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Response to the 2024–25 PA State Budget — Education Funding

By Blog Post, Policy Briefs, Press Statements

Governor Shapiro and the members of the General Assembly have had about 18 months to respond to the Commonwealth Court ruling that Pennsylvania’s system of funding K-12 education is unconstitutional. And Pennsylvania politicians have had decades to recognize that far too many low-income and Black and brown schoolchildren have not received an adequate education, which has limited their opportunities and denied the Commonwealth the full flowering of their talents and abilities.

The K-12 budget that we expect to be enacted soon recognizes the problem. But it does not put the state on a path to solving it.

It recognizes the problem in two ways.

First, for the first time in our history, the school code embraces a formula that quantifies the problem. The school code says that school districts need $4.5 billion in new funding to adequately and equitably fund our schools. Because of an unfortunate change in how poverty is counted, this amount is somewhat less than the $5.1 billion we believe is truly needed by our school children. But it remains a substantial number.

Second, again for the first time in our history, the General Appropriation bill directs the majority of new K-12 funding to the school districts that are least well-funded. This includes $493 million in the Ready to Learn line item and $60 million in the Basic Education Funding line item that is directed to 11 school districts that are especially underfunded.

These two new initiatives are major achievements.

However, this new spending meets only a bit more than 10% of the total needed to give every child the opportunity he or she needs. And, unlike the House-passed bill HB 2370, the new school code does not set a timeline for filling 100% of the adequacy gap.

We have been calling on the General Assembly to finish the job on school funding. The budget legislation they will soon pass takes up the job. But it is very far away from finishing it.

It is important for the people of Pennsylvania to understand why we have come so far but still have so far to go.

We have come so far because our political leaders understand that more than 70% of Pennsylvanians recognize the need for substantial new funding of our schools. And in the last four months, tens of thousands of them have contacted their state senators, representatives, and Governor Shapiro to let them know that they stand with our children and the future of our commonwealth.

We have come so far because House Speaker Joanna McClinton and Majority Leader Matt Bradford and the other leaders and members of the House and Senate Democratic caucuses have been champions for our kids.

Why does this budget not put the state on a path to meeting its constitutional and moral responsibility to fund our schools? Even though they did not appeal the Commonwealth Court decision, Senate and House Republicans have never put forward a plan to meet their obligation under it. They rejected the Basic Education Funding Commission’s plan. And they have sought to whittle away at Democratic legislative proposals and reject a complete plan to fund our schools adequately and equitably.

We are glad that Republican leaders have agreed to the achievements we noted above but they have refused to go further and accept the long-term plan our kids and the Constitution of Pennsylvania require.

So, while we believe Pennsylvanians should appreciate the important steps forward in the budget this year, we note with sadness that unless Governor Shapiro and the General Assembly enact a plan to fully and fairly fund our schools, another generation of our school children will be denied their constitutional and moral right to an adequate and equitable K-12 education. And not just our kids, but all Pennsylvanians, will suffer as a result

Click HERE to learn how much your school district will receive.

 

Op-Ed: A State Earned Income Tax Credit Should Be Part of a Budget Deal in 2024

By Policy Briefs, Press Statements

A State Earned Income Tax Credit Should Be Part of a Budget Deal in 2024

by Marc Stier, Executive Director, Pennsylvania Policy Center

The Pennsylvania state budget for fiscal year 2024–25 is now officially overdue, so we’re still left wondering: What might a deal look like?

There are two critical components that need to be addressed.

The first is enactment of year one of the Basic Education Funding Commission’s plan to adequately and equitably fund education.

Enacting this plan is a moral and constitutional requirement. Failing to meet it would leave the General Assembly to answer to both the voters and the courts. Public opinion polls show overwhelming support for meeting this goal. And while courts are generally reluctant to tell legislators how exactly to spend money, for three reasons this barrier is lower in Pennsylvania right now than in other times and places.

  • Neither Democrats nor Republicans sought to appeal Judge Jubelirer’s ruling that our current system of K-12 school funding is unconstitutional.
  • The Basic Education Funding Commission has put forward a plan that is tailor-made to meet Judge Jubelirer’s concerns.
  • And with a surplus of $14 billion in the bank, a Pennsylvania court can order implementation of that plan without taking the even bolder step of requiring new taxes to fund it.

The second component is the implementation of a state earned income tax credit.

I make the second point with some reluctance. I am concerned—as the Governor and state legislators should be—about using up the state surplus with a tax cut. That surplus is needed to pay ongoing operating expenses and the entire education plan.

Until recently, Senate Republicans seemed to agree. But Republican senators recently enacted, with some Democratic support, a tax cut that would cost the state $2.7 billion in fiscal year 2025–26.

In doing so, Republicans acknowledged that it is entirely legitimate to use the surplus to fund ongoing expenses. A tax cut is as much an ongoing expense as funding for K-12 education.

If we start with the Republican proposal to use $2.7 billion of the surplus in fiscal year 2025–26 for ongoing expenses, the question is how to divide it between the K-12 funding and a tax cut.

The Republican plan to cut taxes by reducing the personal income tax by half a point and eliminating the gross receipts tax is not acceptable for two reasons.

One: it is far too large. The state is going to need $2 billion in fiscal year 2025–26 to fund the second year of the K-12 education plan.

And, two: the plan is heavily weighted to the rich and the corporations that generate electricity. A half-point reduction of the PIT would reduce taxes for the top 1% of taxpayers by $5,435 per year. It would reduce taxes for the middle 20% of families by only $181 per year. And because of the tax forgiveness program, it would most likely not reduce taxes for people in the bottom 20% by more than $20 per year.

In a state and local tax system that already takes 11.8% of the income of the bottom 99% and only 6% of the income of the top 1%, a tax cut weighted so heavily to the richest Pennsylvanians and corporations is unacceptable.

What would be acceptable, however, is a state earned income tax credit (EITC) set at 30% of the value of the federal EITC already received by Pennsylvanians.

Why might Republicans accept this?

Well, for one thing, it’s a Republican plan that was initially proposed by Richard Nixon and expanded with bipartisan support many times.

It is a program that has been proven to encourage work.

It reduces poverty more than any other federal program except Social Security.

It is simple to administer, requiring no new bureaucracy but only an additional line on the PA-40 tax form.

