‘Rithmatic Doesn’t Add Up in One School District

By Walter Brasch

The Danville Education Association (Pa.) has been operating without a contract for three years.

Two years ago, the teachers approved recommendations of an independent fact-finder; the board rejected it. This eventually led to a protest strike of five days in  April 2014. Recently, the teachers and the board agreed to submit their proposals to an independent arbitrator.

Working under regulations of the Pennsylvania Labor Relations Board, the arbitrator analyzed the district finances, tax base, and other data before making his recommendations. The arbitrator concluded the district had the money to pay the teachers more-not what the teachers asked, but more than the board was offering. He also recommended increased contributions by the teachers for their health benefits.

The teachers voted to accept the recommendations. The board unanimously voted to reject the arbitrator’s recommendations, even though the arbitrator agreed with most of the board’s demands.

The board claims it can’t afford the teacher raises. The overall budget for the 2014-2015 academic year is about $34 million. In addition, the district also has about $12.2 million in reserve, most of which the district says is for anticipated increases in health care premiums and unfunded mandates to improve the state retirement system; included is an unassigned reserve of about $2.1 million. In 2011, when the Board only had a $6.2 million surplus, the fact finder had recommended a 5.7 percent increase for teacher salaries for the 2015-2016 academic year. The arbitrator two years later recommended raises of 3.5 percent for each of the four years of the new contract.

Of the 17 districts in the Central Susquehanna Intermediate Unit (CSIU), Danville teachers are ninth in average salary (about $52,000 a year). The district has the second highest average income of all districts in the CSIU. Teacher salaries and benefits are about 48 percent of the total budget, down from 51.1 percent in the 2009-2010 academic year.

Every teacher pays 7.5 percent of his or her salary into a retirement account, in addition to 6.2 percent for social security contributions. The district, under federal law, also pays 6.2 percent social security contribution, but pays only 3.09 percent into the state pension fund, a slow increase from 1.18 percent in 2008-2009. (The state also pays 3.09 percent.)

Each teacher currently pays $1,453-$1,684 per year, depending on the plan, for health care. The arbitrator recommended the teachers increase their share of the total cost to 12 percent of the health care cost.

Perhaps the board needed the money for its “Community Room.” That room, which will be the place for board meetings, includes a new sound system ($31,159), new carpet ($13,242), and new furniture ($8,551.06).

Perhaps the board needed the money for an additional administrator ($69,209), or for the 3 percent increases for its administrative staff, which includes a salary of $133,900 for its superintendent, more than $60,000 higher than the highest pay earned by any teacher.

Because of the teachers, the students have the highest academic scores on the Pennsylvania School Performance Profile; the high school is the only one in the state, one of only 340 in the nation, to have earned Blue Ribbon designation by the U.S. Department of Education. That honor is based upon academic excellence and/or progress in closing achievement gaps among student subgroups.

The board’s performance leaves some serious questions. The major question is why even go to arbitration if you don’t plan to listen to what is a fair settlement? Apparently, the board believes that only if the arbitrator agrees with all of its proposals should it accept the recommendations. This is not what arbitration is.

However, there are two deeper issues. Some residents ignorantly claim that teachers work limited hours a day and only 180 days a year, not realizing that outside of class teachers also have preparation, grading, student and parent conferences, extracurricular advising, required training sessions, and meetings; the average worker, if taking into account weekends, sick days, vacation time, and holidays, works fewer hours a year than does the average teacher. The arbitrator said many of the letters he received from the public argued that the teachers are paid more than the general public in the district, and receive better benefits. These arguments are not uncommon in Pennsylvania.

This is not the 19th century when teachers didn’t need a college degree, were primarily female-they were often called “school marms”-and worked for low wages and near-nothing benefits.

Today, every public school teacher has a college degree and state certification. Every teacher is required to take additional classes. Most teachers are pursuing or have already earned master’s degrees. They are a part of the professional class. But, they are still behind their other colleagues who have similar education and years of experience.

