Pressure is mounting to change the way Pennsylvania schools are funded.

A team of court-appointed education experts has written a report calling on the Pennsylvania legislature to allocate an additional $300 million to provide equitable funding to the Philadelphia School District.

Under the current state funding formula, the district will probably face a $200 million shortfall in three years, the report said. Thus, "the Commonwealth of Pennsylvania should immediately repeal the cap on the Equalized Subsidy for Basic Education and increase the amount of funding in the Poverty Supplement," the report said.

The report also called on the Philadelphia School District to revamp its budgeting methods to equalize funding throughout the district and to give principals and local councils control over 85% of operating and categorical funds. The new budget format should be available by Feb. 1, 1995, and annual budget presentations should begin in the spring of 1995, the report said.

The seven educators behind the report were appointed last year by Commonwealth Court Judge Doris Smith after she ruled in Philadelphia Human Relations Commission v. the School District of Philadelphia that the district was failing to provide a good education to children in racially isolated schools.

In September, the team presented Smith with "A Philadelphia Primer: The School District of Philadelphia Educational Team Report," which recommended a series of drastic steps that the district should take to bring its schools up to standard.

The judge scheduled hearings for Oct. 13 and 14 on the team's findings and has invited written public comment through Oct. 25. No date has been set for her final ruling, and observers are uncertain as to how Smith will proceed.

In addition to calling for $300 million of additional state aid, the report said the Philadelphia School District must reduce class sizes, which experts say will cost at least $200 million.

The district itself must decentralize much of its authority and reallocate, by July 1, 1995, at least $20 million from regional and central offices directly to schools "through a formula weighted to target racially isolated schools," the report said.

Moreover, the city of Philadelphia should assume full fiscal responsibility for municipal services that affect schools, the report said.

"The responsible city agencies should be required to pay for trash pick-up, water and sewer costs, all costs associated with the city's recreation program, student physical exams, and subsidies for student bus fares," the report said.

Driving the team's recommendation is its overall assessment of Philadelphia's schools: bad.

A majority of the district's elementary students read below grade level, one-fifth of all second graders repeat that grade, nearly half of all ninth graders fail that grade, and many students who graduate from high school are unprepared for either a job or college, the report said.

Providing extensive detail, the report said the system suffered from:

* Ineffective teaching and learning practices and policies.

* Poor implementation of desegregation and educational strategies.

* Insufficient and inequitable allocated resources.

* Unsafe school buildings.

* Dysfunctional organization.

* Lack of an accountability system.

* Inadequate school facilities and maintenance.

* Lack of desegregation and student achievement monitoring.

* Failure of public will.

Such shortcomings hurt poor and minority students the most because these students can't rely on strong homes to compensate, the report said.

On another front, the Pennsylvania Association of Rural and Small Schools has filed a lawsuit claiming that the state's funding formula is unfair.

While the lawsuit does not ask for a particular remedy to the current funding formula, it alleges that the funding discrepancies between rich and poor districts violate the state constitution, which guarantees a thorough and efficient education to all children in the state, said Dawson Detwiler, the association's executive director.

More than 200 school districts have joined the suit, Detwiler said, and they are not limited to rural and small districts. Cities such as York and Harrisburg have decided they are also short-changed by the state and have signed on.

In the meantime, the suit is On hold until the court appoints a new judge to the case. "We are hoping to get a court date by sometime early next year," Detwiler said.

The lawsuit echoes the report's language indicting Philadelphia schools. "One of the inescapable causes of this deficient quality of education is Pennsylvania's failure to fulfill its constitutional duty to provide a 'thorough and efficient system of public education,'" the report said.

"Pennsylvania's inadequate and unequal finance system relies heavily on local property taxes, leading to well-funded schools in affluent areas and inadequate funding for schools in poorer districts," the report said.

Philadelphia has not joined the association's suit because the district does not oppose the state's education funding formula; the city's position is that it deserves more under the existing formula, district officials said.

Over the years, the state's contributions to school districts' coffers has declined. In the mid-1970s, the state was covering up to 52% of local districts' costs, Detwiler said. That amount has dwindled to about 37%, he said.

Most districts have fallen back on property taxes, Detwiler said, a choice that is easier for some than others. "Rural districts are landrich but dollar-poor," he said.

Moreover, he said, the state's population is growing older. The elderly, largely dependent on fixed incomes, are often reluctant to raise property taxes.

But the problem goes well beyond that, Detwiler said. "The system is broken and needs to be fixed," he said, noting that a rural district spends about $4,000 per pupil, while a rich district spends about $6,000.

Not all districts agree with the association's logic. Radnor, a district in the southeast corner of the state, and about 40 other districts have filed a countersuit, contending that the state's funding formula can't be declared unconstitutional because it has never been applied, said Richard DeFlaminus, Radnor's superintendent.

"Our belief is not that they don't deserve more funding, but that the basis for their suit isn't founded in the fullest way they state it," DeFlaminus said.

Report or no report, the Philadelphia School District faces credit challenges, said Craig Atwater, vice president at Moody's Investors Service, which rates the district's long-term debt Bal.

In line with the city's five-year economic plan, there are no plans to raise property taxes, and the state has frozen school aid, although Philadelphia schools hare received some supplemental funds for poorer schools, Atwater said.

"We don't perceive a lot of revenue flexibility," said Paul Devine, vice president and assistant director at Moody's.

Standard & Poor's agrees. The agency rates the district's uninsured debt A, viewing its budget as tightly balanced.

As for any court-mandated changes to the state's school funding arrangement, both Moody's and Standard & Poor's are taking a wait-and-see approach. The way the court order was implemented would be subject to politics, and thus unpredictable, rating agency officials said.

So far, initial reaction to the report's call for more state funding for Philadelphia schools has been negative. Both state lawmakers and Mayor Ed Rendell have said there is no extra money for Philadelphia schools.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.