Thinking about School Funding

This Susquehanna Independent article - Montrose school district enters into gas lease got me thinking about school funding and state aid as well as gas revenues. Probably related to dread of the upcoming August school property tax bill.

The bottom line is the Montrose Area School District will get a 3.3% one time funding increase this year from the gas lease and the federal stimulus, resulting in no property tax increase. Hopefully, some of those funds are being retained to keep taxes down next year. The State allocation of discretionary funds (e.g. Stimulus) does not seem fair to Susquehanna County. Read on for the details.

Montrose Area SD will get $2400/acre for a seven year gas lease on 90 acres; that's a one-time payment of $216,000. Sounds big, but it's less than 1% of the district's $25.2 million 2009-2010 budget. Or, at 3078 taxpayers, think of it as $67 per taxpayer.

The article also states that "3,078 taxpayers had been approved to get a homestead exemption and would realize a tax savings of an average of $361 each, down about $40 each from last year, when fewer persons qualified." You can find the exemption reduction numbers for counties here (pdf Object) as released by the PA Department of Education, showing a total of $613,200,000 in state-funded tax relief with $1,o98,584 going to Montrose Area SD.

In addition, the Federal Stimulus bill provided $720,163,740 to PA for it's school districts. This data table ( PA School District Aid Under SB 850) shows that the stimulus bill allocation to school districts averaged an 11.7% gain over the regular state SB850 funding, which was held constant for the 2009-10 school year. So, Montrose Area SD got another one-time plus up of $610,200.

Susquehanna County districts got stimulus plus-ups ranging between 5.4% and 8.5% ( average 6.9%), with Montrose getting a 7.3% gain. Basically, the stimulus allowed the state to increase school funding without increasing the state education budget. Even so, Susquehanna County's share was well below the state average of 11.7%. So where did the Federal stimulus funds go?

They are spread out quite a bit, but Lancaster County did well and Philadelphia County got a 20.1% increase or $212,594,400 over it's SB850 funds. Philadelphia's % gain is not the biggest, but it's $ gain is by far the biggest. Philadelphia got about 30% of the total stimulus funds. Of course, it is a very large school district and gets about 17% of the usual state (SB850) funds. Still. it managed to get proportionally almost double its fair share and about 3 times as big a % gain as Susquehanna County.

Doing a little math on these numbers is interesting.

First, the average Montrose Area SD taxpayer did well this year - gaining $198 from stimulus funds and $67 from gas leasing while losing $40 from homestead/farmstead reductions for a net gain of $225. Of course, those gas and stimulus funds won't be there next year. So, we won't get a tax increase this year; but no reduction is planned either. Maybe, some of the extra funds are being retained for tax savings next year. I hope so, they add up to 3.3% of the district's budget this year. I'd hate to have a "balanced" budget this year followed by a 3-4% tax hike next year.

Next, looking at the available state aid funds, we see that Montrose Area SD got about 1.8% of the state homestead/farmstead exemption funds, 1.4% of the state SB850 funds, and 0.9% of the federal stimulus funds. I can't explain why these ratios are so different.

I wonder if it could be related to the amount of political discretion the State Administration has in allocating the funds? The exemption funds are set by formula in the legislation; the stimulus funds are very discretionary. Just another thought.