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Task Force on School Cost Reduction

Task Force on School Cost Reduction. Prepared for the EPLC Finance Symposium Friday, November 16, 2007. Task Force Background. Special Session Act 1 of 2006 to: Evaluate spending trends Budgetary pressures driven by external mandates and cost factors Composed of members of School Boards

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Task Force on School Cost Reduction

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  1. Task Force on School Cost Reduction Prepared for the EPLC Finance Symposium Friday, November 16, 2007

  2. Task Force Background • Special Session Act 1 of 2006 to: • Evaluate spending trends • Budgetary pressures driven by external mandates and cost factors • Composed of members of • School Boards • Teachers’ unions • School Business Officials • Other Experts

  3. School Cost Categories, Trends and Mandates • School spending during 2004-05 reached $20.8 billion

  4. Cost Drivers • Instructional Expenditures – responsible for 54% of total cost growth since 1995-96 • Special and Gifted education – 97% increase • Regular education – 35% increase • Employee Benefits – 132% increase • Charter School - $364 million statewide annually

  5. Cost Drivers (continued) • Support Services – responsible for 30% of total cost growth since 1995-96 • Student Transportation – 58% increase • Administrative Services – 42% increase • Tax Collection - $78.8 million statewide • Facilities and Financing – responsible for 14% of total cost growth since 1995-96 • Debt Services - 90% increase • Non-instructional Services – responsible for 2% of total cost growth since 1995-96 • Increased by 48% increase • Largely driven by student activities • Federal and State Mandates • NCLB • IDEA

  6. Task Force Focus • Tax Collection • Health Care • School Construction and Green Building • Special Education • Transportation • Charter and Cyber Charter Schools • Shared Services • Mandate Waivers

  7. Tax Collection • Currently • 560 tax collectors • DCED estimates $237 million earned income taxes never collected; $127 million would be available for schools

  8. Tax Collection Recommendations • Consolidate collection of Earned Income Tax, employing fewer tax collectors and clarifying withholding rules for employers. • Consolidate to 66 countywide tax collectors • Uniform rules, regulations, forms and codes • All EIT would be withheld by the employer • Businesses would only need to remit to the county in which their payroll operation is located. • Estimated Savings - $127 million

  9. Health Care • PASBO estimated that health care premiums rose by 24% between 2003 and 2005. • PEBTF’s premium increases averaged 5.6% between 2003 and 2006.

  10. Health Care Recommendations • Establish a statewide system for all school districts to jointly purchase health care benefits • When school districts maximize their purchasing power, the commonwealth will use tax dollars more efficiently while protecting the health care benefits that teachers and other school district employees receive. • Estimated Savings – believed to reach hundreds of millions of dollars according to some analysts.

  11. School Construction • In 2006 – 53 school construction projects • Approximately 80% are alterations and additions

  12. School Construction (continued) • PDE provides reimbursement through the Plan Con process • Act 34 of 1973 • 20-year rule • Contracting Thresholds • Prevailing Wage • Multiple Prime Contracting

  13. School Construction Recommendations • Increase and index limiting thresholds for construction-related expenses in line with their original intent. • Work done by school personnel from $4,000 to $25,000 • Projects done by school personnel and costing between $10,000 and $25,000 would require three quotes • Projects of $25,000 or more require schools to advertise and solicit bids • Provide school districts with flexibility related to prime contracting

  14. School Construction Recommendations (continued) • Increase assistance to school districts to more strongly encourage green building • Increase PDE technical assistance to districts throughout the many phases of the construction process, including releasing information on actual school construction costs

  15. Special Education • Represent 15% of the 1.8 million children enrolled • 4% classified as gifted • Spending grew by 83.4% since 1996-97

  16. Special Education (continued) • State Special Education Funding • Base Supplement • Inflation Index Supplement • Minimum 2% increase • Additional Funding • Contingency Funds • Core Services • Institutionalized Children’s Program

  17. Special Education Recommendations • Alter the state special education formula to provide funding on a tiered system based on the services a student receives • Provide increased state funding for high quality early childhood education in the elementary grades • Develop best practices in moving students out of special education programs • Redo the charter school special education formula to enable the resident school district to better align funding with charter school special education costs.

  18. Transportation • Approximately $1 billion annually (5% of the total statewide expenditures) • Increased by 58%

  19. Transportation Recommendations • Eliminate the requirement to bus students outside district boundaries and only require districts to transport on days when public school is in session. • Optimize fuel cost management to slow long term growth costs • Encourage district to adopt transportation best practices

  20. Charter and Cyber Charter • Currently 117 charter and cyber charter schools in PA • $364 million in 2004-05

  21. Charter and Cyber Charter (continued) • Traditional student tuition for charter and cyber charter students • Special Education student tuition for charter and cyber charter students

  22. Charter and Cyber Charter (continued) • Additional concerns • Truancy • Competitive Grants

  23. Charter and Cyber Charter Recommendations • Primarily Brick and Mortar • Change charter school law to include grants in the list of items exempt in calculations of charter school tuition rate. • Permit school districts to weigh fiscal impact as a criterion when considering new and expanded charter schools. • Align the budgeting process of school districts with enrollment planning for charter schools

  24. Charter and Cyber Charter Recommendations (continued) • Primarily Brick and Mortar • Provide best practices and guidance to school districts that will support them in creating effective truancy monitoring partnerships with their charter schools • Increase guidance to school districts throughout the charter drafting process to ensure a high-quality charter agreement

  25. Charter and Cyber Charter Recommendations (continued) • Cyber Charter • Establish a single, statewide tuition rate to be applied to all cyber charter schools. • Continue to collect and analyze data on the cost of cyber education

  26. Shared Services • Approximately $314 per student on administrative costs • 50% increase • $210 million statewide on central services

  27. Shared Services Recommendation • Expand the approach of shared services to include a variety of entities including districts, intermediate units, counties and other local governments • Draft a report of best practices that shows districts how cost savings can occur through consortia.

  28. Mandate Waivers • Education Empowerment Act, Act 16 of 2000 • Effective for three years • Districts must submit an evaluation • Annual report from PDE to the chairmen and minority chairmen of the House and Senate Education Committees

  29. Mandate Waivers (continued) • Decreasing number of requests • Construction changes

  30. Mandate Waiver Recommendation • Increase the quality of the Pennsylvania Department of Education’s communication regarding Mandate Waivers, to include strategic information about the experiences of school districts in achieving cost savings.

  31. Next Steps • Tax Collection • Health Care • School Construction and Green Building • Special Education • Transportation • Charter and Cyber Charter Schools • Shared Services • Mandate Waivers

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