Tags Posts tagged with "Pennsylvania"



By: Cheryl A. Davenport


PSECU, a Pennsylvania-based credit union created by 22 state workers over 80 years ago, was founded to support and secure the financial well-being of state workers when few existed. From these simple beginnings PSECU has grown to include over 400,000 members.  The not-for-profit member-owned institution provides many low or no- fee financial products to its members and 24/7 banking services while upholding the ethical integrity members have come to trust. This commitment to its members is just a part of the overall dedication to the community. PSECU promotes financial literacy, volunteer participation and engages in charitable contributions. Environmental community outreach includes sponsoring the Earth Day Festival and Shredding Event, the Walk 4 Clean Water and support of the Rotary’s Clean Water Projects. These events express the organization’s focus on taking a leadership role in environmental responsibility through clean water, recycling, sustainability and green practices.

As PSECU expanded, the institution resolved that it had outgrown its location at Credit Union Place in Harrisburg. This was an opportunity to magnify their community influence and environmental dedication. Discussions began about building a new facility which would be eco-friendly and sustainable while providing prospects for future growth over the next 50 years. A 47-acre site was chosen close by on Elmerton Avenue in Susquehanna Township. The site, with large open spaces, was ideal as the space provides for biodiversity and promotes local habitat. This site footage exceeds LEED open space requirements by 227 percent. After approximately 5 years of discussion, a $72 million budget and design was developed that would make the new building and surroundings save energy costs while benefitting the community, members and employees. PSECU moved into their new facility in January 2014 with extremely minimal downtime and impact on its member services.

The new PSECU building is operated by a natural gas powered turbine system, also known as cogeneration. The turbines generate heat, which is then used by a heat exchanger to produce heat for the building or an absorption chiller to cool the building. This system also heats the water for the facility. Other options were discussed such as windmill and solar power, but these were determined to have a larger footprint on the environment and the cogeneration system was better suited to meet the buildings current and expanding future needs. The 239,000 square-foot facility and site has the possibility for expansion up to 425,000 square feet.

The goal was to be LEED Gold Certified, which was obtained. Per the U.S. Green Building Council, LEED (Leadership in Energy and Environmental Design) certification points can be earned in many areas of building development, which address concerns related to sustainability. Four levels of LEED certification are awarded based on the number of points earned – Certified, Silver, Gold and Platinum. LEED certified buildings use less energy and water, reduce greenhouse gas emissions and save money. The facility received LEED points by achieving an energy cost savings of 38.1 percent due to cogeneration, and lighting methods. The capture and treatment of 90 percent of storm water runoff, water-conserving showers and toilets, and landscaping design which requires no irrigation all assist in saving water. The cost savings of LEED initiatives help to re-coup initial building investments. The cogeneration system will pay for itself within 5.5 years of initial installation. While producing cost efficient heating and cooling, the system also produces a surplus, which is sold back to the energy grid. Last year alone, $85,000 in excess energy was sold back.

It’s not just the final building product that is important when considering the environment and community. Seventy-five percent of the debris during construction was diverted from landfill into recycled materials, and 20 percent of the building components are made of recycled materials. LEED points were also awarded for the use of low-emitting sealants and adhesives. Building materials were brought in from local sources to reduce the ecological footprint by saving in transportation costs while at the same time supporting local businesses. Per PSECU’s vision, local businesses were sub-contracted to support the project. Also as a part of PSECU’s dedication to the community, a percentage of the building budget was dedicated to the hiring of minority and female workers.

The construction also provides for back-up energy. Supplemental absorption chillers, onsite stored water in case of interrupted water service, as well as a diesel-powered generator, which can power the entire building and its functions, all provide for complete back-up. Alan Brunner, Director of Facilities Operation and Organizational Support Services, a key planner and manager of the project emphasizes “We can’t be down, we have to be online 24/7 for our members.” This fits in to PSECU’s philosophy of ‘brick and mortar-less banking.’ As stated on the PSECU website, “We’re not about having a branch on every corner. We’re about giving members account access where it’s most convenient for them. Their living room. Their backyard. Their cell phone. By not spending money on branches, we can give members competitive rates for loans and savings, as well as a host of low or no-cost services.” Digital banking service is not just about customer convenience and cost savings but also reducing carbon footprint.

Saving energy and reducing ecological footprint also impacts employees, and PSECU believes that the LEED certified building reflects its culture. Employees were updated and engaged throughout the entire building process, and a workspace planning committee was established to help with the selection of office furniture. Adjustable height desks, using electricity generated on site, were chosen so the employee can stand and change position throughout the day. Work stations were made at a lower height to allow more natural light throughout the working space. Seventy-five percent of the lighting is natural daylight, brought in through efficient design to reduce cost, as well as provide health benefits to employees. Holistic business cultures enhance the total well-being of the employees – physically, financially and emotionally. This practice reduces stress and increases employee productivity. The campus encourages human interaction with the physical environment. Employee walking trails through the open green spaces are provided, as well as a rooftop garden patio area for lunch breaks, which has the added benefit of reducing cooling costs and storm water runoff. Other employee benefits to improve health and well-being include bike racks, on-site gym, the promotion of non-smoking, on-site daycare and involvement in the community through volunteering. Employees are also offered ride-sharing high-occupancy vehicle and fuel efficient vehicle parking, with electric car stations planned.

Each new employee is given a tour and orientation to the building and grounds to understand the scope of the entire initiative. Aside from environmental benefits, health benefits and cost-savings – the character of the building is modern and stunning. It is a professional inviting building, even under heavy security measures to protect their members – not what one might expect from a cost-efficient building.

