State Revenues from Income Taxes Declining

The Nelson Rockefeller Institute of Government released a report the other day that shows states across the country are losing revenue from income taxes at an alarming rate.

Some of the conclusions in the report include:

-The sharp declines in personal income tax collections will punch still deeper holes in the budgets of many states. This increases the risk that state budget agreements for 2009-10 will not close budget gaps completely, and that states will need to make midyear budget cuts.

-These new data on income-tax revenues also make it likely that states will be forced to consider further spending and revenue actions in 2010, and will confront large budget gaps when federal stimulus assistance ends in 2011.

Pennsylvania experienced a 26% decline in Personal Income Tax between January and April of 2009. Because Personal Income Taxes make up 32% of our budget, you can see that being 26% short on 32% of your budget will have a significant impact on budget shortfalls. However, we are not as bad off as some other states. Arizona is seeing a 55% decrease in PIT. PIT makes up 25% of the Arizona budget. California was 34% lower in PIT revenues this year and PIT revenues make up almost 48% of their budget.

Something to remember about government budgets is that the revenues always lag. State and local budgets are set one year in advance and are based on the best projections available at the time. Last July, Harrisburg had no idea what the economy would be doing in April of 2009. They budgeted with their best guess. Now that best guess is going to be off by over 25%.

Each state will handle these shortfalls in their own way. Most will end up doing a combination of things including laying off workers, unallotments (as they are doing in Minnesota), tax increases, etc.

What I can say with confidence is that this recession is not over, especially when talking about the actions various states will be forced to take in June and July of this year (this is when budgets are typically passed). Pennsylvania is weathering this storm better than half of the other states but we will still be impacted. The 2009-2010 budget will be a tough one to pass, but it will be easy compared to what happens in 2010-2011.

The report concludes with this bit:

-It (the PIT situation) raises the risk that the newly adopted budget will take an optimistic view of the year ahead and may unravel as the year progresses, requiring midyear cuts. And because those solutions that are adopted may be nonrecurring in nature, it raises the risk that states will face larger gaps for 2010-11 when such non recurring resources go away

Thanks for reading.

James

Message from Senator Orie on Keystone Exams

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Edit-

I forgot to mention that our State Senator John Pippy is a co-sponsor of Senator Orie's legislation. Thanks to Senator Pippy for stepping up on this issue as well.

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I received a message from State Senator Jane Orie yesterday regarding her attempts to curb the PDE's ability to unilaterally implement Keystone Exams. The message provides a great summary of how we got to where we are today and what is happening at the legislative level. Please see the full message below:

Dear Friend:

Thank you for your recent correspondence stating your opposition to the Rendell administration’s graduation competency assessment (“GCA”) scheme as well as conveying your support for Senate Bill 281, which would expressly prohibit any further movement on GCA’s without the express approval of the General Assembly.

In 2008, the State Board of Education included GCA’s as part of its proposed changed to their Academic Standards regulations. Under the proposal, all high school seniors would be required to pass a series of standardized exit exams in order to graduate. After receiving a tremendous flood of criticism against such a plan from citizens, school administrators, and educational experts statewide, the Pennsylvania Senate and House of Representatives passed a moratorium last July through Act 61 of 2008 that expressly forbid any further action on the GCA for one year.

Despite this clear directive to cease any and all activity related to GCA’s, the Department of Education began to solicit bid proposals for the development of these high school exits exams in the fall of 2008. Faced with the Department’s blatant disregard for the Act 61 ban, it became abundantly clear that this matter must be addressed with legislation conclusively banning any further movement on GCA’s. As such, I promptly introduced SB 281 in February.

SB 281 would bar any direct or indirect advancement of the GCA agenda by the Department. More importantly, the legislation would instruct the Pennsylvania Treasury not to expend funding related in any way to graduation standards unless specifically authorized to do so by the General Assembly. The crucial need for SB 281 was once more sharply reiterated when the Department recently executed a $202 million contract for the development of GCA’s. I would also note, that confronted with a projected deficit of over $3 billion, fiscal prudence demands that we not allow limited resources to be expended on new and unproven initiatives like the GCA’s when many other worthy current programs cannot be funded. Put simply, the Department’s actions in plain disregard to the Act 61 prohibition and our economic circumstances compel an immediate legislative response as embodied in SB 281.

Presented with this difficult situation, I am pleased to report that SB 281 overwhelmingly passed the Senate on June 10th with nearly unanimous bipartisan support (48-1). The bill now proceeds to the House and I urge my colleagues to act swiftly and curb any further action or spending towards the GCA initiative. To this end, you are encouraged to contact your own representative and convey your support for SB 281. Should you require any assistance in doing so, please do not hesitate to contact my offices at your convenience.

Once again, thank you for your contacting me and voicing your thoughts about such a significant issue. Your staunch advocacy is also most appreciated on behalf of all Pennsylvania students who could be considerably harmed by the hasty and irresponsible implementation of graduation tests. Please feel free to contact me whenever you have any other state-related concerns.

