White Paper: Sounding the Alarm 2

 Sounding the Alarm 2 CoverPSEA's Updated White Paper on Pennsylvania's School Funding Crisis   

Pennsylvania Students in Harm's Way as an Increasing Number of Pennsylvania School Districts are at Risk of Financial Distress

In the Spring of 2012, PSEA warned that the fiscal crisis in Pennsylvania school districts would only worsen if policymakers did not take action to solve the factors that caused it. One year of inaction has indeed allowed the impact to hurt even more students in even more schools. We have updated our paper with the hope that policymakers will heed the warnings and take action.

Pennsylvania’s public schools remain mired in their toughest fiscal crisis since the 1930s. Following the nearly $860 million in cuts in 2011-12 and minimal increases since, districts are being forced to make increasingly difficult decisions about how to meet the education needs of their students. Many of these decisions will result in cuts to programs necessary to provide the challenging, well-rounded, and comprehensive curriculum required for success in the 21st Century global economy. These cuts are not in the best interests of America’s students, therefore risking the future of our children.

Since our initial report, four districts have been designated as being in “Financial Recovery” status, which involves the appointment by the state of a Chief Recovery Officer charged with developing binding plans to restore fiscal solvency. Four additional districts have been placed in “Financial Watch” status. These are only the first instances of districts pushed to the breaking point. More will follow. If legislative action isn’t taken now, the financial viability of a significant number of school districts will be threatened within the next few years. Pennsylvania could do a disservice to an entire generation of students who will not get a second chance.


  • Long-standing issues in the funding of public schools, namely an inequitable funding formula, were compounded by the onset of the recession. Districts once considered financially strong are at risk of financial distress, and those that were struggling prior to the recession are in imminent danger of becoming insolvent.
  • A statistical model created by John Trussel and Patricia Patrick and recently published in the refereed Journal of Education Finance, along with data on district fund balances, were used to assess the financial weakness of Pennsylvania school districts. We found that the school districts showing the greatest financial weakness by these measures had fund balances averaging 1.27 percent of total expenditures. The compounding effects of other factors specific to Pennsylvania school districts including payments to charter schools, pension costs, declining tax bases and rate limits, and state funding cuts are discussed.
  • Districts of all types across Pennsylvania have adapted to cuts to education funding by depleting reserves, raising taxes, and/or cutting programs. In nearly every school district, professional and support staff are being cut, threatening school districts' ability to provide students with valuable programs including, but not limited to, full-day kindergarten, tutoring, elementary and middle school languages, and the arts.
  • Now more than ever, legislators must realize that money matters in education and that education matters in Pennsylvania. As Rutgers professor Bruce Baker notes in his 2012 review of the research on funding and school performance, “In short, money matters, resources that cost money matter, and more equitable distribution of school funding can improve outcomes. Policymakers would be well-advised to rely on high-quality research to guide the critical choices they make regarding school finance.”

PSEA recommends:

  1. Enact a sound, rational formula for funding public education
    The formula for funding public education in Pennsylvania should be adequate, equitable, accountable, and predictable. In the short term the Commonwealth should restore the funding cuts to public schools and distribute those funds in accordance with a formula that focuses on equitable distribution.
  2. Enact an accountable funding formula for charter schools
    If the state is going to authorize cyber and other charter schools, it should pay for them. The state should assume responsibility for payments to charter schools, rather than redirecting much-needed resources from public schools that serve all children.
  3. Release districts from revenue limitations of Act 1
    The Legislature should suspend the referenda requirement until the state adequately and equitably funds public schools.
  4. Keep the promise of the new pension law, Act 120 of 2010
    Of the many pension proposals floated in the General Assembly, Act 120 is the least expensive and most effective. The General Assembly should keep the promise of Act 120 of 2010. Policymakers should never again create pension debt for the Commonwealth and for school districts by deciding not to pay actuarially determined and statutorily required employer pension contributions.
  5. Seek new revenue sources
    It is time for Pennsylvanians to stand strong and oppose the Governor’s budget cuts and wrong-headed funding policies. PSEA believes there are other options available to the Commonwealth to balance the budget rather than a “cuts only” approach that will have deleterious impacts in both the short and long term.


Learn more at www.psea.org/schoolfunding.





Member Advocacy Center

Featured Video