Still no Budget

When I left for Alaska ten days ago, parents, teachers, and community members from across the state were still camped out at the Capitol building keeping a vigil for a better budget. The group from Pittsburgh included many ActionUnited volunteers, who worked around the clock.

Volunteers keeping vigil at night with glow-in-the-dark signs!

Volunteers keeping vigil at night with glow-in-the-dark signs!

Delivering coffee to the Governor's mansion.

Delivering coffee to the Governor’s mansion to tell him to “Wake up and smell the coffee: you are hurting Pennsylvania’s children!”

ActionUnited volunteers from Pittsburgh stayed in the capitol around the clock

ActionUnited volunteers from Pittsburgh stayed in the capitol around the clock

Having just returned to the lower-48, I fully expected to see news of a final state budget. Oh, but no. In case you haven’t been paying attention, or have been off-line in the wilderness like me, here’s the current situation.

The Pennsylvania legislature has passed a budget – full of problems – but the Governor has yet to sign it. He is currently holding out because he did not get the pension reforms he wanted. Yet if he doesn’t get his signature on the page before Friday, the budget will go into effect without his stamp of approval. [Patriot News, 7-8-14]

Unfortunately, either way, we’re looking at mostly more bad news for public schools. The budget passed by the legislature once again flat funds the basic education line, which provides the bulk of support to school districts. It does increase special education funding by $19.8 million, which is most welcome after six years of flat funding in this area. However, as Ron Cowell of the Education Policy and Leadership Center points out, “it’s important to note that special education costs to districts have risen more than $400 million during that time.” [Post Gazette, 7-5-14]

The budget sitting on the Governor’s desk also includes a slight increase in education funding through block grant programs. These generally come with strings attached and are less helpful to districts that are desperately struggling to provide basic educational programs. The increase is also $141 million less than what Gov. Corbett initially proposed back in February.

Perhaps the biggest disappointment with this unsigned budget is that it relies on unicorns to pay the bills. We just finished the 2013-14 fiscal year last week short by a half-billion dollars. Sharon Ward of the PA Budget and Policy Center explains that legislators “magically wiped away that inconvenient truth through creative accounting.” Then for the new budget, “lawmakers used one-time transfers, overly rosy revenue projections, and accounting tricks to close a $1 billion projected revenue gap.” For instance, this budget assumes that there will be revenue from new gas drilling on public lands – but that will depend on the outcome of a case still winding its way through the courts. It also assumes there will be revenue from a Philadelphia casino that hasn’t even been built yet! [Philly.com, 7-9-14]

This kind of magical thinking is a recipe for disaster. Overall, Pennsylvania collected less in revenue in 2013-14 than it did the year before. Yet the new budget for 2014-15 counts on adding $1 billion more than we managed to take in this past year. [PA Budget and Policy Center, 7-7-14] Where are we really going to get this money?

Having just returned from mineral-rich Alaska, it’s astonishing to me that Gov. Corbett will not even consider a severance tax on Marcellus shale. Every other major gas producing state has one. Our local guide in Juneau proudly pointed to the Alaska Permanent Fund building and explained that every person in that state gets an annual check, usually between $1,000-$2,000, drawn from oil revenues.

Meanwhile, school districts in Pennsylvania are forced to raise property taxes yet again. Last week, just after the House passed the current budget, the Shippensburg school district voted to raise local taxes to make up for the shortfall in state support it had been expecting. [Philly.com, 7-9-14]

Alaska was gorgeous. But I would like to be able to stay here in Pennsylvania and send my children to properly funded schools. We may not have glaciers, but we do have eagles again, right here in Pittsburgh. Now if only we could fund public education.

Advertisements

Taking it to Harrisburg

From the ‘burgh to H’burg and back in one day. On June 18th, 25 parents, students, and teachers left Pittsburgh under gray skies at 7AM, but arrived in Harrisburg a few hours later under blue, pumped up and ready to meet with their legislators.

IMG_3896

Our bus included folks from across the city, as well as the North Allegheny School District, and two teachers who live in Pittsburgh and teach in Woodland Hills and Mt. Lebanon.

