PRINTER'S NO. 1949
No. 1544 Session of 2007
INTRODUCED BY MICOZZIE, MANDERINO, CIVERA, CURRY, GEORGE, M. KELLER, KOTIK, MYERS, READSHAW, STURLA, THOMAS, BISHOP, BLACKWELL, COHEN, JOSEPHS, KENNEY, McGEEHAN, M. O'BRIEN, PARKER, PAYTON, ROEBUCK, J. TAYLOR AND WILLIAMS, JUNE 18, 2007
REFERRED TO COMMITTEE ON EDUCATION, JUNE 18, 2007
AN ACT 1 Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An 2 act relating to the public school system, including certain 3 provisions applicable as well to private and parochial 4 schools; amending, revising, consolidating and changing the 5 laws relating thereto," providing for a successful school 6 budget subsidy system. 7 The General Assembly of the Commonwealth of Pennsylvania 8 hereby enacts as follows: 9 Section 1. The act of March 10, 1949 (P.L.30, No.14), known 10 as the Public School Code of 1949, is amended by adding an 11 article to read: 12 ARTICLE XXV-B 13 SUCCESSFUL SCHOOL SUBSIDY SYSTEM 14 Section 2501-B. Legislative findings and declarations. 15 The General Assembly finds and declares as follows: 16 (1) Section 14 of Article III of the Constitution of 17 Pennsylvania states: "The General Assembly shall provide for 18 the maintenance and support of a thorough and efficient
1 system of public education to serve the needs of the 2 Commonwealth." 3 (2) The current system of financing public education 4 provides inequitable learning opportunities for pupils, based 5 largely upon the wealth of the communities in which they live 6 and results in an education system that is neither thorough 7 nor efficient. 8 (3) The current system of financing public education 9 places an onerous local tax burden on property owners but 10 does not guarantee every pupil an adequate education and 11 results in an education system that is neither thorough nor 12 efficient. 13 (4) Some school districts are doing an exemplary job of 14 helping their pupils succeed and achieve the State's academic 15 standards, but many other school districts are unable to do 16 so; the result is an education system that is not thorough 17 and efficient. 18 (5) Funding levels for all pupils in this Commonwealth 19 should reflect the funding levels in the school districts 20 that meet the performance standards established by the No 21 Child Left Behind Act of 2001 and by the department. 22 (6) In order to provide for the maintenance and support 23 of a thorough and efficient system of public education to 24 serve the needs of the Commonwealth and to reduce inequities 25 among school districts, the Commonwealth should pay the 26 substantial majority of the total costs of public education, 27 as occurs in the majority of other states. 28 (7) In order to ensure local control of and support for 29 public schools, every local school district should provide 30 some of the funds to support its schools from local tax 20070H1544B1949 - 2 -
1 sources, but reliance upon these sources should be greatly 2 reduced. 3 (8) The Commonwealth should provide relatively greater 4 support to those school districts with the greatest needs and 5 the least ability to raise revenues locally. 6 (9) In no case should any school district receive from 7 the Commonwealth less financial support than the school 8 district receives under the Article XXV funding system. 9 Section 2502-B. Definitions. 10 The following words and phrases when used in this article 11 shall have the meanings given to them in this section unless the 12 context clearly indicates otherwise: 13 "Aid ratio." The market value/income aid ratio of a school 14 district as defined under section 2501(14.1). 15 "Average daily membership" or "ADM." The average daily 16 membership of a school district as defined under section 17 2501(3), including pupils enrolled in preschool programs 18 administered by the school district. Each pupil enrolled for 19 less than a full school day shall be counted as one-half of one 20 ADM. 21 "Department." The Department of Education of the 22 Commonwealth. 23 "District educational performance cost factor." The amount 24 of spending per pupil required by a school district in order to 25 achieve levels of spending equivalent to those in high 26 performing districts, as calculated under section 2505-B(b). 27 "District successful school education cost." The district 28 spending average for the district to achieve the equivalent 29 spending levels of the high performing schools. The cost is 30 calculated by multiplying the district calculated performance 20070H1544B1949 - 3 -