The building of LEED certified projects and sustainability movements in Central Pennsylvania is growing, with PSECU serving as an inspiration. Phoenix Contact has also installed a cogeneration heating and cooling system; Messiah College has expanded sustainability initiatives to include an organic community garden, composting and recycling. Dickinson College offers on its website that 96 percent of the class of 2015 had taken at least one sustainability course.

As PSECU has evolved, its vision and mission encompasses not only the members but the community and environment in a relationship that is advantageous to all. Providing cost savings through energy efficiency and sustainability and ‘brick and mortar-less banking’ affords innumerable benefits.


For more information please visit https://www.youtube.com/watch?v=gfjkL3BU-3E





By Senator John M. DiSanto


The General Assembly recently took action to maintain Pennsylvania citizens’ access to federal buildings and prevent the burden of needing a passport to fly within the U.S.


Lawmakers came together in a bipartisan fashion and approved compromise legislation to bring the Commonwealth into compliance with the federal REAL ID Act. Passed in the wake of the 9/11 terrorist attacks, this federal law established increased security standards for state-issued driver’s licenses and identification cards and prohibited federal agencies from accepting licenses and identification cards from states that did not meet these standards.


Concerned that that federal government sought to regulate what was previously under the domain of the states – driver’s licenses – the General Assembly overwhelmingly voted in 2012 to prohibit the Commonwealth from participating in REAL ID.


In addition to the issue of states’ rights and the Tenth Amendment, concerns about Pennsylvanians’ privacy rights as part of a nationwide driver license database prompted passage of the REAL ID Nonparticipation Act of 2012.


The National Conference of State Legislators estimated that REAL ID implementation costs nationwide could be as much as $11 billion. It is estimated the initial start-up costs to fully implement REAL ID in Pennsylvania would be $141 million, with $39 million in additional, annual operational costs. The federal government provided PennDOT with just $5.4 million in grants to assist with REAL ID requirements—yet another unfunded mandate from Washington D.C.


In addition, the federal law complicates the process of obtaining and renewing a driver’s license. Pennsylvanians will be required to visit a PennDOT facility upon their first renewal after REAL ID compliance, and to produce a certified, raised-seal birth certificate and proof of social security number and principal residence. Also, REAL ID requires a person to apply in person for the re-issuance of their driver’s license if he or she has a material change in his or her personally identifiable information (not including a change in address).


While these and other concerns were valid, not meeting the federal requirements comes at a cost to citizens. By June 6 of this year, Pennsylvanians would no longer have been able to gain access to secure federal buildings using their driver’s license. And, by January 2018, Pennsylvanians would need a passport to fly on commercial airlines within the U.S. A recent study determined Pennsylvanians would need to spend nearly $1 billion on passports if the state did not comply with REAL ID.


The General Assembly needed to prevent these unacceptable burdens from being placed on our citizens. That meant complying with the federal law while maintaining options for residents.


Pennsylvania had already taken 33 of the required 38 steps to enhance ID security as required by the REAL ID Act, such as using digital photos, issuance and expiration dates and a unique identification number on driver’s licenses.  Remaining mandates to be met include having a specific federally approved symbol that is designed to make tampering and forgery more difficult, and requiring a certified birth certificate to issue a driver’s license.


Meeting the last remaining federal requirements, while protecting Pennsylvania citizens and taxpayers, was the goal of a lengthy legislative process that featured compromise in the Senate and House of Representatives as well as input from PennDOT. The result was Senate Bill 133.


The legislation brings Pennsylvania into compliance with REAL ID, with safeguards for citizens.


Senate Bill 133 allows Pennsylvania residents to choose between getting a REAL ID-compliant identification card or a non-compliant card. Holders of standard-issued driver licenses will not be asked to subsidize or cover the cost to issue REAL IDs. Instead, the cost of compliance will be borne by those opting for the federally approved ID. PennDOT will also be required to report annually to the General Assembly regarding the cost to the state of REAL ID compliance.


Pennsylvania’s approach to REAL ID prohibits state government from compelling any individual to apply for a REAL ID, and it does not allow Pennsylvania to exclusively mandate a REAL ID for any reason. These are important protections to preserve individual choice for our citizens.


Without this legislation, Pennsylvania would have soon become one of only five states to remain noncompliant with REAL ID and without an extension.


Now that Governor Wolf has signed Senate Bill 133 into law, PennDOT will begin what is expected to be an 18 to 24 month process to fully implement REAL ID. Given Pennsylvania’s new law to enact REAL ID, it is expected the Department of Homeland Security will provide further extensions that will allow Pennsylvanians, with their Pennsylvania driver’s license or photo ID card, to continue flying commercially and visiting federal facilities in the interim.


Our Commonwealth should never blindly comply with every regulation handed down by the federal government, especially those that encroach on what is rightfully a state matter, such as driver licensing. By slowing down the process and creating alternatives, Pennsylvania is implementing REAL ID on its terms, not Washington’s.




Senator John DiSanto represents most of Dauphin and all of Perry County. He was first elected in 2016.


By Robb Hanrahan

It’s budget time in Pennsylvania and the usual questions are popping up. How late will it be? Or, will it be on time? Every year, the state legislature wrestles with how the Commonwealth will spend its money. Cuts are often considered “draconian” to those who like a program and “necessary” to those who don’t.

