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2/21/2014 1
Presenters:Jay Himes, PASBO Executive Director [email protected] Ammerman, PASBO Director of Technical Assistance
[email protected] Barrick, PASBO Director of Advocacy
2/21/2014PASBO/PASA Commonwealth Budget Seminar
2014-152
Today’s Agenda • Intro and Announcements, Jay Himes,
• State Budget Overview, Jay Himes
• Ready to Learn “Block Grant”, Jeff Ammerman
• The New Special Education Funding Formula, Hannah Barrick
• Question and Answers
• Break 10 minutes
• Other Funding Levels in the PDE Budget, Hannah Barrick
• The School-Based Access Program Debacle, Hannah Barrick
• Act 1 and the State Budget, Jeff Ammerman
• Federal Programs, Jay Himes
• Pension Reform: What We See May Not Be What We Get, Jay Himes
• Other “Stuff”, Jay Himes
• Question and Answers
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Six Things You Should Know About the State Budget
• The State Budget is equal parts politics and finance.
• Emerson-- "A foolish consistency is the hobgoblin of little minds.”
• Mistakes of the past can always be repeated.
• We may have witnessed the very sudden death of the BEF "formula.”
• It's the numbers behind the numbers that count.
• It's not over 'til it's over.
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Six Things You Should Know About the State Budget
• The State Budget is equal parts politics and finance. “Sometimes in government, nothing makes a difference
like defining a promise kept. And with your support, we have not raised taxes in three years.”
“Today our labor force is 6 million strong and growing. In three years, our commonwealth has added enough jobs to replace nearly all we lost in the downturn.”
“We’ve done a lot of good work, you and I, in building a stronger Pennsylvania.”
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Six Things You Should Know About the State Budget
• Emerson-- "A foolish consistency is the hobgoblin of little minds.”
• Remember it’s an election year!
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Revenue Estimate for FY 2013-14
IFO Estimate—July 2013
IFO Mid-Year Revision—January
2014-15 Budget
$29.116 billion $29.154 Billion $29.005 billion $30.540 Billion
+ $38.5 Million - $111 Million + $1.424 Billion
Five Year Growth Rate in General Fund Revenue is 12.2% or less than 3% annually. Growth rate
for 2014-15 revenues is 3.5%
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“Though Corbett budget secretary Charles Zogby in December projected about a $1 billion deficit, yesterday he announced it had vanished. Poof. Magic. Perhaps coincidently, Corbett's new spending is, wait for it, just about $1 billion.”John Baer, Philadelphia Daily Newsarticles.philly.com/2014-02-05/news/47053284_1_corbett-campaign-new-taxes-budget-address
One-Time Revenues and Savings
2/21/2014PASBO/PASA Commonwealth Budget Seminar
2014-1513
$150 million Unclaimed property (reduces state holding period)
$75 million Permitting leasing/drilling under state forests and parks
$225 million Transfer of Tobacco Settlement Funds
$63 million Elimination of the state PSERS reimbursement to charters
$125 million Implementation of Healthy PA (assumes federal approval)
$170 million Tapering the collars to reduce state pension contributions
$10 million Use of Special Pharmaceutical Benefit Program rebates
$75 million Balancing Incentives Program savings-due to fed.
participation
$900 million
Expenditures grow by $927 million or 3.3% for the 2014-15 budget. For the current fiscal year, expenditures are $28.37 billion which is an increase of 2.3% ($645 million) from FY 2012-13.
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2014-1514
2/21/2014PASBO/PASA Commonwealth Budget Seminar
2014-1515
Six Things You Should Know about the State Budget
• Mistakes of the past can always be repeated.“Pension reform cannot ‘kick the can down the
road”. Shifting the problem into the future exacerbates the already significant unfunded liability, making it more difficult to achieve a financially sustainable pension system.”
“This relief can be achieved through reducing the current pension collars to 2.25% in 2014-15, then increasing the collars by 0.5% per year until the collars reach 4.5% or the collared rate is equal to the annual required contribution rate.”
