This blog usually receives 10-20 monthly visitors from Washington, DC — primarily from Congressional offices and special interest groups — so nothing seemed unusual until I checked this month’s service provider detail. “OMG!” was my first thought…and I probably can’t post what my second thought was…LOL!

I immediately followed with a flurry of clicks to verify a few more details and confirm its authenticity. I now have further validation to a phrase I use quite often in discussions about education — it all begins with the power of one.

This bill parallels the anticipated “fix” [and I that word loosely] by “kicking the can further down the road”, rather than addressing the significant issues of the looming pension crisis. Gov. Rendell endorsed this “solution” [and only a politician would deem it this] in his proposed 2010-11 state budget. It’s funny how politicians appear to develop short-term memories around election time [see below].

We should reduce the benefit level. We should reduce when those benefits accrue. We can’t afford it. It’s going to break school districts and the state. It was a giveaway. Interestingly, everyone got upset at the [2005 legislative] pay raise. The pay raise cost the taxpayers about 1/500th of what this [2001] pension grab is costing. And no one got mad at Gov. Ridge. No one got mad at the Legislature back then. I guess it’s because the impact is phased in over so many years. But this is a tsunami compared to the pay raise.

Governor Ed Rendell (during an interview with the Morning Call)

An actuarial note attached to this bill by the PERC (PA’s Public Employee Retirement Commission) estimates the higher costs in later years will far outweigh the contribution reductions in the earlier years – to the tune of an astonishing $52 billion MORE to achieve this “cost smoothing” over the next 30 years. See pages 10-11 of the document below.

Again, this legislative “solution” is projected to cost $52 billion more than the total amount of the current PSERS and SERS pension crisis already!

The following graphs are from “HB 2497 and the Pension Rate Spike”, prepared by PSERS & SERS upon request from the House Democratic Caucus, detailing the impact HB 2497 would have on the employer contribution rate spike and plateau facing both state pension systems. Note: Click on the images to enlarge them.

HB 2497′s Projection of Employer Contribution Dollars

HB 2497′s Projection of Total Employer Contribution Rate

HB 2497′s Projection of Unfunded Liabilities

HB 2497′s Projection of Funded Ratio

More information on HB 2497

Regarding PSERS, the bill re-amortizes all of the unfunded actuarial accrued liabilities of PSERS over a 30-year period using level percentage of pay amortization payments and extends from five to ten years the asset smoothing period beginning July 1, 2011. The bill also proposes to fund any increases in accrued liability enacted by legislation after June 30, 2010 over a ten-year period using level percentage of pay amortization payments. For the fiscal year beginning July 1, 2010, HB 2497 establishes the total employer contribution rate as the final contribution rate of 5.0% of the total compensation for all active members, plus the premium assistance contribution rate.

The bill also imposes “collars” on the rate at which employer contributions may rise from year to year, establishing temporary collared contribution rates for fiscal years July 1, 2011, July 1, 2012 and on or after July 1, 2013, that if the contribution rate is more than 3%, 3.5% and 4.5%, respectively, of the total compensation of all active members greater than the prior year’s final contribution rate, then the collared contribution rate must be applied and equal to 3%, 3.5% and 4.5%, respectively, of total compensation for all active members. For all other fiscal years in which the actuarially required contribution rate is less than the collared rate, the bill establishes the final contribution rate as the actuarially required contribution rate, provided that the final contribution rate is not less than the employer normal contribution rate.

HB 2497 was amended by the committee to insert technical changes and also to allow any active member in the SERS, who was previously an active member of PSERS, to elect to become a multiple service member no later than 365 days after becoming an active member in SERS.

Source: PSBA’s Office of Governmental and Member Relations, Weekly Legislative Update, June 10, 2010

As it appears the Governor and Pennsylvania lawmakers are heading toward another showdown and missed deadline on the annual state budget – for a staggering 8th year in a row – maybe they could spare a few minutes of political posturing and try to learn something from “down under.”

Pennsylvania’s fiscal picture continues to grow grimmer. State Rep. Samuel Rohrer (R-Berks), minority chairman of the House Finance Committee, summed up matters thusly: “If Pennsylvania were a private company, it would be staring bankruptcy in the face.  The truth is that we now have debts that exceed our ability to pay – the definition of insolvency.”

To cover last year’s budget deficit, among other shell games, the Governor and General Assembly exhausted the MCare Fund. The Commonwealth Court, however, ruled this year that financial move was illicit, and that the state must pay back $800 million. Add this to a $1.2 budget shortfall, and PA faces a $2 billion hole. To make matters worse, if Congress does not extend the Federal Medical Assistance Percentages (FMAP), which Gov. Rendell counted in his proposed budget, Harrisburg will be short another $850 million.

Stunningly, Gov. Rendell and many legislators want to increase state spending by 4 percent.