1 cost factor by the district's ADM. 2 "Economically disadvantaged pupils." Any pupil who applies 3 and qualifies for free or reduced-price lunches under the 4 National School Lunch Program under 7 CFR 210.2 (relating to 5 definitions). 6 "Educational difficulty factor." The amount calculated under 7 section 2506-B(a) to account for additional costs associated 8 with educating higher concentrations of pupils who are 9 economically disadvantaged, pupils who are receiving special 10 education programs or services and pupils who have limited 11 English proficiency. 12 "Equalized mills." A measure of a school district's local 13 tax effort which shall be equal to the amount of school taxes 14 collected divided by the real property valuation for the school 15 district. 16 "High performing districts." School districts whose overall 17 student achievement on the 2004-2005 PSSA test of reading and 18 mathematics exceeded proficiency requirements that will become 19 effective in 2011 under the No Child Left Behind Act of 2001 and 20 all of whose schools met the requirements for adequate yearly 21 progress using standards in place during the 2005-2006 school 22 year. Once a school district has been determined to be a high 23 performing district, it shall retain that designation for a 24 period of three years. 25 "Local revenue." All revenue raised by a school district 26 through local taxes or any other source except from the Federal 27 or State government. 28 "Local taxes." Taxes levied by boards of school directors or 29 by city councils on behalf of school districts of the first 30 class with which they are coterminous that support spending of a 20070H1544B1949 - 4 -
1 successful school budget. 2 "No Child Left Behind Act of 2001." The No Child Left Behind 3 Act of 2001 (Public Law 107-110, 115 Stat. 1425). 4 "Pennsylvania System of School Assessment" or "PSSA." The 5 Pennsylvania System of School Assessment established by the 6 State Board of Education under 22 Pa. Code § 4.51 (relating to 7 State assessment system). 8 "Prior spending per pupil." The amount calculated by 9 subtracting from a school district's total expenditures the 10 amount spent on account of capital outlay, debt service and 11 pupil transportation and dividing the result by the number of 12 pupils in ADM. 13 "Prior State subsidies." The sum of all payments received by 14 a school district from the Commonwealth except for payments made 15 from State appropriations for rentals and sinking funds and for 16 pupil transportation. 17 "Pupils with disabilities." The term shall have the same 18 meaning as given to the term "students with disabilities" under 19 22 Pa. Code § 14.101 (relating to definitions). 20 "Pupils with limited English proficiency." Pupils reported 21 annually to the department by school districts as having limited 22 English proficiency. 23 "Real property valuation." The real property valuation of a 24 school district as defined under section 2501(9). 25 "Statewide performance cost factor." The weighted average 26 spending per pupil of the high performing districts. 27 "Successful school budget." The greater of the district's 28 successful school educational cost per student or the district's 29 prior spending. 30 Section 2503-B. Data. 20070H1544B1949 - 5 -
1 (a) Time periods for data.--To ensure the ability of the 2 Commonwealth and its school districts to budget accurately, the 3 successful school subsidy shall be calculated using actual pupil 4 and fiscal accounting data from three years prior to the payment 5 year. 6 (b) Time periods for test data.--In determining high 7 performing districts, PSSA test data from one and two years 8 prior to the payment year shall be used, except that for 9 subsidies paid in the 2007-2008 school year, data from the 2006- 10 2007 testing shall be used. 11 (c) Application of section to definitions.--If the terms 12 defined under section 2502-B are used in this article, the 13 provisions of this section shall be applied to the terms, unless 14 clearly provided otherwise in this article. 15 Section 2504-B. Successful school budget subsidy established. 16 In order to provide for a thorough and efficient system of 17 public education to serve the needs of the Commonwealth and its 18 students, the General Assembly hereby establishes the successful 19 school budget subsidy system. The State subsidy shall be 20 calculated under section 2506-B for the school year beginning in 21 2007-2008 and each school year thereafter and shall be phased in 22 under section 2507-B. 23 Section 2505-B. High performing districts. 24 (a) Determination of districts.--By September 1 of each 25 year, the department shall determine those school districts that 26 are high performing districts for the purpose of determining the 27 successful school budget subsidy for subsequent school years. 28 (b) Determination of Statewide performance cost factor.--By 29 September 1 of each year, the department shall determine the 30 Statewide performance cost factor for purposes of determining 20070H1544B1949 - 6 -
1 the successful school budget subsidy for subsequent school years 2 by calculating the weighted average spending per pupil of all 3 the high performing school districts. The department shall also 4 determine the average educational difficulty factor of the high 5 performing school districts. 6 (c) Notification by department.--By October 1 of each year, 7 the department shall notify the Secretary of the Budget and the 8 chairman and minority chairman of the Appropriations Committee 9 of the Senate, the chairman and minority chairman of the 10 Appropriations Committee of the House of Representatives, the 11 chairman and minority chairman of the Education Committee of the 12 Senate and the chairman and minority chairman of the Education 13 Committee of the House of Representatives of the names of the 14 high performing school districts, the amount of the Statewide 15 performance cost factor, the average educational difficulty 16 factor of the high performing school districts and the data used 17 to calculate these factors. 