Pennsylvania State Budget Review and Education Funding Updates

FINANCE COMMITTEE Pennsylvania State Budget Review Federal Funding Information Local School District Budget Discussion Presented by April 15, 2025

State Budget Update 2

State Funding Increases $1,000,000,000 $912,297,976 $900,000,000 $843,500,000 $800,000,000 $700,000,000 $638,198,000 $614,115,000 $600,000,000 $500,000,000 $346,750,000 $400,000,000 $300,000,000 $206,749,951 $123,470,918 $200,000,000 $100,024,961 $100,000,000 $- $- 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 proposed 3

Basic Education Funding Biggest Education line; funds all 500 districts Proposed increase of $75 million, once added to the $225 million for 24-25, would mean $300 million in dynamic BEF funds Smallest proposed increase for BEF (ignoring 2020-21), in 10+ years BEF Base $7.93 Billion $300 Million $225 Million from 24-25 $75 Million increase proposed for 25- 26 BEF Formula Total BEF $8.23 Billion 4

Basic Education Funding: $300M The average increase in BEF is 0.92% over 24-25 The range is -0.35% to 3.00% From 2024-25 to 2025-26 proposed as is: o 214 districts lost share yr. over yr., to date. o Total range on share loss is -0.06% to -36.2% (can lose share but get additional dollars!) The proposed $75 million increase does NOT bring all districts to positive 5

BEF Formula Review Know your share Know how it s changing and why You can get LESS from year to year Currently, 1 district is proposed to receive $25k LESS in 25-26 than 24- 25 6

FINAL: Poverty percentages, Household income, number of households, MV, PI IMPORTANT! IMPORTANT! BEF Data NOT FINAL: ADMs, ELs, Charter ADMs, Current Expenditures, etc. are all preliminary final they could change! 7

Special Education Funding Third largest education line; funds all 500 districts Proposed increase of $40 million means $37.4 million into the formula Would mean $476.5 million in 25-26 SEF formula Smallest proposed increase for SEF (ignoring 2020-21) since 2014- 15 SEF Base $947 Million $467.5 Million $430 Million from 24-25 $37.4 Million increase proposed for 25-26 SEF Formula Total SEF $1.41 Billion 8

Special Education Funding: $467.5 in Formula The proposed $40 million increase does not bring all districts to positive (17 are negative) BUT the student data has not yet been updated! Act 16 student counts will be updated with 23-24 data this spring That data WILL CHANGE the share distribution! 9

FINAL: MV/PI aid ratio IMPORTANT IMPORTANT ! ! SEF Data NOT FINAL: EMM, ADMs all preliminary data they could change! NOT UPDATED: Act 16 special education counts for 23-24 10

Ready to Learn (RTL) 23-24 24-25 25-26 Proposed RTL Foundation $295 million $295 million $820 million RTL Adequacy N/A $493 million $493 million RTL Tax Equity N/A $32 million $32 million TOTAL RTL $295 million $820 million $1.35 billion 11

RTL: Adequacy/Tax Equity Supplements Another $526 million proposed for 25-26 to the SAME DISTRICTS that received Adequacy/Equity in 24-25 The $526 million in 24-25 is rolled into the RTL Foundation base for 25-26 ($820 million) Supplement Amount NEW in 25-26 Adequacy Tax Equity $493 million $32 million 12

RTL: Adequacy Supplement Methodology is the same as 24-25 no changes no updated data 1. The adequacy target remains $14,120 per weighted student 2. The data is stuck in time at 21-22 CE and 22-23 weighted student count 3. Nothing is updated/will be updated 4. If you didn t get Adequacy funds for 24-25, you won t get them for 25-26

Adequacy Formula The Adequacy and Tax Equity component math does not include the 22-23, 23-24, and 24-25 historic distributions for Level Up, SEF, BEF, and RTL Adequacy/Equity. (We ve closed the identified $4.5 billion adequacy gap by $1.33 billion based on 23-24 CE data) Everything still depends on 21-22 CE data and ESSER impacted that data a lot! 14

IMPORTANT! SDs receiving Adequacy Supplements and/or Tax Equity Supplements are statutorily prohibited from requesting Act 1 exceptions. 15

The Education Appropriations $100 million proposed for safety/mental health grants $125 million for school facilities improvement grants $14.5 million proposed increase for Early Intervention $5.5 million increase in CTE funding $20 million in CTC equipment grants $40 million proposed for student teacher stipends 16

Cyber Charter School Reform Proposes a statewide cyber charter tuition rate of $8,000 per student per year. According to the governor s office, this change will save school districts an estimated $378 million annually (based on 22-23 data). $271 million from regular education tuition rate $107 million from special education tuition rate No other brick-and-mortar and/or cyber charter reforms included 17

Additional Proposed Revenue Video Gaming Terminal Tax Expansion,estimating an additional $368.9 million in revenue. Legalize adult-use marijuana, estimating the industry would yield $536.5 million in additional annual revenue. Corporate Net Income Tax Reduction, proposing a CNIT of 4.99% by 2029 instead of the previous 2031; $264 million increase in revenue Minimum Wage increase, beginning January 1, 2026, to increase revenue by $51 million (PIT and SUT) 18

Federal-level Implications??? 19

Eliminating the US Dept of Education Things to know and keep in mind: Complete elimination would require congressional approval bills are being introduced USDE has already been reduced significantly in staffing levels, in contracts, and discretionary funds 20

USDE Letter to States (3/28) Access to all remaining federal COVID-relief funds to schools was rescinded Includes late liquidation for all ESSER funds, GEER, EANS, and HCY funds Significant impact for some LEAs in PA hearing $200M potentially Several states had filed lawsuits in early March due to delays in getting late liquidation funds 21

What to watch Pay attention if your LEA is receiving a significant chunk of Title funds We assume there will be additional guidance coming from USDE on these executive orders/letters We also assume (?) there will be some guidance coming from PDE Think about what would happen to your budget without/with reduced amounts of Title funds, meal reimbursement, medical access funds, etc. Stay tuned we ll share updates as we go this is uncharted territory, and there are a lot of lawsuits Be prepared with data/info to reach out to your congressional delegation President Trump s budget is due in early-May we ll have a better sense of some of the funding issues then 22

Local Revenue Real Estate Tax (RET) Act 1 Index 2024-25 MV/PI .5742 2025-26 Adjusted Index 5.3% Millage Rates by Fiscal Year 2024-2025 26.2395 2023-2024 24.5 2022-2023 24.5 2021-2022 26 2020-2021 29.5 2019-2020 29.5 2018-2019 29.5 2017-2018 32.63

State Revenue Basic Education Subsidy Increase of $2,283.00 Special Education Funding Increase of $35,270.00 Charter School Transition Subsidy Not Allocated for 2025-26 Proposed Budget Decrease of $177,320.00 Ready to Learn Block Grant Same as 2024-25 - $280,424.00

Federal Revenue 2025-26 Federal Funds Uncertain ESSER Funds Expired

Expenditure Discussion 2025-26 Budget Budget Projections

Questions?