Sincerely,

JANE C. ORIE
Majority Whip
40th Senatorial District

Thanks to Senator Orie for taking a leadership role on this legislation.

Thanks for reading.

James

Senate Education Committee Votes to Stop Keystone Exam Funding

In a bi-partisan effort to stop the Governor from unilaterally implementing the Keystone Exam/GCAs, the Senate Education Committee voted unanimously to block the contract that was awarded to the company that was designing the tests.

From the Pittsburgh Trib:

Senate Education Committee votes to block contract with testing company

HARRISBURG — A high school graduation exam drew fierce opposition Tuesday from members of the Senate Education Committee, who voted unanimously to block a $201 million contract with a Minnesota testing company.

For almost two hours, senators from both parties skewered Education Secretary Gerald Zahorchak for proceeding with a seven-year contract without legislative approval at a time when Pennsylvania faces a $3.2 billion deficit.

Even members of Democratic Gov. Ed Rendell's party, especially Sen. Anthony Williams of Philadelphia, criticized the contract.

"The reason why we're having the hearing today is because every time we ask a question, the response is sort of condescending," Williams told Zahorchak. "You sort of act like, 'What right do you have to ask a question?' I'm concerned about how we arrive at moments like this, which are embarrassing to all of us."

The committee approved a bill by Senate Majority Whip Jane Orie, R-McCandless, requiring that any graduation exam be approved by the General Assembly. Orie, calling the Rendell administration's action "unconscionable," predicted the bill would move through both chambers with a veto-proof majority.

Orie said the bill would negate the contract signed last month with Data Recognition Corp. for the tests. She said the contract is flexible enough that the state would not owe the company money for canceling.

Rendell fired back hours later: "If it becomes law, I will veto it." He said states surrounding Pennsylvania have such exams.

"Do you think all the states have it wrong and we have it right?" Rendell said business leaders across the state back the exams. The opposition was driven by a "special interest," the Pennsylvania State Education Association, the state's largest teachers union, the governor said.

"The fact other states might be doing it doesn't mean Pennsylvania should do it," PSEA spokesman Wythe Keever said. He said 23 organizations across the state oppose the exams, ranging from the NAACP to the Disability Rights Network of Pennsylvania.

The opposition had less to do with the tests than a perception by senators that Rendell's office was dictating education policy without legislative input.

Deeming the situation a "corruption of the legislative process," Sen. Mary Jo White, R-Venango, said, "It is not the Department of Education's job to determine education policy for the entire state."

Zahorchak said the $8 million included in this budget and $20 million next year for the contract are a fraction of the $10 billion the state spends on education. He said it is important to measure students' competency before they go out in the work force.

Committee Chair Jeffrey Piccola, R-Dauphin, supports the idea behind graduation tests but said he is disappointed by the Education Department's "absolutely miserable job" of communicating with the Legislature.

"You're asking us to kill a mosquito with a sledgehammer," Piccola said.

"You can use the sledgehammer, but its not me who will be punished by it," Zahorchak said. "It's generations of kids."

Michael Hauser, principal at Moon Area Senior High School, supports the idea behind the so-called Keystone exams but believes Rendell rushed the issue.

"Ultimately, having some type of standardized assessment of what kids are learning across the commonwealth is not a bad thing, but we need to move forward at a reasonable pace," Hauser said.

Erin Vecchio, a Democratic committeewoman and school board member with two children at Penn Hills High School, does not support the standardized exams. She fears the tests would cause teachers to change the way they teach students.

"It doesn't mean that anyone is going to be educated unless you're going to teach them the test," Vecchio said. "You're teaching the kids how to do the test instead of teaching them how to learn. What good does that do?"

Thank you Senator Orie for stepping up and getting this done.

Thanks for reading.

James

High School Project Update and Thoughts

On Monday, June 1, the Board held a special meeting regarding the high school project. We went over the revised design and had the opportunity to ask questions of the architect. Please refer to the documents from the presentation here.

As I mentioned in my last post on this topic, I do like how much better the outside look of the building has improved from the original curved design presented months ago. However, over the past two weeks there have been a number of questions from the public and the Board that needed to be answered on Monday.

Let me list them in no particular order of importance:

1) Question: Did the architects plan for the moving of large musical instruments from the current pool area all the way over to the Auditorium/Little Theater Area? Did they allow for the fact that when there are performances in these areas that the students involved in these activities will need places to change and places to store equipment/clothes/personal item?

Answer: On the first question the architects responded that they will be building a large ("as large as we need it") freight elevator to move the instruments. On the second question...I don't remember hearing an answer. If someone else did, please let me know. The current spaces used as storage/changing spaces for performances are scheduled to be used as Applied Arts classroom space (see page 16 on the presentation). Is this an irreconcilable difference? Tough to tell. I have received numerous emails from parents stating that this is unacceptable and one email from a parent saying this is no big deal- that instruments are moved all the time. We do have a convoluted way of moving our instruments from one place to another now. Is it just that there was an expectation that this would be improved in this design or is this a matter that is a showstopper? I'd like some more feedback on this.

