Task Force on School Cost Reduction PASBO Annual Conference Thursday, March 6, 2008.
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Transcript of Task Force on School Cost Reduction PASBO Annual Conference Thursday, March 6, 2008.
Task Force Background
Established by Special Session Act 1 of 2006 to: Examine spending trends Evaluate budgetary pressures driven by external
mandates and cost factors Identify options and recommend change
Composed of: School Board leaders Teachers’ union leaders School Business officials Other experts and professionals Appointed by Governor and General Assembly
School Costs
School spending during 2004-05 reached $20.8 billion
2004-05 Allocation per Student
Instruction, $6,322.27
Support Services, $3,217.05
Operation of Noninstructional
Services, $197.93
Facilities Acquisition and
Financing, $1,114.47
Cost Drivers
Costs have outpaced the CPI across all major categories
Increase in Major Expenditure Categories by ADM as Compared to the CPI
49% 45%52%
45%
78%
0%
20%
40%
60%
80%
100%
Tot
alE
xpen
ditu
res
Inst
ruct
ion
Sup
port
Ser
vice
s
Ope
ratio
n of
Non
inst
ruct
iona
lS
ervi
ces
Fac
ilitie
sA
cqui
sitio
n an
dF
inan
cing
Incr
ease
s 19
95-9
6 to
200
4-05
CPI
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 Schools - $364 million statewide annually
Increases in Instructional Expenditures as Compared to CPI
44%35%
97%
32%
0%20%40%60%80%
100%
Tot
alIn
stru
ctio
nal
Exp
endi
ture
s
Reg
ular
Edu
catio
n
Spe
cial
Edu
catio
n
Oth
erIn
stru
ctio
nal
Exp
endi
ture
s
Incr
ease
s 19
95-9
6 to
200
4-05
CPI
Cost Drivers
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
Task Force Focus
Tax Collection Health Care School Construction and Green Building Special Education Transportation Charter and Cyber Charter Schools Shared Services Mandate Waivers
Tax Collection
Currently...
560 tax collectors
DCED estimates $237 million earned income taxes never collected; $127 million would be available for schools
School District Expenditures on Tax Assessment and Collection Services over Time
$60,000,000
$62,000,000
$64,000,000
$66,000,000
$68,000,000
$70,000,000
$72,000,000
$74,000,000
$76,000,000
$78,000,000
$80,000,000
1995
-96
1996
-97
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
School Year
To
tal
Co
mm
on
wea
lth
Exp
end
itu
res
Tax CollectionRecommendations
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 Impact - $127 million
Health Care
PASBO estimated that health care premiums rose by 24% between 2003 and 2005
PEBTF premium increases averaged 5.6% between 2003 and 2006
Health CareRecommendations
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
School Construction
In 2006: 53 school construction projects
Approx. 80% alterations and additions
2006 Average Construction Costs/Sq. Ft. by Project Type
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
$200.00
0
5
10
15
20
25
30
35
Cost Per Sq, Ft. $81.76 $101.18 $80.41 $176.99
Number of Projects 3 33 6 11
Addition Addition/Alteration Alteration New Build
School Construction
PDE provides reimbursement through the Plan Con process
Act 34 of 1973
20-year rule
Contracting Thresholds
Prevailing Wage
Multiple Prime Contracting
School ConstructionRecommendations
Increase and index limiting thresholds for construction-related expenses in line with original intent
Work done by school personnel from $5,000 to $25,000 Projects not done by school personnel and costing between
$10,000 and $25,000 would require three quotes (n0w $,000-$10,000)
Projects of $25,000 or more require schools to advertise and solicit bids (now $10,000)
Provide school districts with flexibility related to prime contracting
School Construction Recommendations
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
Special Education
Represents 15% of the 1.8 million children enrolled
4% classified as gifted
Spending has grown by 83.4% since 1996-97
Special and Gifted Expenditures vs. Total Instructional Expenditures
0%
2%
4%
6%
8%
10%
Pe
rce
nt
Inc
rea
se
fr
om
ye
ar
to y
ea
r
Percent increase in InstructionalExpenditures
4% 2% 3% 4% 5% 5% 5% 3% 6%
Percent increase in Special EducExpenditures
7% 5% 8% 8% 8% 8% 9% 9% 9%
1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
Special Education
State Special Education Funding Base Supplement Inflation Index Supplement Minimum 2% increase
