March 12, 2012

Sounding the Alarm: PSEA warns of growing fiscal crisis for schools in new report

Sounding the Alarm - CoverAcross Pennsylvania, the reality of unprecedented school funding cuts is forcing dramatic cuts to student programs and pushing a growing number of public schools to the financial brink, according to a new PSEA report that documents the root causes of a growing financial crisis and details the consequences that confront students every day.

PSEA President Mike Crossey explained that the report, “Sounding The Alarm” uses research to illustrate a series of systemic problems in state public education policy that are compounding the impact of nearly $1 billion in state funding cuts and pushing many school districts into financial distress.

“This is a manufactured crisis, but it doesn’t have to be this way,” Crossey said. “Elected officials can take steps to solve this problem. If they don’t, a significant number of school districts will be pushed to the breaking point by 2014.”

Find the report at

The report identifies five key problems that have combined to create a financial crisis in the public schools.

1. State Budget CutsUnprecedented state funding cuts and the elimination of key funding programs have compounded underlying, systemic problems, particularly for lower-wealth districts.

2. Charter School Payments. Charter and cyber charter school laws result in a net increase in costs to school districts.

3. Declining Tax Bases and Rate Limits. Declining local property values and caps on property tax increases have eroded school districts’ tax bases and curtailed their ability to raise much-needed revenues.

4. Underlying Fiscal Weakness. School districts showing the greatest underlying financial weakness had fund balances averaging 1.27 percent of total expenditures. These districts tend to be relatively small, rely heavily on a single source of revenue, have a small amount of buffer within their budgets, and carry a heavy debt load. They range in type from urban school districts, to small districts in the coal regions and Monongahela Valley, to rural districts in the central and western parts of the state.

5. Pension Cost Increases. A decade-long “holiday” that allowed employers to avoid paying their share of retirement contributions, coupled with investment losses from 2008 and 2009, forced the current increase in employer payments.

“This report explains why unprecedented state funding cuts are having such a devastating impact on the public schools and the students who learn there,” Crossey said. “Without the funding cuts, we would have had serious problems in the schools. Add the funding cuts to the mix and now we have a true crisis.”

The report also documents the impact of the funding crisis, provides several case studies, and includes a list obtained from the Department of Education cataloguing more than 100 school districts that have made formal requests to curtail a host of student programs.

“Money matters in public education,” Crossey said. “Without fair, adequate, and equitable state funding for the public schools, programs that help students learn will suffer, and our students will be the ones who feel the consequences.

“We are sounding the alarm,” Crossey said. “This report shows why. Now, we call on policymakers and elected officials to answer this alarm and do what’s right for Pennsylvania’s students.”



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