But, this doesn’t matter to those who may be envious that others make more than they do, a problem not just in Danville but throughout the state and nation.

Here are two realities. First, high quality teachers-the ones who teach our children who will become our tradespeople, secretaries, physicians, social workers, firefighters, and scientists-are critical to any society, and should be paid well.

Second, if the public is upset the teachers are paid more than they are, then they should do what the teachers have done successfully-Unionize and raise their own wages and benefits, rather than complain about others and try to drag their compensation down.

[Among those contributing facts to this column were Dave Fortunato, president of the Danville Teachers Association; and Allan Schappert, president of the board of the Danville Area School District. Walter Brasch is an award-winning social issues journalist, a former newspaper and magazine reporter and editor, and the author of 20 books. His latest book is Fracking Pennsylvania, an in-depth look at the economic, political, health, and environmental effects of fracking throughout the country. Full disclosure: Dr. Brasch is a former teacher.]

Gasbag Signs Smoke and Mirrors Budget

Gov. Corbett finally singed the budget pushed through by Republican majorities in the House and Senate though he showed his innate ability to tick off his own Party members by using his line item veto generously.  Gov. Gasbag cut funding for the legislature as a message that he wasn’t happy they hadn’t gutted state worker and teacher pensions.

When conservatives use the word “reform” they actually mean “eliminate.”  That’s what pension reform does and the Guv’s plan actually would have cost taxpayers more in the long run while gutting the retirements of thousands of Pennsylvanians.  These pensions were negotiated in good faith by unions in lieu of higher wages.  The Commonwealth refused to adequately fund them (as required by law) until it has become a crisis situation.  Corbett’s solution was to simply screw these workers.  A new 401(K) system would just result in higher salaries and other benefits for school districts as teachers sought to recoup these lost wages.  Meanwhile the current system would still have to be funded, somehow, along with the new one.  That would wind up costing more than if we simply funded the current pensions as required by the contracts to which we agreed.

The Governor gave the finger (literally and proverbially) to the State House and Senate by cutting its budget significantly.  No need to worry though since they’re sitting on over $150 million in unused prior appropriations.  Heaven help the House and Senate have to do what every other state agency has had to since 2008:  do more with less.

Other items cut in the line item veto gut funding for state parks, medical assistance, lobbying disclosure, gun checks and other important functions of state government.

This is already a smoke and mirrors budget because it depends on one time sources of income which won’t exist.  The Pennsylvania constitution requires a balanced budget but we didn’t have one this year.  Because of Corbett’s vast mismanagement of the state economy, at a time when the national economy is doing well, has resulted in significantly decreased revenues.  He cut corporate taxes and refused to close loopholes.  Jobs aren’t being created and we’re losing hundreds of millions in potential tax revenues of natural gas extraction.  We still don’t tax smokeless tobacco for instance.

This is not a balanced budget because the state liquor store system is not going to be privatized. Corbett didn’t have the votes for that in this session or last and he certainly won’t get any cooperation from the House and Senate after cutting their own budgets.  This clueless blonde has never learned from his mistakes and refuses to develop any relations with the state legislature even though it is controlled by his own Party.  In a way we’re fortunate he’s so incompetent because a lot of potential damage to the citizenry was avoided due to his incompetence.

Education Advocates Continue Capitol Sit In

Public schools in Pennsylvania have lost over $2.5 billion in revenues since Tom Corbett became Governor.  A billion of this was due to his budget cuts and another $1.5 billion has been lost to charter schools.  Charter schools do not have any oversight, regulation or state controls.  Several charter school owners are under investigation or indictment for fraud and embezzelment and charter school students do not have to take PSSA tests.  Teachers don’t have to be certified and cyber charter schools which have drastically lower costs get the same amount of funding per student as brick and mortar public schools are suffocating our public education system.