IMG_5338

The trip was organized by volunteer parents with Yinzercation (special thank yous to Sara Goodkind and Kathy Newman!), and made possible by contributions from the Pittsburgh Federation of Teachers, Education Voters PA, the PA Budget and Policy Center, and an anonymous donor. The PA State Education Association (PSEA) kindly welcomed us with snacks and a bathroom break, before we ran across the street to the Capitol Building.

IMG_5344

We started the day with a press conference, organized by Better Choices for Pennsylvania, a coalition of over 60 organizations allied for a responsible budget. The message was clear: “no more cuts, we have to grow the pie” with other revenue sources so there is enough for all. To drive home the point, the coalition delivered little pies to each legislator’s office. I helped with some of those deliveries, including one to Jake Wheatley, while the rest of our group got busy meeting with other Representatives and Senators on our list.

JessiePressConference

One thing we learned from our trip is that the Capitol is literally swarming with professional lobbyists – some of whom had the audacity to make fun of our group during the press conference – which reinforced for us just how important it is to have “ordinary people” like us take the time to show up and talk with legislators. We are the actual constituents they are there to represent, but legislators generally only hear from those paid to talk to them.

IMG_5350

We split into groups and managed to squeeze in visits to the offices of Jay Costa, Wayne Fontana, Donal White, Dom Costa, Ed Gainey, Mike Turzai, Paul Costa, Dan Frankel, and Daniel Deasy. Some legislators were still in session and we met with their staff, but in every case, we spoke about the same thing: the real impact of budget cuts on our children and schools and the need for adequate, equitable, and sustainable state funding for public schools.

IMG_5354

Rep. Ed Gainey, whose children attend Pittsburgh Fulton and were there visiting with him for the day, spoke at length about his support for public education.

IMG_3944

IMG_8195

Here’s a group meeting with Dan Deasy. The students were particularly eloquent! Two of us also took some time during the afternoon to meet with gubernatorial candidate Tom Wolf’s policy director about his education platform. We are eager to get Mr. Wolf back to Pittsburgh to talk to families so we can understand his vision for public education.

IMG_5371

Our last stop was the Governor’s office, where we delivered a petition with over 12,000 signatures calling for fair funding for our schools! Then it was time to get back on the bus, debrief each other on our visits, eat more snacks, and talk to new friends. Everyone agreed it was a very worthwhile day and that grassroots activism really does make a difference. Before we knew it, we were back in the ‘burgh and ready to start planning our next event together.

It’s Call Your Legislator Day

Today’s the day! We are joining Education Voters PA for a state-wide call-your-legislator day. Over the past three years, our children have suffered enough: they’ve lost thousands of their teachers, art, music, tutoring, library, nurses, counselors, athletics, and so much more. When will it end? Our legislators are debating the state budget right now and things will really heat up over the next few weeks.

Unfortunately, the news out of Harrisburg is not good. Back in February, Gov. Corbett proposed a state budget that would flat fund basic K-12 education, but included some small increases for special education and early childhood education. He also proposed creating a new block grant program, which would come with many strings attached. [See “More Bad than Good”] To pay for it, Corbett’s proposal relies on inflated expectations of leftover year-end revenues that could be carried forward into the next fiscal year. [See “Paying for It”] However, that appears highly unlikely given the latest state revenue projections.

Last Thursday, the state’s Independent Fiscal Office calculated that Pennsylvania would be short $1 billion in revenue needed to fund Gov. Corbett’s proposed budget. Now the governor is looking for ways to cut $800 million from his plan. Will it come out of education? (Or human services? Or any of the other critical things we need?) At the same time Corbett looks to make more cuts, “corporate tax collections have dropped by $292 million compared to last year” because of the numerous tax giveaways our legislators have enacted in recent years. [PA Budget and Policy Center, 5-2-14]

Now is the time to speak up and tell our legislators that, as Education Voters says, “Pennsylvania’s children cannot afford another year of inadequate state funding and political posturing.” Why make phone calls? Just 10 calls in one day can get a legislator to pay attention to an issue: joining together with thousands of other parents, students, teachers, and community members across Pennsylvania on a single day means we can amplify our voices. Please take just a few minutes and make three phone calls:

  1. Call your State Senator. [click here to find the number]
  2. Call your State Representative. [click here to find the number]
  3. Call Gov. Corbett’s office at (717) 787-2500.

