to a 6-inch pie, making less revenue available for the growing needs of its citizens, devoting larger and larger slices of the state budget to education and social welfare programs.” [Morning Call, 5-15-12]

I don’t know where Gov. Corbett buys his dainty pizza, but here in Yinzer Nation our standard pizza is a good extra-large 12-slice with a couple toppings. Preferably washed down with a beer in front of a Steelers game. And if we had a Porsche, we would not be eating pizza in it.

But Gov. Corbett chose his 8-inch to 6-inch analogy, so we’ll stick with that for a moment. By his cheesy logic, Pennsylvania’s economy shrank by a full 44% in the recession [see math note below]. Now there’s a number you don’t hear him – or anyone else – tossing around. Really? Almost half?

There’s no denying that our state revenues are down. But what the governor is trying to do with his incredible-shrinking-pizza metaphor is to make this solely a problem of existing revenues while refusing to look at alternatives – some of which don’t involve raising a single dime in taxes. We’ve got extra toppings we could be throwing on this pizza to feed the needs of all of our citizens, yet Gov. Corbett won’t even talk pepperoni. Here are some ideas for rolling the crust back out to a real size pizza:

• Close the Delaware Loophole: costs our state $500 million in missed tax revenue every year and more than 20 other states have already closed this loophole.
• Impose a severance tax on Marcellus shale: most states with major mineral resources like ours have a severance tax and not having one has cost Pennsylvania over $314 million since October 2009 alone.
• Get rid of the new bonus depreciation rule: The state itself estimates that more than half of the current budget gap is due to a huge shortfall in corporate tax revenues – to the tune of $260 million. (See “We Have a Priority Problem.”)
• Keep the capital stock and franchise tax: Corbett wants to eliminate these as a gift to corporations, costing the state $200 million in revenue every year.
• Eliminate sales tax exemptions: helicopters and gold bullion top the list of hard-to-swallow exemptions. And what about smokeless tobacco?
• Rescind the new Voter ID bill: it solves no actual problem in the state, will most certainly face expensive legal challenge, and will cost taxpayers an estimated $11 MILLION to implement. (See “There Goes $11-million for Our Schools.”)
• Fix the cyber-charter funding formula: Taxpayers and school districts could have saved approximately $86 million in 2009-2010 if cyber charter schools received funding based on what they actually spent per student. (See “Trouble Seeing the Money.”)
• Shut down the EITC program: it costs us $75 million per year by funneling corporate tax money that should have gone to the state for our budget needs into the hands of private schools instead. (See “EITC: No Credit to PA.”)

Now that’s a lot of dough! But in a meeting Wednesday night with newspaper editors in the Eastern part of the state, Gov. Corbett insisted his number one priority is serving up smaller and smaller slices of pizza. In a sign of how effective our movement has become, the Delco Times commented, “Perhaps no place is that priority being debated more hotly than in the education arena.” After repeating his pizza metaphor, Gov. Corbett explained, “I don’t want to be doing this to school districts. I don’t want to have to do this every year, but we can’t give them money we don’t have.” [Delco Times, 5-30-12]

At least in this conversation, he didn’t try to blame school districts for the problem or suggest they spend their emergency reserves. (See “Insane, Irrational, Irresponsible.”) It would seem the governor’s office has backed off that tactic after our massive statewide protests last week, which garnered national media attention. But he returned to an old trick, trying to pit some needs against others, saying, “So if I’m going to propose increasing money for education, who do we take it from?” We call this “The Old Divide and Conquer Tactic” and we’ll have none of it, thank you very much.

Then the Governor pulled out another metaphor. Responding to a question about the possibility of increasing taxes on Marcellus shale drillers, he huffed, “everybody wants the silver bullet, the thing that will solve everything.” Actually, Governor Corbett, there are at least eight bullet points on my list above, and none of them is silver. Realistically, we expect you to use a combination of these strategies to address the current funding crisis in our public schools.

We don’t need extra topping pizzas or silver bullets. We need a political commitment from Republicans and Democrats alike to support our public goods. Here’s a tiny start: in one hallelujah moment, Gov. Corbett admitted to the editors, “We also need to look at charter schools, particularly cyber-charter schools, and how that money is spent.” Now see? That’s one of the (non-silver) bullet points we’ve been talking about.

———–

Math note: Area of an 8 inch circle = 50.27. Area of a 6 inch circle = 28.28. The difference is 21.99, or 44%. In my original post I fell prey to the common misconception that the drop from 8 inches to 6 inches was a simple 25% reduction, forgetting that we are talking about the area of a circle. Many thanks to John Zimmerman for pointing this out. Governor Corbett and I can both attend a remedial math course at our local Community Colleges, assuming they survive these latest state budget cuts.

The Old Divide and Conquer Tactic

“We are reducing the funding in education because we do not have the money — it’s that simple,” Governor Corbett said Monday. He was speaking about the cuts to public higher education, but he could have just as easily been speaking about the draconian cuts to pre-K and K-12.

We’ve heard precious little about the state education budget crisis from Governor Corbett himself. Secretary of Education Ron Tomalis and others have been quoted frequently of late trying to explain how, in their view, the $1 BILLION reduction to public schools has actually been an increase. (To which we say, “Enough with the Spreadsheet Debates.”) But now Gov. Corbett appears to be trying a new (very old) tactic: divide and conquer.