2/21/2014PASBO/PASA Commonwealth Budget Seminar
2014-1516
Year Payroll $000'sProjected
RateTotal Employer Contribution
Tapered Pension Rate
Premium Assistance
Total Revised
ECR
Revised Total Employer
ContributionSavings $000's
13-14 $13,720,000 16.93% $2,322,796(+4.50%)16.00% 16.93%
14-15 $13,482,000 21.40% $2,885,148(+ 2.25%)18.25% 0.90% 19.15% $2,581,803 -$303,345
15-16 $13,841,530 25.84% $3,576,651(+2.75%)21.00% 0.84% 21.84% $3,022,990 -$553,661
16-17 $14,214,689 29.27% $4,160,639(+3.25%)24.25% 0.83% 25.08% $3,565,044 -$595,595
17-18 $14,613,842 30.25% $4,420,687(+3.75%)28.00% 0.82% 28.82% $4,211,709 -$208,978
18-19 $15,028,322 31.28% $4,700,859
(+4.25% ormax rate)30.49% 0.79% 31.28% $4,700,859 $0
Act 120
Rates
Act 120 Collars
“Tapered Collar” Rates
Total Deferred
$1,661,579
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2014-1517
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2014-1518
16.93%
21.40%
25.84%
29.27%30.25%
31.28%32.08%
16.93%
19.15%
21.84%
25.08%
28.82%
31.28%32.08%
2.25%
4.00% 4.19%
1.44%0.00% 0.00%
13-14 14-15 15-16 16-17 17-18 18-19 19-20
Projected Rate Total Revised ECR Reduction
Some Answers, More Questions
• No Specific Benefit Reform Plan
• Details to Follow
• 3 proposals under consideration in the Legislature
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2014-1519
Benefit Reform Outline • Protect Retirees and Employees. Retirees will see no change to their
current benefits; they will continue to collect the benefits they have earned. Pension benefits earned by current employees will not be affected by pension reform. What employees have earned, they will keep. For future employees, pension reform must provide for an adequate retirement benefit.
• Equitable Risk Sharing. Currently, taxpayers bear the full financial risk of the pension plans. Pension reform should reduce the risk on Pennsylvania’s taxpayers by offering a defined contribution, 401-k style retirement plan for future employees.
• Reduce the Burden on School Districts. The escalating pension costs affect school districts’ ability to fund critical education programs. Increasing pension contributions means fewer dollars make their way to direct classroom instruction, essential to promoting student achievement. Pension reform should provide relief to our school districts at a sustainable rate, while paying for the relief through reforms.
• Address the Unfunded Liability. Pension reform cannot “kick the can down the road.” Shifting the problem into the future exacerbates the already significant unfunded liability, making it more difficult to achieve a financially sustainable pension system.
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2014-1520
Six Things You Should Know about the State Budget
• We may have witnessed the very sudden death of the BEF "formula.”
• BEF flat funded for 2014-15
Acting Secretary of Education Carolyn Dumaresq said money was assigned through block grants rather than basic instruction because "we want to make a strategic investment in those practices that . . . increase student achievement. . . . We all recognize that the basic instructional formula needs an overhaul.“ http://articles.philly.com/2014-02-05/news/47053289_1_chester-upland-district-state-aid-corbett
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2014-1521
Basic Education Line Item
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2014-1522
Despite the nearly 2% increase in the basic education line item in 2013-14, the 2014-15 proposed budget level-funds this line item at $5.526 billion, holding Pennsylvania steady at the total basic education funding level of 2009-10.
4.951
5.226
5.526
5.776
5.354 5.4035.526 5.526
4.4
4.6
4.8
5
5.2
5.4
5.6
5.8
6
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Basic Education Line Item
Am
ou
nts
in b
illio
ns
Basic Education Funding Survey"Let's get a true, fair funding system of all the schools of Pennsylvania, not for one district or another.” Governor Corbett 1/22/14
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2014-1523
• Efforts underway to engage in conversation to examine current basic education funding and develop an equitable, adequate, and predictable basic education funding formula.
• House Bill 1738 (Rep. Bernie O’Neill) creates a Basic Education Funding Commission to examine school funding and provide recommendations for a new school funding formula. Senate action likely and soon.
• PASA, PASBO, PSBA, and PARSS are working together on this important issue and just completed a school funding survey of their respective memberships.