Education advocates are fed up and have been conducting a sit-in at the Capitol since last week.  Over the weekend they were on the steps out front while the building was closed.  House Republicans have passed a smoke and mirrors budget which isn’t balanced because it relies on revenues which won’t exist.  The Governor is holding public school students and teachers hostage to his demands that the budget gut teacher pensions.

Pensions have been a negotiated part of teacher compensation plans and school districts have contracted to pay these in lieu of higher wages.  Remember that teachers are substantially underpaid for college graduates (and many have advanced degrees).  These fixed rate pensions have offset some of that wage gap.  The state has neglected to fund these pensions for years and now that the piper is come calling the Governor’s solution is to cheat these public service sector workers.  Worse, his solution will only cause higher pension costs down the road. To fund two separate pension systems at once and having to eventually pay vast amounts to the old system as new teachers stop paying into it will be disastrous for future budgets.

The same for Corbett’s demand to privatize the state store system.. In return for a one time infusion of cash (which would be far lower than he projects) the state will then lose half a billion dollars every year thereafter.  That is the profit these stores earn for us annually and which goes straight into the general fund.  That lost half billion will only make future budgets harder to balance and force tax increases.  This is especially tough for those of us who don’t drink.  Why should I pay higher taxes rather than have those who do drink contribute profits voluntarily?

Neither idea has the votes to pass the legislature so the Governor is trying to force them through.  His bad economic management has resulted in sharply reduced tax revenues already, for cing this $1.5 billion hole in this year’s budget.  Interestingly that corresponds directly tot he $1.5 billion in corporate tax cuts he gave out supposedly to create jobs.  This Republican myth that tax cuts create jobs is outright stupid.  All date shows the opposite.  In Corbett’s case his tax cuts for business have resulted in Pennsylvania sinking to 49th in the nation in job creation since he took office.

Let’s balance the budget the easy way:  repeal those tax cuts, add an extraction tax on natural gas to fund education and let’s restore services for the disabled by taxing smokeless tobacco and e cigarettes and ending the 1% of sales tax business get to keep.  In this day of electronic bookkeeping and electronic funds transfers businesses don’t have expenses related to remitting sales taxes.  Closing the Delaware Loophole too would make the state flush.

These education advocates sitting in are getting attention but can they stop this ridiculous budget from going through?  We’ll see but meanwhile think seriously about whom you’ll vote for this November.  Governor Wolf also needs a good legislature with which to work for the next four years so we can right this ship before it sinks.  

The Fracking Prostitutes of American Colleges

(part 2 of 3)

[Part 1: Lackawanna College, a two-year college in Scranton, Pa., accepted a $2.5 million endowment from Cabot Oil & Gas Corp. to strengthen that college’s programs and ties to the oil and gas industry.]

by Walter Brasch

Two of the reasons Pennsylvania has no severance tax and one of the lowest taxes upon shale gas drilling are because of an overtly corporate-friendly legislature and a research report from Penn State, a private state-related university that receives about $300 million a year in public funds.

Opponents of the tax cited a Penn State study that claimed a 30 percent decline in drilling if the fees were assessed, while also touting the economic benefits of drilling in the Marcellus Shale. What wasn’t widely known is that the lead author of the study, Dr. Timothy Considine, “had a history of producing industry-friendly research on economic and energy issues,” according to reporting by Jim Efsathioi Jr. of Bloomberg News. The Penn State study was sponsored by a $100,000 grant from the Marcellus Shale Coalition, an oil and gas lobbying group that represents more than 300 energy companies. Dr. William Easterling, dean of Penn State’s College of Earth and Mineral Sciences, said the study may have “crossed the line between policy analysis and policy advocacy.”

