Just three years ago, before nearly $1 billion in cuts to K-12 public education, the investment that Pennsylvania was making in its public schools was paying off and the state was being recognized as a national leader in academic achievement. In fact, in 2010 the Center on Education Policy cited the Commonwealth for recording gains in all academic categories from 2002 to 2008.
Today there are 20,000 fewer teachers and support professionals, including nurses to respond to critical medical emergencies and guidance counselors to help steer a troubled child or assist with the college admission process. Class sizes have increased significantly. In some districts, there are not enough funds to purchase new text books; summer school and tutoring programs have been eliminated or reduced; and there are fewer language and other elective courses. Gone are many art and music classes; and extra-curricular activities — including sports — have vanished or require a participation fee. What’s more, some schools are failing to meet their obligations under the Individuals with Disabilities Education Act because they are unable to provide all required services for students with special needs.
So what is Harrisburg proposing to turn around this downward spiral? The governor’s budget includes a $241 million “Ready to Learn” block grant program with funds designated for a short list of state-prescribed initiatives that won’t allow public school districts to determine how best to address their students’ needs. These funds could not be used to rehire teachers and reduce class sizes, or restore classes in music, art, foreign language, or physical education. The situation is especially dire because there is no fat left to trim and virtually no rainy day funds left to tap because they’ve been largely exhausted already.
3 solutions: fracking, Delaware, and corporate taxes
So let’s take a look at three commonsense solutions to increase revenue so we can adequately fund public education.
Pennsylvania holds the distinction of being the second highest producer of natural gas in the nation. A February 22 analysis by The Morning Call showed that the Commonwealth’s policy of levying an impact fee rather than a five percent severance tax on extracted gas (such as neighboring West Virginia has done) has cost the state millions. For example, in 2013, the state could have realized about $425 million from the extraction of 3.1 trillion cubic feet of gas in 4,904 wells. Compare that one-year number to the nearly three-year total of $600 million actually collected from the impact fee. And thanks to our business-friendly taxing policies, even Range Resources, a Texas company that leads in Pennsylvania fracking, considers the Marcellus Shale to “be some of the most economical gas plays in the U.S….”
There’s also a desperate need to eliminate the “Delaware loophole” which helps to protect corporate profits from being taxed in Pennsylvania. This provision allows a large company to earn profits in Pennsylvania and transfer payments to its subsidiaries in another lower or no-tax state, such as Delaware. Instituting “combined reporting” would require that a parent and its subsidiary companies be treated as one corporation for the purposes of taxation.
And finally, the Capital Stock and Franchise Tax (CSFT) has been in existence in Pennsylvania since 1840 and is a property tax on corporate assets. The planned phase-out of this tax which began in 2000 cost the state “$2.3 billion in 2012 alone,” according to the Clear Coalition. With the reduction of 75 percent in the CSFT rate already, we believe it’s time to hold the line on totally phasing out this tax.
For those who argue that these recommendations would cause businesses to leave the state, we’d refer them to a Fortune magazine article from late 2013 that indicates that “corporate tax giveaways are not worth the trouble” and “rarely do what they promise.”
With increased revenue in the commonwealth’s coffers, we can reinstate the fair funding formula that was passed in 2007 after $10 million in research and 18 public hearings. Let’s increase the state’s share of funding from its current 35 percent to the 50 percent level of the 1990s. This will help poor school districts the most and eliminate the stigma of being 47th in the nation in terms of state funding.
We believe that our democracy requires an educated populace, and today’s students won’t have a second chance to learn what they need to know. If you agree that our children and society are worth the investment, we urge you to immediately contact your state legislators and share your concerns.
James Sando is a teacher in the Wissahickon School District and a representative of the Council for the Advancement of Public Schools.