Six Things You Should Know about the State Budget
• It's the numbers behind the numbers that count. Budget numbers change, sometimes only
because the assumptions behind them change.
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2014-1524
Six Things You Should Know about the State Budget
• It's not over 'til it's over.
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2014-1525
• Data is not static
Ready To Learn• $341 million in total funding, including $241 million
in new Ready to Learn funding added to existing Accountability Block Grant (ABG)of $100 million.
• Ready to Learn permitted uses will depend on District School Performance Profile scores
• PDE is preparing to send these scores to Superintendents sometime in February
• Will be calculated using building scores in the District
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2014-1526
ABG Initiatives• Pre-kindergarten programs
• Full day kindergarten programs
• K-3rd Grade class size reduction programs
• Tutoring assistance
• Programs that improve the academic performance of subgroups as identified under the No Child Left Behind Act of 2001
• Programs that improve teacher quality
• Science and Math related program
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2014-1527
Ready to Learn Initiatives• Pre-kindergarten to grade 3 curriculum alignment
• Ensuring that all students are reading and doing math on target by third grade
• Extended learning opportunities for more customized student instruction
• Training to support early literacy
• Supplemental instruction in biology, English language arts and algebra I
• Instructional coaches
• Science, technology, engineering and mathematics (STEM) education
• Implementation of the State Literacy Plan.
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2014-1528
Ready to Learn Permitted Uses by District SPP Score
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2014-1529
See p. 18 Supplemental Handout Packet
Ready to Learn• ABG money can be used for Ready to Learn initiatives, but
Ready to Learn money can’t be used for ABG initiatives unless you are a Tier 4 District
• $100 Million of ABG funds (unchanged from 2013-14)
• $240 Million new proposed to be distributed to Districts and Charter Schools via formula.
• Approximately $221 million to Districts, $19 million to charters
• Proposing ability to deduct this grant on PDE-363
• $1 million in competitive grant funds for Pennsylvania’s high-performing public schools to analyze and publish best practices that have proven to increase student achievement (Governor’s Expanding Excellence Grant Program)
2/21/2014PASBO/PASA Commonwealth Budget Seminar
2014-1530
Ready to Learn Distribution Formula• A per-student factor equal to $231 multiplied by the
product of each school entity’s average daily membership (ADM) and its market value/personal income aid ratio (MV/PI AR)
• An English language learner factor equal to $34.65 ($231 x 15%) multiplied by the product of the number students in the school entity identified as limited English proficient and its MV/PI AR.
• A poverty factor equal to $57.75 ($231 x 25%) multiplied by the product of the number of students in the school entity identified as economically disadvantaged and its MV/PI AR.
2/21/2014PASBO/PASA Commonwealth Budget Seminar
2014-1531
PIMS Definition of English Language Learner
English Language Learner
English Language Learner (ELL): A limited English proficient student defined as one who: 1) was not born in the United States or whose native language is other than English and comes from an environment where a language other than English is dominant; or is a Native American or Alaska Native who is a native resident of the outlying areas and comes from an environment where a language other than English has had a significant impact on such an individual’s level of English language proficiency; or is migratory and whose native language is other than English and comes from an environment where a language other than English is dominant; and 2) has sufficient difficulty speaking, reading, writing or understanding the English language and whose difficulties may deny such individual the opportunity to learn successfully in classrooms where the language of instruction is English or to participate fully in an English speaking society
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PIMS Definition of Economically Disadvantaged
Economically Disadvantaged
It is at the discretion of the District to determine if a student is economically disadvantaged. Poverty data sources such as Temporary Assistance for Needy Families cases, census poor, Medicaid, children living in institutions that are neglected or delinquent, those supported in foster homes or free/reduced price lunch eligibility may be used.