18 (d) Publication of report information.--If the department 19 transmits the information required under subsection (c), it 20 shall annually submit the same information to the Legislative 21 Reference Bureau for publication in the Pennsylvania Bulletin. 22 Section 2506-B. Calculation of successful school budget 23 subsidy. 24 (a) Educational difficulty factor.--The educational 25 difficulty factor of each school district shall be calculated as 26 follows: 27 (1) Divide the number of pupils eligible for free and 28 reduced-price lunches by the ADM of the district and multiply 29 the resulting percentage by 0.35. This result shall be the 30 low-income weight. 20070H1544B1949 - 7 -
1 (2) Divide the number of pupils with disabilities by the 2 ADM of the district and multiply the resulting percentage by 3 1.0. This result shall be the disability weight. 4 (3) Divide the number of pupils with limited English 5 proficiency by the ADM of the district and multiply the 6 resulting percentage by 0.15. This result shall be the 7 limited English proficiency weight. 8 (4) Add the weights from paragraphs (1), (2) and (3). 9 (5) Average the summed weights from paragraph (4) of the 10 high performing districts and subtract the result from the 11 summed weights from paragraph (4) for each school district. 12 (6) Add one to the weight determined under paragraph 13 (5), calculated to the nearest 0.00001. This result shall be 14 the educational difficulty factor for each school district. 15 (b) District educational performance cost factor.--The 16 educational performance cost factor of each school district 17 shall be calculated by multiplying that district's educational 18 difficulty factor under subsection (a) by the Statewide 19 performance cost factor under section 2505-B(b). 20 (c) District successful school educational cost 21 calculation.--The successful school educational cost of each 22 school district shall be calculated by multiplying the district 23 educational performance cost factor under subsection (b) by the 24 ADM of the district. 25 (d) State subsidy.--Except as provided under subsections (f) 26 and (g), the Commonwealth shall annually pay to each school 27 district a subsidy consisting of the following: 28 (1) The prior State subsidy. 29 (2) The amount by which the district's successful school 30 budget exceeds the district's prior spending. 20070H1544B1949 - 8 -
1 (e) Payment.--The remainder of a district's successful 2 school budget amount that exceeds the sum of the subsidy 3 calculated under subsection (d) shall be paid from local 4 revenues. Boards of school directors may use whatever mix of 5 taxes they are authorized by this or any other act to levy and 6 any other revenue they are authorized to collect. In school 7 districts of the first class, the city councils of the 8 coterminous cities of the first class may use whatever mix of 9 taxes they are authorized by this or any other act to levy and 10 any other revenue they are authorized to collect. 11 (f) Reduction for low tax effort.--In order to assure 12 adequate local effort, if the State subsidy determined under 13 subsection (d)(2) is more than zero and if the total local 14 revenue of the district is less than the district's market value 15 multiplied by 20 mills, one of the following shall apply: 16 (1) If the State subsidy increase is greater than the 17 difference between the value of a tax rate of 20 mills and 18 the total local revenue, the State subsidy increase shall be 19 reduced by the difference between the value of the 20 mill 20 tax rate and the total local revenue multiplied by one minus 21 the local aid ratio. 22 (2) If the State subsidy increase is less than the 23 difference between the value of the 20 mill tax rate and the 24 total local revenue, the State subsidy increase shall be 25 reduced by the State subsidy increase under subsection (d)(2) 26 multiplied by one minus the local aid ratio. 27 (g) Adjustment for high tax effort.-- 28 (1) If a district receives no increase in State subsidy 29 under subsection (d)(2) and if it has a local tax rate 30 greater than 21 equalized mills, it shall receive State funds 20070H1544B1949 - 9 -
1 equal to its current spending minus all of the following: 2 (i) Its prior State subsidy. 3 (ii) An amount equivalent to the value of a 20 4 equalized mill tax rate. 5 (iii) An amount payable that year to the district as 6 tax relief under the act of June 27, 2006 (1st Sp.Sess., 7 P.L. , No.1), known as the Taxpayers Relief Act, or 8 any other local property tax relief statute. 9 (h) Actual subsidy.--The successful school budget subsidy of 10 each school district shall be the sum of the subsidy under 11 subsection (d), the low tax effort reduction under subsection 12 (f) and the high tax effort adjustment under subsection (g). The 13 successful school budget subsidy paid to a district may not be 14 less than the actual State subsidy for the school year prior to 15 the school year of payment. 16 Section 2507-B. Phase-in of successful school budget subsidy. 