SUMMARY

• The 2021-22 budget has the largest state education funding increase in Pennsylvania history despite public schools receiving over $6.2 billion in federal COVID-19 relief funds. The funding increase includes a $100 million boost to “Level Up” the lowest-wealth school districts.
• Numbers contradict the Level Up “gap” narrative. School districts with higher poverty rates already receive higher state funding per student than districts in wealthy areas.
• The 100 “most underfunded” districts that received Level Up funds had earmarks close to $3.7 billion in federal COVID-19 relief funds months before the Pennsylvania budget passed in June. Moreover, AFR data shows these districts with a combined total of $702 million in reserve funds for 2019-20.
• Mismanagement, bureaucratic inefficiency, and even corruption often exacerbate the financial, academic, and infrastructure challenges school districts face. Further increasing state funding does not solve for school failures.
• The $100 million for Level Up could instead have directly helped families. These funds could have offered either 33,000 new EITC/OSTC scholarships or some 15,000 EOAs.

BACKGROUND

• For the 2021-22 budget, Pennsylvania lawmakers increased basic education funding by $300 million, with $100 million allocated to Level Up districts. The initiative provides “more equitable funding to the 100 most underfunded districts and the students they serve.”
• Level Up's methodology identified the 100 districts by calculating a “weighted student” count for every school district. Using “student weights,” proponents considered factors such as poverty, English learners, charter school enrollment, and special education population. These districts receive inequitable and inadequate funding, according to proponents, because the current hold harmless rule—which says school districts should not receive less funding than in the prior year—hampers the state’s 2016 student-based formula for funding increases.

GAP BETWEEN WEALTHY AND POOR DISTRICTS?

• The Level Up coalition claims that “the wealthiest school districts” in Pennsylvania “spend, on average, $4,800 more per student than the poorest, and that gap has grown steadily wider.” However, numbers do not lie. State funding per student is significantly higher in districts with higher poverty rates. This higher level of funding has brought total per pupil funding at the highest poverty districts to nearly the same level as the lowest poverty districts.
• Among the 100 Level Up districts in particular, total funding per student is near the state average.

—  The average total funding per student in the 100 districts was $18,153 in 2019-20, which is about $1,000 less than the state average of $19,224.

—  In 2019-20, 30% of the 100 Level Up districts received more funding per student than the state average of $19,224.

• While some school districts may trail behind the wealthiest districts in Pennsylvania, they still receive more funding per student than schools nationwide.

—  According to the most recent data available (2018-19), the national average for public school funding per student was $15,122.

—  In 2018-19, 80% of the school districts on the Level Up list received funding per student above the national average.

FEDERAL AID & RESERVE FUNDS

• Level Up’s 100 “most underfunded” districts received a substantial portion of the over $6.2 billion of federal COVID-19 relief funds. Pennsylvania public schools have and will continue to receive this funding through three packages: the Coronavirus Aid, Relief, and Economic Security Act (CARES), Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA), and American Rescue Plan (ARP).

—  The 100 districts will receive a combined total of almost $3.7 billion in federal COVID-19 relief funds.

—  Nine out of the top ten Level Up districts were also top ten recipients of federal COVID-19 aid to public school districts.

—  Level Up’s top ten districts alone received over 40% of the federal COVID-19 aid allocated to Pennsylvania’s public school districts.

• Level Up’s 100 “most underfunded” districts also have hundreds of millions of dollars in rainy day reserve funds. Although it may be responsible to set aside some funding for unexpected contingencies, school districts are stockpiling taxpayer dollars while claiming to not have enough.

—  Level Up districts have a combined total of $702 million in general reserve funds, according to the latest annual financial report (AFR) data.

—  Meanwhile, 34 of the 100 Level Up school districts have reserve funds over 20% of their total expenditures. In 2016, former Auditor General Eugene DePasquale recommended a benchmark on reserve funds of not more than 20% of a school district’s total expenditures.

MORE FUNDING IS NOT THE SOLUTION

The districts identified by the Level Up coalition as having the most severe underfunding face legitimate financial, academic, and infrastructure challenges. Unfortunately, these problems cannot be simply solved by increasing taxpayer funding. The strangleholds of mismanagement, bureaucratic inefficiency, and even corruption too often exacerbate the difficulties.

