School Strike in the South Hills?

The Keystone Oaks School District has put parents on notice that there could be a work stoppage this week unless last minute negotiations are successful.  As defined by Act 88 of 1992, a strike is defined as “… a concerted action in failing to report for duty, the willful absence from one’s position, the stoppage of work, slowdown or the abstinence in whole or in part from the full, faithful, and proper performance of the duties of employment for the purposes of inducing, influencing or coercing a change in the conditions or compensation or the rights, privileges, or obligations of employment”.

A report we wrote in 2013 identified the total number of school strikes in Pennsylvania from 1997-98 to 2012-13 and measured the strike impact by students days out of class (the enrollment multiplied by the number of days out of class).In southwestern PA in that time frame the impact from 44 strikes was 1.4 million “student days out of class”.

Based on Keystone Oaks’ enrollment (2,005 in 2014-15 average daily membership) if the teachers were to go on strike a similar measurement could be calculated by taking that enrollment against the days of a strike should one occur.  Based on the data in our report Keystone Oaks did not have a strike in the time period 1997-98 to 2012-13, and has not had one in the interim.

Update on Erie’s Decision on School Funding Case

Updating a blog from earlier this month, which was on the subject of the William Penn case we detailed in an October 2016 Policy Brief, the board opted to vote and join the lawsuit.  The case was appealed from Commonwealth Court in May of 2015 and the most recent action in the case was last week on matters unrelated to Erie’s decision.

The resolution approving the District’s joining of the lawsuit notes that the District has closed three schools, eliminated 200 positions and halved administrative staff and asked the Department of Education for $31 million in funding, a request that was rejected.  The resolution states that if the Supreme Court allows the case to go forward (which would send it back down to Commonwealth Court) then the District would authorize its solicitors would join the lawsuit.


Details on State Police Staffing

A new report on the PA State Police by the PA Legislative and Budget Finance Committee provides a nice follow up to a 2014 report on municipal police, the debate over whether to charge municipalities that do not have their own police force and rely on state police, and the issue of funding of state roads and bridges.

It is this third area that the report is most focused upon, especially the study’s finding of what is appropriate for “direct costs related to safety on the public highways and bridges”.  The main finding, as reported in a news article and on page 60 of the study, is that

Expressed in terms of highway and bridge work, if the PSP had been allocated only $532.8 million from the Motor License Fund, rather than $755 million, it would have increased the amount available in the Motor License Fund by $222.2 million. This would have been sufficient to resurface about 1,111 lane miles of urban arterial roadway or design, replace, and maintain 138 bridges for the next 25 years.

The police gets funding from multiple funds beyond the motor license fund (general, federal, state stores, and others) bringing the total to just over $1.1 billion.  The enlisted and civilian component of the state police was authorized for 6,655 positions and had 6,093 filled as of the fall of last year.

Pension Problems Hit School District

Though the title is apropos for many school districts across PA, since they are all a part of PSERS where contribution rates to the pension system have been and are climbing (see page 23 of this report), but the Norwin School District in Westmoreland (and part of Allegheny) County is possibly looking to furlough employees due to what the president of the school board of directors stated is “… ‘mismanagement’ of the Pennsylvania State Employees Retirement System years ago”.  With those contribution rates as described in the report above, Norwin’s expense for PSERS doubled from $3.0 million to $6.3 million from 2012-13 to 2014-15 based on its audit ending the 2014-15 school year.

That audit pointed out the shortcomings with Act 1 of 2006, the state’s funding scheme for K-12 districts, and PSERS funding.  It noted in its section on “major financial issues” that

Further complicating the above situation is a projected substantial increase required for the funding of the state-wide school employees retirement system (PSERS). The defined benefit plan is projecting an increase in the employer contribution rate of approximately 63% by 2016-17. For the 15-16 fiscal year the rate is 26.84%. The impact of this type of increase on the District’s budget is approximately $1.9 million over the next three years.
The District will meet this challenge by reviewing its current staffing levels, future hiring needs, and spending practices to ensure we are maximizing resources and driving efficiencies when decisions are made. We will also look at increasing our current revenues and explore alternative funding sources.

Based on the District’s real estate tax rates, the millages for both the Allegheny and Westmoreland portions have increased from where they stood in 2014-15.  Norwin is a low spender when compared to other districts on total expenditures per-pupil, with $11,867 in total expenditures compared to the state average of $15,854 that year.  It is not clear where pension reform fits in as the state deliberates its 2017-18 fiscal year budget.

