Education Spending Trends 2016-17

$4.5 billion—that's the collective balance in Pennsylvania school district reserve funds. Reserve balances are at an all-time high and hold enough money to cut every Pennsylvania student a $2,860 check, but is more money a solution to Pennsylvania's educational problems?

All-Time High Spending

Education spending in Pennsylvania continues to skyrocket. Yet, calls continue for “more money” or “adequate funding.”

• Overall education spending in Pennsylvania topped $30 billion for the first-time last year, totaling $30.5 billion and representing a 19 percent increase in the last five years.
• At $11.3 billion, state aid to school districts has increased 23 percent since 2012 and is at record levels.
• Average revenue per student is approaching $18,000, far above the national average and up 20 percent over the last five years.
• Even Pennsylvania’s lower-income districts spend more than the national average.
  • For example, 100 percent of the students at William Penn school district qualify for the free lunch program, yet average per-student funding is nearly $3,000 above the national average (most recent data 2014-15).
• Nationally, Pa. ranks 9th in average per student funding.
• Academic outcomes do not track with ever-increasing budgets. For instance, SAT scores have remained largely unchanged since 1970.

Taxpayers Deserve Transparency and Accountability

School districts are supposed to be accountable to the taxpayers. Citizens should have easy access to information about large spending projects and reserve allocations.

• School district reserve fund balances are at an all-time high of $4.5 billion, up 143 percent since 2005.
• School districts now hold enough cash to cut each Pennsylvania student a $2,860 check.
• Auditor General Eugene DePasquale says reserve funds greater than 20 percent of district spending should be questioned.
  • Of Pennsylvania's 500 school districts, 226 held reserves of 20 percent of spending or higher in 2016-17. 
  • 13 districts with reserves above 20 percent have asked for permission to raise property taxes above the state-mandated cap in at least 8 of the last 10 years.
• These figures include general fund balances only, as data for separate capital reserve funds are not available.

'Hold Harmless' Harms

The state’s hold harmless provision guarantees no reduction to a school’s funding regardless of declining enrollment. This provision applies to the majority of basic education funding. In contrast, the new fair funding formula applies to only 7 percent of basic education funding.

• This system exacerbates education spending inequality across the state.
• Shrinking schools get far more funding, while growing schools get less.

Solution: Let Education Funding Follow the Child

By educating students for a fraction of the school districts' costs, education choice programs can save taxpayer dollars and help resolve district funding disparities, while shifting the focus from funding buildings to funding students.

• Education Savings Accounts: ESAs are state funded accounts that empower parents to customize their child’s education. As families utilize ESAs, per-student funding in their home district can rise.
  • For example, Harrisburg spends nearly $19,000 per-student. If a student takes an ESA grant of $6,000, the district keeps the remaining $13,000.

• Education Improvement Tax Credit (EITC): EITC scholarships, funded by tax credits, offer school choice to thousands of Pa. kids. The EITC alone saved taxpayers more than $1 billion from 2002-2014, according to an EdChoice audit.
  • Yet thousands of Pa. kids are turned away each year from tax credit scholarships.

• Opportunity Scholarship Tax Credit (OSTC): OSTC scholarships, funded by tax credits, serve students in the state's lowest-achieving school. These schools rank in the bottom 15 percent, based on Pennsylvania System of School Assessment (PSSA) scores.
   
• Charter Schools: Charter schools are independently run public schools free from many mandates and regulations. While Philadelphia district schools spend a colossal $24,597 per student, Philly charter schools serve students with roughly half that amount at $13,588 per student.

Numerous studies show education choice improves academic outcomes, improves public schools, reduces racial segregation, and improves civic values. Expanding EITC and OSTC and creating Education Savings Accounts is the best way to create a thorough and efficient education system for everyone.

To find information on your school district, view our education spending infographic.