Saying the state simply doesn’t have the money, he asked, “Where would you have me take it from? Would you have me take it from social services? Would you have me take it from law enforcement or from the functions of government?” (Post-Gazette, 3-13-12) Pitting social services against public education, Gov. Corbett suggests that we can have one, but not both – when the proposed budget, in fact, cuts both to the very bone. This is not about choosing one over the other, this is about revenue priorities that put corporations before children.

Governor Corbett asks incredulously if we should find education money by taking funding away “from the functions of government.” I would like to remind him that funding public education is a function of government. In fact, it is the only service mandated by the Pennsylvania Constitution, which says specifically that it is the state’s responsibility to “provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth.” (Article 3, Section 14)

It’s time for the Governor to stop saying, “we don’t have the money,” and start asking, “where can we find the revenue?” Here are some suggestions we’ve been hearing from the people of Southwest PA:

• Close the Delaware Loophole: costs our state $500 million in missed tax revenue every year and more than 20 other states have already closed this loophole.
• Impose a severance tax on Marcellus shale: most states with major mineral resources like ours have a severance tax and not having one has cost Pennsylvania over $314 million since October 2009 alone.
• Get rid of the new bonus depreciation rule: The state itself estimates that more than half of the current budget gap is due to a huge shortfall in corporate tax revenues – to the tune of $260 million. (Read more in “We Have a Priority Problem.”)
• Keep the capital stock and franchise tax: Corbett wants to eliminate these as a gift to corporations, costing the state $200 million in revenue every year.
• Eliminate sales tax exemptions: helicopters and gold bullion top the list of hard-to-swallow exemptions.

A New Mantra

I’m developing a new mantra. Though it’s a bit of a mouthful, it’s worth repeating regularly: “We need sustainable and equitable state funding for public education in Pennsylvania.” Allow me to take that statement apart and focus on it in reverse order.

“We need sustainable and equitable state funding for public education in Pennsylvania.”
State funding is critical, as Ron Cowell, President of the Education Policy and Leadership Center (EPLC), explained at the We Are One Education Action in Pittsburgh this past Saturday. Right now, Pennsylvania ranks in the bottom ten of all fifty states in support provided to public K-12 education. We actually made some progress – we used to be in the bottom five – when Pennsylvania adopted the new state funding formula in 2008 to address entrenched, historical inequities (see “A Shameful Betrayal“). But what this means is that we are overly dependent upon local property taxes. In Pennsylvania, schools receive almost half of their budgets – 43% on average – from local taxes (the national average is only 28%). In addition, the Pennsylvania School Funding Campaign (PSFC) has found that “the Pennsylvania Legislature appropriates almost $500 per student per year less than the national average, and less than all of our contiguous states.” In other words, we spend far less at the state level and make our local districts pay far more.

“We need sustainable and equitable state funding for public education in Pennsylvania.”
With our over-reliance on local property taxes to support public schools, we have developed an extremely inequitable funding system. Currently, school districts in Pennsylvania spend wildly different amounts per student, from a low (in Valley View) of $9,578 to a high (in Lower Merion) of $26,570. [PSFC] Our districts average about $12,000, putting us right in the middle of the pack of our neighboring, contiguous states. But, as we pointed out above, this is not because the state is spending adequate resources on students. As Cowell puts it, “We have one of the most unequal and unjust systems of public education in the country.” We not only tolerate these wild differences in school district spending, the state actually perpetuates the problem, especially as it abandons the 2008 funding formula designed to address such disparities. And what’s worse, the state cuts have disproportionately affected the poorest districts, with cuts ranging from around $100 per student in places like Fox Chapel to over $1,000 in Duquesne.

“We need sustainable and equitable state funding for public education in Pennsylvania.”
Public education is a moral obligation, our legal responsibility, and an economic imperative. Our state support for this public good must be sustainable: we simply can’t cut $1 billion this year and $100 million the next and expect school districts to keep operating, delivering effective education. Pennsylvania school districts report that, due to the state budget cuts, 10,000 positions have been lost just this past year, many of them teachers. [EPLC] Cowell reminded Saturday’s audience that “the state budget cuts were not inevitable.” They came at the same time the state was accumulating a $750 MILLION surplus. “It’s a matter of policies, priorities, and leadership,” he said. Former state Senator (and Representative and Democratic State Chairman) Allen Kukovich agreed, “If the debate is always about not having enough money to pay for things like public education, then we’ll never win.” He urged us at the grassroots level to keep pushing our legislators to consider alternative revenue possibilities. One Pittsburgh handed out a flyer making these suggestions:

• Close the Delaware Loophole: costs our state $500 million in missed tax revenue every year and more than 20 other states have already closed this loophole.
• Impose a severance tax on Marcellus shale: most states with major mineral resources like ours have a severance tax and no having one has cost Pennsylvania over $314 million since October 2009 alone.
• Keep the capital stock and franchise tax: Corbett wants to eliminate these as a gift to corporations, costing the state $200 million in revenue every year.
• Eliminate sales tax exemptions: helicopters and gold bullion top the list of hard-to-swallow exemptions.

Sounds like another new mantra. For now, repeat after me, “We need sustainable and equitable state funding for public education in Pennsylvania. We need sustainable and equitable …”