Schools need long-term fix

By Joseph P. Markham

Last summer in Harrisburg, without much fanfare, House Bill 1776 was tabled by a state House committee. The measure was the legislature's latest attempt to reform Pennsylvania's property taxes and school funding. The idea was to create a revenue-neutral shift away from real estate taxes as a funding source for the state's public schools.

Pennsylvania first got into the business of public education back in 1834, with the passage of the Free Public School Act. Participation in the policy was voluntary, however; if a school district agreed to provide elementary education to its children, the state would cover a third of the cost, while the school district would have to raise the rest.

Over the years, education became mandatory for all of Pennsylvania's children. The mandatory level of education increased incrementally from sixth grade on up as the state recognized children's need for greater skills to function in an increasingly complex society.

School funding continued to come from a combination of state contributions and local real estate taxes. From time to time, the funding formula was tweaked, recognizing the economic disparities among communities in different parts of the commonwealth.

During this evolution of public education in Pennsylvania, there were two paradigm shifts. The first involved the state's mandating and defining the basic kindergarten-through-12th-grade educational programs. Pennsylvania's 1968 constitution enshrined its responsibility for providing for, and fully funding, public education. Under Article III, Section 14, "The General Assembly shall provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth."

The second major shift was the slow disintegration of the funding system that relied on a combination of state money and county property assessments. In an agrarian society, real estate valuation very closely correlates with personal income, so in many ways, real estate taxes acted like income taxes. As we progressed from an agricultural to an industrial and finally to a service-based economy, however, this reliance on real estate taxes for school funding has created significant economic hardship for school districts throughout Pennsylvania (as well as in New Jersey and other states with similar systems). Today, there is a serious disconnect between land values and the income attributable to them.

Economic distortions with very serious consequences have been created among school districts, often those neighboring each other. Communities with schools perceived as good now tend to siphon residents from districts perceived as bad. This in turn drives down the price of housing in the "bad" school districts, creating a downward spiral of real estate values.

Meanwhile, districts that rely primarily on residential real estate taxes find their housing markets at a competitive disadvantage with neighboring districts that have greater commercial tax bases. Again, this causes long-term damage to the viability of the residential tax base.

The reason House Bill 1776 was tabled is simple: While examining the possibility of creating a revenue-neutral means of eliminating property taxes, House members discovered the ugly truth: Public education in Pennsylvania is chronically underfunded, even without the $1 billion in K-12 funding the Corbett administration has cut.

Education funding is so balkanized that its collapse is inevitable; in fact, it's already occurring in the poorest school districts. Flog the teachers' unions as much as you like, but the fact is that well-funded school districts are still providing high-quality education to their students.

Charter schools are great experimental incubators for innovative educational techniques, and vouchers hold short-term promise for providing educational opportunities to children in failing schools. But these remain largely sound-bite solutions that create the perception of action while ignoring the long-term, underlying problem.

The state House Select Committee on Property Tax Reform is now trying to assemble a fiscal framework that can begin to solve this vexing funding conundrum. While there will be winners and losers in any plan, there are two facts that should provide this committee with some room to maneuver: Recent studies have shown that, based on local and state tax rates, Pennsylvania has a lighter tax burden than surrounding states, and its business climate is among the most competitive in the Northeast and Mid-Atlantic regions.

There are hard decisions to be made on school funding that go beyond rearranging deck chairs. But Pennsylvania owes all its children an adequate education. This obligation is not being met, and it hasn't been for a long time. It's time to change that.