Longest Tenured Act 47 Town Contemplates Future

Farrell, a city in Mercer County, was declared distressed under Act 47 in the year the statute was passed, 1987.  This coming November will mark the two decade anniversary for the declaration.  The City Manager described financial recovery as less than comprehensive “The problem with Act 47 is that they give you Band-Aids, but they do not stop the bleeding”. 

The City is tackling blighted abandoned properties and presumably will have to make a decision in the coming year on where it goes in regards to Act 47.  As we wrote in 2014, changes were made to Act 47 in order to eventually move distressed municipalities out of Act 47 status within some set time frame.  As such, “for municipalities in distressed status as of the effective date of the section, the five year period [to exit distressed status] will begin to run from the effective date of the most recent recovery plan or amendment”.   Based on an ordinance from June of 2013, the City adopted its most recent amendment to its recovery plan, meaning June 2018 would be when that decision would have to be made.  Farrell could get an extension if the coordinator recommends it, and then there is the very limited option of dis-incorporation, which would rely upon pre-conditions.

A Tax, or a Fee? Details on Hotel Proposal

Efforts to raise the hotel tax in Allegheny County are ramping up again as the idea received some news coverage today and there is legislation that has been introduced in the House.  While existing statutes on the County’s hotel tax do indeed refer to the 7% total as an excise tax, the newest proposal calls it a “tourism promotion fee”.

The fee, like the tax, would be parceled out to multiple parties and for multiple uses.  The Pittsburgh Film Office, Monroeville, Visit Pittsburgh, the Sports and Exhibition Authority, and the yet-not-existent Sports Commission would all get a share of the money.  The legislation would permit a 2% maximum, but the boosters of the tax increase–or the fee creation–would only ask the County to levy it at 1.25%, bringing the surcharge on a hotel stay in the County to 8.25%.

The Commission itself would be a 21 member board with local, state, hotel, tourism, and sports appointees.  Visit Pittsburgh would get 22% of the revenue to establish the Commission, and the Commission would get 18% of the revenue to construct, upgrade, and maintain amateur sports locations at parks throughout the County (not necessarily at County owned parks), upgrade swimming pools at County owned parks for tournament type events, and enhance the marketability of sports related events at County owned parks to attract events.  Note that since 1994 County owned parks have been a contractual recipient of Regional Asset District funds which come from one-half of the 1% local option sales tax and the County does have operating and capital budgets for the parks.

Pension Audit Shows Few Surprises

The Auditor General’s office released the compliance audit for the City of Pittsburgh’s three pension funds yesterday.  The audit covers the years 2014 and 2015 and shows that the funded ratio of the plans–as reported to the now shuttered Public Employee Retirement Commission and detailed in our report on local pensions in Allegheny County in January of this year–Pittsburgh was 57% funded and at a level of moderate distress under Act 44 of 2009.

As noted in the audit the objectives were to determine if Pittsburgh officials corrected deficiencies from the 2015 audit (which covered 2012 and 2013) and to make sure the City was complying with all applicable laws, regulations, etc. related to municipal pensions under Act 205 and related state and local laws.

Critical to this discussion are the requirements of Act 44 and local ordinances of the City relating to pledging a stream of parking revenues through 2041 and the requirements of the gaming law of 2004 which direct local host fee money from the Rivers Casino to the oversight board which has the discretion to direct the money toward pensions, or debt, or retiree health care, or another purpose that it sees fit to do.  Both were satisfied in the audit period: in fact, since 2010, the City has put more than required into the pension plans, which the Auditor General saluted them for, while lamenting that the health of the fund slipped, having just stood at 58% at the end of the previous audit period.

The audit did show what would occur if the City adjusted its rate of expected return, which was discussed at the City pension board’s December 2016 meeting and in a blog last year.  The audit showed lowering the rate of return a percentage point, from 7.5% to 6.5%, would grow the net pension liability from $851.2 million to $971.2 million.  The pension board did lower the rate of return to 7.25% at its February meeting according to the board’s director.