The Marcellus Center for Outreach and Research (MCOR), a part of Penn State, announced that with funding provided by General Electric and ExxonMobil, it would offer a “Shale Gas Regulators Training Program.” The Center had previously said it wasn’t taking funding from private industry. However, the Center’s objectivity may have already been influenced by two people. Gov. Tom Corbett, who accepted more than $2 million in campaign funds from oil and gas company personnel, sits on the university’s board of trustees; billionaire Terrence (Terry) Pegula, owner of the Buffalo Sabres hockey team, was CEO of East Resources, which he had sold to Royal Dutch Shell for $4.7 billion in July 2010. Pegula and his wife had also contributed about $380,000 to Corbett’s political campaign. On the day Pegula donated $88 million to Penn State to fund a world-class ice hockey arena and support the men’s and women’s intercollegiate ice hockey team, he said, “[T]his contribution could be just the tip of the iceberg, the first of many such gifts, if the development of the Marcellus Shale is allowed to proceed.” At the groundbreaking in April 2012, Pegula announced he increased the donation to $102 million.

The Shale Technology and Education Center (ShaleTEC) program at the Pennsylvania College of Technology, a branch of Penn State, was established “to serve as the central resource for workforce development and education needs of the community and the oil and natural gas industry,” according to its website.

With an initial $15,000 grant from the Marcellus Shale Coalition, the Community College of Philadelphia (CCP) planned to establish certificate and academic programs for workers either already employed by or intending to enter jobs that provide services to Marcellus Shale companies. In a news release loaded with pro-Corbett and pro-industry appeal, college president Stephen M. Curtis announced in November 2012, “The goal is to support the supply chain now serving energy companies and offer specialized career training that connects residents to the high-pay, high-demand career paths.” John Braxton, assistant professor of biology and an ecologist, said CCP “must not be used as a PR puppet for shale gas fracking companies,” accurately noting that the fracking industry “got a free publicity ride” by the administration’s hasty decisions. Within two weeks of CCP’s announcement, the faculty union (AFT Local 2026), which represents the college’s 1,050 faculty and 200 staff, condemned the decision to establish the Center “without the consideration or approval of the faculty, and with total disregard for established College procedures for instituting new academic curricula.” In a unanimous vote by the Representative Council, the faculty declared, “the natural gas drilling . . . industry and peripheral and related industries present unacceptable dangers and risks to public health, worker safety, the natural environment, and quality of life.” Curtis left CCP in Summer 2013; the proposed program was never developed, and remains unfunded.

In April 2011, Gov. Corbett had suggested that the 14 universities of the State System of Higher Education (SSHE) could allow natural gas drilling on the campuses that sit on top of the Marcellus Shale. The ensuing Act, passed by the Republican-controlled legislature, includes clauses to compromise the universities’ academic integrity. In exchange for supporting fracking, the new act allows the university where the gas is extracted to retain one-half of all royalties; 35 percent would go to the other state universities; 15 percent would be used for tuition assistance at the 14 state universities. California and Mansfield universities have already begun to profit from fracking.

In a secret negotiation revealed by the Pittsburgh Post-Gazette, the Student Association of California University signed over mineral rights on 67 acres. The lease includes a confidentiality clause.

The Marcellus Institute at Mansfield University is “an academic/shale gas partnership,” designed to educate the people about the issues of natural gas production. The university holds summer classes for teachers and week-long camps for high school students to allow them to “Learn about the development of shale gas resources in our region and the career and educational opportunities available to you after high school!”

The university’s associate in applied sciences (A.A.S.) degree in natural gas production and services, begun in Fall semester 2012, was fast-tracked, submitted and approved in less than six months rather than the 12-18 months normally required for approval. The university “will take as many students as we can,” said Lindsey Sikorski, the Institute’s director, although only one new faculty position was approved. The SSHE administration encourages larger class sizes and fewer permanent professors. The program, Sikorski says, “is not one of advocacy for the industry, and all sides will be considered.” The program has not received any grants from the industry; Sikorski said she “doesn’t want there to be any conflicts of interest” that would “compromise the integrity of the program.” However, the reality is that energy companies and their lobbying groups may eventually fill a financial hole created by Corbett cutting higher education funding and the system’s chancellor refusing to protect academic integrity in the state-owned universities. (Neither Chancellor John Cavanaugh nor his successor, Frank Brogan, responded to repeated calls.)