By encouraging more Pennsylvanians to file for the federal EITC, it could bring as much as $40 million in federal funds to Pennsylvania at no cost at all.

It helps working people, not with government spending but with a tax credit and would benefit 1.45 million families. The average tax cut for those who receive it would be $773. More than 88% of the benefits would go to Pennsylvania families earning less than $52,100 (and those above that level who get a tax credit have three or more children.) By a small margin, these families disproportionately live in Republican House and Senate districts.

And it would only cost the state $770 million—far less than the tax cut passed by the Senate.

If a tax cut is a necessary part of reaching a budget deal by June 30th, a state earned income tax credit should be part of it.

K-12 School Funding in PA Remains Inadequate and Inequitable

By Policy Briefs

Year after year, our predecessor organization and many others have released research showing both that the vast majority of Pennsylvania K-12 school districts are underfunded and that school districts with a high share of students who come from impoverished families or are Black or Hispanic are disproportionately among them.

That analysis was accepted by Pennsylvania Commonwealth Court judge Renée Cohn Jubelirer who ruled that Pennsylvania’s system of K-12 school funding is unconstitutional.

And yet, with less than a week to go before the fiscal year 2024–25 budget is due, there are still members of the General Assembly who refuse to accept these basic facts.

So here we put forward our most recent update of the data we have provided in the past: estimates of the per-student funding gap in Pennsylvania’s five hundred K-12 school districts divided based on the share of students who live in poverty or who are Black or Hispanic

Click here to read full screen or print.

Adequacy And Equity 2024

Picture of the PA State Capitol building

From Work to Wealth and Back Again

By Blog Post, Policy Briefs

From Work to Wealth and Back Again

Americans suffer because we reward wealth more than work.

 Here’s how we got here and how we can create an economy

that works for all of us.

Introduction

The pursuit of tax justice is now central to the work of both the Pennsylvania Policy Center and our advocacy arm Pennsylvanians Together. It is also the theme of our People’s Budget Summit this year.

In developing this campaign, we needed to pull together a lot of research about  the history and politics of economic and tax policy over the last forty years.  Our executive director has been working on a long paper that surveys this broad topic, which should be read for release by the end of the summer.

He was far enough along, however, to give a 15-minute talk previewing the main themes of the paper at our People’s Budget Summit in early June. This is a revised version of the talk. It’s a little dense, but in just seven pages it gives a overview of how and why the rewards for wealth have jumped in the U.S. and rewards for work have shrunk in our economy over the last 40 years, as well as what we can do to reverse direction.

This is, of course, a huge topic. The paper borrows ideas from others with a few twists of ours own, especially in the political analysis of why the shift from work to wealth took place and what we can do to reverse it.

We would love to hear your thoughts on this early version of our project.

From Work To Wealth And Back

logo for Penn Policy: Pennsylvania Policy Center

A Pennsylvania Budget to Celebrate

By Budget Analysis, PA Budget, Policy Briefs, Policy Statement

A Pennsylvania Budget to Celebrate

Note: This is an initial review of the fiscal year 2024–25 budget proposed by Governor Josh Shapiro on February 6, 2024. As we delve deeper into the budget we may need to revise or modify the conclusion reached here. Also note that rather than providing one lengthy, in-depth analysis of the entire budget seven weeks or so after it is released, as was done by the previous affiliate of the Center on Budget and Policy Priorities, we will be rolling out our in-depth analysis over the next seven weeks in a series of reports.

Overview

Governor Shapiro took office a year ago at a time when there was a great deal of uncertainty about the economy and the fiscal state of Pennsylvania, and in the wake of a Commonwealth Court decision holding Pennsylvania’s system of funding public schools unconstitutional. There was little time for a new administration, led by a new governor and an entirely new set of cabinet members, to develop a long-term plan to address the school funding question. Accordingly, the administration said that its initial budget would be followed by a second-year budget that would fully address the constitutional mandate to fund K­­–12 education fully and fairly and other issues. When we reviewed the budget presented by the Governor last year, we concluded that it set forth the right priorities but did not provide enough funding to meet the needs it identified.

We are very pleased to say that the budget presented by Governor Shapiro today not only has the right priorities but provides the funding needed to meet them, at least in the next fiscal year. The investments the Governor proposes for public K–12 education, higher education, economic development, housing, and other priorities are substantial and bold. And as important as the new funding proposed is, the Governor’s budget also recognizes the need for Pennsylvania to do some things differently in all these areas.

If adopted by the General Assembly, the Governor’s proposal would put us on a path to answering the impassioned call for adequately and equitably funding schools made by our young people, their parents, and other Pennsylvanians who have long understood that equality of opportunity, prosperity, and democracy are intricately linked to the education the state provides our children.

The proposal is the first step in answering their prayers, and we applaud Governor Shapiro for embracing the BEFC report and including  the first year of its seven year plan in his budget. We think Pennsylvanians should celebrate this budget and work with Governor Shapiro to see it enacted this year.

Our only concern about this proposal in the Executive Budget book is that it proposes new investments in K–12 education for only one year. The administration embraced the Basic Education Funding Commission’s seven-year plan to lift state support of K–12 to a level that would meet our moral and constitutional responsibility to fund our schools fully and fairly. However, the long-term budget outlook in the Executive Budget plan release today only contains the first year of the seven-year plan needed to meet that responsibility. The statement of the governor’s priorities does say that the additional educational investment next year is just the “first year adequacy investment as recommended by the BEFC.” So, we are confident that Governor Shapiro intends to follow through on the commitment to the full seven-year plan made by his representatives on the Basic Education Funding Commission, as he is both personally committed and constitutionally required to adequately and equitably fund our schools. But the true cost of that plan—and the revenues needed to fund it—are not apparent in the budget documents submitted today. Pennsylvanians deserve a transparent budget process that allows us to consider the alternatives before us.

