Thursday, May 26, 2011

Education Law Center Analysis of House Bill 1326 and Opposition to Repeal of Certain Act 1 Exceptions

May 25, 2011

TO:      Honorable Members of the Pennsylvania House of Representatives
FR:      Education Law Center
  Baruch Kintisch (215-238-6970 x 320,
  Sandy Zelno (412-255-6414,
RE:      Analysis of House Bill 1326 and Opposition to Repeal of Certain Act 1 Exceptions

The Education Law Center acknowledges that Pennsylvania faces tough choices to meet its obligations to taxpayers and to public education.  However, we believe that House Bill 1326, repealing the exceptions to the Taxpayer Relief Act (Act 1), will not allow either the state or school districts to meet their obligations in a responsible manner.  We respectfully request that serious attention be given to several provisions of HB 1326 that may harm the interests of vulnerable children and struggling schools. 

The exceptions originally adopted in Act 1 were designed and carefully limited to address particular, narrowly circumscribed situations where schools have little or no control over the factors driving up costs.  The Law Center agrees that local tax increases must not result from careless spending, but the exceptions currently in Act 1 do not allow this.  We also agree that the Commonwealth is badly in need of comprehensive reform of the property tax system, but eliminating the Act 1 exceptions is neither a substitute nor a viable solution for this problem.  In fact, HB 1326 will only further complicate the current over-reliance on local taxes to fund public schools.  Real property tax reform is a critical issue that cannot be ignored, but the pending legislation does not provide such reform and will only serve to further jeopardize the fiscal sustainability of school districts and local governments. 

In short, while the Law Center shares the frustrations of the bill’s sponsors about the unfair burden of property taxes, we strongly believe that eliminating the Act 1 exceptions will only make things worse for struggling schools and communities.

Our intent in this memorandum is to focus on a few of the exceptions now contained in Act 1 that we feel deserve to be analyzed much more closely, and retained or perhaps amended to confirm the true costs involved.  Since this legislation would not take effect until next year’s budget cycle for school districts, we encourage the House of Representatives to hold additional hearings and consider alternative approaches that can better address the underlying issues.  We would be pleased to work with you on this.  The following provisions deserve this attention:


The Act 1 exception for special education costs should be maintained and not repealed.

·         This is a reasonable exception and applies only to actual cost increases exceeding the inflation index for students with disabilities enrolled in a school district and in need of legally-mandated services and supports.

·         Federal and state laws mandate that all children with eligible disabilities receive a “free appropriate public education”— that is, special education and supportive services based on individualized assessments and plans.  Special education services can be costly, and school districts have only limited control and often cannot anticipate or plan for these costs.  Elimination of this exception in Act 1 would be a mistake.  For example:

o        Families can move into a school district and enroll children with significant and costly disabilities. 
o        Some districts develop good reputations for quality special education programs and become destinations for families in need. 
o        Other districts have high levels of poverty, often associated with higher-than-average special education student populations. 
o        The budget for a small district can be severely impacted by just one child with disabilities in need of expensive services in order to learn with her peers.

·         By repealing this Act 1 exception, HB 1326 would force districts to make a choice between violating the special education laws or cutting services for other students who do not have disabilities.  A school district’s failure to pay for and adhere to legal standards for special education would violate state and federal law and could result in litigation and legal fees.  Maintaining the Act 1 exception for special education is the only fair way to give districts the budget flexibility needed to make adjustments from year to year without abruptly cutting programs, both for students with disabilities and for all students.

·         It is worth noting that another exception that would be eliminated by HB 1326 is for “costs to implement a court order or an administrative order from a Federal or State Agency.”  A special education dispute can result in an order from a Special Education Hearing Officer or a judge that can be quite costly to implement.  Caught between a binding legal order and voter resistance, a school district (and in some cases the Commonwealth) could be subject to expanded liability, contempt citations, fines, and additional legal fees.  Most importantly, the student and family could encounter implementation delays or denial of needed services, harming the child's opportunity to learn.
·         The special education line item in the state budget has been flat-lined with no increase for the last several years.  And the state's system for funding special education is broken, relying on an inaccurate statewide average of student enrollment and not taking into account the real programmatic needs of students with disabilities.  Local school districts currently bear most of the fiscal burden for special education, with the state and federal governments contributing far less.  The special education exception in Act 1 needs to be maintained at least until the state funding system for this area is reformed.

·         These problems are not resolved by the Special Education Contingency Fund.  The Fund provides limited state support for the extraordinary special education program expenses of some school districts.  Districts can apply to the Department of Education to receive contingency funds to meet the extraordinary needs of an individual child with significant disabilities who requires a highly specialized program or services.  The state does not approve all applications and only partly funds most requests.  The Contingency Fund has also been flat-funded at 1% of the total statewide basic education appropriation and its use is subject to many significant limitations.  For example, the cost of an “extended school year program” or the cost of a residential private school placement for a child is not eligible for payment through the Fund.


The Act 1 exception for growing school districts should be maintained and not repealed.

·         The Act 1 exception being repealed – Section 333(f)(2)(vii) – allows a school district to raise property taxes without a voter referendum if growth in student enrollment exceeds 7.5 percent over the last three school years and if the increased revenue is needed to maintain the same per student level of funding.  This exception is reasonable and should not be repealed.  It does not allow the higher property taxes to expand spending, but does allow school districts to maintain the same per-student spending levels.  Without this exception, the fast-growing school districts will be forced to cut programs and increase class sizes—lowering the very quality of the schools that attracted families to move to these communities.


The Act 1 exception for the local cost of school improvements mandated by state and federal law (No Child Left Behind Act) should be maintained and not repealed.

·         When a public school fails to make adequate yearly progress (AYP) as defined by state and federal law, the school must develop and implement a school improvement or corrective action plan.  The reforms must address the existing achievement gaps, most commonly found for students with disabilities, children living in poverty, and English language learners.  Schools have no choice about this matter and must continue to spend the resources needed to enact reforms until student performance increases and the school makes AYP for two consecutive years.  The state budget has sometimes contained line items that partially support these reforms, but most costs are borne by the local school district.

·         Repealing the Act 1 exception as proposed by HB 1326 would make it even more difficult for struggling schools to make needed improvements, especially at a time when state support is being severely cut for student tutoring, academic remedial programs, and other services benefiting children struggling in school.

·         There is a strong accountability system for the expenditures made to implement school improvement and corrective action plans, as these written plans are reviewed by parents at each school and annually submitted to and approved by the PA Department of Education.


The Act 1 exception for costs to implement and fulfill a court order or an administrative order from a state or federal agency should be maintained and not repealed.

·         School districts commonly face litigation and the inevitable responsibilities of implementing legally mandatory orders from courts and administrative agencies.  The costs associated with these situations cannot always be anticipated or planned in an annually adopted budget, and such costs often have a limited duration until remedies are fully implemented.  Nevertheless, schools must immediately comply when faced with legal orders or face further penalties.

·         If forced to seek a voter referendum to pay for the unexpected costs of a court or administrative order, a school district could face a situation where it must choose between honoring a negative vote by the public, not fully complying with a legally-binding order, or cutting other educational programs to cover the costs.  This could lead to further legal confrontations and complications.

·         The Education Law Center has experienced this situation in school districts throughout Pennsylvania, on issues involving court or administrative orders for compliance with the laws for homeless students, children in foster care, children with disabilities, and others.  These cases usually involve highly vulnerable children, often with costly educational needs.

Thank you for your consideration.

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