Erie Might Sign on to School Funding Lawsuit

Last fall we wrote about a case pending before the PA Supreme Court on school funding.  The plaintiffs in the case want to see a ruling that would declare that the Legislative and Executive branches have failed to adequately fund K-12 education.  The case was dismissed by Commonwealth Court and is being heard on appeal.

The Erie School District this week announced that it would consider joining the case as a plaintiff.  As we noted in an October 2015 Brief on the state budget impasse the District went to the state during that time to ask for a loan.  The District is currently in financial watch status under Act 141 and wants to join the suit to possibly “…strengthen the plaintiffs’ case…we are a district that is inadequately funded” stated the District’s superintendent.

For some reason the article states “if the Supreme Court reverses Commonwealth Court, the case then goes back to Commonwealth Court for a hearing on the core claim–whether the state’s system of funding is unconstitutional because poorer school districts general receive less state money than wealthier school districts”.

But that is not the case: either in the filing or in the data.  The case cited the examples of Lower Merion and Shenandoah Valley on what they raised locally ($23k to $4k) but the state gives three times as much to the latter ($3k to $9k).  And a quick search of state funding per pupil from the Department of Education’s Financial Data Elements sorted by aid ratios shows that those with the highest ratios (indicating a district with low property and income wealth) received more money from the state than those with lower ratios (a point we made in a 2014 Brief).  Those with low ratios of 0.15 were getting amounts in the $3,000-$3,600 range from the state while those with ratios in the 0.7 and 0.8 range were getting amounts of $8,000 and above, with districts as high as $13k to $17k.  The issue is not that the state does not give more money to poorer districts, just that with the ability to tax real estate wealth districts can raise a lot locally and spend more money.

Parties to the case also pointed to the fact that the new funding formula applies only to new money beyond 2014-15 and does not do much to rectify the situation they see as unfair, but as we noted in 2015 the Basic Funding Commission’s recommendation to do so was based on the fact that “Eliminating the “hold harmless” clause would have resulted in 320 school districts receiving approximately $1 billion less in basic education funding.”

Pittsburgh’s BRT In the Context of National Numbers

News arrived about the proposed Bus Rapid Transit route between Oakland and Downtown yesterday, with some questions still to be resolved.  The benefits touted are quicker travel and economic revitalization of the areas the BRT would traverse.  As noted in a press release last year from Oakland CA’s BRT project “Bus Rapid Transit offers all the benefits of a light rail train system without the exorbitant cost of building light rail. In the U.S., construction of a typical light rail system averages $70 million per mile or more. By contrast, the BRT’s average construction cost is $25 million per mile which includes new pavement.”

Right now the price tag for Pittsburgh’s proposal ranges from $200 million to $240 million, which based on the press release would mean about 8 miles of BRT.  An article on the proposal noted the money “would be spent on building transit stations with amenities, buying the buses and installing the infrastructure”.

It is worth noting that in the last five fiscal years, based on the Federal Transit Administration’s annual reports on funding recommendations, only five BRT projects (Oakland (CA), San Francisco, Nashville, Provo, and Albuquerque) out of 19 have topped the $100 million mark.  The Cleveland project which was funded prior to FY13, which Pittsburgh officials visited and were very high on, was close to $200 million.

And though local officials feel that the federal government will cover 50% of the cost, it is also worth noting that BRT projects receiving a share of 5309 new starts funding in some cases received more than that (as high as 80%) but also in some cases closer to 42 to 43%, and one as low as 12%.  On the North Shore Connector, the federal/state/local split was 80%/17%/3% on a final price tag of $517 million.  The state/local share on that project totaled $102 million: with a 50% federal contribution on a $200-$240 million BRT the state local dollar total would be about the same.

What to do about Cheney University?

By almost any measure the situation at Cheyney University is dire. Enrollment is down over 50 percent, graduation rates are among the nation’s lowest, the university has been forced to adopt open enrollment, it has a very high cost per student for Pennsylvania taxpayers and has extremely poor academic rankings statewide and nationally.

What can be done? Here is an idea. Why not offer to sell the university to an all-black or predominantly black institution such as Howard University for a dollar? They would get the properties and the responsibilities for operating and maintaining the school. It would keep the tradition of the African American school intact and put management in the hands of leaders who have developed the skills and have the experience to operate successfully a predominantly African American school.

Under that umbrella, the historical role of Cheyney can be preserved and built on. Better that than to continue sinking into the dysfunctional ward of the state it is becoming.