In The Pursuit Of Justice: Fixing Philadelphia’s School Budget Deficit

To absolutely no one’s surprise, the School District of Philadelphia (SDP) is running a deficit.  Projections show that at current funding levels, the SDP will be more than $700 million dollars in the red by 2020.

According to a recent WHYY piece, there are often two methods to raise revenue, raise property taxes, or raise wage taxes.  Essentially, ask residents to pay more, or ask business to pay more.

There is rationale for both sides.

On the business side of things, as represented by the Committee of Seventy and University of Pennsylvania’s Wharton School of Business, Philadelphia is increasingly unfriendly to business. “Philadelphia, they argue, relies disproportionately on wage and business taxes compared with similar U.S. cities and its surrounding municipalities. In fiscal year 2017, the city’s wage tax and net-profit tax brought in $1.45 billion, its business income and receipts tax brought in $435.1 million, and its use and occupancy tax brought in $138.7 million.”

The result, so the logic goes, is that such exorbitant taxes decrease investment and prevent businesses from moving into Philadelphia, thus resulting in even less tax revenue, thus resulting in even greater city budget deficits.  

so, Why Not Raise Property Taxes?

So why not raise property taxes?  After all, schools serve those who live in the city.  Should they not be the ones to fit the bill for their own schools?  One could argue that business people, particularly those on the executive rungs of the ladder, may not necessarily the people who are using the city’s public school system.  Indeed in all likelihood they may not even live within city limits. So why should they bear the brunt of funding Philadelphia’s schools.

From my perspective, which is that of an educator, not a budget analyst or policy wonk, there are two distinct problems with this scenario.

The first, aside from the obvious benefits to business communities that come with a more highly educated workforce, has to do with the inescapable reality of Philadelphia’s poverty.  

Let’s be clear; Philadelphia has been, and remains, the poorest large city in America. Of the roughly 1.5 million people who live in Philadelphia, almost 26% live in poverty.  That is almost 400,000 people.

But what exactly is defined as poverty?

According to Federal Medicaid guidelines, an individual living in poverty earns an income of roughly $12,000.  A family of 3 living in poverty earns roughly $20,400. And a family of 5 living in poverty earns roughly $28,000.

As anybody raising a family knows, a family of 5 earning $30,000, thus not officially living in poverty, does not live a life of comfort.  Far from it. More than likely, such a family is barely making ends meet. Therefore it is entirely likely that while Philadelphia’s official poverty rate is almost 26%, the number of families who live in what most of the privileged world would consider poverty is actually far higher.

The Two Largest Property Owners In Philly Don’t Pay Any Taxes

To ask families in a city with such stark poverty to contribute more money in property taxes to fund their own city’s schools seems a bit like robbing Peter to pay Paul, particularly when tax abatement has encouraged more affluent residents to flock into the city.  It should also be noted that two largest property owners in the city, Temple and University of Pennsylvania pay no property taxes at all.

Mayor Kenney in his most recent budget proposal seemed to split the difference by calling for an increase in property taxes while simultaneously planning to stop future cuts to wage taxes; and that’s the problem.

The debate between those who support increasing property taxes and those who support increasing wage taxes ignores another opportunity to support Philadelphia’s schools, a way to satisfy both the business community as well as Philadelphia families, and to provide high quality education to all Philadelphia students.

Many State Legislators Don’t Care About The Inequity

Pennsylvania needs a fair and equitable education funding formula.

According to US News & World Report, “it costs districts 40 percent more to educate a student in poverty than a student not in poverty.”  When one considers the only recent adoption of universal Pre-K, a monetized health care system, and the link between poverty and trauma, it makes sense that it would cost more to provide high quality education to students living in poverty.  Nevertheless, “in more than half of the states in the U.S., the poorest school districts do not receive funding to address their students’ increased needs.” Pennsylvania is among the half of states that do not allocate funds to offset the needs of students living in poverty.  In fact, Pennsylvania ranks in the bottom third of such states, and ranks 46th in the country in state contributions to local school district funding.

According to PCCY (Public Citizens for Children and Youth), such inequitable funding results in Philadelphia receiving $3500 less per student, or to put another way, $88,000 less per classroom, when compared to wealthier school districts. Imagine the teachers, counselors, nurses, social workers, libraries, laboratories and special education services the SDP could provide Philadelphia’s children with those funds. And let’s be clear; these added funds should not be considered ‘extra dollars,’ but rather the funds that empower all students, regardless of income, with the high quality education that is their birthright.

There is an opportunity for Philadelphia’s powerful business leaders, the SDP, city leaders, and teachers unions to combine their substantial political might to lobby Harrisburg to adopt a fair and equitable funding formula.  Not only would such a funding formula benefit Pennsylvania’s many rural communities which see their own share of poverty, such funding would make long strides towards equipping the SDP with the funds it needs to provide high quality education for the children of America’s poorest large city, while maintaining Philadelphia’s allure as a vibrant place to do business.

We need to get past the tired, short-sighted conversation of property tax vs. wage tax, and focus on what will serve all of Philadelphia: a fair and equitable education funding formula.

 

What do you think?

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Zachary Wright

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