• Philadelphia City School District is the top recipient of Level Up funding. Sadly, the district’s recent performance on removing asbestos from school buildings highlights broader oversight and mismanagement issues that plague the administration. Philadelphia Inquirer reports that hired contractors do poor-quality and incomplete work that often makes school conditions worse for the children.
• Allentown City School District, top 3 in Level Up funding, has a record of mismanagement. The district has underbudgeted salaries, given six-figure buyouts for former superintendents, and produced financial figures that do not always line up. On one occasion, the school districts’ business office suddenly discovered $11 million half-way through the year.
• A 2019 state audit found that the Harrisburg City School District, top 6 recipient of Level Up, had over $5 million in questionable costs over a three-year period. Among these include overpaying the superintendent nearly $20,000, paying more than a third of vendors above contracted amounts, and continuing to provide terminated employees with health care. The school district originally refused the audit and when it finally complied, the district terminated two of the employees that cooperated with the auditors.

—  In 2019, the FBI and the Pennsylvania Office of Attorney General also performed a joint investigation into the Harrisburg City School District. While the FBI did not disclose the reason or topic of its investigation, the Attorney General’s office confirmed joint efforts for what began as a probe into the disappearance of several computers from the school district’s business office.

• Scranton School District, top 7 recipient of Level Up funds, has a history of corruption and incompetence.

—  In 2020, Attorney General Josh Shapiro charged three top school district administrators “with endangering the welfare of children.” Former School District Superintendent Alexis Kirijan, Chief Operating Officer Jeff Brazil, and Maintenance Supervisor Joseph Slack received indictments for their cover-up of the districts’ dangerous levels of lead and asbestos.

—  In 2019, the deputy superintendent of finance that had worked in the district for 33 years pleaded guilty to using over $8,000 in school district money to pay for repairs on his personal vehicle. Earlier that year, the fleet manager was imprisoned for overbilling the district for erroneous auto work over 13 years.

—  Through a 2017 audit of Scranton School District, the Department of the Auditor General found “an extreme level of board and administrative staff dysfunction.” The audit uncovered reckless overspending, improper payments and health benefits provision, inadequate oversight of inventory, and wasteful no-bid contracting. The audit concluded that “the problem with this district’s finances is not about revenue, it is about wasteful spending and general mismanagement.”

• Chester-Upland, top 9 in Level Up funding, was in such “administrative chaos” that auditors were unable to complete an assessment in 2017. In 2021, the district was still in chaos and only narrowly avoided an "unprecedented" takeover by charter school operators.
• Coatesville Area, top 24 in Level Up funding, has also struggled with transparency and corruption issues. In 2018, former superintendent Richard Como was sentenced for theft and ethics violations including using school money to pay for personal football rings, receiving reimbursements for fraudulent expenses and “off the book” events, and facilitating the hiring of his son. The former athletic director was also imprisoned for stealing $15,000 from the district. Chester County’s district attorney noted that the Coatesville school board actively tried to hinder its investigation.

While these examples of mismanagement and corruption may not apply to all 100 districts on the Level Up list, they help explain why school districts can be flush with taxpayer dollars and still fail kids and families.

• Increasing state funding is not a guaranteed solution for failing schools. Aliquippa School District, for example, receives the highest revenue per average daily membership (ADM) of the top 30 recipients of Level Up funding. However, between 2015 and 2019 (see appendix), the percentage of students with Pennsylvania System of School Assessment (PSSA) Math and English Language Arts scores at or above proficiency declined even as state funding per student increased by 24% (adjusted for inflation). Aliquippa School District receives $22,799 per ADM, which is $4,000 higher than the state average.

LOST OPPORTUNITY

• Instead of spending more taxpayer dollars on systems with a long history of shortchanging kids, state lawmakers should direct funding to the kids themselves through further expansion of the Educational Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs. While state lawmakers expanded the EITC program by $40 million this summer, there are still tens of thousands of students that are on the waiting list. The $100 million directed to the Level Up initiative could have funded close to 33,000 new scholarships, potentially eliminating the current waitlist.
• Lawmakers can also directly fund kids by establishing Education Opportunity Accounts (EOAs). EOAs are publicly funded accounts that allow children and their families to pay for educational resources like tuition, curriculum, tutoring, internet access, and services for students with special needs. Students should be able to choose the educational environment and resources that works best for them, and not tied to an unyielding bureaucratic system. The $100 million directed to the Level Up initiative could have funded EOAs for almost 15,000 students in Pennsylvania.

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