Pa. budget 2023: How a landmark school funding lawsuit is shaping negotiations

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HARRISBURG — A court decision requiring state lawmakers to make the funding system for public schools more equitable is front and center in this year’s budget negotiations, but the issue will not be resolved by the looming deadline.

Commonwealth Court, following a challenge by Shenandoah Valley and several other school districts and groups, ruled in February that the current school funding scheme is unconstitutional, but did not prescribe a solution, leaving it up to lawmakers to find an answer.

The budget has a deadline of June 30, and while some lawmakers hope to include extra education funding in deference to the court’s ruling, talks over a larger education overhaul are expected to last much longer.

The Democrats who newly control the state House are pushing for a large funding increase, and also want to boost money specifically earmarked for the poorest districts.

Republicans are reluctant to spend down the commonwealth’s multibillion budget surplus, citing concerns about a possible economic downturn. Many also say they want any school overhaul to include more publicly funded scholarships for students to attend private or charter schools, a policy that many Democrats argue weakens public schools.

The need for big changes to the school funding scheme comes courtesy of Commonwealth Court, which ruled in February that the current approach is unconstitutional because it creates lopsided outcomes in which wealthier districts get more resources and poorer districts can’t properly educate children.

The judge didn’t prescribe a solution, leaving it up to lawmakers to figure it out themselves.

The numbers involved are big and highly contested among lawmakers and interest groups. Public education advocates have argued it’ll take at least a few billion dollars in new funding to satisfy the conditions of the ruling, on top of the $7.9 billion Pennsylvania spent on basic education this fiscal year.

Democratic Gov. Josh Shapiro or GOP legislative leadership could still appeal the case to the state Supreme Court. While GOP leaders haven’t said what they plan to do, Spotlight PA has learned Shapiro won’t appeal. And earlier this year, the governor said he expects his Republican colleagues will let the ruling stand as well.

Lawmakers on both sides of the aisle acknowledge that if the ruling stands, some kind of big overhaul of education funding will be necessary.

The question before them this year is: How should the commonwealth be planning for that change?

Dollars, cents, and school choice

Pennsylvania uses two different formulas to determine how much money goes to each school district.

One is generally seen as outdated and unfair because it doles out cash based on 30-year-old enrollment numbers, which means it routes relatively more money to shrinking districts and less to ones that have grown in recent decades, and doesn’t account for factors like student poverty. The other is considered to be more responsive to districts’ needs, but it’s only used for funding that has been added to the budget since 2016.

Once that state money is allocated, districts are then left to pad out much of their budgets through property taxes, which vary widely and tend to disproportionately burden poor areas.

The advocacy groups that brought the case decided by Commonwealth Court have argued that much more funding is needed to make education outcomes fairer, and that the state must also rethink its scheme for distributing those dollars.

Sharon Ward, a policy advisor with the Education Law Center, which represented plaintiffs in the case, said not all of that needs to change this year. Her organization is pushing for this budget to be a starting point.

“We have always said that it was important to make a significant down payment this year in order to respond to the judge’s decision,” she told Spotlight PA, “and to use the next couple of months to do the planning for an overhaul of the school funding system so that it meets constitutional muster.”

The question of how much money the commonwealth should be spending this year undergirds all discussions about education funding.

In his initial budget proposal, Shapiro pitched a roughly billion-dollar increase to education funding over last year’s, including $567 million more for basic public school education — about an 8% bump that slightly outpaces inflation. His plan would put hundreds of millions more dollars into things like special education and mental health programs, but wouldn’t increase funding to the commonwealth’s Level Up program, which routes money specifically to the poorest districts.

At the time, education advocates called Shapiro’s plan disappointing, saying it was not the major funding increase that Commonwealth Court had ordered.

State House Democrats, who control their chamber by a single seat, advanced their own budget plan last week. It largely matches Shapiro’s pitch while making significant additions to the education budget.