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2014-1533
Example of Calculation
2014-15
Proposed
Ready to
Learn Grant
2013-14
Accountability
Block Grant
2014-15
Student-
Focused
Funding
Supplement
Per Student
Factor
English
Language
Learner
Factor
Poverty
Factor
Preliminary
Student
Focused
Funding
Supplement
2012-13
Preliminary
ADM
2012-13
Preliminary
Economically
Disadv. ADM
2012-13
LEP
Count
2013-14
MV/PI
Aid Ratio
$440,406 $133,436 $306,970 $283,290.02 $1,571.61 $22,220.92 $307,082.55 2,054.899 644.735 76 0.5968
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2014-1534
Lower than preliminary due to rounding
2054.899*$231*.5968
76*$34.65*.5968
644.735*$57.75*.5968
Hold Harmless at 13-14 levels
Distribution of Ready To Learn
$185,120
$285,166
$433,042
$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000
25th Percentile
Median
75th Percentile
Response to Ready to Learn
“Restrictions on how school districts may use the funds along with the fact that the source of the increased funding are one-time transfers and non-recurring revenue, raises serious concerns as to their availability and sustainability beyond 2014-15.” PASA
“Although the stated goals of the Ready to Learn block grant are laudable, the block grant would effectively limit the flexibility of a school district to determine how to appropriately target additional funds to meet its unique needs and increasing costs at a critical time.” PASBO
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2014-1536
ABG History Lesson-Original Funding Formula• (1) Each school district shall receive an amount based on
the percentage of its students scoring below proficient on the PSSA tests, calculated as follows:• (i) Divide the number of PSSA tests administered in the school
district on which students scored below proficient in reading or mathematics during the 2002-2003 school year by the total number of PSSA tests scored in reading and mathematics in the school district during the 2002-2003 school year.
• (ii) Multiply the quotient from subparagraph (i) by the average daily membership of the school district for the 2002-2003 school year.
• (iii) Multiply the product from subparagraph (ii) by the market value/income aid ratio of the school district for the 2003-2004 school year.
• (iv) Multiply the product from subparagraph (iii) by one hundred fifty million dollars ($150,000,000).
• (v) Divide the product from subparagraph (iv) by the sum of the products of subparagraph (iii) for all school districts.
2/21/2014PASBO/PASA Commonwealth Budget Seminar
2014-1537
ABG History Lesson-Original Funding Formula• (2) Each school district shall receive an amount based on
the percentage of its students scoring at or above proficient on the PSSA tests, calculated as follows:• (i) Divide the number of PSSA tests administered in the school
district on which students scored at or above proficient in reading or mathematics during the 2002-2003 school year by the total number of PSSA tests scored in reading and mathematics in the school district during the 2002-2003 school year.
• (ii) Multiply the quotient from subparagraph (i) by the average daily membership of the school district for the 2002-2003 school year.
• (iii) Multiply the product from subparagraph (ii) by the market value/income aid ratio of the school district for the 2003-2004 school year.
• (iv) Multiply the product from subparagraph (iii) by fifty million dollars ($50,000,000).
• (v) Divide the product from subparagraph (iv) by the sum of the products of subparagraph (iii) for all school districts.
2/21/2014PASBO/PASA Commonwealth Budget Seminar
2014-1538
ABG Since• Funded at $200 million in 2004-05 and 05-06
• Increased to $250 million in 2006-07
• Hit high level of $275 million in 2007-08
• Reduced to $100 million in 2011-12 and remained there since
• Proration and some slight alterations to original formula but for the most part funding still driven out by original factors
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2014-1539
Alternate Method Assuming 2.4X ABG Addition instead of Ready to Learn Method
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2014-1540
