A School Funding Formula for Philadelphia

This report examines how a new, comprehensive state education funding formula, if adopted by Pennsylvania, would impact the School District of Philadelphia. After comparing Philadelphia with 10 other big city districts across the country, the analysis concludes that a state formula based on district needs, demographics, and ability to pay—such as those used in most states—would not necessarily provide a substantially higher level of aid for urban districts. Equally important, the analysis finds, is the overall amount of state spending on education. 

According to the report, per-pupil funding for Philadelphia schools was less than that of seven of the 10 other districts studied­—all of which were in states with funding formulas.

Read the full report.

OVERVIEW

Pennsylvania is one of only three states that do not use a comprehensive school-finance formula to distribute state education funding to individual districts. In June 2014, the state Legislature created the Basic Education Funding Commission to develop and recommend a formula, and a report is due by June 2015. Tom Wolf, Pennsylvania’s governor-elect, also has pledged to put a formula in place. A lawsuit seeking a formula has been filed by some parents, school districts, and others dissatisfied with the status quo.

With this in mind, The Pew Charitable Trusts commissioned the nonpartisan Education Commission of the States to review funding formulas in other states, analyze their impact on big-city school districts across the country, and determine how a formula in Pennsylvania could affect the School District of Philadelphia.

The study found that in other states, a formula based on needs, demographics, and ability to pay did not necessarily provide a high level of state aid to big-city districts and that the overall funding available from the state was just as important a factor.

Regardless of the level of overall funding from Pennsylvania, a new formula would almost certainly provide Philadelphia with a larger share of state education money than it receives under the current system, which does not account for differences among districts such as the percentage of low-income students. A formula might also provide a lesser share of state funding to wealthier suburban districts with smaller numbers of high-needs students, thereby reducing the wide variation in per-pupil revenue between those districts and poorer urban and rural ones.

For this analysis, the School District of Philadelphia’s funding was compared with that of 10 other large urban districts in different states for the 2013-14 school year. The districts were chosen because of their demographic and financial similarities to Philadelphia. The comparison found that:

• Philadelphia’s $12,570 per-pupil operational revenue was well below the average of the other districts, trailing Boston, Milwaukee, Cleveland, New York, Baltimore, Chicago, and Detroit. The three districts with less per-pupil revenue were Shelby County (Memphis, Tennessee), Hillsborough County (Tampa, Florida), and Dallas, all of which generally had lower labor costs than Pennsylvania.
• Philadelphia relied somewhat more heavily on state revenue and less on local sources than did most of the 10 other districts in 2013-14. In that year, Philadelphia received 45.9 percent of its operational revenue from the state, which was slightly above the 10-district average, and 42.3 percent of its revenue from local sources, which was slightly below the average. For the 2014-15 school year, Philadelphia Mayor Michael A. Nutter has said that the local share will rise to about 47 percent, thanks to two additional revenue sources: a new tax on cigarettes and the commitment of $120 million in existing local sales tax money to the district.

In addition, the report examined how Philadelphia’s revenue, wealth, and student needs compare with those of nine other districts in Pennsylvania—three urban, three suburban, and three rural. It found large variations in the total revenue each district had to spend per student, caused in part by the differences in property values from one community to another. Philadelphia’s per-pupil revenue was less than Pittsburgh’s but more than Erie’s and Reading’s, less than in the suburban districts but more than in the rural ones.

Charter school funding also is an important issue for Philadelphia. At last count, nearly one-third of Philadelphia students—about 61,000—attended brick-and-mortar charter schools, with 5,100 others enrolled in cyber charters. The district paid the schools $8,417 for each student in 2013-14.

The study determined that Pennsylvania’s current charter school funding system places a greater financial burden on local districts than do the systems in five of the 10 other states—Massachusetts, Michigan, Ohio, Texas, and Wisconsin—and roughly the same burden as the systems in the remaining five states: Florida, Illinois, Maryland, New York, and Tennessee, all of which mandate local funding.

Having more money to spend is no guarantee of better student outcomes. Even so, how the funding formula and charter financing issues are resolved in Pennsylvania will go a long way toward determining how the School District of Philadelphia, which has been in near-constant crisis in recent years, fares in the years ahead.