The Budget Overall

The Governor proposes a General Fund budget of $48.3 billion, 8.4% more than the current fiscal year budget of $44.6 billion. This is a substantial increase, but a necessary one. In evaluating the overall size of the budget, it is important to keep in mind two important things. First, looking just at the budget number can be misleading. As our economy and population grow, and inflation occurs, the state budget necessarily must grow. The best measure of the impact of the state budget on our economy is not the number of dollars spent but the proportion of the Gross State Product (GSP) of Pennsylvania that flows through state government. The Governor’s proposed expenditures, if accepted by the General Assembly, would equal 5.02% of the projected GSP of $940 billion.[1] This is higher than the average 4.36% of GSP in Governor Wolf’s budgets. But, it is in line with the 4.66% average during the fifteen years before Governor Corbett. Governor Shapiro is not proposing a major expansion of state government but, rather, a return to the historical path the state budget was on before the sharp budget reductions of the Corbett years.

The second key point to remember in evaluating the overall size of the budget is that Pennsylvania has been falling behind in meeting many responsibilities, not just the  responsibility to educate our children at all levels. We have suffered from a severe public investment deficit. For the last decade, our public schools have been among the most unequally funded in the country; we are fourth from the bottom in higher education funding (and near the top in the cost of public higher education); our public health spending is close to the bottom; we have cut funding for environmental protection even as the need to protect ourselves from the dangers of natural gas fracking has increased the demands for environmental inspectors; we provide less than other states in support for those with mental health issues; and so on. The result of the  public investment deficit is that inequality in our state has increased, and our economy has been growing too slowly. It is going to take higher budget levels this year and, in the future, to close the public investment deficit gap.

Education

Governor Shapiro’s recommendation for education funding closely follows the plan put forward by the BEFC. It calls for over $1 billion in new basic education funding to our five hundred school districts divided into three buckets:

  • $736,000,000 is targeted to school districts that are inadequately funded by the state’s own criteria and as established by the BEFC.
  • $136,000,000 is targeted to school districts that have higher-than-average property taxes because they have had to rely on local funds to make up for inadequate state aid.
  • $200 million will be distributed through the Fair Funding Formula to all five hundred school districts to ensure that state support keeps up with the inflation in education costs.

The Shapiro proposal also accepts the BEFC recommendation to update the current funding formula to improve predictability and stability of funding. The administration embraces the BEFC plan to smooth the poverty factors in the formula to ensure that temporary jumps or statistical anomalies in poverty rates do not lead to sharp changes in state funding. They also call on the General Assembly to reset the BEF base to the 2023–24 allocation. New education funding to school districts in future years would be added to the 2023–24 funding level rather than the 2014–15 level. This means that the school districts that see a decline in the number of students would be protected from a drastic reduction in state funding.

Altogether, total funding for basic education would reach $8.9 billion in FY 2024–25.

The Governor also calls for

  • a $50 million increase in special education funding, a 4% increase over FY 2023–24.
  • a $2.4 million increase for career and technical education, a 2% increase over FY 2023–24.
  • a $7 million increase for dual enrollment programs.

In addition, he calls for $300 million per year for repairing dilapidated and toxic school buildings.

The Governor also proposes to reform the way school districts pay for cyber charter schools. Currently payment rates range from $8,639 to $26,564 per student per year. These payment variations are not at all related to the actual cost of educating children in cyber charter schools. The Governor proposes a fixed $8,000 payment per student per year. This plan would save school districts, including many rural school districts, a total of roughly $262 million per year.

Early Childhood Education

Governor Shapiro proposes $32 million in new funding for early childhood education programs, including $30 million for Pre-K Counts, an 11% increase over FY 2023­–24; $2.7 million for Head Start, a 3% increase over FY 2023–24; and a $17 million increase for Early Intervention, a 5% increase over FY 2023–24.

These proposals are not only welcome but bold. But, as we mentioned above,  they are for one year only. The Basic Education Funding Commission proposal, which Governor Shapiro’s representatives voted for, made clear that reducing the adequacy gap in funding our 500 school districts, as well as addressing tax inequity, would require an additional investment at this scale seven years in a row. At the end of the seven-year plan, state spending on K–12 education would be $6 billion higher than it would have otherwise been. However, the five-year plan in the Executive Budget shows flat funding for education in the four years after FY 2024–25.

It is not uncommon for the out years in a governor’s budget proposal to project flat funding of many budget lines combined with a mixture of conjecture and fantasy about possible future initiatives and revenues. So, we are not concerned about what we don’t see in the future projections of education funding. We trust in the Governor’s endorsement of the BEFC report and the bold rhetoric in his speech today about the necessity of providing an adequate education to all the children of Pennsylvania. But, as we will show below, excluding future increases in education funding from the long-term budget outlook could create a misleading picture of the fiscal status of the Commonwealth and the eventual need for new recurring revenues to both balance the budget and fund education fully and fairly.

Higher Education

The Executive Budget calls for major changes in the way higher education is governed and funded in Pennsylvania. We can’t speak to the details of this proposal here as some of them are not clear and the impact of others requires more careful consideration than we can provide today.

The good news is that Governor Shapiro recognizes that our state has been disinvesting in higher education for thirty years with the result that tuition at PASSHE and community colleges are among the highest in the country, even relative to median income. Because of the high tuition, there has been a drastic decline in enrollment, far greater than is caused by the decline in the number of high school graduates. Pennsylvania has tens of thousands of open jobs that require higher education. Even worse, many Pennsylvanians leave the state to attend less expensive colleges in other states and, too often, they do not return.

To deal with these issues the Governor proposes both structural changes and new funding. He calls for consolidating the PASSHE and Community College systems under one board and administration. We will consider this proposal in greater detail later in the year, but we do think there are two points in its favor. First, it is vital to the success of higher education in Pennsylvania that students graduating from community colleges have a smooth path to finishing a four-degree at a state university. Combining the operations of the two systems may well make those transitions easier. And second, we believe that in the last forty years colleges and universities have spent too much on administration and too little on faculty members and vital support services. Consolidating the two systems would reduce the administrative overhead of both systems.

Recognizing the need for new funding to reduce tuition, the Governor proposes an additional $127 million in funding for the combined PASSHE-Community College system and $31 million for the state-related universities: Lincoln University, Temple University, The University of Pittsburgh, and Pennsylvania State University. Total higher education funding would rise from $1.54 billion to $1.7 billion. He also calls for changing the way the state-related universities are funded to remove the requirement that such funding receive a vote of two-thirds of the House and Senate. This important step is needed to reduce micromanagement of these universities by the General Assembly.