For the past three years, we have been demanding adequate, equitable, and sustainable funding for our public schools. Want some tips on what else you might say? Here is what Education Voters suggests we all ask our legislators:

  • Make the proposed increase of $230 million a permanent source of funding in the Basic Education Fund (BEF). This increase should NOT be distributed to school districts in block grants that have many strings attached and can be eliminated in future budgets.
  • Allocate state funding using a fair, transparent, and accurate funding formula. This formula should take political deal making out of the budget process and be based on current data and the real costs of educating students with different needs.
  • Keep the proposed increase for special education of $20 million in the budget. After six years of flat funding for special education, we applaud the decision to finally increase the funding.
  • Restore charter school reimbursement payments to local school districts. Public schools lost hundreds of millions of dollars in state funding when Governor Corbett eliminated this line item in 2011. The legislature made changes to the public education system by adding charter schools, and then put in place the charter reimbursement line to help address the additional costs communities were facing.  Cutting this funding hurt both community school district students and charter school students and compounded an already difficult situation. These funds should be restored until a formula is adopted.
  • Ensure that any savings from the elimination of the charter school pension double-dip payments stay in the education budget and be returned to local school districts. These savings should not go into the general fund where legislators can spend them as they please.

These phone calls work! If you want some more inspiration, check out this fun one minute video of Pittsburgh Public School parents making phone calls in 2012, the year we saved $100 million from being cut from the early childhood budget:

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.

Paying for It

In our analysis earlier this week, we concluded that Governor Corbett’s proposed education budget is “More BAD than GOOD.” But the way he intends to pay for it is just plain WRONG.

First, the governor depends on an overly rosy picture to balance his spreadsheet. He is counting on having $216 million left over at the end of this fiscal year in June to carry forward, yet state revenue collections are already $41 million below where they were projected to be as of January. [Unless otherwise noted, all numbers from PA Budget and Policy Center, “Proposed Budget Overview,” 2-4-14] What’s more, “The governor’s budget relies on more than $1 billion in one-time revenue sources that will not be available for future budgets.” [Sharon Ward, PBPC Commentary, 2-5-14]

Pennsylvania students deserve adequate, equitable, and sustainable funding for their schools. That means tricks like inflating year-end projected balances or finding one-time sources of funding won’t cut it.

I’m also dismayed to see that the governor’s budget depends on $75 million from new land leases for gas drilling in our state parks and forests. We’ve had a moratorium on leases since 2008, and for good reason. Our children’s future depends on a decent education and clean water, air, and soil. But even if you think fracking is a good idea, we can probably agree that we ought to 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. Doing so could yield $334 million per year. [Post-Gazette analysis, 12-27-13] Not imposing this severance tax is essentially a gift to oil and gas corporations, who are some of Governor Corbett’s largest campaign donors. [FollowTheMoney.org]

And that leads us to the biggest problem with how Gov. Corbett intends to pay for his proposed budget. For the past three years, “attempting to improve growth, [he] made a bet that a billion dollars in new corporate tax cuts would fuel economic recovery, but that bet has been lost.” Instead, job growth in Pennsylvania is behind all but two other states in the nation and our unemployment rate is above the national average. Meanwhile, “corporate profits continue to rise, but those profitable corporations are paying less in taxes, if anything at all.” [Sharon Ward, PBPC Commentary, 2-5-14]

This proposed budget continues to give away millions to corporations that ought to be on the table and available for public goods and services. The PBPC reports that, “Total corporate tax collections are predicted to decline for a second straight year, with continued annual declined expected through 2017-18.” [PBPC “Proposed Budget Overview,” 2-4-14] This includes the continued phase-out of the capital stock and franchise tax, which Gov. Corbett is handing to corporations as a bonus. If our legislators would freeze this one tax at its 2012 level, the state could raise around $390 million. [PBPC, “Budget Analysis,” 5-29-13]

