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While the new budget has some modest funding increases in several programs that benefit children, Pennsylvania Partnerships for Children is concerned about the sustainability of the budget even through the end of this fiscal year.

How Pennsylvania's New Budget Impacts Kids

July 10, 2014

Earlier today, Gov. Tom Corbett signed a $29 billion state budget for fiscal 2014-15 after line-item vetoing $72.2 million in appropriations related to legislative spending in an effort to force the General Assembly to address pension reform. The new spending plan is about a 1.7 percent increase over fiscal 2013-14, but less than Gov. Corbett's original budget proposal in February.

Spreadsheet detailing fiscal 2014-15 investments in PA children

While the new budget has some modest funding increases in several programs that benefit children, it puts about $141 million less into basic education than the governor's original budget proposal. Pennsylvania Partnerships for Children is concerned about the sustainability of the budget even through the end of this fiscal year. The budget does not include any new sources of substantial and recurring revenue. Rather, it relies on a mix of one-time transfers, revised revenue projections, a delay in payment to Medicaid managed care organizations and a few other assumptions to come up with the total spend number. If the revenue assumptions don't keep up with expectations, Pennsylvania could be faced with a need to make mid-year budget cuts in order to balance the scales.

The fiscal code bill, House Bill 278, which directs how the money can be spent didn't reach the governor's desk until July 9. The delay was caused by disagreements between the House and Senate on economic development, the bank share tax, and language to provide a basic education funding enhancement of $1.45 million to the Allentown School District. All three of the issues were eliminated from the bill by the House on July 2 and the Senate concurred on their changes on July 8.

Here are details on how the new spending plan impacts key children's programs:

Early Learning

Pre-K Counts received the $10 million increase proposed by Gov. Corbett, funding the program at $97.284 million. This increase will allow 1,670 more children to participate in high-quality pre-k programs. The Head Start Supplemental Assistance Program was level-funded at $39.178 million. The Pre-K Counts increase marks a down payment on the much larger investment that is needed to make high-quality pre-kindergarten accessible to more young learners. Today in Pennsylvania, there are only enough public funds to make pre-k available to help about 18 percent of 3- and 4-year-olds access high-quality programs.

The Child Care Services appropriation, which funds child care subsidies for low-income, working families and quality initiatives such as Keystone STARS, received a small increase of $18,000, funding the line at $155.691 million. However, with the use of about $15 million in expanded federal support, 2,895 children will be served from the child care subsidy waiting list.

The Child Care Assistance appropriation, which funds child care subsidies for families receiving TANF and SNAP benefits and those formerly-receiving TANF, was level-funded at $152.609 million. Additionally, the budget allocates $15.221 million awarded by the federal government for fiscal 2014-15 as part of the "Race to the Top – Early Learning Challenge" grant program.

Early Intervention, which provides services for children with developmental delays and disabilities, received level-funding for the infants and toddlers program and an increase to serve 1,500 additional children in the preschool program. Nurse Family Partnership, an evidence-based home visiting program, was level-funded.

K-12 Education

The new budget provides several increases in K-12 education funding, but not through the basic education subsidy, which is the primary and most flexible funding source for school districts. Rather, school districts and charter/cyber charter schools will receive money through the new Ready to Learn Block Grant (RTLBG) program. Of particular importance, special education received its first funding increase in six years. A detailed rundown of the K-12 education investments includes the following:

  • Basic education funding - $5.526 billion – level funded
  • Special education - $1.046 billion – a $20 million increase over fiscal 2013-14 (More details on the distribution of special education funds are below.)
  • Ready to Learn Block Grant - $200 million – This is $141 million less than what the governor proposed in February. The new block grant program includes $100 million of the former Accountability Block Grant (ABG) program. (More details on the distribution of the RTLBG dollars and allowable uses of the money are below.)
  • Assessments - $58.291 million – A $4.6 million increase that will support continued costs for PSSAs, Keystone Exams, the Standards Aligned System and other supports for schools and teachers. It does not include the development of new Keystone Exams.
  • Teacher professional development – $6.459 million – level funded
  • Career and Technical Centers – $62 million – level funded

The RTLBG program represented one of Gov. Corbett's top education priorities in the budget and, as stated earlier, now includes the former ABG program. The $100 million of former ABG funds will be distributed to school districts just as they received it last year. The former ABG dollars also will be required to be used for the ABG-approved strategies.

