HARRISBURG — Fifty Pennsylvania school districts with significant property tax burdens are set to receive an additional $32 million as part of a sweeping education funding overhaul in this year’s budget.
The grants, which range from $50,000 to $5 million, target counties with high local taxes relative to the wealth of their residents. Many of the counties receiving a grant are in Allegheny County or neighboring Philadelphia counties.
State law directs local school boards to use the money to mitigate or prevent property tax increases, supplement existing tax reduction programs or reduce debt.
The tax equity grants are part of a larger effort to respond to a Commonwealth Court ruling that Pennsylvania’s public school funding system is unconstitutionally unfair. A significant portion of the unfairness stems from property taxes. Pennsylvania districts rely heavily on these taxes to fund education, creating inequities among schools.
In response to the ruling, lawmakers focused most of their energy on helping the poorest districts.
Democrats in the state House of Representatives, Republicans in the Senate and Democratic Gov. Josh Shapiro agreed in this year’s state budget to increase funding for pre-K through 12th grade education by more than $1 billion and to allocate about half of that amount to support those districts.
The legislature has approved $493.8 million for these new grants. The funding for the tax fairness grants, by contrast, is small – $32 million for this fiscal year.
Still, Dan Urevick-Ackelsberg, a Public Interest Law Center attorney involved in the school funding case, said he believes the tax equity supplement is a logical step toward creating a fairer system.
In some cases, he noted, a school district achieves good outcomes for students by charging residents significantly higher taxes – in other words, the district makes “extraordinary efforts.”
“That’s why it makes sense to reduce their burden and not take advantage of the great work that these districts have done,” Urevick-Ackelsberg said.
The grants are awarded to counties based on their “local outlay,” which is determined by dividing the revenue a county receives from local taxes by the market value of property within its boundaries and the personal income of its residents.
Counties are eligible for the bonus if their local effort rates are in the 90th percentile or higher compared to the rest of the state.
A higher local benefit rate means a higher surcharge. The amount of the surcharge is determined by comparing a county’s actual tax revenues to the revenues it would have received if it had taxed its residents at the 90th percentile rate.
Fifty school districts across the state will receive grants, including 15 in Allegheny County. Another 15 districts are in Delaware and Montgomery counties and other Philadelphia suburbs.
The amount of the grants varies widely. The West York Area School District in central Pennsylvania receives $23,000, the smallest match. The East Stroudsburg Area School District in Monroe County receives $5.5 million, the largest match. The median match is about $330,000.
For Cosmas Curry, the tax fairness amendment offers long-awaited relief.
Curry is the superintendent of the Stroudsburg Area School District, which is set to receive the second-largest grant at nearly $2.5 million. Curry said the support has prompted his school board to discuss cutting property taxes for the first time in years.
“Anything we can give back – even $50 or $100 – is a start. And if that money comes in every year, as we hope it will, it will make a huge difference to the families,” Curry told Spotlight PA.
The tax equity amendment was recommended by the Basic Education Funding Commission, a bipartisan group of lawmakers that reviews the state’s public education system. As part of that review, the commission held statewide hearings over nine months that produced two reports – one sponsored by Democrats on the commission and one sponsored by Republicans. The commission approved the report written by Democrats.
The Republican-backed report recommended rethinking the state’s use of property taxes to fund schools, saying the costs were unfairly distributed and placed an excessive burden on older Pennsylvanians. However, the proposal did not suggest any specific changes.
The report, written by Democrats, recommended a much larger tax increase – $955 million over seven years.
In his budget proposal to lawmakers, Shapiro also proposed the larger surcharge. The plan would have allocated funds to any district that taxes its residents at the 66th percentile or higher, as opposed to the 90th percentile that was ultimately adopted. That would have funded about 170 districts. As proposed in the commission report, the funds would have been distributed over seven years.
Urevick-Ackelsberg told Spotlight PA that the funding ultimately approved was still a good start, calling the entire education deal a “watershed moment.”
However, he noted that school districts need a long-term commitment to achieve lasting improvements. He advocated increasing the number of school districts that could be included in the program and the amount of funding they could receive.
“We now have bipartisan agreement that there is a gap of nearly $5 billion… The next step is to close that gap.”
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