PRINTER'S NO. 3256
No. 2344 Session of 2002
INTRODUCED BY MICOZZIE, CIVERA, COLAFELLA, THOMAS, BEBKO-JONES,
CAPPELLI, CORRIGAN, FEESE, HORSEY, STEELMAN, STURLA,
E. Z. TAYLOR, WALKO AND YOUNGBLOOD, FEBRUARY 6, 2002
REFERRED TO COMMITTEE ON EDUCATION, FEBRUARY 6, 2002
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 the successful school
6 budget subsidy system; and further providing for payments.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Section 2517(d) of the act of March 10, 1949
10 (P.L.30, No.14), known as the Public School Code of 1949, is
11 amended by adding a paragraph to read:
12 Section 2517. Payments.--* * *
13 (d) Subsection (c) of this section shall apply to:
14 * * *
15 (4) Payments to which a school district is entitled under
16 section 2506-A for the school year 2002-2003 and each school
17 year thereafter.
18 Section 2. The act is amended by adding an article to read:
19 ARTICLE XXV-A
1 SUCCESSFUL SCHOOL SUBSIDY SYSTEM
2 Section 2501-A. Legislative findings and declarations.
3 The General Assembly finds and declares as follows:
4 (1) Section 14 of Article III of the Constitution of
5 Pennsylvania states: "The General Assembly shall provide for
6 the maintenance and support of a thorough and efficient
7 system of public education to serve the needs of the
8 Commonwealth."
9 (2) The current system of financing public education
10 provides inequitable learning opportunities for pupils, based
11 largely upon the wealth of the communities in which they live
12 and results in an education system that is neither thorough
13 nor efficient.
14 (3) The current system of financing public education
15 places an onerous local tax burden on property owners but
16 does not guarantee every pupil an adequate education and
17 results in an education system that is neither thorough nor
18 efficient.
19 (4) Some school districts are doing an exemplary job of
20 helping their pupils succeed and achieve the State's academic
21 standards, but many other school districts are unable to do
22 so; the result is an education system that is not thorough
23 and efficient.
24 (5) Funding levels for all pupils in this Commonwealth
25 should reflect the funding levels in the most successful
26 school districts.
27 (6) In order to provide for the maintenance and support
28 of a thorough and efficient system of public education to
29 serve the needs of the Commonwealth and to reduce inequities
30 among school districts, the Commonwealth should pay the
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1 substantial majority of the total costs of public education.
2 (7) In order to ensure local control of and support for
3 public schools, every local school district should provide
4 some of the funds to support its schools from local tax
5 sources, but reliance upon these sources should be greatly
6 reduced.
7 (8) The Commonwealth should provide relatively greater
8 support to those school districts with the greatest needs and
9 the least ability to raise revenues locally.
10 (9) In no case should any school district receive from
11 the Commonwealth less financial support than the school
12 district receives under the Article XXV funding system.
13 Section 2502-A. Definitions.
14 The following words and phrases when used in this article
15 shall have the meanings given to them in this section unless the
16 context clearly indicates otherwise:
17 "Aid ratio." The market value/income aid ratio of a school
18 district as defined in section 2501 (14.1).
19 "Average daily membership" or "ADM." The average daily
20 membership of a school district as defined in section 2501(3).
21 "Department." The Department of Education of the
22 Commonwealth.
23 "District performance cost factor." The amount of spending
24 per pupil required by a school district in order to achieve
25 levels of performance equivalent to the levels of performance
26 attained in high performing districts, as calculated under
27 section 2505-A (b).
28 "Economically disadvantaged pupils." Any pupil who applies
29 and qualifies for free or reduced-price lunches under the
30 Federal school lunch program.
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1 "Educational difficulty factor." The amount calculated under
2 section 2506-A(a) to account for additional costs associated
3 with educating higher concentrations of pupils who are
4 economically disadvantaged, pupils who are receiving special
5 education programs or services, and pupils who have limited
6 English proficiency.
7 "Equalized mills." A measure of a school district's local
8 tax effort and shall be equal to the amount of school taxes
9 collected divided by the real property valuation for the school
10 district.
