Mar. 06, 2020

By Rep. Steve Mentzer (R-Lititz)
Property tax reform and how we fund our schools are issues that go hand in hand. Over the next several weeks, I would like to share with you the challenges our State has in implementing reforms.

This week, let’s review a policy that had been in place for over 30 years called “Hold Harmless.” This was a budgetary policy that allowed funding to be preserved for areas of the state where there were declining student populations.

Hold harmless guarantees each school district receives no fewer state education dollars than it received the previous year—regardless of changes in district enrollment. This may sound appealing in theory, but it is actually quite problematic in practice. While the policy was instituted to prevent school districts from being harmed by reduced funding, it has resulted in severe inequity to hundreds of school districts.

For example, during the 2012-13 school year, state revenue per student in Pennsylvania's 20 fastest-growing districts was slightly more than $3,000. In contrast, state revenue per student among those districts with the largest decreases in enrollment was nearly $10,000. This means school districts with declining enrollment received more than three times the state funding per student than growing districts.

This funding disparity has a direct result on school property taxes. Growing school districts raise property taxes to make up the difference. School districts with low or declining populations of students typically have low property tax levies. That is what is happening here, property owners residing in these high-growth school districts, as we have in many parts of Lancaster County, are faced with the hardship of paying more and more in property taxes every year.

So, 30 years later, we have substantial school funding inequities throughout the state. Most would agree this is due to our unfair funding formula. Fortunately, several years ago, the Legislature came up with a new fair funding formula to distribute school funding in a more equitable fashion. However, this new formula does not apply to the baseline $5 billion for K-12 currently being spent and distributed to all school districts. It only applies to state budget increases on top of the baseline in school funding.

Next week we will examine why this new formula is not applied to all existing state funding for K-12.