The consolidation and new funding proposals this year, and one promised for 2025–26, would allow the state to ensure that any student whose family income is less than the median family income in the state would be able to attend a community college or state system university for no more than $1,000 in tuition and fees per semester. Students attending state-related universities would see a $1,000 increase in their Pennsylvania Higher Education Assistance Agency (PHEAA) grant, bringing it to $6,750 per year. This bold plan promises to make a college education far more affordable, especially for families with low and moderate incomes, enabling our community college / state university systems to once again be the engines of economic opportunity they were in the past and thereby providing the education and training needed to drive our economy forward in the future.

Building a Strong Economy

Governor Shapiro has long recognized the importance of state support for economic development beyond that which is provided by a strong education system. He has created a new economic development strategy that promises not only to attract new businesses to the state but also help existing businesses expand. He proposes a total of $600 million in new and expanded investments to enhance the Department of Community and Economic Development work in this area.

This new investment would be distributed among a number of different programs, including

  • $500 million for the PA SITES program, which provides funds for on-site development for priority industries, including agriculture and manufacturing. It would be paid for by a taxable bond issue.
  • $20 million in new funding to leverage Pennsylvania’s research and development assets.
  • $3.5 million to create the Pennsylvania economic competitiveness challenge to encourage the creation of regional development strategies.
  • $25 million for the new Main Street Matters program that would build on the work of the Keystone Communities and Main Street and Elm Street programs that have helped local governments create vibrant downtowns.
  • $21.5 million in funding for tourism and business marketing.
  • $2 million in funding to support internships.
  • $10 million in new funding for the Department of Environmental Protection to hire new staff and improve IT systems to expedite permitting approvals.
  • $10.3 million in funding for agricultural innovation.
  • $5.6 million for the dairy industry.

While it is included in a separate category in the Governor’s budget, we want to note that the new investments in career and technical education discussed above are critical to any successful economic development strategy. We continue to believe that the best way forward to a strong future economy is to invest in people. Businesses come and go. But a well-educated and trained workforce is a major attraction to new businesses and those seeking to expand their operations in our state.

Minimum Wage

Raising the minimum wage is long overdue. At a time when every state around us is moving quickly to a $15 minimum wage, Pennsylvania’s minimum wage is not only a moral embarrassment but also a barrier to economic growth. The minimum wage has not been increased for 14 years. Many Pennsylvanians seek work in neighboring states to earn higher wages. And they spend some of what they earn in those states as well, depriving Pennsylvania businesses of their patronage. Indeed, low wages hold back economic growth and hurt local businesses all over the Commonwealth. So, we are glad to see Governor Shapiro again propose an increase in the minimum wage to $15 on January 1, 2025. It is imperative that the Senate follow the House in embracing this proposal. We would also like to see the General Assembly end the tipped minimum wage, allow local governments to set a minimum wage higher than the state level, and create an automatic cost-of-living increase in the minimum wage.

According to data from the Keystone Research Center, raising the minimum wage to $15 per hour would increase the wages of 1.34 million Pennsylvanians. More than 21% of Pennsylvanians would see their wage go up. This would lead to an increase in consumer spending of $5 billion dollars, giving our economy a strong push upwards. A majority of the people who would see their wages go up are women and full-time workers—and over a quarter of minimum wage workers have a child. About 21% of them live in cities, and 25% live in rural areas. An increase in the minimum wage to $15 would add $56 million to state revenues and would reduce state expenditures for Medical Assistance and other safety net programs by roughly 20–30 millions of dollars.

Public Transportation

Another important component of a successful economic development strategy, and especially one that seeks to expand opportunities for low- and moderate-wage workers, is public transportation. Public transportation is not just critical in our largest cities. Many smaller cities, and even some more rural counties, have public transportation systems that make it possible for workers to get to their jobs. Thus, we welcome the Governor’s advocacy for adding 1.75% of sales tax revenue to the Public Transportation Trust Fund, which would provide $283 million dollars for operating subsidies for transportation agencies across the state.

Child Care

Child care remains a critical priority for all parents with young children and yet is often not easy to afford. And child care jobs have historically paid too little to ensure that our most precious resource, our children, are well cared for. Governor Shapiro’s budget leverages a small state investment to secure $62 million in new federal funding that would increase reimbursement rates for child care providers taking part in the Child Care Works program, raising their pay to the 75th percentile of the current market costs of child care services.

Housing

Affordable housing is in increasingly short supply as the 2008 financial crisis and the pandemic recession slowed housing development. Governor Shapiro proposes two initiatives to make affordable housing more accessible. First, he calls for additional funding for the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund (PHARE), which helps people become homeowners, helps Pennsylvanians stay in their homes, and provides funding for local communities seeking to remove blight.

The Governor also proposes an additional $50 million for the whole home repairs program which provides funds for low-income Pennsylvanians  to repair and upgrade  their homes.

While these are important initiatives, we fear that they do not do enough to address a growing crisis—and not just in low-income communities. In the near future, we will be proposing additional ideas to deal with this crisis, such as expanding the Property Tax Relief and Rent Rebate program to low-income Pennsylvanians under the age of 65.

Revenues: Short-Term

The Governor’s budget is funded by a combination of recurring revenues and a drawdown of $3.2 billion of the more than $14 billion in the state surplus, which includes both the General Fund surplus and the Rainy Day Fund. Drawing down this surplus is entirely appropriate. The surplus came from our tax dollars and should be spent to benefit the people of our state. Those funds should not be left sitting in a bank account in Harrisburg.

The Governor also proposes two new sources of revenue: legalizing adult-use cannabis and new skill games. Legalizing adult-use cannabis is long overdue, both because it raises revenue and because it ensures that no one goes to jail for violating a law that is unevenly enforced and widely disregarded. The Governor proposes that some of the funds raised from a tax on cannabis use be returned to communities that have been disproportionately harmed by the enforcement of our cannabis laws. The tax on cannabis sales would not raise new revenues in the next budget year but promises to do so in the future. Indeed, we believe that the Governor’s long-term estimates of the revenue that can be raised are extremely conservative.

The Governor also proposes an expansion of video skill-based gaming that would generate $150 million in revenue in 2024–25, mostly through the sale of licenses to those who plan to offer these new gaming opportunities.

We do not support this gaming initiative. Gambling has repeatedly been shown to raise less revenue than expected. Even worse, it is a regressive way to raise state revenue. People with lower incomes tend to lose a larger share of their income than those with high incomes. We should be seeking revenue from people who gamble on stock and bond prices.