So every year around this time on my show “Face the State” the idea of zero base budgeting is tossed about. It’s the total opposite of how we currently decide how much and where the money will be spent in Pennsylvania.

The way we do it now

Currently we use incremental budgeting which always begins with the budget from last year. It’s not a bad way to budget and is used in many businesses and governments. The idea is to approach the coming budget year with the current budget’s numbers. If a department or agency needs more money for programs or services, it requests an increase. The increase must be justified. But here’s where many lawmakers have a problem with this practice. If a department doesn’t use all of the money in the previous budget year, they lose it.

It’s this “use it or lose it” philosophy that has many thinking the only way to go is up. More spending, which requires more revenue, which these days often means more taxes. Money isn’t pouring into the Commonwealth at this point. So to keep the budget balanced without an increase, departments and agencies often have to cut spending. That’s hardly a popular thing to do for one running a multi-million-dollar government agency.

So why not start at zero?

To remove the “use it or lose it” mentality, a process known as zero-base budgeting is floating out there. It’s far from new. A guy named Peter Pyhrr wrote an article about Texas Instruments use of it in 1970. Interest grew in its success. Then, Governor Jimmy Carter implemented ZBB into the state of Georgia’s budget. Carter brought it to Washington where it lasted all of four years until President Reagan killed it in 1980.

It’s a simple idea that gets complicated quickly. Zero based budgeting starts at zero. Sounds good, right?  Each department gathers every expense that it will incur during the next year. Every expense. Then they simply budget for that amount. There’s no “bagging” of last year’s budget and asking for more. The simple genius behind it is that there’s no incentive to spend all of the current year’s budget, and it requires proof of every expense needed. Here’s where it gets complicated. That’s a lot of detail. Detail that requires managers, department heads, even mid-level employees to be recording current expenditures and predicting next year’s. Governments that have used it often had to hire and train more people in order to get it up and running. In other words, it needs more work and is often not very popular with employees.

The reason many government agencies abandoned zero-base budgeting was because it requires time and understanding of its complexity. Units in every department have to justify spending, not only to meet minimal expectations but also to include predictions for providing higher levels of service. The analysis has to be handed up through several levels before finalization. In Pennsylvania, that would have to be done every year. Whew. That would include counting every pencil, paper clip and folder, not just major expenses.

Advantage: detail

ZBB is a great way to have a working knowledge of where every cent is being spent. It provides an efficient allocation of money and can improve cost effective spending on services. It also takes away the “entitlement” philosophy of spending the entire current budget.  ZBB can also weed out stale and outdated programs and departments.

Disadvantage: complexity

With Pennsylvania on a yearly budget cycle, implementing zero-base budgeting would require enormous preparation time and increase the cost of preparing the spending plan. Our state government is huge and complex in and of itself. ZBB requires a microscopic examination of everything that needs money. In my opinion it would probably need a year-round department of its own just to gather the information needed to produce a yearly zero-base budget.

So why all the talk about ZBB?

Because we’re looking at a possible $6-billion-dollar budget deficit by the end of next year if we don’t close the current $700 million deficit this year. Lawmakers are looking for money in every corner and ZBB appears to be an answer to wasteful government spending. In a recent appearance on CBS 21’s “Face the State,” House Appropriations Chair Stan Saylor talked about performance base budgeting. It’s a sort of hybrid off-shoot of ZBB which requires accountability and measurable objectives. PBB presents its own list of challenges but may be a possible road to explore as we face the state budget challenge every year.

According to the National Conference of State Legislatures, almost half the states use performance information but differ in when and where the information is used in the budget process. Basically all information is important in the budget process and performance information can provide background on the purposes of state-funded programs and the results they achieve.

Robb Hanrahan is host of CBS 21’s “Face the State.” The show can be seen every Sunday morning at 8:30 a.m.






By Chris Comisac

Well, folks, Pennsylvania is going to get some more “pension reform.”

I know, the House of Representatives has yet to vote on Senate Bill 1, the latest lacking legislation held up by lawmakers as “reform,” but this is happening.

So what does that mean?

As someone recently said to me, with us “accomplishing pension reform,” we can move on to doing pension reform.

The actuarial note analyzing the legislation indicates there will be no pension system savings, and the risk-shifting within SB1 only matters should the systems incur significant investment shortfalls a couple decades from now. Those shortfalls, should they occur two to three decades from now, will still add more debt to our debt-ridden systems, it just won’t be quite as much added debt – the “historic” savings we’re told SB1 would deliver would come at a significant cost.

It’s pretty clear passing anything with the title “pension reform” has become the goal, not passing something that’s worth passing.

I’m reminded of about two years ago, when I wrote a column in which I argued – with regard to both property taxes and public pensions – doing something isn’t always better than doing nothing.

Carefully reviewing the analysis of this session’s version of “pension reform,” it appears as though lawmakers have found a way to do both: look like they’re doing something while doing nothing.

If this is the “politics of the possible,” we have hit another new low in the Pennsylvania State Capitol.

The comparison between current law and SB1 for both the State Employees’ Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS) shows little-to-no difference regarding the impacts on employer contribution rates, pension funding ratios and the unfunded accrued liability going forward during the next three decades.

So if accomplishing that is the best we can do, then why vote SB1 in the first place?

We’re told by SB1 proponents it’s because the legislation is “transformative,” that it puts the pension systems on the path to future fiscal health because it reduces pension risk for state taxpayers.

