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Welcome to FYI • Our Intent and Purpose – Strategic Plan Outreach and Mentorship Effort for New and Newer PASBO Members in all aspects of School Business Management – Use PASBO Experts to Help New Entrants 2

Today’s Agenda I. Calendar of State and Federal Reports II. Basic Education Funding III. PASBO Tools You Can Use IV. 3 What's Due Resources to Help Your Questions Answered An Open Forum for Your Questions About Topics Covered and Uncovered!

What’s Due 18 Feb 23 Feb 26 Feb 1 Mar 5 Mar 10 Mar 4 Adopt Preliminary Budget PDE-2028/Real Estate Tax Rate Report Notice to Apply For Referendum Exceptions New Hire Report Annual School Board must pass by then if not adopting an Act 1 Resolution Finance PDE Annual Submit Preliminary Budget to PDE Annual Newspaper Notification of Intent to Apply for Exceptions Monthly Report of New Hires NSL Report on PEARS Monthly Reimbursement for Lunches Served each Month Upload NPAS Reports and Send On-line Monthly Report of Wages & Retirement Contributions Referendum Exception Application Annual Application for Act 1 referendum exceptions 2030 Quarterly Reconciliation of cash on hand Finance HR Food Service Dept. of Labor & Industry Finance CN PEARS PSERS/NPA S Finance PDE Finance Comptroller

31 Mar 31 Mar 31 Mar 5 Dept. of Revenue PIT Filers Dept. of Labor &Industry UC-2 Fuel Tax Refund PDE-4625 What’s Due Re-assignment of taxpayers who do not live in the Dept. of Annual district. Finance Revenue Dept. of Labor Quarterly Report of Unemployment Comp. Wages Finance & Industry Dept. of Annual Fuel Tax Refund Report Finance Revenue Annual Temporary Assistance to Needy Families Finance PDE Local EIT Finance Collector Earned Income Tax Quarterly Report of Local Wage Tax Withholdings IRS- 941 Quarterly FICA & Federal Income Tax PA Dept. of Revenue Quarterly Report of State Tax Withholdings Finance IRS Dept. of Finance Revenue PDE-339 (Act 29) Quarterly Social Security & Medicare Contributions Finance PSERS - Employer All State and Federal Grant reporting Quarterly Deposit of Employer Retirement Due Submit all grant reporting for State and Federal Quarterly programs. Finance PSER 819 Quarterly Sales and Use Tax Report Finance REV Finance

Sources of Filing and Reporting Info • PIMS Data Collection Calendar q http: //www. portal. state. pa. us/portal/server. pt/community/pimspennsylvania_information_management_system/8959 • Comptroller Forms q http: //www. portal. state. pa. us/portal/server. pt/community/form s_and_procedures/13472 • Food Service Calendar q http: //www. portal. state. pa. us/portal/server. pt/community/natio nal_school_lunch/7487/activity_calendar/964588 6

Sources of Filing and Reporting Info • PIMS Data Collection Calendar q http: //www. portal. state. pa. us/portal/server. pt/community/pimspennsylvania_information_management_system/8959 • Comptroller Forms q http: //www. portal. state. pa. us/portal/server. pt/community/form s_and_procedures/13472 • Food Service Calendar q http: //www. portal. state. pa. us/portal/server. pt/community/natio nal_school_lunch/7487/activity_calendar/964588 7

Today’s Expert, Jeffrey Ammerman • Previous business manager at State College Area SD, South Middleton SD, and Philipsburg-Osceola Area SD • Worked in the Business Office at Tuscarora Intermediate Unit • Answer Man: Part of his role at PASBO is to answer questions and provide technical information to members • jammerman@pasbo. org, 717 -5409551

The Short History of Basic Education Funding • It’s not a formula • It used to be a formula • We then enacted a formula with an adequacy target • Now we have BEF targeted by gerrymandering 9

1966 Formula (Act 580) • The law transitioned funding based on teaching units to a formula: district wealth (Aid Ratio) times Actual Instructional Expense (AIE) per Weighted Average Daily Membership (WADM) times the district's WADM. Additional state support based on poverty, density or sparsity, home bound instruction and vocational education. • Additionally, Act 580 set the level of state support at 50% of reimbursable costs. This funding framework remained in place until 1983. 10

1983 Equalized Subsidy for Basic Education (Act 31) • The ESBE formula: – Aid Ratio times Factor For Educational Expense (FEE) and times WADM. – The FEE was set at $1, 650 and – Additional funding by an Economic Supplement that used poverty, local tax effort and population per square mile as factors. • The legislation creating ESBE removed the 50% state share and added a minimum annual increase of 2%. The ESBE formula determined state funding for schools through the 1991 -92 fiscal year. 11