County ABG Multiplied by 2.4 New RTL Grant Difference
Adams Total $1,908,283 $1,765,889 -$142,394
Allegheny Total $18,662,059 $17,693,105 -$968,954
Armstrong Total $1,743,106 $1,650,656 -$92,450
Beaver Total $3,872,770 $3,600,756 -$272,014
Bedford Total $1,286,878 $1,167,558 -$119,320
Berks Total $9,276,149 $10,685,279 $1,409,130
Blair Total $2,744,868 $2,865,618 $120,750
Bradford Total $1,891,176 $1,607,889 -$283,287
Bucks Total $6,250,726 $6,060,694 -$190,032
Butler Total $3,095,455 $3,197,643 $102,188
Cambria Total $2,826,881 $3,064,045 $237,164
Cameron Total $164,683 $118,412 -$46,271
Carbon Total $1,152,038 $1,328,699 $176,661
Centre Total $1,203,816 $1,123,295 -$80,521
Chester Total $4,422,768 $5,388,611 $965,843
Clarion Total $1,098,749 $974,785 -$123,964
Clearfield Total $2,432,813 $2,238,667 -$194,146
Clinton Total $781,174 $692,783 -$88,391
Columbia Total $1,345,663 $1,409,012 $63,349
Crawford Total $1,632,379 $1,604,551 -$27,828
Cumberland Total $2,557,793 $3,039,804 $482,011
Dauphin Total $5,209,826 $4,359,945 -$849,881
Delaware Total $9,194,789 $8,284,021 -$910,768
Elk Total $555,569 $572,357 $16,788
Erie Total $5,875,363 $6,497,337 $621,974
Fayette Total $3,637,334 $3,315,144 -$322,190
Forest Total $74,014 $46,514 -$27,500
Franklin Total $2,274,946 $2,534,605 $259,659
Fulton Total $392,566 $352,329 -$40,237
Greene Total $1,092,569 $867,929 -$224,640
Huntingdon Total $1,037,489 $952,910 -$84,579
County ABG Multiplied by 2.4 New RTL Grant Difference
Indiana Total $1,759,934 $1,530,802 -$229,132
Jefferson Total $963,922 $823,803 -$140,119
Juniata Total $429,624 $424,344 -$5,280
Lackawanna Total $3,494,952 $4,366,010 $871,058
Lancaster Total $7,317,300 $8,429,325 $1,112,025
Lawrence Total $2,468,057 $2,230,783 -$237,274
Lebanon Total $2,403,538 $2,760,738 $357,200
Lehigh Total $5,794,502 $6,604,107 $809,605
Luzerne Total $5,096,275 $6,780,721 $1,684,446
Lycoming Total $2,474,383 $2,518,513 $44,130
Mckean Total $1,322,122 $1,178,793 -$143,329
Mercer Total $2,771,153 $2,686,155 -$84,998
Mifflin Total $937,044 $900,212 -$36,832
Monroe Total $4,557,017 $4,171,008 -$386,009
Montgomery Total $5,288,095 $6,955,783 $1,667,688
Montour Total $307,778 $232,485 -$75,293
Northampton Total $5,038,759 $5,143,560 $104,801
Northumberland Total $2,094,194 $2,128,577 $34,383
Perry Total $1,051,637 $926,527 -$125,110
Philadelphia Total $51,934,987 $29,049,123 -$22,885,864
Pike Total $667,265 $691,085 $23,820
Potter Total $494,054 $368,999 -$125,055
Schuylkill Total $2,898,607 $3,155,619 $257,012
Snyder Total $775,942 $696,563 -$79,379
Somerset Total $1,725,490 $1,418,865 -$306,625
Sullivan Total $55,308 $43,947 -$11,361
Susquehanna Total $1,367,494 $1,021,545 -$345,949
Tioga Total $1,072,961 $871,474 -$201,487
Union Total $449,299 $523,001 $73,702
Venango Total $1,684,838 $1,565,609 -$119,229
Warren Total $1,196,513 $816,820 -$379,693
Washington Total $4,180,546 $3,852,813 -$327,733
Wayne Total $948,144 $766,704 -$181,440
Westmoreland Total $6,516,478 $6,915,517 $399,039
Wyoming Total $597,446 $519,629 -$77,817
York Total $8,169,653 $8,628,051 $458,398
$240,000,000 $220,758,452 $19,241,548
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2014-15
41
“Winners” using Ready to Learn vs ABG• Winners
• Districts who scored well on the 2003 PSSAs
• Districts who have experienced ADM growth since 2003
• Districts who have experienced aid ratio increase since 2004
Funding “Formulas” in General
• Basic Education is currently hold harmless with ad hoc criteria
• Costing out study served as a basis for Basic Education formula for a number of years
• Special Education “old money” been frozen for years and based upon an assumption of 16% special education incidence rate (more on this later)
• ABG is based on proration of a formula based upon 2002-03 PSSA scores, 2002-03 ADMs, and 2003-04 Aid Ratios
• Ready to Learn uses current student data
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2014-1543
Special Education
After 6 years of flat-funding at $1.026 billion, the proposed budget recommends a $20 million increase to the line item, nearly a 2% increase.
