East vs. West: How geography — and politics — play into how Pa. funds its schools

HARRISBURG — In Pennsylvania’s school funding dilemma, there’s a little-known mechanism that pits the western half of the state against the east.

And although it’s controversial, it will likely remain untouched as Gov. Josh Shapiro and state lawmakers work this year to develop a new funding formula to divvy up more than $8 billion in state funding between the state’s 500 school districts.

Political party doesn’t determine where lawmakers stand on the issue, a provision in the current funding system, known as hold harmless, which dictates how 71% of state funding is spent and prevents districts with shrinking student populations from losing funding. Only geography does — western school districts tend to benefit from it, while districts in the eastern part of the state, and particularly in the populous and growing Philadelphia region, lose out on millions of dollars and have to raise property taxes to keep up.

According to an Inquirer analysis, 317 school districts of the state’s 500 gain from the hold harmless policy, with most of these schools losing students each year. But a majority of Pennsylvania’s students attend the other 183 school districts that lose out each year by failing to account for increasing enrollment and student needs.

That dynamic creates a complicated political dilemma in the wake of the Commonwealth Court ruling last year that found the current school system unconstitutional because it shortchanges poor districts and fails to account for student needs. Shapiro, a Democrat, and the divided General Assembly now must design a new way to fund public schools in Pennsylvania — and public school advocates say it will cost an additional $6.2 billion over five years to do it right.

A report expected this week from the Basic Education Funding Commission will detail what a new funding system should look like to equitably and adequately fund Pennsylvania’s public schools. The report is the culmination of months of hearings and work by a bipartisan panel, appointed by legislative leaders and Shapiro, and should reflect an agreed-upon funding proposal.

Rep. Mike Sturla (D., Lancaster), who chairs the funding commission and helped design the fair funding formula in 2014, said Tuesday that the commission was still negotiating a final report. But the hold harmless policy would likely remain, no matter what.

“We’re not getting rid of hold harmless, because it would give some districts less money than they had before,” Sturla said. “The objective is to put enough dollars in where it matters that hold harmless won’t matter anymore.”

Next, Shapiro and the General Assembly will seek to agree on a solution in the coming months and include it in the next state budget. Lawmakers all have their own motivations and will likely each advocate for the option that brings more money home to their school districts.

“A root problem is that funding is grossly inadequate and pitting school districts against each other has been Harrisburg’s way of ensuring that they don’t have to do anything,” said Susan Spicka, the executive director of Education Voters of Pennsylvania “They get school districts facing off, fighting over these crumbs they throw out.”

House Democratic leaders all hail from Southeastern Pennsylvania and have advocated for an end to the hold harmless policy — but they’ll need to appease their whole caucus, as they hold only a one-seat majority over Republicans. Shapiro, who comes from Montgomery County, has declined to take a position on the policy since taking office last year. He and House Democrats must strike a deal with Senate Republicans, who control the upper chamber and whose leaders represent Western Pennsylvania.

“There are no blue or red [school] districts, just like there are no blue or red kids,” said House Majority Leader Matt Bradford (D., Montgomery). “There’s a clear recognition that we have this moral and constitutional obligation to get this right.”

Ten years ago, when the state last refreshed its education funding formulas in an effort to make them more equitable, lawmakers continued the hold harmless policy dating back to the 1990s, stipulating that no district could receive less than it did in the 2014-15 school year, and the new funding formula would be applied only to new money added to public education.

Had this policy not been implemented, and instead, all of the state’s funding to school districts was put through the new funding formula — which accounts for student population, number of students living in poverty, and the number of English language learners — money would have been allocated based on only those qualifications. And districts that lose out due to hold harmless in the southeast and other parts of the state would be eligible for $1.1 billion more in state funding.

While the Commonwealth Court ruling found that the state unconstitutionally penalizes poor kids for living in poor districts, hold harmless can’t be simplified the same way. The majority of districts that benefit are poor and rural. However, there are some wealthier districts that benefit, such as Council Rock School District in Bucks County.

» READ MORE: See how much money your school district has for students

Legislative leaders make most of the decisions in Harrisburg in closed-door meetings and hold a vote when they think they have enough support. Top leaders have used their positions, in the past, to protect their districts or push their own agendas. So the geographic divide on school funding between House leaders and Shapiro, from the southeast, and the Senate, from Western Pennsylvania, will matter as they negotiate.

Senate Majority Leader Joe Pittman (R., Indiana), whose legislative district includes all school districts that gain from hold harmless, said in an interview in September that continuing the provision is “absolutely critical.”

“While, yes, it’s a benefit to the district I represent, it’s a benefit to the vast majority of school districts,” Pittman said. “As a whole, our enrollments [in Pennsylvania] are declining. And we have to keep in mind we’re putting more money into a system with fewer students.”

Pittman noted that districts may be losing students, but the districts’ needs don’t automatically decline, too. At the same time, these districts are hemorrhaging property taxpayers that are supposed to help support the district.

Even if the commission recommends keeping hold harmless in place, as Sturla suggested, lawmakers whose districts don’t benefit from that mechanism are likely to advocate for other ways to help schools in their districts.

Bradford, whose Montgomery County district loses out on funding except for one school district, said the state will need to put more money into the system to avoid “stealing from Peter just to pay Paul.”

Public education advocates say hold harmless will be a critical issue in the school funding negotiations, because redividing the same pie in a different way doesn’t make it any bigger.

Some advocates testified during hearings last year that the state can’t get rid of hold harmless right away. It would be “catastrophic to hundreds of school districts,” the Pennsylvania School Boards Association wrote in its testimony to the Basic Education Funding Commission. Association members overwhelmingly disapproved of any policy that would end hold harmless that “would harm more than 60% of school districts to benefit the other 30%.”

But other advocates, including some who sued the state over its unconstitutional education funding system, want the state to ditch hold harmless, at least in the way it’s applied today. They want to scrap most of the current equation and create individualized adequacy targets – based on costs, special education, facilities, and more – for each district. They say that would help the state meet the requirement, as stated in the state Constitution, to provide a “thorough and efficient system of public education to serve the needs of the Commonwealth.”

If those targets aren’t met within five years, advocates said, they’re prepared to go back to court.

“School funding got so out of whack because lawmakers in Harrisburg didn’t have the courage to come up with a formula that was going to direct money to the school districts that needed it the most,” Spicka said. “We have the opportunity to fix it and focus on getting the money into the system where kids need it most.”