It’s not exactly that, but the analysis of SB1 by actuarial firm Milliman notes a future shift in risk (although at least 30 percent of the state government workforce is exempted from this risk shift): “Over time, the bill also reduces future risk exposure because it transfers a portion of retirement benefits to a DC [defined contribution] plan in which the member assumes investment and longevity risks. The provisions of the bill apply only to new members, and the full reduction in risk exposure will be phased-in over several decades as new employees are hired, become vested and ultimately retire.”

But SB1 still maintains a defined benefit plan that is subject to the political and financial winds that blew up PSERS’ and SERS’ unfunded liability to a combined $76 billion. So while exposing state taxpayers to slightly less risk, there’s still plenty of risk for which current and future Pennsylvanians will be financially responsible (not to mention the $76 billion, and growing, debt already on the books).

It’s true that state taxpayers would continue to be exposed to risk even if the current defined benefit plans were closed, and even if they were fully funded today (they’re obviously not).

Because of the way defined benefit plans work (even after they’re closed), underfunding can occur if the systems’ investment returns come up short, the systems fail to meet the other assumptions built into the costs of the defined benefit plans or lawmakers decide they don’t wish to pay the contributions they need to pay. We’ve seen all three happen in Pennsylvania annually during the better part of the last two decades.

None of that occurs with a defined contribution plan.

So if the risk of a DB plan falling short is the top concern as we’re told by SB1 proponents, why choose a less-than-half-measure like Senate Bill 1 that continues the DB plan, albeit a slightly smaller DB plan?

If the upfront costs of SB1 – and there are greater costs associated with the bill’s changes (including the yet-to-be-discussed roughly $50 million cost to the pension systems to implement the incredibly complex three-tiered benefit plan proposal) – are worth the potential of only partial risk shifting in 20 to 30 years, then why not do the whole enchilada?

Pull the Band-Aid off in one quick rip, instead of what amounts to a slow, painful, centimeter-by-centimeter removal – with all of that pain borne and endured by Pennsylvania taxpayers – that doesn’t end up removing the Band-Aid; in Michigan (where their pension problems are smaller than ours), that state’s failed hybrid pension plan was recently referred to as “a Band-Aid on a bullet wound” by one of that state’s lawmakers.

Just put every new employee – no exemptions – into a standalone DC plan.

I know, I know – “We can’t get the votes for that” is the refrain from some legislative leaders who, if given their druthers, would drop SB1 in a second for something that accomplishes a real change, even if that change also comes two to three decades down the road.

In addition to making needed funding reforms – such as shorter amortization periods for both DB plans, as recommended by the actuary that produced the SB1 analysis – to reduce the risk of an underfunded DB plan, a standalone DC plan for everyone would eventually simplify the retirement systems as well as completely eliminate the risk borne by taxpayers, once the only active plan for SERS and PSERS is the DC plan (which would take several decades to occur).

That would be good public policy.

Obviously it’s important to get the votes to send legislation to a governor that’s willing to sign it, but when did that become the definition of good public policy?

If you’re willing to make no impact on employer contributions or the unfunded liability during the next two decades anyway – which describes SB1 – then why not keep pushing a few more years for legislation that puts SB1 to shame on risk transfer?

Sometimes you have to try – and, yes, fail once in a while – to accomplish your goals. Legislative Republicans would do well to remember the Fiscal Year 2015-16 state budget, if they’ve forgotten that lesson, or maybe Act 120 of 2010, the last “pension reform” which was supposed to fix the things lawmakers are once again trying to fix (and the current “fix” doesn’t look much different, actuarially speaking, than Act 120).

There’s been a lot of failure to accomplish the goal of pension reform the last several years – as evidenced by the continued growth of the pension systems’ unfunded liability – but most of those failures involved bills that were better (some only marginally so) than SB1.

Adopting SB1 would simply be another failure a future General Assembly will have to address.

Chris Comisac is Capitolwire Bureau Chief.



The power of the state attorney general to tackle public corruption would be greatly expanded under a legislative proposal stemming from a state investigation into the large public debt racked up through financing deals at Harrisburg’s trash incinerator.

A bipartisan group of lawmakers plan to introduce a bill giving the attorney general authority to investigate and prosecute county, city, and municipal officials and employees for public corruption. Under current law, the attorney general can only prosecute public corruption cases of state officials and employees under certain circumstances. This occurs when county district attorneys refer a case because they have a conflict of interest or lack adequate resources to pursue it.

A state grand jury issued a report last month wrapping up a state investigation of incinerator deals that led up to $300 million in debt during the tenure of former Harrisburg Mayor Stephen Reed. The investigation was launched followed a referral from Dauphin County District Attorney Ed Marsico.

The grand jury recommended no criminal charges in the incinerator case citing a statute of limitations that expired in 2015. However, the grand jury made recommendations to change state laws to help protect municipal taxpayers from excessive debt in the future. These include expanding the attorney general’s prosecuting power to include local officials and extending the statute of limitations to cover wrongdoing discovered after an official leaves office.

The referral system often causes “undesirable delay” in pursuing criminal charges, the grand jury said.

The grand jury report gave momentum to senators who have pushed to enact stronger municipal debt laws since 2013 in response to the incinerator controversy. They have now gained allies in the House who plan to introduce companion bills.

Under the powers bill, the attorney general could prosecute local officials when state laws are violated, said Sen. John Blake, D-Lackawanna, the sponsor. Federal prosecutors have jurisdiction to prosecute local officials for violations of federal laws in such areas as mail fraud and bribery and extortion.

