Author: Marc Stier
Last year, Commonwealth Court Judge Renée Cohn Jubelirer ruled that Pennsylvania’s public school financing system was unconstitutional because it did not guarantee every student a “thorough and effective education.”
In January, the Basic Education Financing Commission voted for a seven-year plan to fully and equitably fund our schools, provide tax relief to school districts that incur high local taxes due to a lack of state funding, and direct recent funds to proven education programs. to improve student achievement.
Since then, Republicans have been largely mute on the plan, mainly arguing that “Pennsylvania can’t afford it.”
The reality, however, is that Pennsylvania cannot miss this opportunity to ensure that all of our children receive an appropriate education.
One reason to act now is the $14 billion surplus in general funds and the Rainy Day Fund created by our tax revenues flowing through federal COVID-19 relief grants. These funds are to be spent on behalf of Pennsylvanians. Even if $2 billion to $4 billion were allocated for future economic downturns, there would still be enough money to fund the first four years of the seven-year program.
What about the next years? Republicans rightly point out that the surplus will eventually run out and that by next year the state will spend more every year than it receives.
This is a valid concern. But Republicans lack the moral authority to raise it. The structural deficit – in which annual expenditure exceeds annual income – is not a recent phenomenon. The problem plagued Pennsylvania budgets for at least a decade before federal pandemic relief was enacted, largely due to numerous corporate tax cuts by the Republican-led General Assembly.
In 1972, corporate taxes accounted for 30% of state revenues. Next year they will constitute only about 15%. During this period, the tax on capital shares and franchises of capital companies was abolished and the corporate income tax base was reduced. Few Republicans expressed concern that these tax cuts would cause future deficits.
Two years ago, Republicans demanded a 50% cut in the net corporate tax rate over nine years in exchange for additional education funding. No Republican has argued that the state cannot afford $2 billion in tax cuts when future structural deficits are likely. (But I did.)
It seems that Republicans can always afford corporate tax cuts, but we can never afford to provide every child in the state with a good education.
This is a consistent choice made by the Republican-led General Assembly, sometimes with Democratic support. It is no coincidence that, as the chart below shows, the state’s share of financing K-12 education has declined at roughly the same rate as the state’s share of corporate tax revenues. The school funding crisis referred to in the school funding lawsuit is partly the result of corporate tax cuts.
By our conservative estimate, the cost of all corporate tax cuts since 1972 would more than cover the $5.6 billion costs of the BEFC plan in its fifth year. If these cuts to businesses had not occurred, the state would have enough revenue to fund the entire plan – or the state could already be using corporate tax revenues to fully and fairly fund our schools.
But Republicans argue that cutting corporate taxes creates jobs and stimulates economic growth.
There is little evidence that deep corporate tax cuts have helped improve Pennsylvania’s economy. Indeed, the most economically struggling regions of the state – which are overwhelmingly Republican – have lower taxes than the regions of the state that are experiencing economic growth.
Because corporate taxes are a petite part of the cost of doing business, even pricey, deep cuts have only a petite positive effect on the economy, as I have shown Here.
On the other hand, there is substantial evidence that recent education funding can improve student achievement, raise wages and therefore be a much more effective way of creating recent jobs and growing our economy. Research by C. Kirabo Jackson et al suggests that a sustained 10% boost in education spending could result in a 7% boost in adult wages by age 40 and a 3 percentage point reduction in the likelihood of being destitute.
Eric Hanushek, an education financing expert who testified for the defense in a school funding lawsuit, recently acknowledged that additional school funding could improve academic achievement.
AND, in another jobHanushek estimated that if all states matched the educational performance of the nation’s top-ranked state, Minnesota, within two generations, Pennsylvania’s gross domestic product per capita would be about 225% higher than at current levels of academic achievement. Corporate tax cuts cannot have this impact on our economy.
At some point, we may need recent revenues to fund the entire seven-year education program. However, there are many ways to raise them. Most importantly, as we will document in detail shortly, it is possible to fund the entire program without raising income tax on anyone’s wages.
So the answer to Republicans’ claim that “we can’t afford to fix public education” is that constitutionally, morally, and pragmatically we cannot afford not to fix public education. It’s not just the futures of children attending the state’s worst-funded schools that are at stake. The economic future of all our state’s residents, our children and our grandchildren depends on us doing the right thing, and doing it now.
Marc Stier is executive director of the Pennsylvania Policy Center, a progressive think tank based in Harrisburg. His work frequently appears on the Capital-Star magazine’s comments page.
Correction: This article was updated at 5:30 p.m., April 16, 2024, to correct the name of Renée Cohn Jubelirer.