The union that represents the state system’s 6,000 faculty passed a resolution in September 2013 opposing drilling on campuses, stating that the campuses “are not appropriate locations for [fracking] given the environmental and health hazards of the fracking process.”

[Next week: Compromising academic integrity at other American universities.]

[Dr. Brasch is an award-winning journalist and professor emeritus of mass communications. He is author of 20 books, including Fracking Pennsylvania, a critically-acclaimed in-depth investigation of the process and effects of high volume hydraulic horizontal fracturing throughout the country.]

 

The Fracking Prostitutes of American Colleges

(part 1 of 2)

by Walter Brasch

Lackawanna College, a two-year college in Scranton, Pa., has become a prostitute.

The administration doesn’t think of themselves or their college as a prostitute. They believe they are doing a public service. Of course, streetwalkers and call-girls also believe they are doing a public service.

Lackawanna College’s price is $2.5 million.

That’s how much Cabot Oil & Gas paid to the School of Petroleum and Natural Gas, whose own nine building campus is in New Milford in northeastern Pennsylvania.  On the School’s logo are now the words, “Endowed by Cabot Oil & Gas Corporation.”

That would be the same Cabot Oil & Gas Corporation that has racked up more than 500 violations since it first used horizontal fracking to extract gas in the Marcellus Shale almost six years ago.

That would be the same company that was found to be responsible for significant environmental and health damages in Dimock, Pa.

It’s the same company, fronted by four lawyers, that managed to keep a peaceful grandmother anti-fracking activist not only off its property, but away from Susquehanna County’s recycling center, a hospital, grocery stores, restaurants and 40 percent of the county where Cabot has mineral rights leases.

Several major gas and oil companies and suppliers-including Anadarko, BakerHughes, Chesapeake Energy, Halliburton, Noble Energy, Southwestern Energy, Williams Midstream, and others-have also contributed scholarships, equipment, and funding to the School. The School’s mission includes creating “a campus that is focused and dedicated to the oil and gas industry.”

Lackawanna College proudly claims its Cabot-endowed School is “focused on its vision of becoming a nationally-recognized, first in class program in the field of petroleum and natural gas technology.” There is no question the School is fulfilling its promise. A $500,000 outdoor field laboratory simulates a working gas field; all students are required to complete internships.

Richard Marquardt, the School’s executive director, has B.S. degrees in petroleum engineering and business management, as well as a long history of work in the industry. The eight other full-time faculty also have engineering degrees and significant industry experience. Fifteen adjunct faculty also have significant industry experience.

By Fall semester, the School will have about 150 full-time students. Students major in one of four programs-petroleum and natural gas technology, natural gas compression technology, petroleum and natural gas measurement, and petroleum and natural gas business administration.

Admission to the School’s rigorous academic programs “is highly competitive,” with students needing a strong science and math background prior to acceptance, says Marquardt. The students earn an associate in science degree upon completion of the two-year program. “It is focused on a very specific market,” says Marquardt, providing personnel at a level between the vocational training programs and the B.S. engineering programs. The placement rate is over 90 percent, says Marquardt.

In their fourth semester, students take a course in “Leadership, Ethics, & Regulations,” which explores “the holistic environment in which the Petroleum and Natural Gas industry operates, including the effect of corporate leadership on the company’s credibility and reputation; real world ethical issues  . . . and the relationship of the industry to federal, state, and local governments, including regulatory agencies.”

The development of the process of high volume hydraulic horizontal fracturing (commonly known as fracking) was the result of brilliant engineering by Mitchell Energy during the 1990s. Less than a decade ago, it became the most prevalent way to extract oil and gas. But, with the new technology has come significant problems.

