Philadelphia, Too

Our Brief this week covered the efforts of consultants working with the Pittsburgh Public Schools who laid out per-pupil spending comparisons for Pittsburgh and a peer group of similar districts in Pennsylvania. We noted Allentown, Reading, Scranton, Erie, Hazelton, and Lancaster as being in that comparison group but failed to note that the state’s largest district, Philadelphia, was also in that group.

Based on the consultants’ data, Philadelphia spent about $6,000 less per-pupil than Pittsburgh before ($20,477 to $14,132) and after ($18,371 to $12,988) after they came up with an adjusted amount.

Imagine that: if Pittsburgh was to spend at the per-pupil level of Philadelphia, its budget would be more than $100 million less than at present. If Philadelphia-which is facing a $300 million shortfall and has plans for new taxes, higher taxes, and requests for state money-its budget would be more than $4 billion rather than the $2 billion it is today.

Eyes Focused on Pupil Costs in the Burgh?

Consultants engaged by the Pittsburgh Public Schools at the beginning of 2013 released a finding that the per-pupil cost in Pittsburgh is about $7,000 more than similar districts in Pennsylvania. Reacting to the finding, the Superintendent noted that the school board needs to “…have the facts on the table”. 



It is not clear if the implication is that the board had heretofore been in the dark about per-pupil costs in the District-the Annual Financial Report always contains data on student operating statistics and duly reports the cost per-pupil in 2011 was $21,177.  None of this will come as a surprise to readers of Allegheny Institute Policy Briefs that have made these points many times.  Likewise the state Department of Education regularly makes such information accessible and reported that identical amount for 2010-11, making Pittsburgh the eighth highest in the Commonwealth out of 500 public school districts.


The consultants, as reported in a news article, looked at spending and made adjustments to the data (removing special expenditures such as payments to charter schools) to produce a figure of $18,400.  Compared to “similar districts in the state” that produced an average cost of $11,600, the resulting difference was $6,800.  A later article identified the peer districts as Allentown ($11,952), Erie ($12,913), Hazelton ($10,917), Lancaster ($14,606), Reading ($12,559), and Scranton ($13,792). 


Give the consultants some credit for at least identifying the per-pupil cost and comparing it to other districts.  Let’s hope the report drives some discussions about the District’s budget and the impending arrival of insolvency that has been predicted to arrive sometime around 2016.  Previous consultants missed real opportunities to look at the data they had produced on per-pupil costs and therefore missed real opportunities to make hard recommendations for the District.


For instance, in 2005 (see Policy Brief Volume 5, Number 25) a consultant was paid $250,000 in taxpayer money for a report telling the District it needed to close schools and achieve other savings of $84 million over five years (combined operating expenditures for the District from 2005 through 2010 was $3.3 billion) and found that Pittsburgh’s per-pupil cost was 23 percent higher compared to five midwestern and northern districts. Lowering the Pittsburgh District’s per pupil costs toward the average of those districts would have produced savings on the order of $100 million per year. 


A year later (see Policy Brief Volume 6, Number 61) another group brought in to help the District also presented a review group of other school districts (across the country) but never calculated per-pupil spending even though they had expenditure and enrollment data.  The Allegheny Institute calculated Pittsburgh spending to be 59 percent higher than the average of the other districts. We recommended the District reduce per-pupil costs to around $12,500 with adjustments for inflation and enrollment, something the consultant should have done based on the data available but did not.  


No matter how you slice it, Pittsburgh spends an exorbitantly high amount on a per-pupil basis. 


If student population (average daily membership) is chosen as the basis of comparison, Pittsburgh spent more than Philadelphia ($14,132), Central Bucks ($13,811), Allentown, and Reading, a group that, along with Pittsburgh, represents the five largest districts in the state from the 205,000 students in Philadelphia to the 18,000 in Reading.


If the comparison is based on the relative wealth of the District-using Pittsburgh’s ranking of 386th on the state’s market value to personal income aid ratio list to compare (1st being “poorest” and the 21 districts tied at 480th being “wealthiest”)-we find per pupil spending at similarly ranked districts was lower. Districts included Fairview in Erie ($12,552), Schuylkill Valley in Berks ($15,618), Upper Perkiomen in Montgomery ($13,882), Dallas in Luzerne ($11,154) and Keystone Oaks in Allegheny ($17,929). 