The legislation to expand the attorney general’s power comes after the elective office weathered a series of controversies leading to the conviction of former Attorney General Kathleen Kane for leaking grand jury information to a reporter and lying about it to another grand jury and her resignation from office last summer.

Attorney General Josh Shapiro said this week he strongly supports having the additional prosecuting authority. He also noted he’s seeking a $500,000 increase to strengthen the office’s Public Corruption Unit in the fiscal 2017-18 state budget.

House Judiciary Committee Chairman Ron Marsico, R-Dauphin, said he would take a close look at what he described as giving the attorney general “super power” to investigate local officials.

The attorney general’s office would need a larger budget if that power was granted, said Harrisburg attorney Water Cohen, a one-time acting attorney general.

“The question here is whether the General Assembly, if it expands the jurisdiction of the OAG, will give the office the necessary resources to actually conduct such additional investigations and prosecutions, which can be very complicated and time-consuming,” wrote Cohen.

The Pennsylvania District Attorneys Association will probably take a position on the legislation.



By Tony May


Give Pennsylvania state government some credit.  It has put the Commonwealth on the cutting edge in recent years of some important trends that have slowed the slow slide into Rust Belt decay.

The state authorized casino gaming which has created thousands of new jobs and generated billions in state revenue.  It aided and abetted the birth and growth of the “tight gas” industry making Pennsylvania one of the largest producers of natural gas in the nation.  It countered the national anti-tax trend and authorized an overhaul of the state’s funding strategy for transportation funding.  In a time when Congress has failed in its responsibilities to write a new national transportation policy and fund it, Pennsylvania has turned the corner on replacing and upgrading obsolete bridges and restoring and expanding highways.  And it about to join the growing number of states legalizing cannabis to heal the sick, create jobs and add needed state tax revenues.

Yet Pennsylvania still lags behind other states in population growth, average and median family income, economic development and other vital signs of a thriving economy. So what one, single thing can the General Assembly and the Governor do to get ahead of the curve and increase the rate of economic growth and restore actual population growth to keep Pennsylvania competitive among the states?

The answer is: be more like California – the good aspects of California.  The “Golden State” is unafraid to see itself as an outlier, a trend-setter and innovator.  Pennsylvania is more inclined to avoid sticking out like a sore thumb.  It doesn’t mean that we need threaten to secede from the union, ala California Gov. Jerry Brown.  It means that we need to work harder to chart our own future independent of the largesse of the federal government – something that looks like it might go the way of the dodo bird anyway.

A good place to start would be to evaluate Pennsylvania’s unused capacity and find ways to increase utilization on existing resources.  One of the reasons Pennsylvania faces bitter annual state budget fights is because the decay of our existing economic engine is throwing off less and less cash.  The first factor to address here is population stagnation.

Outside of a few key, mostly suburban counties, Pennsylvania’s population is not growing.  While an increasing population would add to demand for services, it is likely that new residents would generate more in economic demand than they would consume in state and local services.  This would be true even of immigrants from war torn countries.

Another sector that is under-utilized is higher education, particularly our state-owned universities.  Attracting out-pf-state students (perhaps even international students) would help our state-owned schools operate more efficiently.  Because they are operating, for the most part, under capacity, increasing the number of higher-revenue non-resident students would not be denying access to qualified in-state students.  The bottom line would be an economic boost in 14 Pennsylvania non-urban communities.

Third on the list would be a state approach to increase demand for home ownership aimed primarily at third class cities and boroughs.  Pennsylvania’s towns and cities are being hollowed out.  The state should investigate strategies to attract new residents to small  towns where thousands of dwellings stand vacant and decaying.

The best part is that most Pennsylvanians would relish the challenge.  Every Pennsylvania community has local pride; it would be easy to transfer that enthusiasm to support for a state growth effort.



educationThe Basic Education Funding Commission — a collection of state lawmakers and administration officials tasked with creating a “fair, equitable” funding formula for public schools — agree that Pennsylvania’s current mechanism leaves poor school districts disproportionately vulnerable to state-level cuts in education spending.
“It’s been so hard to follow, when it comes to running a school operation … to be able to determine what you have available to you to sustain that operation over time, the last 30 years have been very challenging in that respect,” said Sen. Pat Browne, R-Lehigh, co-chair of the commission, during Wednesday’s meeting. “We have to reflect on that.”

In fact, the challenges facing today’s commission began much earlier than the 1980s — lawmakers have been grappling with similar problems since The Great Depression, based upon the Pennsylvania Association of Rural and Small Schools 2013 report on the history of education funding, Pennsylvania Historical and Museum Commission archives and testimony from the state Department of Education.

Pennsylvania School Board Association statistics — gleaned the Rural and Small Schools Association’s report on the history of school funding — chronicled the fluctuations in state public education aid before the implementation of the Public School Code of 1949.

In 1930, according to PSBA records, 83 percent of education costs “were funded locally, almost exclusively by property taxes.” As the depression squeezed income levels and reduced property tax revenue, state public education subsidies swelled to 30 percent in 1940. A decade later, state aid to school districts would surpass 40 percent.

The Hare-Lee-Sollenberger Act of 1945 restructured state aid to public education following the Great Depression. Pennsylvania Historical and Museum Commission archives report that to amp up funding levels, state lawmakers determined a figure for the “basic amount to educate a room full of students” — defined as 30 students in an elementary school or 22 students in a secondary school — at $1,800, with gradual increases each year.