An associate’s degree doesn’t mean the students, no matter how prepared they are to work in the shale gas industry, will be exposed to the issues, reports, and scientific studies that suggest fracking causes significant environmental and health problems, major concerns of those who oppose the process of horizontal fracking. After all, Cabot wasn’t going to invest in a college program that presented all sides of the issues. Nor is Cabot likely to invest anything more if the college expands its program to require that students also take classes in renewable energy, and the health and environmental effects of fracking.

But, that really doesn’t matter. Cabot paid $2.5 million, and other gas supplier, extraction, and development companies donated scholarships, funds, and equipment to make sure the students receive what may be one of the nation’s best possible educations to be prepared to work in the gas fields. They didn’t put money and resources into a program that would ask some of the most important questions-“What are the major effects to the health and environment from what we are doing?” “What should we be doing to develop new technology that doesn’t threaten the health and safety of the people?” and “Is fossil fuel really the best way to assure the production of energy.

[Next week: Other colleges that may have been compromised by accepting corporate donations.)

[Dr. Brasch is an award-winning journalist and professor emeritus of mass communications. He is author of 20 books, including Fracking Pennsylvania, a critically-acclaimed in-depth investigation of the process and effects of high volume hydraulic horizontal fracturing throughout the country.]

 

Video: Don’t Let Property Tax Plan Derail PA Schools

By Chris Lilienthal, Third and State

The future of Pennsylvania schools – and the quality of education every child receives – is at stake in a property tax proposal in Harrisburg.

The plan to swap property taxes for higher state levies will drain billions from Pennsylvania classrooms within a few years. Over time, it increases funding inequities across districts and makes it harder for future graduates to compete in a 21st century job market.

There is a better way. Watch our new whiteboard video to see how we can strengthen our schools, make funding more equitable, and address property tax concerns. Then share the video with your friends on Facebook and Twitter.

Video: Don't Let Property Tax Plan Derail PA Schools

Good schools are vital to every community and its economy. Yet the real problem, as our video explains, is that Pennsylvania trails most other states when it comes to state funding for public schools. By investing more state dollars in education, Pennsylvania can improve its schools and ease the pressure on property taxes.

In other words, we can have good schools AND help people having trouble paying their property taxes.

What’s At Stake for PA Schools in Property Tax Debate?

Michael Wood, Third and State

The latest proposal to eliminate property taxes in Pennsylvania would leave school districts with $2.6 billion less in overall funding within five years, according to an analysis from the Pennsylvania Independent Fiscal Office. Matthew Knittel of the IFO presented the findings during a Pennsylvania Senate Finance Committee hearing Tuesday.

The plan – proposed in both HB 76 and SB 76 – would swap school property taxes for higher state income and sales taxes, largely on individuals. The IFO, which did not take a position on the bill, compared what could be expected from the new mix of state funding to projected property tax revenue over time and tallied the fiscal impact on school districts and state government.

Much like with previous versions of this property tax plan, the numbers don’t add up. The IFO projects school districts would receive $112 million less in funding than they would have received from property taxes in 2014-15, which grows to $2.6 billion by 2018-19

The reason is fairly simple. The bills place an artificial limit (the lower of sales tax growth or rate of inflation) on how much in new income and sales tax dollars go to school districts to replace lost property taxes in future years. This is true even if those state tax collections exceed the caps, as they likely would in most years. The bill does not address how schools are to pay for increasing pension obligations, let alone costs for health care, supplies, or utilities that may increase in price faster than inflation.

Like all tax swaps, this one picks winners and losers – with Pennsylvania’s school students and the state’s future among the biggest losers.

Corporations, which pay about 30% of all property taxes and are among the largest taxpayers in many districts, would come out as big winners. Their school property taxes would be eliminated, but unlike individuals or small businesses, corporations would pay no more in state taxes. Instead, their share of school funding would be shifted to individuals and small business owners who pay income taxes and consumers who pay sales tax. (Many goods and services purchased by businesses would remain exempt from the state sales tax under this plan).