Revenues: Long-Term

Finally, we come to the long-term implications of Governor Shapiro’s budget plan. As we pointed out above, the Executive Budget does not provide any details about education spending beyond the next fiscal year. However, the Governor has indicated that his proposal for next year is, as the BEFC recommended, the first step in a longer term, seven-year project.

Even after drawing down $3.2 billion from the $13 billion dollar surplus, a large surplus would remain. And, even after leaving aside a significant amount in the Rainy Day Fund, the surplus would be large enough to support the second and third years of the full seven-year program. But after that, new and recurring revenues would be needed to complete the full program and meet our constitutional and moral responsibility to adequately and equitably fund K-12 education.

The Pennsylvania Policy Center will soon provide a detailed analysis of the cost of enacting the BEFC proposal over the next seven years and make some recommendations about how to fund it. Here we will simply say that the Governor’s long-term education program can be funded without taking a dime from the wages of any Pennsylvanian. All we have to do is enact what we call the Fair Share Tax Plan, which cuts taxes on earned income, wages, and interest, while raising taxes on unearned income—that is on income from wealth. Currently, the bottom 20% of families in Pennsylvania pay 15% of their income in state and local taxes, and the middle 20% pay 11.4% of their income in state and local taxes. This is all while the richest 1% of Pennsylvanians pay on 6% of their income in state and local taxes. We can fully and fairly fund K-12 and higher education in Pennsylvania just by asking the richest Pennsylvanians to pay the same share of taxes paid by the poorest Pennsylvanians.

[1] We are using the GSP projections in the Governor’s Executive Budget 2024–25, p. A1–23. These projections are slightly higher than those of the IFO, but we believe that both projections are quite conservative.

Editorial Board Memo on Education Funding in Pennsylvania

By Editorial Board Memo, Policy Briefs, Press Statement

In February 2023, Judge Renée Cohn Jubelirer called for a new funding system in Pennsylvania to fulfill the state’s obligation to provide a thorough and efficient education for its children.

The Basic Education Funding Commission has been charged by Governor Shapiro and legislative leaders with developing a response to Judge Jubelirer’s decision in the school funding lawsuit, which held that every student in Pennsylvania should have—but doesn’t have now—access to a “comprehensive, effective, and contemporary system of public education,” as required by the Pennsylvania Constitution.

The Pennsylvania Policy Center has prepared materials for the Commission that address a number of questions raised during its hearing, drawing on both our own analysis of education policy in Pennsylvania and summaries of the relevant academic research. As members of the General Assembly will ultimately be making the critical decisions about how we fund K-12 education in the state and the public has a strong stake in the Commission’s work, we thought we would share this with you.

This memo summarizes three policy reports.

The first report, Shuffling the Deck Won’t Solve the Pennsylvania School Funding Crisis, addresses the paradox that Pennsylvania has a relatively high level of school funding yet also has a system with the most inequitably funded schools in the country. The result: a majority of Pennsylvania students attends schools that, by the state’s own standards, are inadequately funded. The paper shows that the inequity of Pennsylvania’s school funding is the result of our low state share of K-12 funding. And the inadequacy of funding in most schools, despite a relatively high overall amount of funding, is not just the result of inequity but also arises because the standard set by our constitution requires more than the mediocre school performance found in most states.

The second report, Education Funding and Educational Achievement, reviews the recent academic evidence about the impact of new school funding on student achievement and later-life success. It shows that studies of new state funding of K-12 schools subsequent to court decisions in other states have shown strong, and sometimes, dramatic improvements in the quality  of education.

The third report, The Contribution of K-12 Education to Economic Growth and Democracy, reviews the impressive academic evidence demonstrating that the 19th-century founders of public education in Pennsylvania, starting with Thaddeus Stevens, were right to believe that improvements in the quality of education both strengthen our democracy and lead to faster economic growth.

We summarize the three papers in the rest of this memo.

Editorial Board Memo On Education

Shuffling the Deck Won’t Solve the Pennsylvania School Funding Crisis

By Policy Briefs

In February 2023, Judge Renée Cohn Jubelirer called for a new funding system in Pennsylvania to fulfill the state’s obligation to provide a thorough and efficient education for its children. But, opponents of increased education funding cite the state’s high per-student spending, compared to other states, as a reason not to increase our total spending on K-12 schools.

The comparison to other states’ spending per student is misleading in multiple ways.

VIEW IN A PDF READER OR DOWNLOAD.

 

The Contribution Of Education To Economic Growth And Democracy

Education Funding and Educational Achievement

By Policy Briefs

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A year ago, Judge Renée Cohn Jubelirer ruled that Pennsylvania violates its constitutional obligation to create a “thorough and efficient” system of school funding. In response, legislative leaders and Governor Shapiro have charged the Basic Education Funding Commission with providing a blueprint for General Assembly action that would meet our constitutional obligation.

In in developing that blueprint, the General Assembly can learn from what other states have done. Seen from a national perspective, Judge Jubelirer’s decision is not an outlier. In response to similar court decisions, about half the states have added substantial state funding of K-12 education in the last thirty years.  In almost every case, the judicial decisions, like that of Judge Jubelirer, focused on the inequity in school funding created by over-reliance on locally raised revenues to pay for schools.

Because Pennsylvania is a latecomer to school funding reform, a generation of our children has been denied a good education. And that is a terrible loss we have all suffered as a result. But the delay gives us the benefit of learning from the large body of research on education and school funding that was stimulated by reform efforts in other states. That research shows us how effective new funding for underfunded schools in Pennsylvania can be in lifting student achievement and in later-life success.

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We Need To Let Local Communities Set Their Own Minimum Wage

By Blog Post, Policy Briefs

The state of Pennsylvania does not allow local governments—whether counties or municipalities—to set a higher minimum wage than that set by the state. It should do so.

The reason it should is obvious: Pennsylvania is a large, diverse state in which local economies differ from one county and city to another.

Some of our counties have a much higher cost of living than others, which means that the single statewide minimum is less valuable to working people in some counties than others.

Some of our counties have much higher average wages than others, which means that they can support a higher minimum wage without any job loss. (And it’s pretty clear that, under current economic conditions, it would take a much higher minimum wage to cause job loss than anything being discussed in the General Assembly.)