At the time, the state Department of Public Instruction — now the Department of Education — guaranteed each district that met state education standards would receive at least an $1,800 subsidy each year, but the source of the money, state or local, depended upon the “real property wealth of the district.”

That meant, in effect, poor districts leaned heavily on state subsidies while local tax dollars, almost exclusively, financed wealthier districts.

And the situation hasn’t changed much for the better part 70 years. Rep. Mike Sturla, D-Lancaster, said during the commission’s meeting Wednesday that the state’s across-the-board and line-item percentage cuts harmed poorer districts — some who lost $1,000 in funding per student — while wealthier districts were able to sustain funding levels, sometimes only losing $100 per student in state aid.

The inequity of state subsidies was a problem for lawmakers in the 1920s, too.
In 1927, Columbia University Professor Paul Mort — chair of a commission tasked with studying the distribution of state education subsidies on behalf of the administration and the General Assembly — recommended each district receive “the same amount of tax revenues per teacher unit.” Because Pennsylvania lacked uniform county assessment laws (and still does), the report called for the creation of an independent body to assess true market values in each district.

But lawmakers wouldn’t get around to creating the State Tax Equalization Board — now called the Tax Equalization Division — until 1947. This board determined a “per teacher unit,” which calculated the state’s subsidy level through 1957.

Both the Tax Equalization Board and the Hare-Lee-Sollenberger Act would be consolidated, with other existing public school laws, into the Public School Code of 1949 — the “main source for legislative authority” for state education public policy, even today.

In Act 391 of 1957, lawmakers created the first “add ons” — or supplements — to its funding formula, in order to incentivize the creation of “joint and union districts.” Financial supplements still exist and cover a range of district circumstances, from high poverty rates to enrollment growth to low population density.

While the funding formula remained unchanged for the next nine years, according to the commission report, national perspective surrounding education began shifting.
“With the successful launch of Sputnik in 1957, the Nation’s collective eye was turned to the issue of education and specifically science education,” commission members Janice Bissett and Arnold Hillman wrote in the report. “In President Eisenhower’s 1958 State of the Union Address, he outlined a series of activities the federal government must undertake to meet the military and education challenge that the Russians posed.”

Eisenhower called for a four-year $1 billion investment into the Department of Health, Education and Welfare “designed principally to encourage improved teaching quality and student opportunities in the interest of national security.”

The directive spurred the growth of additional science courses for students, science fairs and clubs in public education systems across the country. Graduation requirements also expanded to include science proficiency.

Act 580 of 1966 established the state’s 50-percent subsidy rate to school districts. The new formula reimbursed school districts $1.2 billion in the 1974-75 school year — the highest rate ever until the policy was repealed in 1983, according the Association of Rural and Small Schools report.

The official 1966 formula included variables related to district ratio aid, actual instruction costs and weighted average daily membership. It also established a new base salary for teachers and consolidated the state’s 2,500 school districts into 505.
Department of Education Deputy Secretary Nichole Duffy described weighted average daily membership as the calculation of enrollment figures multiplied by the number of hours students spend in school. She said weights were added to the formula depending on a child’s grade level and whether kindergarten at the school lasted a full or half-day.

During the late 1970s, lawmakers tried to balance its growing subsidy and ensure its fair distribution statewide with the equalized supplement for student learning, but “artificial aid ratios” tied into the original formula “skewed the final distribution.”
In 1983, lawmakers repealed the 50 percent reimbursement guarantee and instead established a factor for education expense (FEE), set at $1,650 through Act 31. The new formula, the equalized subsidy for basic education, added supplements for low income students, local tax efforts and population density per square mile. School districts, under the new law, were guaranteed a minimum of a 2-percent funding increase each year.

One year later, the FEE was increased to $1,725 and the Legislature bumped the minimum funding increase up to 3 percent. In 1985, lawmakers added the small district assistance supplement and capped funding increases between 2 percent and 7.45 percent.

Through 1993, the Legislature created six more funding supplements that tackled challenges related to poverty levels, small districts’ limited ability to increase local taxes, and enrollment growth. In 1994, the hold-harmless provision guaranteed districts would receive state funding at a level no less than the previous year’s allocation.

This provision remains a source of conflict among legislators today: supporters say the money guarantees the survival of small, rural districts who depend on the subsidy due to a limited tax base, while opponents argue the provision stiffs growing school districts in need of extra funds for capital expenditures.

After the results of a 2008 costing-out study determined the state was spending $4.3 billion less than what it should on education, then-Gov. Ed Rendell created a 6-year plan to boost state aid to districts from just over 30 percent to more than 56 percent. In the 2008-09 school year, the Legislature increased basic education by $275 million.

Some 464 school districts that year qualified for a state-share “phase-in” of additional funding targets. Another 235 school districts shared $22.9 million for transition funding. The total basic education funding allocation for the year was $4.87 billion.
Through 2011, school districts collected around $1.6 billion in supplemental funding. Federal stimulus dollars allowed the Legislature to continue to direct additional funding to school districts despite declining state revenues.

In the 2011-12 school year, the stimulus money dried up, and while much of the basic education funding went unreplaced, Gov. Tom Corbett and the Legislature appropriated $233 million in supplemental funds, including a $105 million add-on spread amongst all 500 school districts for “student-focused” initiatives. Another 14 districts split $29 million in supplemental funding for a high incidence of ELL students, personal income disparities and hardship due to subsidy loss.

The Corbett administration, though lambasted by Democrats for cutting basic education subsidies for charter school reimbursement payments and the Accountability Block Grant, among others, has continued supplementing district funding through the current school year, trying to off-set the impact of decreased state spending in poorer districts.

