Pennsylvania’s Costing-Out Study

Background
In 2005, a group of prominent business leaders in the Lehigh Valley (Education 2010) commissioned an in-depth audit of the Allentown City School District to study the issues of education, workforce preparation and economic revitalization. They were aware that the district faced many challenges: A high drop-out rate, high rate of teacher turnover, inadequate educational materials and facilities, and an out-of-date curriculum. In addition, Allentown was severely overtaxed with one of the highest local tax rates in the state to support its increasing education costs.

Education 2010 sought answers for how to remedy these challenges. They commissioned Augenblick, Palaich & Associates, a national consulting firm based in Denver, to study the Allentown City School District. Their analysis found that the district would need to close the more than $2,000 per pupil revenue gap by increasing the state’s share of paying for education if Allentown was to have a chance at revitalization and reverse troubling trends, from penalties for failure to meet federal and state standards, to increased out-migration of families to neighboring suburbs, increased economic decline, and increased drop-out rates.

Education 2010′s study brought to light the issues facing Allentown, and also highlighted the fact that many similar challenges existed in other older communities throughout Pennsylvania. Good Schools Pennsylvania, in partnership with the Education Law Center and The Education Policy and Leadership Center, took the lead in calling for a similar analysis to be conducted statewide. In 2006, the General Assembly and Governor Rendell authorized the state’s first costing-out study. "Costing-Out the Resources Needed to Meet Pennsylvania’s Public Education Goals" was released in November 2007, and became the basis for a new school funding and accountability formula adopted in July 2008.

Who performed the study?
The study was commissioned and funded by the General Assembly in July 2006. It was supervised and released by the State Board of Education. Like the Allentown study, it was performed by Augenblick, Paliach & Associates.

What the purpose of the study?
The study was designed to understand what it costs for all students Pennsylvania public schools – no matter where they live – to receive a quality education allowing them to meet state standards for academic achievement. By understanding these costs, the state adjust its funding system to close the gap between high-spending and low-spending school districts. These gaps cause local tax pressures in many communities, especially on property taxes.

What were the findings?
The base cost for providing a high quality public education was $8,003 per pupil. The average annual total funding needed per student in Pennsylvania was $11,926, which included multipliers to factor the increased costs of educating students who live in poverty, speak another language or require special education services. The average per-student amount annual spent in 2005-06 was $9,512. Thus, the study found that an average of $2,414 per student per year would be needed for all students to reach Pennsylvania’s academic proficiency and performance expectations.

At the time of the study, 471 of Pennsylvania’s 501 school districts were spending below the levels recommended by the costing-out study. 1.67 million students were attending these underfunded schools. Some districts were spending more than $6,000 per student below the level needed to provide a quality education under state standards.

In total, Pennsylvania would have to increase education spending by $4.38 billion over 2005-06 levels – a 25.4 percent increase – in order to meet established performance standards. This number was calculated by adding the per-student spending gaps in districts throughout the state.

Pennsylvania’s state funding system (as of 2007-08) was inequitable. Districts with higher wealth and lower student needs spend more per student than lower wealth districts with higher student needs. On average, the higher wealth districts were able to do this while still making a lower tax effort than other districts.