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2014-1544
$980,619
$1,010,038
$1,026,815 $1,026,815 $1,026,815 $1,026,815 $1,026,815 $1,026,815
$1,046,815
$940,000
$960,000
$980,000
$1,000,000
$1,020,000
$1,040,000
$1,060,000
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Special Education Line Item
Am
ou
nts
in t
ho
usa
nd
s
Special Education
Details of 2014-15 Special Ed line item:
• Approx. $948 million to be distributed to districts
• Approx. $10.5 million for the Contingency Fund
• Approx. $56.4 million for IU core services funding
• $9 million Institutionalized Children’s funding to IUs
• $20 million in new funding to be distributed to districts based upon 3 special education cost categories pursuant to recommendations by the Special Education Funding Commission
2/21/2014PASBO/PASA Commonwealth Budget Seminar
2014-1545
Special Education Funding Commission• Created by Act 3 of 2013
• Led by Sen. Patrick Browne and Rep. Bernie O’Neill, and made up of 12 legislators and administration officials
• Tasked specifically with:• developing a special education funding formula and identifying
factors that may be used to determine the distribution of a change in special education funding among the school districts in the Commonwealth.
• gathering information on charter and cyber charter school funding reimbursements for special education students and draft proposed legislation based upon those findings.
• Had 6+ months to hold hearings across the state to examine the issue of special education funding and issue a report with recommendations
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2014-1546
Commission Recommendations• New special education dollars should be
allocated to school districts based primarily upon the number of students in each of three categories determined by the cost of each student’s special education services.
• School district-specific factors, such as aid ratios, equalized millage rates, and a sparsity/size factor that targets small, rural school districts, should be used to provide adjustments in the new formula.
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2014-1547
MV/PI Aid Ratio
Equalized Millage
Multiplier
Category 1:Student Count
X Weight
Category 2:Student Count
X Weight
Category 3:Student Count
X Weight
Total Weighted Student Count
Total Weighted Student Count
Small, Rural School District
Factor
Total Weighted Student Count
District Total
District TotalDistrict
Total to Prorate
Proposed Special Education Formula
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2014-1548
Example: Weighted Student Count
School District X has 549 Special Education ADMs for 2011-12
School District X has a 3 year average total ADM of 4,006
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2014-1549
Category 1: 526 students x 1.51 (Cat. 1 weight) =794Category 2: 22 students x 3.77 (Cat. 2 weight) =83Category 3: 1 student x 7.46 (Cat. 3 weight) =7
Total Weighted Student Count for SD X = 884
Example: Sparsity/Size Adjustment
SD X ADM/square mile=53.32
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2014-1550
State Avg ADM/square mile=38.35
SD X SPARSITY RATIO:
1-((53.32/38.35) x 0.50)=0.30
SD X ADM/Sq.Mi.
State Avg. ADM/Sq.Mi.
SD X Sparsity
Ratio
Example: Sparsity/Size Adjustment
SD X 3 year avg. ADM=4,006
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2014-1551
State 3 year avg. ADM=3,475
SD X SIZE RATIO:
1-((4,006/3,475) x 0.50)=0.42
SD X 3 yr. avg.
ADM
State 3 yr. avg.
ADM
SD X Size
Ratio
Example: Sparsity/Size AdjustmentSD X Sparsity Ratio: 40%
0.30 x .40 = 0.12
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2014-1552
SD X Size Ratio: 60%0.42 x .60 = 0.25
SD X Sparsity/Size Ratio = 0.12 + 0.25 = 0.37
70th Percentile Sparsity/Size Ratio = 0.75
SD X is below the 70th percentile, so there is NO adjustment made to the weighted student count.
IF SD X were above the 70th percentile, an adjustment equal to the % over the 70th percentile multiplied by 50% would be added to the weighted student count.
Example: Final Adjustments
• SD X MV/PI Aid Ratio (3 yr. avg.) = 0.5630
• SD X Equalized Mills (3 yr. avg.) = 16.57
• 70th Percentile Equalized Mills = 20.12
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SD X Equalized Mills Multiplier = 16.57/20.12 = 0.8235
884 x 0.5630 x 0.8235 = 410.13
SD X would receive an estimated $36,963 in additional special education funding
Total SD X Amount to be prorated
Weighted Student Count
MV/PI Aid Ratio
Equalized Mills Multiplier
Proposed Special Education Formula• While the $20 million
in new funding represents nearly a 2% increase in the total special education line item, PASBO estimates that the range for school districts will be from < 1% to over 6%.
