Hold Harmless Law Contributes to Unequal School Funding in PA
Apparently, they don’t teach the laws of supply and demand in Pennsylvania schools.
Like most of America, the demand for public school services — aka, enrollment — has been falling in the Keystone State. But the supply — the money taxpayers are pumping into the public schools — continues to increase.
While the state’s public school enrollment has fallen from more than 1.7 million in the 2019-2020 school year to just over 1.5 million last year, Gov. Josh Shapiro’s $51.4 billion budget adds an additional $860 million in spending over the year before.
Senate Republicans point out this budget creates a $27 billion shortfall over the next five years.
Plunging enrollment and soaring spending is a math problem that’s hard to explain to taxpayers. And at a recent roundtable hosted by the Commonwealth Foundation, experts highlighted a state policy that makes the imbalance even worse.
During a recent webinar, Commonwealth Foundation experts explained that due to a “hold harmless” law, schools that lose population receive the same amount of state funding as the previous year. However, schools that gain students do not receive more state funding.
“People are moving away from rural Pennsylvania to other areas,” said Rachel Langan, senior education policy analyst at the Commonwealth Foundation. “So, those school districts receiving an influx of students are at a disadvantage. So they’re receiving funding based on their previous lower enrollment numbers. This is one reason that Pennsylvania should consider funding students rather than school systems,” she said.
“If Pennsylvania followed a student-based formula, the money would follow the student to their school, which would more equitably distribute funds across the state,” said Langen.
The 25 fastest-growing districts received approximately $5,262 in state funds per student in 2021–22, while the 25 districts that lost the most students received $12,155 in state funds per student, about 2.3 times as much. That disparity allows districts to retain or add staff even with significantly fewer students, according to a Commonwealth Foundation report.
The average Pennsylvania student is funded at $23,000 with local, state and federal funds. In most districts, local funding from real estate taxes is their major source of revenue. But in some poorer areas, state and federal funding is paramount.
“We started to see a big migration from the public schools in 2020, when district schools did not reopen and private schools did,” said Elizabeth Stelle, Commonwealth vice president for policy.
As of 2023-34, 75 percent of students were in their public school district public schools; 10.5 percent were in private schools; 8.5 percent were in cyber or brick and mortar charter schools; 2.6 percent were homeschooled, and 3.4 percent were in career or technical schools.
Ten percent of the Coatesville Area School District, also in Chester County, are homeschooled.
“Coatesville is on the list of low-achieving public schools, so it is not a surprise that so many homeschool, but that is a large number of homeschoolers,” said Langen.
DVJournal asked if any bills are on tap to address some of the problems in how Pennsylvania schools are funded, such as the “hold harmless” provision.
Stelle said a Basic Education Funding Commission of lawmakers meets periodically to suggest changes to school funding law.
“Unfortunately, they made some really bad ones last time around,” said Stelle. “You have less funding going through a student-based formula and more going through hold harmless…There’s usually not a lot of appetite to open up the funding formula between those commissions. Whichever party controls the legislature and governorship dictates what that formula looks like.”
Tennessee is an example of a state with a funding formula that “works well,” said Langen. “It would really address the problems that are being caused by hold harmless. Districts are not going to want to get rid of hold harmless because it’s a cash cow for them. But I think it would be worth (lawmakers) having a conversation to look at what they’re doing in Tennessee and how it’s working and to see what we could take from that.”