Since 1991 -92 • Hold Harmless (funding level from previous year) + supplemental funding • “…made on an ad hoc basis with the purposes and target of additional funding changing annually depending on transient administrative and legislative priorities. The bases for supplemental payments have included: low wealth, low expenditure, poverty, limited revenue, small district assistance, enrollment growth, minimum funding increases, tax effort, meeting foundation levels, limited English proficiency and performance. ” Dr. William T. Hartman, Penn State University 12

Except for the Costing-Out Study 2008 -10 (Act 114 -2006) 13

Budgeting with No Formula • In the absence of a funding formula, the distribution criteria are changed each year through the budgeting process • Over the past 20 -years, 30 different factors have been used in one year or another to distribute Basic Education Funding 14

Budgeting with No Formula 2013 -14 State Budget • 21 school districts • Represented by 37 lawmakers, 33 of whom held leadership positions • Special language written in fiscal code to provide each district a share of $30 million in additional Basic Education Funds 15

Consequences of No Basic Education Funding Formula Wide Funding Disparities • • Lowest Resourced SD - $9, 803 per student Highest Resourced SD - $26, 808 per student • Difference $17, 005 per student • Average Elementary class of 25 students = $425, 125 difference (2012 -13 data) 16

Basic Education Funding Commission • Legislative commission authorized by Act 51 of 2014 • Made up of 12 legislators and 3 administration officials • Must issue a report and recommendations for a new basic education funding formula by June 10, 2015 17

Who Needs Another Commission? • A commission is a good idea because… • It creates a bi-partisan sand box • The end result will position champions in each chamber • An issue as complex and as big as BEF ($5. 5 billion) cannot be crafted without in-depth and technical discussions that do not easily fit into a committee or floor deliberation; a commission approach allows a singular focus by knowledgeable legislators and outreach to external experts. 18

Successful Commission Work • Special Education Funding Commission (Act 3 of 2013) • Led by Sen. Patrick Browne and Rep. Bernie O’Neill, and made up of 12 legislators and administration officials • Tasked specifically with: – developing a special education funding formula and identifying factors that may be used to determine the distribution of a change in special education funding among the school districts in the Commonwealth. – gathering information on charter and cyber charter school funding reimbursements for special education students and draft proposed legislation based upon those findings. • Had 6+ months to hold hearings across the state to examine the issue of special education funding and issue a report with recommendations 19

Commission Recommendations • New special education dollars should be allocated to districts based primarily upon the number of students in each of three categories determined by the cost of each student’s special education services. • School district-specific factors, such as aid ratios, equalized millage rates, and a sparsity/size factor that targets small, rural school districts, should be used to provide adjustments in the new formula. • Act 126 of 2014 20

Proposed Special Education Formula Category 1: Student Count X Weight Total Weighted Student Count District Total 21 Category 2: Student Count X Weight Small, Rural School District Factor Equalized Millage Multiplier Category 3: Student Count X Weight Total Weighted Student Count MV/PI Aid Ratio Total Weighted Student Count District Total to Prorate

BEF Commission Representation • • • 22 Two Democrats west of Harrisburg One Republican west of Harrisburg Three members (two Rs, one D) from IU 13 (Lancaster-Lebanon Counties) and now the Secretary of Education Three members from the Philadelphia suburban counties (Chester, Montgomery and Bucks) Four members representing large urban districts—Philadelphia, Allentown, Harrisburg and Lancaster Under-represented: The “T” (central PA and northern tier (largely hold harmless districts).

BEF Commission Discussion • • • What factors increase the cost of providing an education? Should an adequacy target be identified? Eliminate or maintain hold harmless? How to define state/local share of education funding? How to determine an accurate measure of local wealth? 23

BEF Commission Formula Progress • In the process of identifying student-specific factors that increase the cost of education and weights: – – – Poverty English language learners Homelessness, transiency, trauma Charter school enrollment Vo-tech enrollment High performing districts • Examining district-factors that should provide an adjustment – Small, rural school districts – Local wealth – Tax effort 24

BEF Commission Next Steps • Commission report will likely be released in late April/early May • Legislation implementing the Commission’s recommendations must then be passed by both chambers of the General Assembly • Unclear if this will be completed to go into effect for 2015 -16 school year • Unclear how much (if any) additional BEF dollars will be available to districts 25

PASBO Basic Education Funding Formula Proposal

What We Avoid: • Using indicators and measures that may have outlived their reliability • That continue to be used because “that’s the way we have always done it” • Trying to address all localized situations and circumstances in hopes of creating the “perfect formula” • Adding complexity when simplicity works

The PASBO Proposal: Does NOT use Aid Ratio Does NOT use Equalized Mills Does NOT establish a base cost Does NOT apportion state and local costs Does NOT differentiate between elementary and secondary education costs (WADMs) • Does NOT use free/reduced lunch to measure poverty • Avoids cliffs that draw arbitrary eligibility lines • Applies only to new money • • •