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6.10%
2.50%
1.97%
1.49%
0.28%
0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%
High
75thPercentile
Median
25thPercentile
Low
Estimated Increase in Special Ed Funding
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Hybrid Learning Grant
$10 million in competitive grants to school districts for hybrid learning.
• These proposed grants would be available to up to 100 schools for the development, implementation or expansion of hybrid learning programs that blend traditional classroom learning with digital learning.
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• Authority Rentals and Sinking Fund Requirements: The PlanCon line item was again level-funded at $296 million.
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PlanCon
$296,483,000
$308,368,000
$315,500,000
$330,000,000
$314,937,000
$296,198,000 $296,198,000 $296,198,000 $296,198,000
$270,000,000
$280,000,000
$290,000,000
$300,000,000
$310,000,000
$320,000,000
$330,000,000
$340,000,000
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
PlanCon State Appropriation
11%Decrease
• $1.2 billion due to the 350+ school construction projects currently in the PlanCon pipeline
• Over 200 projects trapped at Part G of the process-facilities are complete, financing is in place, debt payments are due
• Districts have increased taxes, cut programs and staff, borrowed additional money, and spent reserves to cover the state’s absent reimbursement
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PlanCon
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• Press Conference with Rep. Seth Grove to discuss delayed PlanConreimbursement
• 16 districts at Part G attended from 10 counties across the state
• Districts participating are owed a total of over $125 million in state reimbursement and are due $14.6 million in delayed reimbursement
• Rep. Grove will introduce legislation to streamline PlanCon and help those districts awaiting funding.
PlanCon
Transportation & Food Services• Transportation: The pupil transportation line item
is down by 0.1% from the 2013-14 budget, with a total proposed appropriation of $546.6 million. The non-public and charter transportation line item was level-funded at $78 million.
• School Food Services: The 2014-15 budget proposes a slight increase of 1.5% to the school food services line item, increase the appropriation to $32.48 million.
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Career & Technical Education
• Career and Technical Education: The line item was level-funded at $62 million for the 5th year in a row.
• Career and Technical Education Equipment Grants: Created in 2013-14 with a $3 million appropriation, the 2014-15 budget proposal eliminates this grant program.
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Pre-K & Early Childhood Education
• Pre-K Counts: The line item was increased by $10 million, providing 1,670 pre-school children with access to learning programs.
• Early Learning Challenge Grant: PA was awarded $51.7 million in Race to the Top grant money for early childhood learning. $15.8 million of this award was allocated to DPW’s Office of Child Development & Early Learning to increase the access of high quality early learning programs across the state.
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Miscellaneous• Tuition for Orphans and Children Placed in Private
Homes: The 2014-15 budget proposes nearly at 20% decrease in this line item, cutting it from $58.6 million to $48.5 million. This reduction corrects an inflated appropriation based upon updated data.
• Early Intervention: The 2014-15 budget proposes slight increase in this line item of $841,000 (in addition to a 2013-14 supplement). Some of this increase will cover the CMS audit findings of the School-Based Access Program.
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School-Based Access Program
$75,176,791$81,163,693
$99,369,090
$0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
2009-10 2010-11 2011-12
School-Based Access Funding to School Districts
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Third Party LiabilityThe following third party insurers have issued a denial letter for 2012-13:
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4th District IBEW Health FundAetnaAPWU Health PlanBCBS of Alabama/Arizona/Kansas/Rhode IslandBenefit ConceptsCapital Blue CrossCentral PA TeamstersColonial Penn Life Ins. Co.Educators Mutual Life Ins. Co.First Priority HealthFurman’s Food InsuranceGEHAGeisinger Health PlanH.E.R.E.I.U. Welfare FundsHealthnow New YorkHighmark BCBS PA/WVIHC Health SolutionsIndependence Blue Cross
International Medical GroupKeystone Health Plan EastKeystone Health Plan WestLoomis CompanyMass Mutual Life Ins. Co.Mennonite Mutual Aid Assoc.MVP Health CareNGS American Inc.Operating Engineers Local 825 UnionPA Blue ShieldPEBTFPOMCORegence BCBS of IdahoSierra Helath and LifeSouth Central PreferredTeachers Protective MutualUnited Food & Commercial Workers TrustUPMC
Third Party Liability
• PCG stated that previously denied claims for 2012-13 in which there is now a denial letter from the third party insurer have been resubmitted.