The second $100 million in the RTLBG will be distributed to school districts, charter and cyber charter schools via the formula proposed by Gov. Corbett in February. This formula uses a base student amount, market value/personal income aid ratio and weights for poverty and English language learners to arrive at each school entity's allotment.

Funding under the new RTLBG money is required to be used for the following strategies:

  • Pre-k-3 curriculum alignment with academic standards;
  • Teacher training and professional development designed to improved early literacy and STEM;
  • Pre-k-3 extended learning;
  • Establishing, maintaining or expanding quality pre-K;
  • Establishing, maintaining or expanding a quality full-day K program;
  • Supplemental instruction and instructional coaches for Keystone Exams;
  • Implementation of the PA comprehensive literacy plan;
  • Efforts that improve student outcomes in STEM education;
  • Establishing, maintaining or expanding hybrid learning models;
  • Researching, maintaining or expanding competency–based learning models;
  • Other uses under the ABG program; and
  • Other uses approved by PDE.

Unlike Gov. Corbett's original RTLBG proposal, school entities will not be limited in how they use their RTLBG dollars based on aggregated scores from the School Performance Profile (SPP). Additionally, since charter and cyber charter schools receive state funds via the RTLBG, revenues received by school districts for the new RTLGB are prohibited from being used in the calculation of school districts' charter and cyber charter payments (the former ABG funds are excluded from this provision).

The new state spending plan also incorporates the special education funding formula that was unanimously endorsed and recommended in December 2013. The formula now bases a school district's new special education allocation on three separate weights for three different cost categories of special education students.  These categories are reflective of the range of disabilities and corresponding costs. The formula appropriately accounts for other factors that influence the cost of providing special education services and a local community's capacity to support its special education students. Proposed changes for special education payments to charter and cyber charter schools were not included. Charter and cyber charter schools will continue to receive payments for special education students in the same manner - as they have for almost two decades – irrespective of the varying costs to educate students with different degrees of disability.

Discussion about a proposal allowing the City of Philadelphia to levy an additional $2 per-pack cigarette tax remains unresolved at this time. The House passed House Bill 1177 on July 2, the vehicle for the cigarette tax, but amended the bill to allow charter schools to appeal decisions of the School Reform Commission to the state's charter appeal board. The Senate added the provisions related to economic development that had been eliminated from the fiscal code bill by the House. The Senate also limited Philadelphia's ability to levy the higher cigarette tax to five years. The bill must now go back to the House for concurrence -- again. The House is scheduled to return on Aug. 4 to consider the bill.

The School District of Philadelphia is trying to close a $93 million deficit. The cigarette tax would reportedly help raise $80 million annually to fill that gap, but only about half that amount in its first year. Combined with the $12 million increase the school district will receive through the RTLBG, the gap could significantly close. Mayor Nutter and Superintendent Hite report the cigarette tax would keep average class sizes from rising and prevent 1,300 teacher layoffs.

Child Welfare

County child welfare will receive a $26 million increase - bringing total funding to $1.081 billion - to help address increasing caseloads and investigations into reports of abuse and neglect. While the increase is $2 million less than Gov. Corbett originally sought, the funding difference is not expected to impact services. The increase was reduced since Act 28 of 2014 (providing funding for mandated reporter training and child advocacy centers) included funding for mandated reporter training.

The budget also includes a nearly $5.8 million increase to fund child welfare information systems. This funding is essential to implement Act 29 of 2014, which updates Pennsylvania's outdated system for tracking child abuse complaints by creating a statewide database to help authorities more efficiently and effectively receive and respond to reports of abuse and neglect.

Also, for the first time ever, the state budget includes a separate $2.25 million appropriation for child advocacy centers. These centers help improve the commonwealth's ability to investigate and treat child abuse, particularly child sexual abuse. The fiscal code requires that $250,000 be allocated for a mobile child advocacy center.

Health Care

The budget level-funds the Children's Health Insurance Program (CHIP) at $111.094 million. The governor's proposed budget included $5.6 million in additional funding for CHIP - funding the administration planned to use to provide health insurance coverage to an additional 10,000 Pennsylvania children. The proposed increase included $250,000 for outreach activities, which are critical in reaching Pennsylvania's 144,000 uninsured children. Sources share newer calculations determined CHIP could continue to serve current enrollees, as well as projected growth with level-funding. At this time, PPC has not yet determined if outreach will remain funded at the $250,000 level.

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