Editorial: Property tax hikes a sign of what's to come
Property tax bills have arrived in homeowners’ mailboxes, and for many, this year’s sticker shock has gone up despite an increase in state funding for schools and despite local school boards weighing program cuts.
That squeeze -- weighing students’ needs against taxpayer resources -- is about to get worse with a divide that threatens more than half the 500 school districts in Pennsylvania with financial crisis in five years.
In the next five years, 60 percent or more of school districts in Pennsylvania will be in fiscal distress, according to a June 28 report by MediaNews Group staff writer Evan Brandt. Brandt’s report detailed the findings of a study, “A Tale of Haves and Have-Nots," released earlier this year by the Temple University Center on Regional Politics.
Study authors William Hartman and Timothy J. Shrom illustrate how unfunded mandated costs — retirement and charter school tuition in particular — will soon exceed the amount of state aid many districts receive.
Districts are left with no choice but to raise local property taxes to balance their budgets. With the Act 1 Index tax cap on those increases, it may still not be enough, and many will have to resort to cutting programs to balance their budgets, Brandt reported. .
"The 'Have-Nots' will have lower expenditures, fewer educational resources, lower levels of staffing, and limited other opportunities for students. (The) 'Haves' will have higher levels of expenditures, appropriate educational resources, including advanced technology, adequate levels and types of staff, and additional educational opportunities for their students," wrote the study authors.
A sampling of 10 school districts analyzed by Brandt in the tri-county area, using the report's calculations and Pennsylvania Department of Education data, show five districts weathering deficits of more than $12 million while five districts amass combined surpluses of more than $23 million. It works out to a school funding gap of more than $35.7 million among just 10 school districts in Berks, Chester and Montgomery counties, Brandt reported.
The culprits, according to the report, are mandated costs which local school districts can’t control. Even in wealthier districts like Spring-Ford, Perkiomen Valley, Radnor Township and Downingtown, those costs threaten to outstrip resources forcing them into the have-nots column.
The mandated costs of pensions, special education and charter school payments grew by $293 million in Montgomery County districts alone since 2010, according to another recent report by Public Citizens for Children and Youth.
"Charter school tuition is the second largest increase of any of the major expenditure categories, second only to salaries, and more than PSERS (Public School Employee Retirement System), health care and 'other,'" according to the Temple report. "One out of every five district taxpayer dollar increases will be used to pay charter school tuition."
Another big mandated cost driver is school employee retirement benefits, known as PSERS. PSERS costs "are projected to grow at a lower rate due to lower annual Employee Contribution Rate (ECR) jumps, but they will continue to place a substantial burden on district budgets," according to the Temple report.
Adds PCCY: "Despite the state’s recent funding increases, it still funds just 35 percent of education costs, placing Pennsylvania 46th out of 50 nationwide for the share of education costs provided by the state."
Thus, the annual budget season dance in which local school boards debate cutting things not mandated by the state, such as athletics, art, music and foreign language instruction. When all else fails, that property tax bill climbs.
Legislators refuse to raise taxes on the state level, and efforts to reform charter school reimbursements and pension plans fall short.
Increasing the state subsidy does little when the cost of mandates remains high. “Getting $12 in your right pocket does no good if someone is taking $13 out of your left pocket," said Temple study author Shrom.
Without drastic changes in mandates or substantially increased funding, the study authors said, their predictions will become reality. They told Brandt that their study shocked staff members of the Senate Appropriations Committee, prompting talk of a task force to examine school funding.
We strongly urge that examination, beginning with the recommendation to reduce mandates and increase the state share of funding. Charter school reform is near the top of that list.
This fiscal crisis has been edging closer to reality through years of bad decisions in Harrisburg. It’s time to stop the slide before hundreds of districts – and thousands of children and taxpayers – suffer the consequences.
Local cartoonist and illustrator Alan McBain