Some of our counties have lower unemployment or more employers looking to hire people than others which also means they’re able to sustain a higher minimum wage with no job loss.

All these factors would  justify a higher local minimum wage than that set by the state.

County and municipal governments will, no doubt, be cautious in raising the minimum wage too high. While we have repeatedly argued that, at the rates being considered statewide, a higher minimum wage will not lead to the loss of jobs, there is no doubt some point at which a higher minimum wage might cost some jobs. And if one county raises its wages too high, relative to those immediately around it, the difference in wages could lead to differential in prices from one side of the county line to another.

So, counties are likely to be very careful about raising the minimum wage above the state level, and some may choose to only raise their wage in concert with some of the surrounding counties. Local option in setting the minimum wage may lead to regional as well as county minimum wage rates.

You can see the extent to which the wage now varies in the following chart, drawn from Glasmeier, Amy K., Living Wage Calculator, 2023, Massachusetts Institute of Technology. https://livingwage.mit.edu. According to the authors, “A living wage is what one full-time worker must earn on an hourly basis to help cover the cost of their family’s minimum basic needs where they live while still being self-sufficient.: the Living Wage Calculator’s estimate of living wage includes eight typical expenses or basic needs – food, childcare, health care, housing, transportation, civic engagement, broadband access, and other necessities. In addition to these basic needs, the Calculator also accounts for the additional cost to families associated with income and payroll taxes. (See the FAQ page. Click here for detailed information about the methodology of the Living Wage.

