Proposed School Funding Formula Explained

The Morning Call ran a story yesterday, including comments by me, on how Governor Rendell's proposed funding formula will benefit schools that have raised property taxes rather than schools that have kept taxes in line. PDE has calculations for 08-09 by district and for the six-year plan. Here is an explanation of that proposed formula (I can't promise it will be simple).

Step 1: the state determines the adequacy target that schools "should be" spending to reach proficiency (this number comes from the Costing Out study, which I debunked here, and the Allegheny Institute debunks here). The shortfall is the adequacy target minus actual spending per pupil.

Step 2: State Funding Target computes the "state share":

State Funding Target=Shortfall * Students * (1) * (2)

1. The Market Value/Personal Income Ratio of a district (state numbers here). In other words, the state share is higher for districts with low wealth.
2. A district's Equalized Millage divided by 23.5 (equalized millage data here, 23.5 is the 75^th percentile of districts) or 1, whichever is less. This means the state share is higher for districts with higher property taxes.

Step 3: State aid for 2008-09 and future years

1. District funding in 2007-08 (no district will lose revenue, even if all their students leave) +
2. $4,000,000 if the district is a Commonwealth partnership district – this means Pittsburgh, and only Pittsburgh +
3. A set percentage (see table) of State Target Funding or
   a 1.5% increase on 2007-08 funding if the "Shortfall" is 0, i.e. a district is spending more than the costing out study said it needed to.
   

Annual Percent of State Target Funding

	High Tax Districts (top 20% in millage)	Low Tax Districts (bottom 80%)
2008-09	16.75%	10%
2009-10	47%	15.5%
2010-11	72.9%	27.9%
2011-12	100%	35%
2012-13	100%	69.4%
2013-14	100%	100%

Again, this phase-in favors districts with higher taxes, which as I pointed out, is a perverse incentive for districts.

And the formula, despite Governor Rendell's changes, still funds school districts, not school children. A formula where the money follows students (weighted for high cost students) is a better, and far simpler approach.