Renters, including many seniors, would see higher sales tax and income tax bills, but little “relief” in the form of lower rent payments. For low-income families, this plan is Robin Hood in reverse, with poor renters paying higher taxes to subsidize tax cuts for wealthy property owners.

For non-elderly homeowners, it’s a mixed bag. Homeowners would see their local property taxes decline, but their state income taxes would rise. Many homeowners would also see their federal taxes increase, as they would lose a deduction for paying property taxes.

Many school districts have already adopted earned income taxes to reduce dependence on property taxes. Taxpayers in those districts would pay increased state taxes to subsidize property tax cuts in other parts of the state.

The change could make houses in Pennsylvania less affordable in the future. When California adopted property tax limits, it saw housing prices skyrocket. 

Many seniors and people with medical conditions would have to pay sales tax on an array of health care goods and services.

Finally, schools would receive much less than they need to help students succeed. Good schools are the lifeblood of a community and its economy. If we shortchange our schools, how will Pennsylvania ever prepare better workers for tomorrow’s economy or attract and retain businesses that need skilled workers?

Paying property taxes are a real problem for some homeowners and in some specific areas of the state. We should address those concerns with targeted reforms rather than a one-size-fits-all approach that has been adopted nowhere else in the nation. Some of the reform efforts, like Act 1 of 2006, have helped moderate property tax growth – and the IFO report reflects that. Many districts have adopted earned income taxes to lessen reliance on property taxes.

The most effective way to ease Pennsylvania’s over-reliance on local sources for school funding is to increase the state’s support of education. Pennsylvania trails most states in state funding for schools, creating tremendous inequities across districts. A good education should not depend on where a child lives. The state needs to make – and keep – a commitment to provide a larger share of school funding. That is the key to a healthier economy and a better Pennsylvania.

Final Pa. Budget Fails to Make Up Lost Ground

By Sharon Ward, Third and State

The Pennsylvania Budget and Policy Center has released a full detailed analysis of the 2013-14 state budget plan spending $28.376 billion, roughly $645 million (or 2.3%) more than in the 2012-13 fiscal year.

Governor Tom Corbett signed the budget into law late in the evening of June 30, 2013. Overall, the plan is $64 million less than the Governor proposed in February, reflecting nearly $113 million in reduced spending for public school pensions and school employees’ Social Security payments along with a shift of $90 million in General Fund spending off budget to other funds.

2013-14 General Fund Summary

The plan includes a small increase to basic education funding, $122.5 million overall, with $30.2 million allocated to 21 school districts through a supplemental allocation, on top of the $90 million increase in the Governor’s proposal.

After many years of cuts, most programs received small increases in the Governor’s proposed budget, which remained in the final plan.

Changes to pension benefits for current employees, the cornerstone of the Governor’s original budget proposal, did not occur. The Legislature does not seem inclined to tamper with benefits for current employees. A proposal to move to a 401(k)-style retirement plan for new employees gained traction later in the session but was not adopted. This proposal may return in the fall.

Also abandoned was an $800 million education initiative to be funded through the sale of state liquor stores. While the privatization vs. modernization debate held center stage until the last week of the session, the school funding component was quickly abandoned and was not part of legislative proposals. Privatization is likely to be considered in the fall, as well.

For the first time in two years, there were no major cuts to services for vulnerable Pennsylvanians; however, a bill that would expand Medicaid coverage in 2014, a state option under the federal Affordable Care Act, was left undone. Legislation including the Medicaid expansion won bipartisan support in the Senate, but the House stripped out the expansion provision from the bill. When the bill returned to the Senate, a last ditch effort to restore the Medicaid expansion provision failed in a dramatic Senate committee vote on July 3.