11 "High performing districts." Those school districts with
12 average scaled scores of at least 1,350 on the PSSA tests of
13 reading and mathematics at grades 5, 8 and 11 for the two most
14 recent years and with no more than 15% of pupils in the lowest
15 performing group on any of those tests in either school year.
16 Once a school district has been determined to be a high
17 performing district, it shall retain that designation for a
18 period of five years.
19 "Local taxes." Taxes levied by boards of school directors or
20 by city councils on behalf of school districts of the first
21 class with which they are coterminous that support spending of
22 the successful school budget as defined in this section. For
23 school years prior to the effective date of this amendatory act,
24 this shall be calculated by subtracting from total expenditures
25 spending for capital outlay, debt service, pupil transportation
26 and prior State subsidies as defined in this section. For the
27 2002-2003 school year, this shall be calculated by subtracting
28 the successful school budget subsidy under sections 2506-A and
29 2507-A from the lesser of a school district's successful school
30 budget or its total expenditures less spending for capital
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1 outlay, debt service and pupil transportation. For the 2003-2004
2 school year and each school year thereafter, this shall be
3 calculated by subtracting the successful school budget subsidy
4 under section 2506-A from the lesser of a school district's
5 successful school budget or its total expenditures less spending
6 for capital outlay, debt service and pupil transportation.
7 "Pennsylvania System of School Assessment" or "PSSA." The
8 Pennsylvania System of School Assessment established by the
9 State Board of Education under 22 Pa. Code § 4.51 (relating to
10 State assessment system).
11 "Prior State subsidies." The sum of all payments received by
12 a school district from the Commonwealth except for payments made
13 from State appropriations for rentals and sinking funds and for
14 pupil transportation.
15 "Pupils with limited English proficiency." Pupils reported
16 annually to the Department of Education by school districts as
17 having limited English proficiency.
18 "Pupils with mild disabilities." Pupils who are defined in
19 State Board of Education regulations at 22 Pa. Code § 14.101
20 (relating to definitions) as students with disabilities but not
21 including pupils with severe disabilities.
22 "Pupils with severe disabilities." Students classified by
23 the Department of Education as having severe disabilities.
24 "Real property valuation." The real property valuation of a
25 school district as defined in section 2501(9).
26 "Spending per pupil." The amount calculated by subtracting
27 from a school district's total expenditures the amount spent on
28 account of capital outlay, debt service, and pupil
29 transportation and dividing the result by the number of pupils
30 in ADM.
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1 "Statewide performance cost factor." The average spending
2 per pupil of the high performing districts.
3 "Successful school budget." The total spending required by a
4 school district in order to achieve the levels of performance
5 equivalent to the levels of performance attained in high
6 performing districts as calculated by multiplying the
7 performance cost factor of the district by the average daily
8 membership of the district.
9 Section 2503-A. Data.
10 (a) Time periods for data.--To ensure the ability of the
11 Commonwealth and its school districts to budget accurately, the
12 successful school subsidy shall be calculated using actual pupil
13 and fiscal accounting data from three years prior to the payment
14 year.
15 (b) Time periods for test data.--In determining high
16 performing districts, PSSA test data from one and two years
17 prior to the payment year shall be used, except that for
18 subsidies paid in 2002-2003, data from 1998-1999 and 1999-2000
19 testing shall be used.
20 (c) Application of section to definitions.--When the terms
21 defined in section 2502-A are used in this article, the
22 provisions of this section shall be applied to such terms,
23 unless clearly provided otherwise in this article.
24 Section 2504-A. Successful school budget subsidy established.
25 In order to provide for a thorough and efficient system of
26 public education to serve the needs of the Commonwealth and its
27 students, the General Assembly hereby establishes the successful
28 school budget subsidy system. The State subsidy shall be
29 calculated under section 2506-A for the school year beginning in
30 2002-2003 and each school year thereafter and shall be phased in
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1 under section 2507-A.