Additional Funding Contingency Funds Core Services Institutionalized Children’s Program
Special EducationRecommendations
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 transitioning students from 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
Transportation
Approximately $1 billion annually (5% of the total statewide expenditures)
Increased by 58%
Average Transportation Expenditures Per Student Transported
YearPublic
Transportation*Non-Public
TransportationAverage Per
Student**Non-Public as % of
Average
1995-96 $485.21 $566.56 $495.64 117%
1996-97 $501.20 $535.13 $505.58 107%
1997-98 $516.52 $533.69 $518.72 103%
1998-99 $533.72 $523.66 $532.44 98%
1999-00 $548.16 $549.03 $548.27 100%
2000-01 $578.50 $566.70 $576.99 98%
2001-02 $625.84 $612.65 $624.16 98%
2002-03 $653.74 $647.37 $652.95 99%
2003-04 $688.25 $827.02 $704.85 120%
2004-05 $728.01 $971.49 $756.04 133%
TransportationRecommendations
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
Charter and Cyber Charter
Now 117 charter and cyber charter schools in PA
$364 million in 2004-05
Rising Statewide Charter School Expense
1.68%
1.16%
2.19%
2.65%
3.18%
$0.00
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
$300,000.00
$350,000.00
$400,000.00
Am
ou
nt
in T
ho
usa
nd
s
0
50
100
150
200
250
300
350
400
450
500
Nu
mb
er o
f sc
ho
ol
dis
tric
ts
Total Charter School Tuition $106,584.00 $160,957.00 $221,388.00 $286,505.00 $364,052.00
districts paying charter schooltuition
167 449 483 482 495
2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
Charter and Cyber Charter
Traditional student tuition for charter and cyber charter students
Special Education student tuition for charter and cyber charter students
Non-Special Education Cyber Charter School Tuition
1
38
187
159
64
2613
3 2 0 1 10
20
40
60
80
100
120
140
160
180
200
$5,000.00 $6,000.00 $7,000.00 $8,000.00 $9,000.00 $10,000.00 $11,000.00 $12,000.00 $13,000.00 $14,000.00 $15,000.00 $16,000.00
Tuition Range
Nu
mb
er
of
Sc
ho
ol
Dis
tric
ts
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
Charter and Cyber Charter Recommendations
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
Charter and Cyber Charter Recommendations
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
Shared Services
Approximately $314 per student on administrative costs
50% increase
$210 million statewide on central services
Growth in Central Service Expenditures
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
1995
-96
1996
-97
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
School Year
Shared ServicesRecommendations
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
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
Mandate Waivers
Decreasing number of requests
Construction changes
Mandate Waivers by Category
0
10
20
30
40
50
60
70
80
90
2000 2001 2002 2003 2004 2005 2006
Nu
mb
er R
equ
este
d
Alt. Ed
Certification
Construction
Purchasing
Special Ed.
Unclassified
VoTech
Mandate WaiverRecommendation
Increase the quality of PDE communication regarding Mandate Waivers Include more strategic information about
the experiences of school districts in achieving cost savings
For More Information
www.pde.state.pa.us
Pre K – 12 Finances
Task Force on School Cost Reduction
The Rendell Administration’s Strategy for Driving Down the Local Burden
A new school funding formula that will invest $2.6 billion over the next six years to help school districts move towards their adequate funding targets.
All homeowners will receive property tax relief in July – an average of $185 for every household – and total property tax relief will reach $854 million in 2008-09. Older Pennsylvanians have already received nearly $115 million in the program’s first year, and first-ever controls on local tax increases are keeping school property taxes in check.
Legislation to create a statewide school health benefits system will bring down the cost of health care for school districts – addressing a leading cost driver while preserving the quality of benefits for educators.
The state is encouraging voluntary consolidation of school districts that choose to combine their efforts to boost achievement and save taxpayers money.
“Common Cents” makes it easier for school districts to share services to improve efficiency and avoid costly duplication of back-office, instructional, transportation and other expenses.