1. PARSS Annual Conference April 28, 2016 State College 1 Hannah Barrick Director of Advocacy, PASBO

2. Pathway to a 15-16 State Budget 2 Republican Budget (HB 1192) $11B Stopgap Budget Pension Reform/$400M in Education Line item Veto Override Gov.’s revenue plan Senate Veto Override Governor Wolf Proposed Budget Liquor Reform/Pension Reform Proposal X X X X X X X X X Republican Budget (HB 1460) Republican Budget (HB 1801)

3. The 2015-16 Budget: Summary $30.03 billion state budget – RTL: $50 million increase (above 14-15) – Special Ed: $30 million increase (above 14-15) – BEF: $150 million increase (above 14-15) – PlanCon: zero funding Act 25 of 2016 (fiscal code) provided the instructions for distribution of education funds 3

4. Special Education Funding $30 million increase (plus the 14-15 increase) is being distributed to districts through the new SE formula – 13-14 funding is the base – Each year all new money after base year is re-run through formula – Formula targets money based on number of students in each SE cost category – Act 16 data determines number of students in each category 4

5. Ready to Learn Block Grant $50 million increase from 14-15 distributed to school districts pro-rata based on last year’s RTL distribution – Act 25 undoes governor’s January RTL distribution – All districts (and charter schools) get what they got in 14-15 – Only school districts get a share of the $50 million – Reconciliation required to ensure districts get the appropriate share of new RTL dollars under Act 25 5

6. Basic Education Funding $150 million increase in BEF (over 14-15) distributed to districts using new BEF formula – Act 25 undoes governor’s restoration distribution proposed in March – 2014-15 becomes the base year, and new dollars added after are aggregated and run through the formula annually – Formula counts/weights students and includes several new district-level measures – Unclear when PDE will post updated data 6

7. Basic Education Funding Formula Count Students Count/Weight subsets of students – Poverty – English Language Learners – Charter School Students 7

8. Uses 3 separate poverty weights – Census data instead of Free/Reduced Lunch data – Measures all residents in district ages 6-17, then apply percentages to district ADMs – Generally consistent with Title I measure 8 Basic Education Funding Formula

9. Poverty Weights Acute Poverty Weight: – Students below the poverty line (acute poverty) get a weight of 0.6 Moderate Poverty Weight: – Students between 100% and 185% of the poverty line (moderate poverty) get a weight of 0.3 Concentrated Poverty Weight: – School districts with 30% or more of students in acute poverty get an additional 0.3 weight per student in acute poverty 9

10. Poverty Weights 10

11. English Language Learners 11 Apply a weight to ELL students recognizing the additional associated costs – Students identified in PIMS as ELLs – Students who are ELLs (SD + CS count) receive a weight of 0.6 – 50,881 ELL students in PA (SD + CS) (14-15 data)

12. Charter School Weight 12 Apply a weight to based on the number of charter school students, recognizing the financial impact of charter school attendance on a district – Counts charter school ADMs from each district – Data comes from year end Child Accounting Reports – 130,905 charter school students (14-15 data) – Charter School Weight = 0.2

13. Weighted Student Count SD ADMs Acute Poverty Adjustment Moderate Poverty Adjustment Concentrated Poverty Adjustment ELL Adjustment Charter School Adjustment Weighted Student Count 13

14. Sparsity/Size Ratio 14 Provides an adjustment for small AND rural districts that can’t achieve economies of scale Same measure used in Act 126 (Special Ed.) Measures ADMs/square mile compared to state average (40%) and total ADMs compared to state average (60%) Applies to districts above the 70 th percentile of the combined ratio 150 districts get adjustments to their ADMs Adds 13,722 students statewide

15. New BEF Formula 15 Formula uses new measures for local wealth and local effort, replacing Aid Ratio and Equalized Mills with more accurate factors

16. Median Household Income Index New measure for local wealth Use Federal census data to determine median household income by school district Compare median district household income to state median household income ($53,115) If > 1 = district median is below state median If < 1 = district median is above state median 16