2 Section 2505-A. High performing districts.
3 (a) Determination of districts.--Annually by September 1,
4 the department shall determine those school districts that are
5 high performing districts for the purpose of determining the
6 successful school budget subsidy for subsequent school years.
7 (b) Determination of Statewide performance cost factor.--
8 Annually by September 1, the department shall determine the
9 Statewide performance cost factor for purposes of determining
10 the successful school budget subsidy for subsequent school years
11 by calculating the average spending per pupil of all the high
12 performing school districts.
13 (c) Notification by department.--Annually by October 1, the
14 department shall notify the Secretary of the Budget and the
15 chairman and minority chairman of the Appropriations Committee
16 of the Senate, the chairman and minority chairman of the
17 Appropriations Committee of the House of Representatives, the
18 chairman and minority chairman of the Education Committee of the
19 Senate and the chairman and minority chairman of the Education
20 Committee of the House of Representatives of the names of the
21 high performing school districts, the amount of the Statewide
22 performance cost factor, and the data used to calculate the
23 Statewide performance cost factor.
24 (d) Publication of report information.--Annually, when the
25 department transmits the information required in subsection (c),
26 it shall cause the same information to be published in the
27 Pennsylvania Bulletin.
28 Section 2506-A. Calculation of successful school budget
29 subsidy.
30 (a) Educational difficulty factor.--The educational
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1 difficulty factor of each school district shall be calculated as
2 follows:
3 (1) Divide the number of pupils eligible for free and
4 reduced-price lunches by the ADM of the district and multiply
5 the resulting percentage by 0.2. This result shall be the
6 low-income weight.
7 (2) Divide the number of pupils with mild disabilities
8 by the ADM of the district and multiply the resulting
9 percentage by 0.15. This result shall be the mild disability
10 weight.
11 (3) Divide the number of pupils with severe disabilities
12 by the ADM of the district and multiply the resulting
13 percentage by 1.3. This result shall be the severe disability
14 weight.
15 (4) Divide the number of pupils with limited English
16 proficiency by the ADM of the district and multiply the
17 resulting percentage by 0.1. This result shall be the LEP
18 weight.
19 (5) Add the weights from paragraphs (1), (2), (3) and
20 (4).
21 (6) Average the summed weights from paragraph (5) of the
22 high performing districts and subtract the result from the
23 summed weights from paragraph (5) for each school district.
24 (7) Add one to the weight determined in paragraph (6),
25 calculated to the nearest 0.00001. This result shall be the
26 educational difficulty factor for each school district.
27 (b) District performance cost factor.--The performance cost
28 factor of each school district shall be calculated by
29 multiplying that district's educational difficulty factor under
30 subsection (a) by the Statewide performance cost factor under
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1 section 2505-A (b).
2 (c) Successful school budget calculation.--The successful
3 school budget of each school district shall be calculated by
4 multiplying the district performance cost factor under
5 subsection (b) by the ADM of the district.
6 (d) Payment in tiers.--Annually, the Commonwealth shall pay
7 to each school district a subsidy in two tiers, based upon each
8 district's successful school budget, as follows:
9 (1) Tier 1 of the successful school budget subsidy shall
10 be calculated by multiplying the school district's successful
11 school budget by 25%.
12 (2) Tier 2 of the successful school budget subsidy shall
13 be calculated by subtracting the tier 1 subsidy amount from
14 the successful school budget and multiplying the result by
15 the school district's aid ratio.
16 (e) Local requirements.--
17 (1) The remainder of the successful school budget amount
18 that exceeds the sum of the tier 1 subsidy and tier 2 subsidy
19 under subsection (d) shall be paid from local taxes. Boards
20 of school directors may use whatever mix of taxes they are
21 authorized by this or any other act to levy. In school
22 districts of the first class, the city councils of the
23 coterminous cities of the first class may use whatever mix of
24 taxes they are authorized by this or any other act to levy.
