The Senate Education Committee approved a bill today that would allow the state to takeover Pennsylvania school districts that are in danger of financial collapse, and would give a state-appointed receiver the power to negate labor contracts and convert schools into charters. The bill will now go to the PA Senate and will be fast-tracked for a vote in the House if it passes.
The progression of the bill comes on the heels of a report by the Pennsylvania Association of School Business Officers and the Pennsylvania Association of School Administrators that indicates Pennsylvania's public schools are in the midst of a serious financial crisis. According to the report, "3 percent of Pennsylvania school districts reported they're already in financial distress. Some are even on the verge of bankruptcy."
If you've been reading the newspaper lately (or have subscribed to LfL's online magazine, Pennsylvania School Board Coalition), you know that school districts around the state are slashing staff and programs, raiding rainy day funds, and raising property taxes to make ends meet.
What's the most cited reasons for the dire financial conditions? The survey indicated that funding cuts, stagnant local revenues and increasing costs, especially due to mandates, "have swirled together into a financial storm."
The funding cuts pertain to the loss of the federal stimulus monies that had padded the state's education funding budgets in 2009 and 2010. Leadership for Liberty addressed the $900 million in funding "cuts" school districts experienced in 2011-12 in a previous blog, Debunking the Education Funding Myth. And, it's no surprise that local revenues are stagnant in such a weak economy.
The final reason, unfunded mandates, requires further investigation however. The PASBO-PASA report rightly asks "Where is the Mandate Relief?":
One critical avenue of relief that could help stave off further financial troubles for schools is mandate relief. If mandated costs are eliminated or reduced, the continued cuts in instructional programs and personnel may be reduced. While there has been lots of talk about mandate relief and several legislative efforts to address mandates, there have been no significant results to date. Charter school funding reforms, changes to prevailing wage requirements and permitting districts to furlough staff for economic reasons could provide significant savings to school districts and taxpayers. Special education also remains a major cost driver to schools, and flat state funding for the past five years continues to push cost increases to local property taxpayers.
What's missing from this list of reforms is PSERS, the Pennsylvania School Employee Retirement System. This omission is interesting since the report indicates in an earlier section:
For fiscal year 2012-13, the mandated cost to pay state-imposed retirement benefits will increase by 45 percent. In 2013-14, the upward leap of pension costs continues to one billion dollars for the first time in history (a 40 percent increase from fiscal year 2012-13).
In article, after article, after article, school board members and district administrators cite PSERS as the major financial challenge. And, the Pittsburgh Post Gazette published a recent article about the "pension iceberg." While the observation is accurate that the current crisis was exacerbated by underfunding of the pension program under Gov. Tom Ridge, it is important to realize that the public unions also fully supported and lobbied legislators to defer these same contributions. The financial forecast for PSERS is so dire that some in the PA legislature are actually calling for major changes to the state's pension program. "Speaking at the monthly luncheon of the Pennsylvania Press Club, state Sen. Jake Corman, R-Centre, said he favored making structural changes to the state pension system in light of coming cost increases that will see an estimated $4 billion of the state budget consumed by pensions by 2016." Corman went on to say the government needs to consider reducing the future benefits of employees to help soften a massive pension cost spike, even if it means challenging state constitutional law.
An elected official saying the state needs reform is quite different that actually reforming. The PASBO-PASA report is right to call out the state legislature on their lack of action on education reform issues. Pennsylvanians have watched "bluer" states like Wisconsin implement groundbreaking reforms as our Republican legislature and governor have achieved nothing. The Commonwealth Foundation has written about the reason for this extensively on their website. I'll be writing a blog comparing states like California and Pennsylvania to Texas and Wisconsin very soon.
This brings me back to the bill that was voted out of the State Education Committee today. A similar piece of legislation was recently defeated in Connecticut (yes, public pensions are a problem in almost every state). I, myself, am not sure if I agree with a state takeover of a school district that essentially allows a dictator to come in and erase negotiated contracts with district employees. While this is indeed a solution, it's not really one that preserves freedom and liberty, and it's one that might do more harm than good. I think it's a cop-out for the school board members who negotiated and approved the contracts in the first place. Maybe that's why the legislation is supported by so many school boards. It allows them to continue to take the politically "safe" route and avoid making the hard decisions that are necessary to bring their budgets under control.
It's easy for administrators and school board directors to blame Harrisburg for their financial woes, but in reality, they have a lot of power and control over their district's budget. They are the ones who vote for costly construction projects, approve expensive full-day kindergarten programs, choose to accept state and federal grants with mandate strings attached to them, and negotiate and approve employee contracts (upon which pensions are based), including ones with huge taxpayer-funded buyouts of administrators like the one recently exposed in the Allentown School District. These poor decisions bloat district budgets and cost local taxpayers millions of dollars when state and federal funding dries up.
Instead of throwing their hands up and handing the keys of their school districts over to Harrisburg to clean up, elected school board members need to start demonstrating leadership. If they aren't willing to make hard decisions to cut spending, eliminate programs that are no longer funded, or stand up to the teachers' union, then they have no business sitting on the board. And, just complaining and voting against budgets isn't enough either. They need to offer common sense alternatives that they must present and explain to the public to gain their support. In other words, they need to force even the wrong people to do the right thing.
Unfortunately, most school board directors are political creatures, whose only purpose is to get re-elected or move up the government ladder. So, very few have the intestinal fortitude and political will to offer real alternatives. Therefore, in the end, it is citizens who must take up the challenge. Leadership for Liberty can show you how. It might be too late for this year's budget season, but NOW is the time to prepare for the next budget season. At the very least, you can force the public dialog and debate to start this year.