17 (a) General rule.--To provide for orderly, planned and 18 effective use of additional spending resources for many school 19 districts, the payment of the successful school budget subsidy 20 shall be phased-in over a period of three years. 21 (b) Phased payment.--During the 2007-2008 school year only, 22 the subsidy increase of each school district shall be limited to 23 one-third of the difference between the successful school budget 24 subsidy under section 2506-B(h) and the prior State subsidy of 25 the school district. During the 2008-2009 school year, the 26 subsidy increase of each school district shall be limited to 27 two-thirds of the difference between the successful school 28 budget subsidy under section 2506-B(h) and the prior State 29 subsidy of the school district. 30 Section 2508-B. Maintaining and increasing local effort. 20070H1544B1949 - 10 -
1 (a) General rule.--The successful school budget subsidy is 2 designed to enable every school district to achieve spending per 3 pupil equal to the State's most successful districts, with a 4 reasonable local tax effort. Except for the sums provided under 5 2506-B(g), State subsidies under this article shall not be used 6 to reduce local tax effort. 7 (b) Reconciliation.--If in any school year a school district 8 levies taxes under section 2506-B(e) at a rate insufficient to 9 achieve its successful school budget when the local revenues are 10 added to the successful school budget subsidy amount calculated 11 under section 2506-B(h), the department shall reduce the 12 district's subsidy payment under subsection (c). 13 (c) Reductions.--During the payment year, the amount of the 14 reduction required under subsection (b) shall be determined by 15 one of the following: 16 (1) Recalculating the reduction for low tax effort under 17 section 2506-B(f) based on the school district's actual 18 budget for local revenues, if section 2506-B(f) is 19 applicable. 20 (2) Multiplying the difference between the local 21 revenues calculated as necessary to meet the successful 22 school budget under section 2506-B(e) and the actual local 23 revenues times the district's aid ratio. 24 (d) Permitted increases in local taxes.--Notwithstanding any 25 other provision of law, a school district which would receive a 26 reduced State subsidy under subsection (c) because of low local 27 support may increase its taxes or local revenues until the time 28 as its local taxes are sufficient to ensure a full State subsidy 29 without any reduction under section 2505-B(f). For school years 30 prior to the effective date of this section, the amount of local 20070H1544B1949 - 11 -
1 taxes shall be calculated by subtracting from total expenditures 2 spending for capital outlay, debt service, pupil transportation 3 and prior State subsidies. For the 2007-2008 school year and 4 each school year thereafter, the amount of local taxes shall be 5 calculated by subtracting the successful school budget subsidy 6 under section 2506-B(g) from a school district's successful 7 school budget. 8 Section 2509-B. Accountability. 9 The increase in State subsidy provided under this article is 10 intended to be used to increase student achievement. Each 11 district shall use its increase in State subsidy in accordance 12 with best practices demonstrated to improve student achievement, 13 including reducing class size, establishing and expanding pre- 14 kindergarten programs, focused professional development and 15 other programs permitted under the Accountability Block Grant 16 program. Each district shall annually report to the department 17 how the increased State subsidy is being used in accordance with 18 regulations issued by the department. 19 Section 2. The following shall apply: 20 (1) State subsidies in effect prior to the effective 21 date of this section shall be paid as provided by law through 22 the 2007-2008 school year. 23 (2) The provisions of Article XXV shall apply for the 24 purposes of making any necessary adjustments and 25 reconciliations after the effective date of this section and 26 for the calculation of prior State subsidies under section 27 2502-B. 28 (3) Except as provided under paragraph (4), the 29 provisions of Article XXV pertaining to the payment of State 30 subsidies shall not apply to payments which school districts 20070H1544B1949 - 12 -
1 would previously have been entitled to receive in the 2007- 2 2008 school year or any school year thereafter. 3 (4) Nothing in this act shall affect State subsidies 4 that school districts are entitled to receive under sections 5 2502.16, 2502.30, 2541, 2542, 2543, 2572, 2574, 2574.1, 6 2574.2, 2574.3, 2575, 2575.1, 2575.2, 2576, 2577, 2578, 7 2578.1, 2579, 2580, 2595, 2597.5 and 2599. 8 (5) Nothing in this act shall affect State subsidies 9 paid to intermediate units or area vocational-technical 10 schools. 11 (6) Nothing in this act shall be construed to relieve a 12 school district of the responsibility to operate schools, 13 departments and programs provided for under the act or other 14 Federal or State statutes or regulations. 15 Section 3. This act shall take effect immediately. E3L24MSP/20070H1544B1949 - 13 -