If the comparison is based on geography and is limited to Allegheny County, districts including Duquesne ($20,564), Brentwood ($20,693), Wilkinsburg ($20,569), and Quaker Valley ($20,046) nudge up against Pittsburgh’s level of spending per-pupil. The average per-pupil expenditure of all districts in the County not including Pittsburgh was $15,500. 


With this new consulting report set to be finalized toward the end of the year along with a hefty reshaping of the school board with four of the nine school board members not returning in 2014, perhaps the board will finally get serious about reducing costs-and improving academic performance.

Are Consultants Finally Seeing the Light?

In early 2013, the Pittsburgh Public Schools announced it was going to use a $1.2 million foundation grant to hire consultants who would help steer the District through a "large scale visioning process" leading to a strategic plan to be delivered to the Commonwealth by 2014. Some of the work completed by the consultants was reported in a newspaper article and, lo and behold, the consultants found that the District spends more per-pupil than comparable districts in the state (the article did not identify the other districts, and the findings are not on the District website) by a margin of $6,800.

We have written much over the years about per-pupil spending in the Pittsburgh Public Schools so the findings should not be much of a surprise. Based on the statement of the District’s Superintendent ("the board has to have the facts on the table") does this mark a turning point in how blunt consultants working with the District will be?

Consider that in 2005 an audit found that, when examined against various school districts in the northeast and Midwest U.S. consultant data revealed the Pittsburgh Public Schools spent 20-45% more per pupil and spent less than half of their budget on administration and instruction (meaning they spent money on other expenditures) and yet could only recommend closing schools (something that was being planned on at the time) and obtaining savings that would have amounted to less than 5% of the budget. Much was left unanswered.

A year later the Council of Great City Schools came to the Steel City and presented its own set of overly general recommendations and they too left out the critical measurement of per-pupil spending when looking at districts from Chicago to Boston to Orlando. The resulting 59% gap between Pittsburgh and the other cities would have led a consultant to recommend steep expenditure reductions until the gap was closed.

But here we are in 2013 with a new set of consultants still finding a gap in per-pupil spending and there is still a gap in time before recommendations will be delivered and then, possibly, implemented. The District has said it would like to "…cut that [$6,800] gap by $2,000 a student" (the consultants’ adjusted per-pupil amount for Pittsburgh was $18,400 for 2011-12) but based on the 2013 budget ($521.8 million) and the enrollment posted on the District’s fact page (26.4k) the resulting per-pupil amount is closer to $19,718. A decrease of $2,000 per pupil means the budget target would have to be $448 million (if enrollment holds steady) or enrollment needs to grow to 30,000 if the budget stays flat to arrive at per-pupil spending closer to $17,000. And then what? Does the District want to drive spending down past that or make it a one year goal to serve as a baseline for future increases?

City Double Parking on Lease Idea

Under the timeline contained in the "Request for Concessionaire Qualifications" released by the Pittsburgh Public Parking Authority earlier this year, prospective bidders interested in entering into a long-term lease for the publicly owned parking assets were to submit responses to the RFQ by March, due diligence on the applicants would be done through June, final proposals would be due in July, and a close of the deal would occur in November.

That timeline is predicated on the fact that the purpose of the lease is to turn an up front lump sum into a deposit for the anemic pension funds. Under existing state law, if the City can show a 50% minimum funded ratio (assets/liabilities) by the valuation taken in January 2011 then it is business as usual. If that 50% is not met, then the state is going to take over administration of the plans.

So one has to wonder what, if anything, the proposed action by City Council to spend $250k by amending the Capital Budget and Community Block Grant Budget to engage a consultant to study the lease idea does to that timeline and the plan. Presumably, Council is going to have to sign off on the lease idea in the end (notwithstanding any complicated financial arrangements, the Authority owns the assets up for lease consideration) and wants to have the best information available. But what happens if their analysis stretches past the established period of due diligence that is supposed to wrap up this month? What if it even goes into the dog days of July when the pool of bidders (11 parties as of March) is submitting final proposals?