The proposal would add about $900 million to Shapiro’s total spend, with most of the addition going to schools and related expenses. That includes an additional $225 million earmarked for Level Up.

“We know we’re going to need to invest a significant number in education as a result of the lawsuit in the next, you know, X number of budgets,” said state Rep. Peter Schweyer (D., Lehigh), who chairs the House Education Committee. “So every dollar that we’re investing in education today will make it easier for us to get to the court-ordered goal of adequacy and equity tomorrow.”

Schweyer was “a little surprised” that Shapiro didn’t include more money for Level Up in his initial proposal, since that program was started as an acknowledgment of the district-by-district inequity that prompted the lawsuit.

But, Schweyer added, Shapiro “very clearly was applauding our improvement over his budget. So, you know, I think we’re all very much on the same page about it.”

Republicans remain on a different page.

Democrats’ plan passed the state House by one vote and without any GOP support. State Senate Majority Leader Joe Pittman (R., Armstrong) called the plan’s total spend “an impossible number.”

He added this week that he thinks any attempt to begin satisfying the Commonwealth Court ruling should include “parental empowerment, parental engagement. That is absolutely critical to us.”

Pittman explained that he wants to expand a program that gives companies tax credits in exchange for them funding scholarships for kids to attend private schools. He also wants to create a new program in which the state directly offers a share of a struggling district’s funding to students so that they can use the money to attend a different private, public, or charter school.

Pennsylvania lawmakers have in the past considered legislation that would create such a program, which lawmakers called “lifeline scholarships.” Shapiro has indicated he’s open to them, and Pittman said he would “love to have a detailed conversation about what that could look like.”

Ultimately, Pittman said, he thinks Commonwealth Court’s ruling “didn’t distinguish between public and private education, it distinguished educational opportunities. And it also made reference to the fact that providing equal education doesn’t always have to translate into more funding.”

While Democrats have historically been divided over whether to encourage charter schools and publicly fund scholarships that can be used for private education, many oppose Republicans’ school-choice-centric approach to responding to the Commonwealth Court ruling.

“We disinvested in public schools. We rely on local property taxes that … disproportionately impact our poorest and already most at risk,” Schweyer said. “We are not going to lose focus on that.”

Still, there are also some areas of potential compromise.

Lowering the temperature

Within the vast education budget, lawmakers expect to pass a few smaller priorities that have at least some bipartisan support.

One of the in-progress bills that lawmakers believe could end up as part of the final deal is a measure that aims to incentivize new teachers to join the workforce. The legislation would give student teachers stipends of at least $10,000 during the semester that they typically spend working in a classroom as they finish their training.

Versions of the bill have been introduced in both chambers.In the state House, the bill passed Schweyer’s committee this week. The state Senate’s version of the measure has lawmakers from both parties’ leadership among its sponsors, and Pittman said the proposal “certainly merits us taking a hard look.”

Lawmakers in the controlling caucuses of their respective chambers also said they think some amount of money must be allocated for school construction projects.

In their budget pitch, state House Democrats included a new special fund that would route $250 million to school modernization projects. Though that idea wasn’t in Shapiro’s initial proposal, Schweyer said the governor has been “very, very supportive.”

Pittman said state Senate Republicans also believe school infrastructure projects are “important,” though he argues that in some rural areas with shrinking populations, modernization can involve demolishing and repurposing buildings. “I think we need to look at school construction in a broader context of also right-sizing the footprint of school districts,” he said.

Lawmakers also are discussing overhauling oversight of charter schools — particularly cyber charters — and balancing resources between those charters and public districts.

These discussions are perennial, but Schweyer, who is new to chairing the state House Education Committee, said he feels that “there’s real dialogue going on … it’s the first time in a long time we have a shared desire to lower the temperature between public schools and the publicly funded charter schools.”

He isn’t sure if any new policies related to charter school oversight or resource distribution will be included in this year’s spending deal.

“It’s got to be a piece of the overall education equation,” he said. “Whether or not we have enough runway between now and the budget deadline is yet to be seen.”

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