25 In no event shall any school district be required to levy
26 local taxes at a rate that exceeds 20 equalized mills in
27 order to achieve the successful school budget of that
28 district.
29 (2) Except as provided in paragraph (3), the
30 Commonwealth shall pay a tax effort subsidy equal to the
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1 difference between the successful school budget and tax
2 revenues derived from a levy equal to 20 equalized mills.
3 (3) No school district that has a rate of spending per
4 pupil that exceeds its successful school budget on the
5 effective date of this amendatory act shall be required to
6 levy taxes at a rate that exceeds 20 equalized mills in order
7 to achieve its current rate of spending per pupil. The
8 Commonwealth shall pay such districts a tax effort subsidy
9 equal to the difference between the current rate of spending
10 per pupil and tax revenues derived from a levy equal to 20
11 equalized mills.
12 (f) Minimum increase subsidy.--The Commonwealth minimum
13 increase subsidy shall be determined as follows: Add the tier 1
14 subsidy under subsection (d), the tier 2 subsidy under
15 subsection (d), and the tax effort subsidy under subsection (e).
16 Subtract from the total so derived the prior State subsidies of
17 the school district. Divide that result by the prior State
18 subsidies received by the school district. In making the initial
19 calculation under this article, if the result is an increase of
20 less than 5%, the Commonwealth shall pay a minimum increase
21 equal to the difference between a 5% increase and the increase
22 that otherwise would be derived from adding the tier 1 subsidy
23 under subsection (d), the tier 2 subsidy under subsection (d),
24 and the tax effort subsidy under subsection (e).
25 (g) Actual subsidy.--The successful school budget subsidy of
26 each school district shall be the sum of the tier 1 subsidy
27 under subsection (d), the tier 2 subsidy under subsection (d),
28 the tax effort subsidy under subsection (e), and the minimum
29 increase under subsection (f).
30 Section 2507-A. Phase-in of successful school budget subsidy.
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1 (a) General rule.--To provide for orderly, planned, and
2 effective use of additional spending capacity for many school
3 districts, the payment of the successful school budget subsidy
4 shall be phased in over a period of two years.
5 (b) Initial payment.--During the 2002-2003 school year only,
6 the subsidy increase of each school district shall be limited to
7 50% of the difference between the successful school budget
8 subsidy under section 2506-A (g) and the prior State subsidies
9 of the school district.
10 (c) Reduction of local taxes.--During the 2002-2003 school
11 year only, each school district shall reduce local taxes by an
12 amount that is equal to 96% of the first year subsidy increase
13 under subsection (b), with first priority given to the reduction
14 of real property taxes, provided, however, that the reduction
15 under this subsection shall not exceed the total local tax
16 reduction if the successful school budget were fully implemented
17 in the 2002-2003 school year under section 2506-A.
18 Section 2508-A. Reconciliation for insufficient local effort.
19 (a) General rule.--The successful school budget subsidy is
20 designed to enable every school district to achieve spending per
21 pupil equal to the State's most successful districts, with those
22 costs divided between State and local revenue sources based upon
23 each district's educational difficulty and its student and
24 fiscal circumstances.
25 (b) Reconciliation.--If in any school year a school district
26 levies taxes under section 2506-A(e) at a rate insufficient to
27 achieve its successful school budget when such local tax
28 revenues are added to the successful school budget subsidy
29 amount calculated under section 2506-A(g), the department shall
30 reduce the district's subsidy payment under subsection (c).
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1 (c) Reductions.--During the payment year, the amount of the
2 reduction required under subsection (b) shall be determined by
3 recalculating the tier 1 subsidy and the tier 2 subsidy under
4 section 2506-A(d) based upon that school district's budgeted
5 spending per ADM rather than the school district's performance
6 cost factor under subsection 2506-A(b). During a subsequent
7 year, the department shall make a final reconciliation based
8 upon audited financial and pupil membership data.
9 Section 2509-A. Tax reductions.
10 (a) General rule.--Implementation of the successful school
11 budget subsidy shall require all school districts to reduce
12 local taxes with first priority to be given to the reduction of
13 real property taxes.