• PCG estimates that school districts will begin to see payments shortly.
• Denial letters from all third party insurers must be obtained annually, so additional letters must be obtained before 2013-14 claims can be paid.
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Only One Third of Slot Machine Revenue Goes to Property Tax Relief
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Act 1 Index Forecast
Source: Independent Fiscal Office Analysis of Senate Bill 76 and House Bill 76
Fiscal Year SAWW ECI Act 1 Base Index
2006-07 4.2% 3.5% 3.9%2007-08 2.8 4.0 3.42008-09 4.3 4.5 4.42009-10 4.6 3.6 4.12010-11 2.7 3.0 2.92011-12 0.9 1.9 1.42012-13 2.1 1.3 1.72013-14 2.0 1.4 1.72014-15 2.6 1.6 2.12015-16 2.3 2.5 2.42016-17 2.3 2.6 2.42017-18 2.2 2.9 2.62018-19 2.7 2.9 2.8
History and Forecast of the Act 1 Base Index (and Components)
Federal Program Funding
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“Tapering the Collars” and Act 1 Process• Recommendation: Stay the Course
• Reducing the ECR for PSERS is a proposal
• Likely not decided until late in process if at all
• No provision for revoking of exceptions once granted
• Past practice
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Pension Reform: What Current Employees Need to Know• Tobash side-by-side hybrid
• Only affects new employees
• Employer Contribution Rate capped at 27%
• $5 Billion in cost shifting to state from school districts
• Reached in FY 2017-18
• Uncapped if ECR reaches 35% (50/50 sharing with Commonwealth)
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New Employees—Plan Design
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Less than 25 years of service/Less than $50K in wages
Employee Contribution:
6% DB/1% DC Total 7%
Employer Contribution Rate:
DB PSERS + DC .5%
25 years or more of service/Less than $50K in wages
Employee Contribution:
DC Total 7%
Employer Contribution Rate:
DC 4%
Less than 25 years of service and above $50K in wages:
Employee Contribution:
DC Total 7%
Employer Contribution Rate:
DC 4%
25 years or more of service and above $50K in wages:
Employee Contribution:
DC Total 7%
Employer Contribution Rate:
DC 4%
Estimated Pension Benefit with “Side-by-Side Hybrid Plan
34 YOS Age FAS Final DB Cap 5 Yr. FAS
Annual DB Pension DC Plan $'s
Act 120 Annual Benefit
2049 65 $140,500 $67,005 $66,367 $33,183 $318,982 $93,000
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Yr. Age Sal DB Cap DB Cont--EE 6%
DC Cont--EE 1%
DC Cont--ER .5%
DC Cont--EE 7%
DC Cont--ER Total DC
2015 31 $40,000 $50,000 $2,400 $400 $200 $0 $0 $600
2035 51 $87,645 $60,755 $3,647 $608 $304 $1,881 $1,075 $3,867
Balanced Approach – Three Buckets Plan
Future Employees
• New Cash Balance Plan -
• $7 billion savings
Past Underfunding
• General Fund borrows $9 billion to make up for 10 year underfunding
Current Members
• Agree to modest plan changes:
• Lump sum option modification
• 5-year final avg. salary
• Receive a reduction in their employee contribution rate
Cash Balance Plan
Employee Contribution
Employer Contribution
Guaranteed Return
Account Value
For New Members Enrolled after June 30, 2015
7% 4/5% 4%
At retirement account turns into a monthly annuity like a defined benefit plan.
Source: Rep. Glenn Grell
Other Stuff
• Charter school appeal on federal expenditure deductions
• Additional instructional days
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Thank you for the opportunity to talk with
you today.
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