The Pottstown School District lost $1 million in annual tax revenue after a for-profit hospital was sold in 2017.
It has cut more than 60 administrators, teachers, and staff over the last eight years, outsourced its transportation department, and increased elementary class sizes, the district says.
Its tax base has declined, and it’s reluctant to turn to property owners for help: The district already has one of the state’s highest real-estate tax rates — triple that of the Upper Merion School District at the other end of Montgomery County.
So when Gov. Tom Wolf unveiled a spending plan that would add $665,000 in state aid to Pottstown’s $62 million budget, district officials weren’t exactly celebrating.
“In the overall grand picture of putting our students on a fair and equitable platform with students across Pennsylvania, there’s a long way to go,” said school board member John Armato.
Districts across the state — particularly those with lesser resources — share Pottstown’s complaint. They stand to get more money in 2019-20, but say it’s not nearly enough.
Despite funding increases under Wolf and the adoption of a new state formula several years ago that directed more money to school districts with greater needs, many Pennsylvania districts are still facing financial challenges that will require deeper cuts, steeper tax increases, or both.
Because Pennsylvania relies heavily on local taxes to pay for schools — in 2016, the state contributed 37 percent of public education revenue, a lesser share than all but four other states — much of the burden falls to property taxpayers. Districts with more limited tax bases have less ability to raise money to pay their bills.
“The plight of the have-nots is going to get worse, there’s no question about that,” said Jay Himes, executive director of the Pennsylvania Association of School Business Officials.
For a majority of school districts, cost increases are likely to continue to outpace new revenue, according to a January report from the Temple University Center on Regional Politics.
By 2021-22, 60 percent of districts will likely have budget shortfalls, compared with 40 percent with surpluses, according to the report, which projected that local tax dollars would provide the vast majority of new revenue for schools over the coming years.
“The disparity between the two will grow greater and greater," said William Hartman, emeritus professor of education at Pennsylvania State University and one of the report’s authors. While the state’s funding formula was intended to direct more money to needier districts, it applied only to new education dollars — or under Wolf’s proposal for next year, about 11 percent of the state’s main subsidy for public education.
“The problem is that there’s not enough money in it," Hartman said.
The resource gap between school districts is part of an ongoing lawsuit alleging Pennsylvania’s school funding is both inadequate and inequitable. The case has been scheduled for trial in 2020.
Some advocates and school districts have pushed for immediate changes to send more state money through the formula. Pottstown would receive an additional $13.8 million if all of the state’s main education subsidy was run through the formula, said Armato, the district spokesperson.
In New Jersey, the state has taken steps to redistribute some education funding, a shift that has meant boosts for some districts and cuts for others.
Wolf, who drew pushback last year for saying he supported sending all education money through the formula, which would have meant cuts to many districts, did not propose any redistribution in his new budget plan.
On the other side of the budget equation, school districts have faced growing costs. Districts have been required to make escalating payments into the state Public School Employees Retirement System. While the rate of those increases is slowing, the cost is still going up.
Districts must also fund charter schools based on the number of enrolled students. Those costs are projected to have grown by 7 percent statewide in the five-year period ending in 2021-22, according to Hartman’s report — though some districts will be affected more than others. About half of Pennsylvania’s charter schools are located in Philadelphia.
Special education costs have also been mounting — both because more students are receiving services, and more students are requiring costlier services, according to a January report by the Pennsylvania Association of School Business Officials and the Pennsylvania Association of School Administrators.
Between pension contributions, charter school tuition, and special education services, costs climbed nearly $4 billion between 2010-11 and 2016-17, while state funding grew by less than $2 billion, according to the report.
If approved by lawmakers, Wolf’s budget plan for the coming year would include an additional $200 million for the main state subsidy for public schools — a greater than 3 percent bump over the $6.1 billion the state currently spends, and double last year’s. Wolf had proposed a larger increase at the start of his first term, but it was blocked by the GOP-led legislature.
Even if this increase is approved, school officials said, it won’t do much more than cover added costs.
“The sad point is, very few of those dollars are going to make it to the classroom,” said Mark DiRocco, executive director of the school administrators’ association, though he said Wolf’s proposed $50 million increase in special education funding “will help keep several districts in the black.”
Although state aid is slated to increase by $200,000, or 4 percent, in Cheltenham, “it still does not meet our financial needs,” said superintendent Wagner Marseille. The district is serving an increasing number of students requiring special education, as well as those eligible for free or reduced lunch, Marseille said.
Cheltenham has one of the highest school-tax rates in Montgomery County — second only to Pottstown. “We’ve been really mindful of trying not to go above" the Act 1 index, which caps tax increases on average by 3 percent, Marseille said. But “that really is just delaying the inevitable.”
In Bensalem, which is proposed to receive a 6.5 percent increase in state aid, the district’s preliminary budget avoids cuts but includes a tax increase. The district — which plans to seek state permission to raise taxes above its index to cover special education costs — has raised taxes in all but two of the last 10 years, said superintendent Samuel Lee.
Bensalem has “a really good tax base” to draw on, Lee said. “We’re the only way out of this, by and large.”
In Pottstown, where the assessed value of properties has been declining, and the sale of a for-profit hospital to a nonprofit cost the district $1 million in annual tax revenue, district officials aren’t yet sure what next year’s budget will look like.
Beth Yoder, an art teacher at Pottstown High School and president of the district’s teachers union, said the accumulation of cuts has created “one huge mess.” Pottstown’s middle school dropped foreign language. The district of 3,200 students — 72 percent are economically disadvantaged — has no guidance counselors.
Pottstown laid off the person who used to make copies. Teachers “don’t even have time to make a parent call now, they’re running making copies,” said Yoder, who has worked for the district for 25 years. She said teachers are leaving for better-paying districts: Yoder’s sister now drives a half-hour to the Colonial School District and makes $20,000 more.