Finally, a transportation funding package that would repair crumbling infrastructure and give a much needed shot in the arm to Pennsylvania’s flagging job growth failed to pass the House, despite overwhelming support in the Senate.

Get all the details from PBPC's budget analysis.

Three New Tax Breaks Will Cost PA Schools and Services

By Chris Lilienthal, Third and State

After making deep cuts to schools, early childhood education, and health and human services, Pennsylvania lawmakers are now considering new tax breaks that will largely benefit a small number of higher-income earners.

Last week, the Senate Finance Committee approved legislation that would create a new loophole in the state inheritance tax. It allows business owners to bequeath business assets tax-free to their heirs – an advantage unavailable to most hardworking Pennsylvanians who inherit a family home or car.

Over in the House, the Finance Committee voted 18-16 on Wednesday to approve a bill that would exempt sales tax on the purchase of private and corporate aircraft, jet parts, and aircraft maintenance and repair. A car or truck purchase will still be subject to sales tax, but those in the market for a private jet will get a tax break. 

Finally, the House Commerce Committee is voting today on legislation that would reward investors in Pennsylvania start-up companies with a new tax credit that they can take even if they owe no state taxes. To qualify for the credit, the investor must have a net worth of $1 million or income above $200,000 a year.

Each bill, estimated to cost millions annually, could come up for votes before the House and Senate in the coming weeks. The Pennsylvania Budget and Policy Center has more on all three bills here.

These bills come on top of Governor Corbett’s proposal to enact a new round of tax cuts beginning in 2015 that will ultimately cost hundreds of millions from the state treasury and put profitable corporations first in line when future budgets are negotiated. It would be the latest in a series of costly special tax breaks over the decade that have undermined Pennsylvania’s ability to invest in schools and other vital services.

Pennsylvania can continue to fund special tax breaks like these or we can invest again in our children and our economic future – but increasingly we can’t do both. Unaccountable tax cuts undermine success in the classroom and growth in our communities, and they shift costs onto school districts, local governments, and property taxpayers.

Pennsylvania needs real tax reform that closes loopholes, ends special tax breaks, and levels the playing field for everyone. Only then can we enact a state budget that returns to tried-and-true investments in education and the services that promote long-term economic growth.

State Tax Cuts Take a Bite Out of Pennsylvania’s Budget Pie

By Chris Lilienthal, Third and State

State Tax Cuts Take a Bigger Bite of Budget Pie

Advocates delivered half a pie to every Pennsylvania legislator Tuesday. Why half a pie?

To remind them that a decade of large tax cuts for businesses has left schools, health care services, and local communities with a smaller share of the state budget pie.

Tax cuts enacted since 1999 have drained close to $3 billion this year alone from state coffers. The cost of the tax cuts has more than tripled since 2002, with little to show for it. Too often, these tax cuts are put in place with very little accountability or obligation for companies to create jobs. In fact, Pennsylvania ranked 27th in job growth in 1999-2000 but fell to 34th in 2011-12.

Budget cuts fueled by large business tax cuts also pass the buck to school districts and local governments – and onto local taxpayers.

Governor Corbett is now proposing a new round of tax cuts for 2015 and beyond that will cost as much as an additional $1 billion. The proposal includes no plan to close tax loopholes that allow companies to hide profits and avoid paying their share of taxes. 

Pennsylvania needs a budget that returns to tried-and-true investments in education and the public infrastructure that promotes long-term economic growth. After a long economic downturn, that is the path to more jobs, stronger communities, and a brighter future for our children. 

We can fund corporate tax cuts or we can fund our children’s schools, but increasingly we can’t do both. Giving larger slices of the pie to profitable corporations means less money in the classroom, fewer early childhood programs, and less support for local services. 

Pennsylvania needs real tax reform that levels the playing field for businesses that play by the rules, and stops giving away dollars that are essential to helping our children and families succeed. Only then will we be able to invest in a world-class public education and the community assets that build a stronger economy.