Over the past ten years, under Republican and Democratic administrations alike, the legislature has created a whole raft of new corporate tax breaks. Incredibly, at the same time our students are going without the most basic educational needs, “The annual cost of these [tax breaks] has already grown by 300% between 2003-04 and 2012-13, from $850 million to $3.0 billion, and is expected to reach $3.9 billion by 2018-19.” [PBPC, “Corporate Tax Cuts Help Put State in the Red,” 12-13-13]

This is unconscionable. Corporations need to pay their fair share. Because when it comes to our state budget, if corporations aren’t helping to pay for it, our children wind up paying the price.

Tax Shift is Shifty

First, the good news. Legislators in the Pennsylvania House yesterday voted down a proposal that would have eliminated school property taxes. [Post-Gazette, 10-3-13] These are the taxes that you and I pay (whether we own property or not, because the cost gets passed along to renters, too) to support our schools. In fact, they are the largest source of funding for public education. They are also a source of the inequality in public school funding – so you would think getting rid of them would be a good thing, right?

Well, here’s the problem. By eliminating property taxes, the House would have shifted the funding of schools onto state income and sales taxes. This is what a separate House bill (HB 76) attempts to do – but with potentially disastrous results for schools. The Pennsylvania Budget and Policy Center found that HB76 (and its companion in the Senate, SB76) would:

  • Create a permanent funding gap, by locking in the cuts to public education over the past two years.
  • Cap education spending at a rate lower than what school districts need to keep up with rising costs.
  • Give large tax cuts to corporations who own commercial real-estate (think office buildings, shopping malls, factories, etc). A third of property taxes come from non-homeowners. [PA Budget and Policy Center, 9-25-13]

Pennsylvania’s Independent Fiscal Office agrees. In an analysis of HB/SB 76, they found that property tax elimination done this way would lead to a deficit for schools of hundreds of millions after the first year, growing to $1billion in just five years. [IFO Special Report, 10-1-13] In order to make up the difference through state personal income taxes, the PA Budget and Policy Center estimates that Pennsylvania would have to increase the tax rate from 3.07% to 6.8%: “Put another way, Pennsylvania would go from having the lowest top income tax rate in the country to having the highest personal income tax rate on working families in the country.” [PA Budget and Policy Center, 9-25-13]

The cruel irony here is that we started to relieve property tax burdens back in 2008 when the General Assembly adopted a modern school funding formula. Governor Corbett cut that formula in his first budget (along with close to $1 billion for public education), taking us backwards. Pennsylvania actually ranks in the bottom five of all states in the country in the proportion of school funding provided at the state level. This pushes responsibility for education down on local taxpayers and greatly increases disparity as wealthier districts can afford to pay more for their schools – while some poor districts actually have to raise their tax rates beyond those of wealthy districts.

The PA Budget and Policy Center concludes: “Restoring the state’s commitment to fund 50% of the cost of public schools would go a long way toward solving both problems — ensuring that students who live in modest and lower-wealth districts get the same high-quality education as their wealthier counterparts, and reducing the pressure on property taxpayers.”

So the good news is that the legislature did not do away with property taxes entirely. But the bad news is that the bill they did pass (HB1189) basically shifts local taxes without addressing the real problem. Mike Woods, Research Director for the PBPC explains, “It allows school boards to enact new business privilege taxes or raise earned income taxes and use all the new funds for property tax reduction.” However, under current law, schools districts would first have to get voters to approve any new income tax, and the law explicitly forbids business privilege taxes. [Third and State, 10-2-13]

In other words, this tax shift bill is a bit shifty. The Post-Gazette reports that, “House Republicans celebrated passage of the bill, which they said would provide local communities greater flexibility in how they pay for education.” [Post-Gazette, 10-3-13] Could someone please tell them that the problem is not flexibility at the local level. It’s that the state reneged on its commitment to adequate, equitable, and sustainable funding for public education. Our kids are missing a cumulative $2.3billion dollars for their schools.