14 (b) Local tax reduction.--During the 2002-2003 school year,
15 every school district shall reduce the rate of local school
16 taxes with first priority to be given to the reduction of real
17 property taxes on a dollar-for-dollar basis such that the sum of
18 the revenues from such taxes and the successful school budget
19 subsidy under section 2506-A(g) shall not exceed the lesser of
20 the district's successful school budget or its budgeted
21 expenditures for 2002-2003. During the 2002-2003 school year,
22 school districts that were spending in excess of their
23 successful school budget on the effective date of this
24 amendatory act shall reduce the rate of local school taxes on a
25 dollar-for-dollar basis such that the sum of the revenues from
26 such taxes and the successful school budget subsidy under
27 section 2506-A(g) shall not exceed the district's budgeted
28 expenditures for 2002-2003.
29 (c) Spending increases.--During the 2003-2004 school year
30 and each school year thereafter, any school district that was
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1 spending in excess of its successful school budget on the
2 effective date of this amendatory act and any school district
3 that subsequently reaches its successful school budget shall
4 limit annual spending increases to no more than 4%, except that
5 a larger increase may be adopted upon approval of the electorate
6 of the school district in a public referendum at the primary
7 election preceding the fiscal year for which such increased
8 spending is proposed. The election officials shall cause a
9 question to be placed on the ballot at the primary election
10 provided that the request for such referendum in the form of a
11 resolution by the board of school directors is received at least
12 90 days prior to such primary election. The referendum question
13 shall state the estimated amount of spending in excess of the 4%
14 increase and shall state the proposed uses of such budget
15 increase. The question shall be in clear language that is
16 readily understandable by a layperson. If a majority of the
17 electors voting on the question vote yes, then the board of
18 school directors shall be authorized to adopt a budget and tax
19 levy that includes spending in excess of a 4% increase. If a
20 majority of the electors voting on the question vote no, the
21 board of school directors shall adopt a budget and tax levy that
22 ensures spending that does not exceed a 4% increase. Proceedings
23 under this subsection shall be in accordance with the provisions
24 of the act of June 3, 1937 (P.L.1333, No.320), known as the
25 Pennsylvania Election Code.
26 (d) Exceptions.--The provisions of this section shall not
27 apply to taxes levied on account of expenditures for pupil
28 transportation, school construction, or debt service payments.
29 Section 3. Effectiveness of statutory provisions and
30 repeals:
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1 (a) State subsidies in effect immediately prior to the
2 effective date of this amendatory act shall be paid as provided
3 by law through the 2001-2002 school year.
4 (b) The statutory provisions for subsidies under subsection
5 (a) shall be retained in Article XXV for purposes of making any
6 necessary adjustments and reconciliations after the effective
7 date of this amendatory act and for the calculation of prior
8 State subsidies under section 2502-A.
9 (c) The statutory provisions in Article XXV pertaining to
10 the payment of State subsidies are hereby repealed insofar as
11 they apply to payments which school districts would previously
12 have been entitled to receive in the 2002-2003 school year or
13 any school year thereafter, except as provided in subsection
14 (d).
15 (d) Nothing in this amendatory act shall affect State
16 subsidies school districts are entitled to receive under
17 sections 2502.16, 2502.30, 2541, 2542, 2543, 2572, 2574, 2574.1,
18 2574.2, 2574.3, 2575, 2575.1, 2575.2, 2576, 2577, 2578, 2578.1,
19 2579, 2580, 2595, 2597.5 and 2599.
20 (e) Nothing in this amendatory act shall affect State
21 subsidies paid to intermediate units or area vocational-
22 technical schools.
23 (f) Nothing in this amendatory act shall be construed to
24 relieve a school district of the responsibility to operate
25 schools, departments and programs provided for in this act,
26 other Federal or State legislation or Federal or State
27 regulations.
28 Section 4. This act shall take effect July 1, 2002.
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