Source: “PA’s Fiscal Picture Grows Dimmer”, The Commonwealth Foundation, June 7, 2010

The Senate Education Committee is scheduled to consider a number of bills this week, including bills that would extend the life of the mandate waiver program and that would mandate a two-third affirmative vote on the school board for property tax millage increases.

Pennsylvania – Senate Bill 250

SB 250, sponsored by Sen. Jake Corman (R-Centre) simply removes the sunset date of June 30, 2010 from the current Education Empowerment Act, Act 16 of 2000. This would have the effect of continuing the current mandate waiver program. It would also have the effect of continuing the remainder of the current statute, which includes accountability standards for school districts, many of which have been overridden by the provisions of the No Child Left Behind Act, and the takeover of the Harrisburg School District by an empowerment board named by the city’s mayor. An amendment to be offered by Sen. Mike Folmer (R-Lebanon) would allow school boards to furlough professional employees for economic reasons.

Pennsylvania – Senate Bill 553

SB 553, sponsored by Sen. John Rafferty (R-Montgomery) simply requires any property tax millage increases to be approved by two-third majority of a school board. The bill would take effect in 60 days; therefore, it would become necessary to have 6 votes to approve millage increases, effective for the 2011-2012 school year, should the bill become law.

Pennsylvania – Senate Bill 1321

SB 1321, sponsored by Sen. John Wozniak (D-Cambria) would require all school districts of the second, third or fourth class within a county to consolidate all administrative functions. Under the bill, these would include but not be limited to: payment of payroll obligations, financial accounting and reporting and purchasing and contracting with insurers, vendors and others. The governing body of the county would appoint a single county superintendent for all schools within the county and may appoint a solicitor and such other appointees and employers as it may deem proper in carrying out the provisions of the bill. Each school district within the county would pay a pro-rata share of the expenses based on the percentage of the district’s employees as compared to all the school employees in the county. This bill is scheduled only for discussion and not for vote.

Source: PSBA’s Office of Governmental and Member Relations

The Pennsylvania Senate will reconvene on Monday, June 7, 2010. Their current agenda includes a second consideration for SB 1192, Printer’s No. 1871 (Sponsors: Picolla, Dinniman, Browne, Earlle, Rafferty, Williams, Boscola and Alloway).

Unquestionably, all eyes of an array of public education groups and advocates will be clearly focused upon Harrisburg; as deliberations begin to take place on this proposed reauthorization of PA’s Education Empowerment Act.

SB 1192 - An Act amending the act of March 10, 1949 (P.L.30, No.14), known as the Public School Code of 1949, further providing for definitions; and providing for empowering the Department of Education, school districts, schools and parents of school children to undertake measures necessary to improve the academic performance of students.

Scroll down to page 41 to the start of the major changes:

Pennsylvania Senate Bill 1192

The Good

• The bill attempts to deal with the schools and districts that are struggling the most.
• The bill includes charter schools and vocational-technical schools in the reform system.
• The bill contains long lists of education reforms that could help many schools and districts.
• The bill addresses options for parent and community involvement in improving public education.
• The bill allows districts to form their own charter schools rather than using outside companies.

The Bad

1. The bill does not provide any additional funding or resources to pay for and sustain reforms and does not fix the unfair property tax system. Most failing schools are in districts that have been under-funded for decades and have very high property taxes that drive away businesses. Ironically, revisions to the bill made in April now give extra funding for six of the current empowerment districts but ignore the fiscal needs of the hundreds of additional schools and districts that would fall under the control of the bill.

2. The bill would lower the standards and make it easier to place individual schools and school districts under the Empowerment Act.

• Currently, the Act uses a two-year average of both reading and math test scores and targets districts (not individual schools) with more than 50 percent of all students failing both tests (scoring “below basic”).
• SB 1192 would incorporate most of No Child Left Behind’s adequate yearly progress system of measuring school and district performance. The NCLB system looks at whether different subgroups of students – not just all students averaged together – score below state targets. A school would fall under the Empowerment Act if too many students failed the test – 44 percent failing in math or 37 percent failing in reading – by scoring at either “basic” or “below basic” levels.
• The U.S. Congress is expected to make major changes to NCLB in 2010 or 2011 that will impact these standards and requirements. Revisions to SB 1192 made in April would make it somewhat easier for the proposed empowerment system to interact with the expected changes to NCLB. But SB 1192 remains committed to using only student test scores to measure school and district performance, rather than multiple measures that better reflect student outcomes.

3. The bill would place hundreds of schools and dozens of school districts under the Empowerment Act. Currently, the Act only applies to whole districts, not individual schools.

4. The bill would look back in time and apply reform mandates based on past failures over many years. Schools and districts would be graded based on the number of years currently in school improvement and corrective action status under No Child Left Behind.