PASBO Proposal Framework School District ADM Poverty Adjustment ELL Adjustment Charter Adjustment Adjusted School District ADM Student-Specific Factors Adjusted School District ADM Sparsity/Size Adjustment Median Household Income Index Residential Taxation Index District-Specific Factors TOTAL Adjusted School District ADMs to prorate available $

Step 1: Count Students • Begin with the ADM of each school district • Could also use a weighted ADM that considered changing ADM over 5 years. – Example: • • • 0. 52 multiplied by the 2012 -13 ADM 0. 26 multiplied by the 2011 -12 ADM 0. 13 multiplied by the 2010 -11 ADM 0. 06 multiplied by the 2009 -10 ADM 0. 03 multiplied by the 2008 -09 ADM

Step 2: Adjustments for Student Factors • Poverty – Measure using Federal census data, which counts the number of individuals ages 5 -17 living at or below the poverty line. – Recognizing the additional resources needed to educate students living in acute poverty are significant, weight total number of students in poverty in each school district by 1. 0. This high weight also functions to cover some of the other categories that have been discussed but may be difficult to measure.

Step 2: Adjustments for Student Factors • English Language Learners – Measure using PIMS data reported to PDE annually. – Using an average across all states, weight the total number of ELL students in each school district by 0. 3.

Step 2: Adjustments for Student Factors • Charter School Enrollment – Measure using charter ADMs per district – To replace the eliminated charter reimbursement, apply a weight of 0. 3 to the total charter ADM count.

Step 3: Adjustment for Sparsity/Size • Provide additional ADMs to small, rural school districts that can’t benefit from economies of scale. – Use modified formula from Act 126 • Sparsity Ratio-measures district ADM/square mile compared to state average • Size Ratio-measures district 3 year average ADM compared to state average – Weight size ratio and sparsity ratio 50/50 – Provide adjustment for those districts with a ratio above the 70 th percentile

Step 4: Adjustment for Local Wealth • Replace Aid Ratio with Median Household Income Index – Use Federal census data to determine median household income by school district – Compare median district household income to state median household income ($52, 667), setting the median at 1. 0 • > 1 = district median is below state median • < 1 = district median is above state median

Step 5: Adjustment for Tax Effort • Replace Equalized Mills with Residential Taxation Index – Use STEB data to estimate the amount of residential property taxes (deduct property tax reduction $) – Combine residential property tax and other nonbusiness taxes to determine non-business tax per household – Take average non-business tax per household as a percentage of district median household income, expressed as mills – Use a multiplier of 1. 0 for school districts at or above the 80 th or 50 th percentile.

Example: Hamburg Area SD Total ADM(2012 -13): 2, 415 Students in Poverty(2012 -13): 361 * 1. 0 = 361 ELL Students(2009 -10): 18 * 0. 3 = 5. 4 Charter School Students (2012 -13): 54 * 0. 3 = 16. 2 School District ADM 2, 415 Poverty Adjustment 361 ELL Adjustment 5. 4 Charter Adjustment 16. 2 Adjusted School District ADM 2, 798

Example: Hamburg Area SD ADMs/square mile = 23. 6 3 year avg. ADM = 2, 458 Sparsity Ratio = 0. 3479 Size Ratio = 0. 3253 Sparsity/Size Adjustment 0 Sparsity/Size Ratio = 0. 6732 BELOW the 70 th percentile (0. 755) = NO adjustment

Example: Hamburg Area SD SD median household income = $55, 774 State avg. median household income = $52, 667 Median Household Income Index = 1/($55, 774/$52, 667) Median Household Income Index 0. 944

Example: Hamburg Area SD Number of households = 6, 851 Residential taxes = $14, 265, 079 Residential taxes/household = $2, 082 SD median household income = $55, 774 Residential taxes/household as share of median household income as millage = 37. 33 Multiplier if use 50 th percentile = 1. 0 Residential Multiplier if use 80 th percentile = 0. 94 Taxation Index 1. 0

Example: Hamburg Area SD Adjusted School District ADM 2, 798 Sparsity/Size Adjustment 0 Median Household Income Index 0. 944 Residential Taxation Index 1. 0 TOTAL Adjusted School District ADMs=2, 642

Mark Your Calendar 42

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There’s a doc for that… at the Electronic Resource Center www. pasboerc. org Delivering Best Practices and Good Ideas

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Next Session • In-person at PASBO Conference • March 12, 2: 30 pm, Cocoa 4/5 • Focus group about mentoring 47

Time for Questions! Send text questions using the “Chat” function at the left side of your screen. Type message in box and click “Enter” to send.

Thank you for your participation! CPE and CEU Credits are not available for this forum. Next FYI is in-person at the PASBO Annual Conference March 12 at 2: 30 pm in Cocoa 4/5. Visit pasbo. org/FYI