17. Local Effort Capacity Index New measure comprised of 2 components: local tax effort and local tax capacity Combines a district’s local tax effort with the ability to generate local resources Functions as a multiplier 17

18. Local Effort Index Replaces equalized mills as tax effort measure School district's local tax-related revenue divided by median household income times the number of households compared to the state median Index is adjusted down if a district’s current expenditures are more per student than the state median 18

19. Local Effort Index High spending districts get a reduction in their index to disincentivize high taxing for high spending Low spending districts get no reduction applied to their index Median LEI= 0.93

20. Local Capacity Index Local Capacity= district’s ability to generate local tax-related revenue per student Compares a school district's personal income and market value to the state median of local tax-related revenue divided by the sum of personal income and market value Adjusts ONLY those districts with a local tax capacity per ADM that is less than the state median 20

21. Local Capacity Index 253 districts get no capacity adjustment because they have the capacity to raise more (MV + PI) than the state median per student Provides adjustment to 247 districts that have a capacity per student less than the state median Range of adjustment for 247 eligible districts is 0.01 to 0.83

22. PlanCon Provisions in Act 25 Authorizes up to $2.5 billion in bonding through the Commonwealth Financing Authority, paid off by maintaining $300 million PlanCon line item. – Districts currently receiving reimbursement will receive reimbursement on the normal schedule (districts trapped in the backlog will be made current) – Districts with projects now in Parts A-F will receive lump sum reimbursements when they reach Part H – Provides approximately $40 million/year for 12 years for new projects (provides time for new funding structure to be developed) 22

23. PlanCon Provisions in Act 25 Creates a PlanCon Advisory Committee to develop recommendations for a new PlanCon by May 15, 2017 – Committee made up of mostly legislators and administration officials – A moratorium on new projects entering the current program goes into effect on May 15, 2016 and continues throughout the 2016-17 school year. – When moratorium is lifted, theoretically a new PlanCon program is in place. 23

24. PlanCon Provisions in Act 25 Transparency and flexibility for PDE – PDE must post information on their website about the status, reimbursement, etc. of each PlanCon project – PDE can “jump” projects ahead of others in the current PlanCon queue if the district has not yet submitted all required information. When all documentation is submitted, the project will return to the queue. 24

25. What happens now? Major hurdles still exist for PlanCon even with passage of Act 25: Administration still arguing that the state cannot borrow anything until the 16-17 structural deficit is addressed This tees up another PlanCon fight between the legislature and the governor Without the borrowing, districts owed PlanCon reimbursement in 15-16 won’t get it…don’t plan on getting your 15-16 reimbursement before June 30 25

26. Stalemate 26 2016-17: Round Two? Election year Tax votes necessary??? Lots of big policy issues on the table???

27. Pathway to a 15-16 State Budget 27 Republican Budget (HB 1192) $11B Stopgap Budget Pension Reform/$400M in Education Line item Veto Override Gov.’s revenue plan Senate Veto Override Governor Wolf Proposed Budget Liquor Reform/Pension Reform Proposal X X X X X X X X X Republican Budget (HB 1460) Republican Budget (HB 1801)

28. The 2016-17 Budget? Lots of positive talk, but no details Timeline is June/July? Talk about small increase for BEF Unclear if there is support for any broad-based tax increases (PIT/SUT) for 16-17 Unclear if other issues (pension, property tax, etc.) are included Still need to codify new BEF/SEF formulas for 16-17 28

29. 2016-17 State Budget Don’t be surprised if: – There is a flurry of activity in May/June and maybe a bill on the governor’s desk – Lots of action in May falls apart until the fall – Lots of issues make it on/fall off the table – There isn’t a vote for broad-based tax increases – There is a renewed fight to get the new BEF formula implemented 29

30. Issues still on the table Charter school reform School turnaround (tied to ESSA) Truancy reform Lots and lots of other, smaller education issues… 30

31. Questions & Answers Thank you for your time and attention! 31 hbarrick@pasbo.org