Sadly, HB1189 received broad support from House Democrats as well as Republicans (it passed 149-46). It seems that our legislators are all eager to be doing “something” about property tax relief. But that must come with serious attention to the crisis this Governor and legislature have created in our public schools. If they are going to talk about property tax relief, then they also need to talk about relieving our schools by restoring the education cuts, fixing the state funding formula, and sensible charter funding reforms.

Unfortunately, even our allies in the House are not hearing from public education advocates on these issues. I know, I know. This stuff is in the policy weeds. It makes your eyeballs roll back in their sockets. I get it. But consider what just one or two voices can do: on Monday I met with the legislative director for Rep. Erin Molchany (who sits on the House education committee) and he told me I was the only person contacting them in opposition to HB76 (the property tax elimination bill). Meanwhile, when I tweeted about that bill last week, a person going by the name of “Mrs. D” publicly accused me of purposefully misleading people and then launched a twitter campaign urging libertarians to tweet every PA Senator and Representative to support the bill, saying “American Freedom = No taxation!”

LibertarianTweet1.pngLibertarianTweet2.png

(Apparently American freedom also means hiding behind pseudonyms, making false accusations without evidence, and ending all public goods and services paid for with tax dollars. This actually doesn’t sound like freedom to me at all.)

These are the people making the noise about tax issues right now. Our legislators need to know that we believe in public funding for public education. Yes, that’s right. We believe in taxes. Because that’s how we pay for our public goods and services. Public schools are a collective responsibility and everyone needs to pay their fair share. Do we need property tax reform? Probably. But not at the expense of our common good. Enough with the shifty politics.

Where’s the $$$?

As expected, the Pennsylvania House passed a budget yesterday that does next to nothing to help our public schools. The debate now moves to the Senate, but if the strict party-line vote in the House was any indication, Republicans in Harrisburg are sticking to their mantra that the state is broke and can’t afford to adequately fund education. House Majority Leader Mike Turzai from here in Allegheny County claims that this proposed budget “lives within our means, just like families and businesses across the state.” [Penn Live, 6-12-13]

But when Rep. Turzai or Gov. Corbett and others say we have to “live within our means,” what they really mean is that our schools must continue to cut into the bone – ditching art, music, library, tutoring, Kindergarten, books, supplies, field trips, athletics, and thousands of teachers – while families struggle to make up the difference. That’s not living within our means, that’s just mean.

This is about budget priorities. There is money, but it’s not going to public education (or our other public goods). We could fully fund the vibrant, rich curricula and the educational programs our children deserve right now if our legislators wanted to. Here is our updated list of revenue ideas:

  • Close the Delaware Loophole: It 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 estimated that more than half of last year’s budget gap was 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: Gov. Corbett wants to eliminate these as a gift to corporations and plans to eliminate them by next year. But if lawmakers freeze the tax at 2012 levels, the state could raise around $390 million.
  • Eliminate sales tax exemptions: Helicopters and gold bullion top the list of hard-to-swallow exemptions. And what about smokeless tobacco? (See “Can They Fly Our Kids to School?”)
  • Rescind the new Voter ID bill: It solves no actual problem in the state, is facing 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 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. (See “One Million Per Day.”)
  • Shut down the EITC programs: These two voucher-like giveaway programs now funnel $150 million (double the amount from last year) in public money to private and religious schools with no accountability for expenditures or student outcomes. [See “EITC: No Credit to PA” and “2-4-6-8, Who Do We Appreciate?”]
  • Stop handing money to international giants. The new sweetheart deal with international giant Dutch Royal Shell will cost taxpayers $1.675 billion. (See “Can Shell Education Our Kids?”
  • Close other tax loopholes. The “89-11” real estate transfer scheme has cost Pittsburgh schools millions of dollars. (See details at “Corporate Grinches“)
  • Insist on PILOT payments from large non-profits such as UPMC. They would be supporting Pittsburgh schools to the tune of $8.5 million if they did this. (See “UPMC’s Fair Share“)
  • Hold corporations to their word. Rivers Casino is trying to wriggle out of paying $1million a year to Pittsburgh schools after promising to be a good neighbor when we gave them perks for setting up shop in our city. (See “Rivers Casino’s Fair Share“)