“The costing out study had some very interesting research,” said Sen. Andrew Dinniman, D-Chester, during the commission’s meeting. “Maybe if we look at low-cost, high performing districts, we might get some insight.”

Browne said that the only component of any formulas used in the past “that has maintained sustainability is relative wealth.”

“Historical review is very valuable at least,” Browne said. “You don’t know where you’re going unless you know where you are and where you’ve been. The foundation of a good formula is predictability and sustainability. Historical actions do not present us that foundation.”

Now you know.

–Christen Smith, Capitolwire


gender gapWomen’s rights in the United States have made leaps and bounds since the passage of the 19th Amendment. Yet many women today still struggle to crack the proverbial glass ceiling. And it doesn’t take a feminist to convince anyone that the gender gap in 21st-century America remains disgracefully wide. In 2013, the U.S. failed to make the top 10 — or even the top 20 — of the World Economic Forum’s list of the most gender-equal countries. In fact, the U.S. had fallen one spot to No. 23 since 2012 and six spots since 2011 on the WEC’s annual Global Gender Gap Index. Worse, it lagged behind developing nations — including Burundi, Lesotho, Nicaragua and the Philippines — with primary areas of weakness in economic participation and political empowerment.

Pennsylvania ranked 23rd.

Perhaps most apparent about the issue is how far gender inequality stretches in the American workplace environment. Even with all their advances toward social equality thus far, women continue to be disproportionately under-represented in leadership positions. This past March, the Center for American Progress reported that women “are only 14.6 percent of executive officers, 8.1 percent of top earners, and 4.6 percent of Fortune 500 CEOs.” And though they comprise the majority of the labor force in the financial services and health care industries, none are head honchos of their companies.

Apart from unequal representation in executive leadership, salary inequity also has been central to the gender gap debate. Few experts dispute the existence of an earnings gap between women and men, but defining the issue in simple terms remains a challenge. Although the U.S. has completely closed its gender education gap, about two-thirds of minimum-wage workers across the country are female, according to the National Women’s Law Center. At a federal minimum wage of $7.25 an hour, the NWLC points out, a full-time worker would earn only $14,500 a year, placing a three-person family “thousands of dollars below the federal poverty line.”

In observance of Women’s Equality Day on Aug. 26, WalletHub crunched the numbers to gauge the scope of gender-based disparities in each of the 50 U.S. states. WalletHub examined 10 key metrics, ranging from the gap in the number of female and male executives to the disparity between women’s and men’s life expectancy to the imbalance of their political representation. By highlighting the most and least gender-egalitarian states, WalletHub accomplished three goals: help women find the best career opportunities, empower them to keep fighting for their rights and encourage states to learn from one another.

Women’s Equality in Pennsylvania (1=best)
• 18th – Earnings Gap
• 31st – Executive Positions Gap
• 38th – Workday Hours Gap
• 32nd – Educational Attainment Gap
• 32nd – Minimum-Wage Workers Gap
• 32nd – Unemployment Rate Gap
• 42nd – Political Representation Gap
For the full report, go to:



By Eric Montarti, Senior Policy Analyst

land banksThere is a new type of bank in town, but instead of operating in the world of deposits, withdrawals and making loans, it deals with property—specifically, dilapidated, worn out, vacant, tax-delinquent, underutilized, unwanted property where it might be impossible to determine who holds title or ownership. This new entity is known as a land bank.

Blighted properties can impose significant costs on local communities and homes nearby that are being kept in good shape. That’s why legislation passed by the General Assembly in 2012 allowed for the creation of land banks by local entities—whether counties or municipalities acting on their own or as a group—so long as the combined population within the land bank’s jurisdiction is a minimum of 10,000.

The thought behind the concept is that it will be singularly focused on returning the types of property it obtains, whether by donation or purchase, to the category of productive and taxpaying use. According to those in favor of land banking, the responsibility of handling the task of vacant and underutilized property is often spread between redevelopment authorities, municipalities, sub-departments of both, non-profit development corporations, etc. and, due to legal restraints, lack of expertise, and “mission creep” the problematic properties become, in essence, no one’s responsibility.

As described by the Housing Alliance of Pennsylvania, land banks will be able to “discharge and extinguish real property tax liens and claims, with the approval of taxing bodies, and pursue a quiet title action through an expedited procedure”. Those appear to be the main advantageous powers of a land bank in the battle to eliminate blight—and they are powers not possessed by redevelopment authorities, which would logically be the existing entity one would believe is charged with the role of eradicating blight and doing the job land banks are now charged with. Land banks are prohibited from using eminent domain and are permitted to operate only in the territorial limits outlined in the ordinance creating it. The state law does not authorize or establish a funding mechanism for land banks. Funding is left up to the municipalities or counties that establish them.

If taxing bodies and those with claims against a property agree to it, a land bank can discharge or eliminate liens and thus make the property free and clear of the troublesome things that tie up a property and keep it from moving to productive reuse. The land bank has to maintain an inventory of the property it has acquired and make the information available on its website and at its business office.

Once a land bank ordinance is passed, the Pennsylvania Department of State must grant it a certificate of incorporation. As of August 1st four such land banks have been incorporated: Dauphin County, Westmoreland County, Philadelphia, and the City of Pittsburgh.