MIT Living Wage Calculation for Pennsylvania Counties
The living wage shown is the hourly rate that an individual in a household must earn to support his or herself and their family. In the case of households with two working adults, all values are per working adult, single or in a family unless otherwise noted.
County One Adult Working 2 Adults (One Working) 2 Adults (Both Working
0 Children 1 Child 2 Children 3 Children 0 Children 1 Child 2 Children 3 Children 0 Children 1 Child 2 Children 3 Children
Adams $15.77 $32.98 $41.74 $54.58 $26.26 $32.48 $37.28 $41.75 $13.13 $18.49 $23.14 $27.62
Allegheny $16.24 $33.64 $43.45 $56.92 $25.91 $32.11 $36.91 $40.82 $12.96 $18.82 $23.98 $28.70
Armstrong $14.59 $31.55 $40.51 $52.24 $24.62 $30.85 $35.64 $38.98 $12.31 $17.78 $22.52 $26.54
Beaver $16.24 $34.65 $45.63 $60.19 $25.91 $32.11 $36.91 $40.82 $12.96 $19.33 $24.99 $30.22
Bedford $14.98 $30.96 $39.69 $51.40 $24.48 $30.49 $35.28 $38.88 $12.24 $17.48 $22.12 $26.15
Berks $15.71 $34.30 $44.43 $57.99 $25.94 $32.53 $37.32 $41.07 $12.97 $19.15 $24.44 $29.20
Blair $14.71 $30.59 $38.43 $48.82 $24.98 $31.01 $35.80 $39.17 $12.49 $17.30 $21.48 $24.96
Bradford $15.42 $31.16 $39.81 $51.63 $24.87 $30.78 $35.57 $39.35 $12.43 $17.58 $22.17 $26.26
Bucks $17.53 $36.83 $47.85 $62.56 $27.83 $34.42 $39.21 $43.39 $13.92 $20.41 $26.02 $31.31
Butler $16.24 $33.57 $43.30 $56.70 $25.91 $32.11 $36.91 $40.82 $12.96 $18.79 $23.92 $28.61
Cambria $14.96 $30.94 $39.65 $51.22 $24.37 $30.49 $35.28 $38.77 $12.18 $17.47 $22.10 $26.07
Cameron $14.74 $31.01 $39.78 $51.17 $24.25 $30.49 $35.28 $38.53 $12.13 $17.50 $22.16 $26.05
Carbon $16.76 $34.61 $43.85 $57.27 $26.87 $33.68 $38.47 $42.93 $13.44 $19.31 $24.17 $28.87
Centre $18.25 $34.36 $43.18 $56.12 $27.72 $33.79 $38.59 $42.97 $13.86 $19.18 $23.86 $28.34
Chester $17.53 $37.51 $49.33 $64.79 $27.83 $34.42 $39.21 $43.39 $13.92 $20.76 $26.70 $32.41
Clarion $15.32 $31.32 $40.41 $52.18 $24.72 $30.49 $35.28 $38.53 $12.36 $17.66 $22.47 $26.51
Clearfield $14.63 $30.51 $38.80 $50.05 $24.51 $30.49 $35.28 $38.97 $12.25 $17.26 $21.67 $25.53
Clinton $14.77 $30.70 $38.54 $49.30 $24.72 $31.12 $35.91 $39.62 $12.36 $17.35 $21.54 $25.18
Columbia $15.95 $32.82 $42.67 $55.64 $25.40 $31.23 $36.02 $39.44 $12.70 $18.41 $23.61 $28.12
Crawford $14.43 $30.96 $39.69 $51.11 $24.35 $30.49 $35.28 $38.61 $12.18 $17.48 $22.12 $26.02
Cumberland $14.43 $30.96 $39.69 $51.11 $24.35 $30.49 $35.28 $38.61 $12.18 $17.48 $22.12 $26.02
Dauphin $16.01 $34.12 $43.74 $57.15 $26.18 $32.79 $37.59 $41.64 $13.09 $19.06 $24.12 $28.81
Delaware $17.53 $36.64 $47.44 $61.95 $27.83 $34.42 $39.21 $43.39 $13.92 $20.32 $25.83 $31.03
Elk $14.35 $31.43 $40.63 $53.18 $24.46 $30.49 $35.28 $39.12 $12.23 $17.72 $22.59 $26.98
Erie $14.35 $31.43 $40.63 $53.18 $24.46 $30.49 $35.28 $39.12 $12.23 $17.72 $22.59 $26.98
Fayette $16.24 $33.66 $43.50 $56.99 $25.91 $32.11 $36.91 $40.82 $12.96 $18.83 $24.01 $28.74
Forest $15.05 $31.42 $40.21 $51.73 $24.57 $30.90 $35.70 $39.04 $12.28 $17.71 $22.37 $26.31
Franklin $15.85 $32.24 $40.93 $53.49 $25.25 $31.81 $36.60 $40.95 $12.62 $18.12 $22.73 $27.12
Fulton $14.74 $30.24 $38.26 $49.23 $24.89 $30.49 $35.28 $39.02 $12.44 $17.12 $21.40 $25.15
Greene $15.53 $32.41 $42.48 $55.51 $24.90 $30.59 $35.38 $38.65 $12.45 $18.20 $23.51 $28.06
Huntingdon $14.95 $30.96 $39.69 $51.51 $24.77 $30.49 $35.28 $38.98 $12.39 $17.48 $22.12 $26.20
Indiana $14.92 $31.60 $40.74 $52.70 $24.85 $30.73 $35.52 $38.87 $12.43 $17.80 $22.64 $26.75
Jefferson $14.75 $31.30 $40.32 $52.03 $24.42 $30.54 $35.34 $38.60 $12.21 $17.65 $22.43 $26.44
Juniata $14.35 $30.15 $38.08 $48.41 $24.28 $30.49 $35.28 $38.53 $12.14 $17.08 $21.31 $24.77
Lackawanna $15.16 $32.73 $42.36 $55.47 $25.25 $31.36 $36.15 $39.95 $12.62 $18.37 $23.45 $28.03
Lancaster $16.39 $34.34 $43.65 $56.81 $26.68 $33.33 $38.12 $42.26 $13.34 $19.17 $24.08 $28.65
Lawrence $14.51 $32.59 $42.71 $56.06 $24.43 $30.73 $35.52 $39.02 $12.22 $18.30 $23.63 $28.31
Lebanon $16.05 $33.39 $42.86 $56.04 $25.57 $32.17 $36.97 $40.95 $12.78 $18.69 $23.70 $28.30
Lehigh $16.76 $34.92 $44.53 $58.29 $26.87 $33.68 $38.47 $42.93 $13.44 $19.46 $24.49 $29.34
Luzerne $15.16 $32.06 $41.01 $53.29 $25.25 $31.36 $36.15 $39.95 $12.62 $18.03 $22.78 $27.03
Lycoming $15.85 $32.07 $40.98 $53.18 $25.24 $31.42 $36.21 $39.99 $12.62 $18.04 $22.76 $26.98
Mckean $14.85 $30.58 $38.93 $49.88 $24.26 $30.49 $35.28 $38.61 $12.13 $17.29 $21.74 $25.45
Mercer $14.90 $32.39 $42.56 $56.24 $24.31 $30.49 $35.28 $39.06 $12.15 $18.20 $23.55 $28.39
Mifflin $14.55 $30.96 $39.69 $51.62 $24.67 $30.49 $35.28 $39.08 $12.33 $17.48 $22.12 $26.26
Monroe $17.02 $34.96 $44.95 $59.91 $26.42 $33.36 $38.16 $43.39 $13.21 $19.48 $24.68 $30.09
Montgomery $17.53 $37.31 $48.89 $64.13 $27.83 $34.42 $39.21 $43.39 $13.92 $20.66 $26.50 $32.09
Montour $15.76 $32.63 $42.26 $55.74 $25.40 $31.26 $36.06 $40.21 $12.70 $18.32 $23.40 $28.16
Northampton $16.76 $35.00 $44.70 $58.55 $26.87 $33.68 $38.47 $42.93 $13.44 $19.50 $24.56 $29.46
Northumberland $16.76 $35.00 $44.70 $58.55 $26.87 $33.68 $38.47 $42.93 $13.44 $19.50 $24.56 $29.46
Perry $16.01 $32.82 $41.10 $52.93 $26.18 $32.79 $37.59 $41.64 $13.09 $18.41 $22.82 $26.86
Philadelphia $17.53 $36.94 $48.10 $62.94 $27.83 $34.42 $39.21 $43.39 $13.92 $20.47 $26.14 $31.49
Pike $18.31 $36.70 $47.02 $62.52 $27.72 $34.93 $39.72 $45.26 $13.86 $20.35 $25.64 $31.30
Potter $14.74 $30.71 $39.20 $50.77 $24.37 $30.49 $35.28 $39.04 $12.19 $17.36 $21.87 $25.86
Schuylkill $14.97 $31.14 $40.01 $51.97 $24.37 $30.53 $35.32 $39.00 $12.18 $17.57 $22.27 $26.42
Snyder $15.46 $30.77 $39.04 $50.38 $24.93 $30.77 $35.56 $39.34 $12.47 $17.39 $21.79 $25.68
Somerset $15.27 $30.71 $39.20 $50.84 $24.67 $30.49 $35.28 $39.10 $12.33 $17.36 $21.87 $25.90
Sullivan $14.74 $30.92 $39.61 $51.97 $24.72 $30.49 $35.28 $39.54 $12.36 $17.46 $22.07 $26.42
Susquehanna $14.80 $31.36 $40.16 $52.14 $24.54 $30.82 $35.62 $39.36 $12.27 $17.68 $22.35 $26.50
Tioga $14.68 $31.59 $40.45 $52.48 $24.63 $30.99 $35.78 $39.50 $12.32 $17.80 $22.49 $26.65
Union $15.15 $31.16 $39.53 $51.35 $25.37 $31.04 $35.83 $39.90 $12.68 $17.58 $22.04 $26.13
Venango $14.58 $31.32 $40.41 $52.18 $24.44 $30.49 $35.28 $38.53 $12.22 $17.66 $22.47 $26.51
Warren $15.08 $30.80 $39.38 $50.82 $24.48 $30.49 $35.28 $38.81 $12.24 $17.40 $21.96 $25.89
Washington $15.43 $32.97 $42.77 $55.98 $25.36 $31.42 $36.21 $39.89 $12.68 $18.48 $23.66 $28.27
Wayne $15.43 $32.97 $42.77 $55.98 $25.36 $31.42 $36.21 $39.89 $12.68 $18.48 $23.66 $28.27
Westmoreland $16.24 $33.26 $42.67 $55.69 $25.91 $32.11 $36.91 $40.82 $12.96 $18.63 $23.60 $28.14
Wyoming $15.16 $33.44 $43.84 $57.79 $25.25 $31.36 $36.15 $39.95 $12.62 $18.72 $24.17 $29.11
York $15.72 $33.41 $42.65 $55.52 $25.75 $32.43 $37.22 $41.17 $12.88 $18.70 $23.59 $28.06

 

 

 

Why We Should Raise the Minimum Wage in Pennsylvania to $15 Per Hour

By Blog Post, Policy Briefs, Press Statement

 

Click here to read a full-screen version, download, and print.

