Pennsylvania’s School Funding Is So Screwed Up That It Almost Upended Its Whole Tax System to Fix It

Much of the budget debate out of Harrisburg, Pennsylvania, has centered on school funding.


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How should we pay for our public schools? The majority of U.S. states rely primarily on local property taxes to fund K–12 education, which sets an intractable problem in motion: When property taxes pay for schools, schools in rich neighborhoods inevitably end up with more money than those in poor neighborhoods. State money constitutes roughly 90 percent of school funding nationwide, and because the federal money designated to bridge the funding gap never quite does the trick, the wealthiest districts often spend as much as twice per capita as the poorest ones.

Pennsylvania is among the worst offenders; it has, according to the Philadelphia Inquirer, the “single most inequitable system of allocating education dollars in the nation.”

Monday night, the Pennsylvania Senate barely, in a tie broken by the lieutenant governor, rejected a measure that would have upended this whole system, replacing the property tax with increased income and sales taxes to pay for schools.

Legislative disagreement over this proposal has been a major factor in the monthslong budget crisis that has been brewing in the state. With budget negotiations dragging five months past deadline and state money frozen by the Legislature, Pennsylvania schools have been struggling to pay for basic services—remember the teachers in the Chester Upland District who agreed to work for free?

The proposed property-tax overhaul presented a radical solution to this perennial problem of school funding—but it seems to have created a few new problems in its wake. According to the Associated Press:

[The] measure would end the collection of school property taxes from millions of households and businesses starting July 1, except to pay off school debt. It also would impose another barrier for school boards to raise taxes in the future, requiring them to win voter approval to increase local income taxes if they want to spend above the state’s allotment.

To compensate for the loss of property-tax revenue, the state would up the sales tax rate from 6 to 7.25 percent and the income tax from 3 to 4.95 percent (though, as often with proposals to eliminate property taxes, it was unclear whether these increases would raise sufficient funds). Sundry new items would be subject to the sales tax as well: cable, concert tickets, day care, some services from lawyers, CPAs, even hairdressers and morticians. Meanwhile, according to an earlier Associated Press report,

No one would pay school property taxes: landlords, millionaires, the fixed-income elderly, shopping malls and international corporations. Renters would immediately pay higher sales taxes.

The proposed $12 billion takeover of school funding and massive change in the whole state taxation system had supporters—and vociferous opponents—on both sides of the aisle. Civil rights organizations never like any sales tax hike, obviously, and if the increase had passed, Pennsylvania would have the second-highest sales tax in the nation.

Said David Argall, the Republican senator who sponsored the Property Tax Independence Act amendment, according to a Pittsburgh paper, “We owe the taxpayers of Pennsylvania a sincere apology … [for] forcing schools since 1834 to rely on the unfair, archaic property tax.”* Like many supporters of the bill, he argued that the property tax penalized older people on fixed incomes.

So what’s the solution? Can Pennsylvania figure out a way to fund schools more equitably without making poor people shoulder the difference, either through a burdensome property tax or a regressive sale tax? It’s a very large question, not just in the Keystone State but throughout the country.

*Correction, Nov. 24, 2015: This post originally misspelled Pennsylvania state Sen. David Argall’s last name.