As these land banks are still getting up and running we cannot perform an evaluation of how well they have carried out the mission of taking problem properties and eradicating blight. However, it is instructive to examine how these land banks will be governed. The ordinances creating these four land banks describe the composition of the board of directors, which vary in size and appointment method. State law stipulates that the board must be an odd number no less than five and no more than eleven.

Elected municipal officials and municipal employees are eligible to serve on the board, but one member must be a resident of the land bank jurisdiction, not be either an elected official or a municipal employee, and must be a member of a civic organization within the land bank jurisdiction. The board is responsible for the by-laws of the land bank, incurring debt, hiring and firing employees, adoption of annual budgets, and property acquisition and disposition. They are to serve without compensation except for reimbursement for expenses incurred related to the land bank.

Two land banks (Dauphin and Westmoreland) set aside seats for the board of the redevelopment authority in each respective county (meaning a seat on the redevelopment authority board means a seat on the land bank board) and the appointment of the board is vested solely in the county commissioners. Having redevelopment authority board members constitute a majority of the land bank board could go one of two ways: it could lead to cooperation and collaboration since both deal in the world of redevelopment, but since the state opted not to vest redevelopment authorities with land banking powers and instead allowed for the creation of separate entities, there could be issues with jurisdiction and responsibilities that these board members will have to navigate. It seems a better legislative solution would have been to grant redevelopment authorities the powers given to land banks and thereby avoid unnecessary duplication of efforts and potential conflicts.

How Many Members of the Land Bank Are There?
Pittsburgh: 9
Philadelphia: 11
Westmoreland: 7
Dauphin: 7

Are Redevelopment Authority Board Members Guaranteed Seats?
Pittsburgh: No
Philadelphia: No
Westmoreland: Yes, 5 Seats
Dauphin: Yes, 5 Seats

Who Appoints the Land Bank Board?
Pittsburgh: Mayor (3), Council (3), Land Bank Board (3)
Philadelphia: Mayor (5), Council (5), Land Bank Board (1)
Westmoreland: County Commissioners
Dauphin: County Commissioners

What is the Length of Term (not counting interim board)?
Pittsburgh: Three Years
Philadelphia: Concurrent with appointing authority and at pleasure of appointing authority
Westmoreland: Five Years
Dauphin: Four Years
• In Pittsburgh and Philadelphia, the appointees of the Mayor and Council will in turn select the remaining members of the board Pittsburgh’s ordinance specifies that appointees will serve staggered terms; in Dauphin and Westmoreland Counties, those serving on the redevelopment authority board are already serving staggered terms, so the non-redevelopment authority board members will also serve staggered terms.
In Pittsburgh and Philadelphia appointment is shared between the executive and the legislative body and their appointees likewise get a say in the rest of the composition of the board. The land banks in these two municipalities add additional requirements: in Philadelphia board membership is to include people with a background in real estate, planning, and architecture and four members of the board have to have association with a housing or community development organization. In Pittsburgh six of the appointees must have background in those areas and are to be reflective of the geography of the City. The three members that are selected by the board have to be selected from Council districts based on the level of distressed and vacant parcels.

There will certainly be more land banks that will come on line as time progresses, and as properties are acquired and disposed there will be plenty of opportunity to examine the work of these new entities.

Eric Montarti is Senior Policy Analyst for the Allegheny Institute for Public Policy.



marijuanaAccording to the Tribune-Review, state taxpayers have paid almost $5,000 for Sen. Daylin Leach and three aides to travel to Denver to assess how legalization of marijuana is working and what effect it’s having on everyday life in Colorado.

Leach, D-Montgomery County, a champion of marijuana legalization in Pennsylvania, said he sampled marijuana while there last week — using a vaporizer pen, or “vaping,” rather than smoking — but did not charge the vape pen to taxpayers. It was a gift from a facility he toured, an aide said.

The trip cost “a little less than $5,000,” spokeswoman Sarah Charles said.
His Colorado trip is “a total waste of taxpayers’ money for what will be a total blight on society,” Don Thomson, chairman of the Westmoreland County Conservative Coalition. Legalizing marijuana told the Tribune-Review.

In an op-ed piece to newspapers, Leach wrote:

”We wanted to make sure we understood how it works and what Colorado did right, and wrong, in an effort to ensure we do this the right way when the time comes,” said Leach, who predicts that full legalization is inevitable.

“We packed as much information-gathering as we could into our three days. We toured two facilities where the marijuana is grown, one lab where it is processed, one where it is tested for potency and impurities, and two dispensaries.” (See full statement on Capital Watch’s Opinion page)

He described soaring tax revenue, professional handling of marijuana in a regulated environment and reduced crime and traffic accidents.

“The bottom line is that we saw a system that is working,” Leach said. “ … Business is booming to the point that more than one person we talked to likened the coming cannabis explosion to the tech explosion of the ’90s.”

According to the Tribune-Review, The Pennsylvania District Attorneys Association opposes full legalization, citing negative health effects of marijuana use, but its executive director, Richard Long, told the paper,“Medical marijuana is a different issue, as it apparently can provide some relief to people with some serious health problems.The newly enacted New York law is a good model and an acceptable bill for Pennsylvania. It would neither allow ingestion by smoking nor driving while impaired by marijuana.”

The Colorado travel charges — for flight, car rental, hotel and meals — will come out of Leach’s office account, Charles said.

Leach told the paper that his aides helped him write bills for legalization of medical and recreational marijuana, and will continue to work on the issue.

“There are many millions of dollars at stake in getting legalization right,” he said. “It seems $5,000 to make sure that happens is a wise investment.”