A high minimum wage ensures we have an economy that works for all of us. It protects workers and provides a dignified life.
  • The minimum wage is a critical protection for workers—like the right to form unions, the social safety net, and a tax system that asks the rich to pay at a higher rate than the poor. These policies ensure that our economy works for all of us, not just the wealthy owners of huge corporations.
  • We show respect for the dignity of work by ensuring all full-time workers are paid a decent wage that allows them to support themselves and their families. Opponents of a higher minimum wage want the work but won’t provide the dignity.
  • Since 1947, workers’ share of the benefits of the United States economy has shrunk drastically. But our economy is more productive than ever. If the minimum wage had gone up with productivity increases since 1968, it would be over $23 per hour today. Most of us struggle while the wealthy owners of corporations grow ever richer.
  • Our tax dollars subsidize wealthy corporations that fail to pay their workers a living wage by forcing workers to supplement their low wages with social safety net programs.
  • Pennsylvania workers have fallen behind because the state hasn’t raised the minimum wage in more than 13 years. It is worth 27% less than it was in 2009, the last time it was raised nationally. Adjusted for inflation, the minimum wage is now worth less than at any time since the mid-1950s.
  • We need a higher minimum wage to protect workers whose incomes have fallen further behind as inflation has increased, in part, because corporations have ratcheted up prices to make record profits.

Every state around us is raising the minimum wage!

  • Since 2014, 30 states and Washington, DC, have increased their minimum wage, including every state that borders Pennsylvania.

Raising the minimum wage dignifies the work of adults who head families.

  • Raising the minimum wage benefits low-income workers, who now make below the proposed minimum wage, and those who make just above it because businesses typically raise the wages of workers making just above the new minimum wage so as not to lose them to competitors.
  • KRC’s analysis of $15-per-hour minimum wage proposals shows that more than 80% of the workers who would see a pay raise are over age 18. These workers are disproportionately women and people of color, and many were “essential” workers during the height of the pandemic.

A higher minimum wage will create new jobs.

  • Recent research by the NY Federal Reserve, KRC, and UC Berkeley economists is consistent with earlier research showing that raising the minimum wage doesn’t reduce jobs—in fact, it often creates new ones by increasing consumption.

Raising the minimum wage is good for local businesses and the economy—and this is the best possible time to do it.

  • Higher wages for workers mean that they and their families will be spending more in their communities, boosting the local economy and helping Pennsylvania businesses. That is why dozens of economists have endorsed a minimum wage increase.
  • Many small businesses can’t hire enough workers right now. They want to pay their employees more but are worried about being at a competitive disadvantage to businesses that pay less. Raising the minimum wage would create a higher wage floor, enabling all businesses to find the workers they need.
  • Higher wages increase worker morale and productivity. They also reduce turnover and training costs, benefiting local businesses that are being pressed by the higher wholesale costs charged by large corporations.

Would raising the minimum wage increase prices?

Some prices may go up, but wages will increase faster than prices for a number of reasons.

  • For example, the cost of a 12-inch, hand-tossed Domino’s pizza averages 1.5% more in the states around PA, even though the minimum wage averages 69% more.
  • Wages are only part of the cost of doing business.
  • Increased productivity and reduced training costs for employers hold price increases down.

The Impact of the Minimum Wage on the Price of Pizza

Price of 12-inch,  hand-tossed or thin-crust Domino’s Pizza Price relative to Harrisburg State minimum wage as of January 1, 2023 Minimum wage relative to Pennsylvania
Harrisburg, PA $10.99 $7.25
Annapolis, MD $11.99 9.10% $13.25 82.76%
Albany, NY $11.49 4.55% $14.20 95.86%
Trenton, NJ $10.99 0.00% $14.13 94.90%
Wilmington, DE $10.99 0.00% $13.25 82.76%
Charleston, WV $10.99 0.00% $8.75 20.69%
Columbus, Ohio $10.49 -4.55% $10.10 39.31%
Average difference between PA and surrounding states 1.52% 69.38%

Pennsylvanians support a higher minimum wage.

  • A  May 2022 poll commissioned by the State Innovation Exchange found that 73% of Pennsylvanians support putting the state on a path to a $15-per-hour minimum wage. A majority of Pennsylvanians in every state House and Senate district, including the most Republican districts, agree.

Ending state preemption that prevents local communities from raising their minimum wage is needed to protect workers.

  • The cost of living in many Pennsylvania counties—Philadelphia, Allegheny, Pike, and others—is far higher than the state average. Counties should have the option to account for these variations.

“One fair wage,” an end to the tipped minimum wage, is also needed to protect workers.

  • In Pennsylvania, employers of workers who customarily receive tips are only required to pay their tipped workers a base wage of $2.83 per hour.
  • Forcing workers to rely on tips also encourages sexual harassment in the workplace. One fair wage would protect all workers, especially women, from being abused by customers and employers.

For more information, contact: Marc Stier, Executive Director, Pennsylvania Policy Center; stier@pennpolicy.org, (215) 880-6142.

The Real Cost of Opening a Window for Sexual Abuse Lawsuits in Pennsylvania

By Blog Post, Policy Briefs

By Marc Stier

I was asked to testify about the claims made in a paper by the Susquehanna Valley Center for Public Policy that opening a two-year window for childhood victims of sexual abuse to bring lawsuits against their abusers might cost public schools in Pennsylvania between $10 billion and $32 billion. On its face, the claim sounds utterly absurd. (Not to mention irrelevant; if that is the cost of doing justice for those who have suffered from sexual abuse, then that is what we should be prepared to pay.) But as I delved into the details of the paper, I discovered that it was based on what, frankly, was a horror show of faulty research methods and statistical analyses. I was tempted to say—but in the setting of an official hearing in the Capitol, did not say—that this paper would have received no better than a D grade in the research methods or statistics courses I had taught at the University of North Carolina Charlotte or City College of New York. But that is, in fact, the truth.

Read the whole response here.  

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