2) Question: What's up with the tennis courts?

Answer: The architects have vowed to find space for a total of 6 tennis courts. As pointed out by an experienced coach, we need to ensure that the 6 courts are located together and not across the street from one another. Having four on one side of Horsman Drive and two courts on the other would not be conducive to coaching a varsity tennis team.

3) Has there been a traffic study done on Horsman Drive to ensure that it can be a 2-way road?

Answer: No, but we expect to have one soon. For me, there is no doubt that Horsman can be made into a two way street. There is certainly space for it. But my concern is not so much for Horsman as it is for Lebanon Ave and Hollycrest Drive. Lebanon is pretty narrow at the top of the hill and I suspect that making Horsman a two way street would require the widening of Lebanon Ave from the top of the hill down to the stoplight. Hollycrest is also a very narrow residential street and one where the residents probably do not expect to have a serious increase in traffic by people/students going up their street to take a right on Horsman to drop off/pick up/park, etc. Maybe this is a municpal issue but it is a pretty serious one given the debate about traffic calming measures that have been taken by the sitting commissioners. Is this a dealbreaker? I'm not sure I can vote for this plan without a traffic study/commission meeting that says they will allow the extra traffic on those streets. Additionally, if we do need to widen the road at the top of the hill, who pays for that? If it is the District, then that cost is not included in our most recent documents.

4) What is the deal with the pool?

Answer: It appears that the Board is willing to increase the size of the pool from 6 to 8 lanes. The pool is a different animal than most of the other aspects of the school in that it is perhaps the most widely used community asset the high school has. Setting this pool up for more community use makes sense. Simply repeating the issues we have with the current pool would be a mistake. I am hopeful that the architects will take up a resident's recommendation to contact USA Swimming and talk about a design that works not only for our swim team, but for the community as well. There are plenty of examples out there of good combination community/school use pools. I believe there will be ways to reduce the cost of the pool while also building one that is a better fit for the community. Please see this link for a possible alternative. This link has also been given to our architects and design team. Here is a picture of what a possible "stretch" pool might look like. This design would not be exceptionally larger than what is currently planned.

5) Will the athletic spaces meet Title IX requirements for our student athletes?

Answer: The architects said that they would. There is a concern that, given how many student athletes we have, we would be cramming them all into small locker rooms. This is borne out by the evidence gathered by two different studies, one by Dejong and the other by RSH Architects (who were hired on behalf of the Blue Devil Club). If we are to remove the field house, we would eliminate over 20,000 square feet of field sports facility space. The new design does not make up any lack of existing space, it simply builds a newer space.

6) How much is it costing us to have a design criteria that says we are not to use temporary classrooms?

Answer: Noone knows. Director Hart first asked this question. Due to a lack of any clarity on the answer, I asked it again. I received the same answer. The architects cannot quantify how much this is costing. What is clear is that the design of this building (the "Z" shape) is predicated on not demolishing building C until the new academic wing is built. We need that classroom space if we are not to use temporary classrooms. This is the reason why the length of the building is barely shortened (another design criteria that apparently is only being mildly met by about 45 feet from one end of B Building to the far end of G Building). What would happen if we took out this single criteria? I get that there are a lot of people against temporary classrooms. Apparently people here have had negative experiences with them. As someone who grew up in temporary classrooms from 3rd grade through high school due to increasing student population and therefore demand for inexpensive additional classroom space, I can say that I really didn't care much if my class was in a well ventilated air-conditioned temporary classroom or in the main building. On hot days, it was always much better to be in the temporary room. I get that there is serious sentiment against using these classrooms here, but at what cost? The architect said that he was told to avoid temporary classrooms "at all costs". Surely, that is not a good way to think about this. At a $1 million cost? What about $5 million? What about $10 million?

To me, not knowing what "at all costs" is actually costing us is one of the reasons I am leaning towards voting against this footprint design.

As a final note, some will remember way back in January that I proposed we invest some money in the school now, pay down some debt, and plan for a major renovation/construction project for 2016-2017. I was told, as was the public, that the costs of renovating B Building alone would make this plan cost-prohibitive. In the latest architect costs, please note that B Building in now the LEAST expensive building to renovate at $127 sq/ft. Total cost of renovation of B Building is sitting at $14 million. This is much less than the $20-30 million number that was given as a deterrent to such a plan back in January.

That $14 million number is very well within the range of what I thought we could afford to do. I suggested in January that we use the Guaranteed Energy Savings Plan to invest in the existing school building which would cut the costs of this plan possibly in half and leave us with a viable option for a future new building in a few years.

Thanks for reading and please give the Board any feedback before Monday's meeting.

James