5. The bill would end the currently appointed boards for Chester-Upland and Harrisburg, return day-to-day management to the local elected school boards, and require all management and reform decisions to be initiated, amended, or approved by the new Statewide Control Board.

The Ugly

6. The bill would give state officials power over all of the schools and districts coming under the Act, even schools and districts failing for just two years.

• The PA Department of Education would have legal authority to order the reforms it wanted at hundreds of schools and districts under the Act. Local officials could not override the decisions of the Department.
• The improvement plans for schools and districts could be amended by the Department, without the consent of local officials.
• A Statewide Control Board appointed by the Governor and the Senate leader would write the reform plans for and have final authority to amend and approve the management decisions of locally elected school boards in districts failing for nine or more years (beyond the fourth year of “Corrective Action II”). The time period would start running based on NCLB status from 2001 to date.
• This means that the Senate leader and the Governor, who appoints the Secretary of Education and other Department officials, would essentially run all of the schools and districts subject to the Act.

7. The bill would treat Philadelphia differently than the rest of the state. No changes would occur to the current governance structure or reform systems.

8. The bill would strongly encourage the operations of failing schools and districts to be turned over to charter school companies or to private education management organizations. The Pennsylvania Department of Education and the new Statewide Control Board would have the power to impose these changes or even to close the school or district. This could have the immediate effect of taking many schools out of their districts and taking the teachers at these schools out of their unions.

9. The bill allows local school officials to hand-pick parents to participate on school improvement teams and does not allow parent elections. In contrast, teachers would be elected by their peers to the improvement teams.

10. The bill does not give students a voice or a role in the school reform process.

Source: Education Law Center

Earlier this week, I received a copy of the following letter [below] from several statewide education advocacy groups through a legislative email distribution group for school board members.

This document originates as joint statement from the AFT Pennsylvania, Education Law Center, Education Voters of Pennsylvania, Good Schools Pennsylvania, Media Area Branch of the NAACP, Pennsylvania Association of School Administrators, Pennsylvania Association of Rural and Small Schools, Pennsylvania League of Urban Schools, Pennsylvania School Boards Association and the Pennsylvania State Education Association.

The following spreadsheet of districts and schools and was prepared by the Education Law Center to illustrate the potential impact of SB 1192.

Today the Senate Education Committee, by a 9-1 vote, approved SB 1192, a bill that would take the place of the current Education Empowerment Act, which is due to sunset on June 30. The only “no” vote was recorded by Sen. Mike Folmer (R-Lebanon).

Two amendments, one introduced by the bill’s prime sponsor, Sen. Jeff Piccola, the committee chair, makes substantive changes to the measure.

The Piccola amendment removes the term “adequate yearly progress” and replaces it with “academic performance target” to keep in it in line with potential changes made to NCLB by Congress. The amendment also changes the names of the different achievement levels to “warning,” “accountability level 1,” ” accountability level 2″ and “accountability level 3.” Schools or districts that miss academic performance targets for one year would be put on “warning” status. Schools or district that miss academic performance targets for two or three consecutive years would be put on Accountability Level 1 status. Those that miss academic performance targets for 4-8 consecutive years would be classified in Accountability Level 2. Districts or schools missing academic performance targets for nine or more consecutive years would be placed in Accountability Level 3. Schools and districts would only be identified in Accountability Levels 1, 2 or 3 if they miss academic performance targets in the same subject by the same subgroup for consecutive years.

School directors in a district that is identified as in warning and above would have to complete a 30-hour board training program on a number of issues within nine months of designation. Newly elected directors would have to complete the program within nine months of election.

Districts in Accountability Level 3 would be governed by a 3-member statewide academic accountability board which would be appointed by PDE. The Accountability board would be responsible for developing a district improvement plan, and for approving the district’s annual budget, employment or termination of a superintendent, assistant superintendent, principal or assistant principal, approving collective bargaining agreements and approve any issuance or refinancing of debt. Elected school districts would continue to run the day-to-day operations of the district.  If the school board does not comply with orders from the accountability board, the district or school is penalized through a loss of subsidy in the amount of $5,000 per day for the first violation and $10,000 per day for a subsequent violation.

A second amendment, sponsored by Sen. Andy Dinniman, was approved as well. This amendment would limit the no strike provision in the bill to only districts in Accountability Level 3 status and would remove the exemption from the Prevailing Wage Act, the Separations Act and the Steel Procurement Act from charter schools formed under the bill.

What’s next – The bill now goes to the floor; it is likely to be sent to the Appropriations Committee prior to a floor vote.

Source: PSBA Office of Governmental and Member Relations, April 20, 2010

At what point does “Education” adopt a system wide approach, combined with a true collaborative effort, to support the vision of a macro-management environment of shared values, goals, rewards and accountability?

This post must have stuck an accord with many as this blog realized a “spike” of it’s own yesterday — a 219.44% increase in the number of visitors from the previous day.

My first recommendation is to continue to gather as much information as possible. A great place to start is the Pennsylvania Public School Employee Retirement System (PSERS) website. They have assembled a webpage entitled “Pension Funding Rate Spike Resources”, which contains a good amount of information and data projections from the PSERS actuaries.

I know its a lot of information to grasp, so I will make use of this blog to help explain some of the real issues. I will also leverage the use of data visualization tools to better summarize the information.

Additional resources from both sides of this issue:

• The Pennsylvania School Board Association (PSBA)
• The Pennsylvania State Education Association (PSEA)

My second recommendation is to get involved. After learning more about this important issue facing public education, contact your local and state representatives and share your input with them. Attend school board meetings…search the web…stay informed.

Local Legislative Offices:

• Rep. Gary Day, 187th District (includes all of Northwestern Lehigh School District)
  Northwest Centre, Suite 302
  6299 Route 309, New Tripoli, PA 18066
  Phone: (610) 760-7082
  E-mail: gday@pahousegop.com
• Sen. Pat Browne, 16th Senatorial District (includes Lowhill & Weisenberg Townships)
  8330 Schantz Road, Breinigsville, PA 18036
  Phone: (610) 366-2327
• Sen. David Argall, 29th Senatorial District (includes Heidelberg & Lynn Townships)
  One West Centre Street, Mahonoy City, PA 17948
  Phone: (570) 773-0891
  E-mail: dargall@pasen.gov

Contact the leadership of the Senate:

• Sen. Joseph Scarnati at jscarnati@pasen.gov or fax (717) 772-2755
• Sen. Dominic Pileggi at dpileggi@pasen.gov or fax (717) 783-7490
• Sen. Robert Mellow at mellow@pasenate.com or fax (717) 772-2162.

Contact the leadership of the House:

• Rep. Keith McCall at kmccall@pahouse.net or fax (717) 772-1231
• Rep. Todd Eachus at teachus@pahouse.net or fax (717) 772-9991
• Rep. Sam Smith at shsmith@pahousegop.com or fax (717) 787-6564.

Education is the single most important investment we can make in the future.  However, need to change outdated laws that make it harder to achieve educational quality and prudent use of tax money.

We can bring transparency to how public money is spent – not just after the fact but at  every stage of the process.  We can bring more sunlight to bear on how we make our laws, and we can end political perks for legislators, nicknamed WAMs (for “Walking Around Money”).

Baldwin, a self-employed writer and consultant, holds a doctorate in American history from Princeton University.  Through his blog, www.SchoolBoardTransparency.org, he promotes awareness and a call for greater fiscal transparency in public education.  As an “independent-minded Democrat”, Baldwin believes that voters know that party labels mean little compared to character and willingness to work.

I couldn’t agree more! Despite a difference in party affiliations, I share Dr. Baldwin’s ideology and commitment to ethics, education and fiscal prudency. Congratulations Fred – you have my support and I wish you great success!

Dr. Fred Baldwin’s official press release appears below:

This is a valuable resource to help school directors stay informed and up-to-date on a vast array of information. I clipped the following highlight from this week’s report to share with you on the Pennsylvania State Employee’s Retirement System (PSERS).

On the surface, the intent of this action is pure and deeply patriotic. I share this concern with our lawmakers of making foreign investments, including publicly funded pensions, into countries that might not always have America’s best interests at heart. Its just the fine print that intensifies my growing concern.

Over the next few weeks, I will post more information about PSERS — and why this system is such a huge financial concern for our state’s public educational system. I will also share some details as this area relates to our local school budget and its impact on our taxpayers.

The House unanimously approved HB 1821, which prohibits the investment of state retirement funds in private entities that actively do business in Sudan and Iran. Members of the Public School Employees’ Retirement System and State Employees’ Retirement System are indemnified for all good faith actions taken under this act for any expense, liability and loss, including attorney fees, judgments, fines and taxes. The bill also requires the commonwealth to reimburse each public fund for any net losses, costs and expenses incurred as a result of compliance with this act. While the reimbursement language provided in HB 1821 is helpful, PSBA is still concerned that further safeguards regarding the implementation of such reimbursement and indemnification are required to prevent any need for increased employer contribution rates for school entities.

Source: PSBA, Office of Governmental & Member Relations, Weekly Legislative Report 12/10/09

***

Jeff Clay has been criss-crossing the state this year with a message. “A big problem is looming in the state pension system that is going to hit taxpayers hard, and officials can’t keep pushing it off”, said Mr. Clay, executive director of the Pennsylvania School Employees’ Retirement System.
Read more: http://www.post-gazette.com/pg/09344/1019820-298.stm

Source: PSBA website