Hold-Harmless Clause Spurs Pennsylvania Legislators' Planned School Finance Lawsuit

Last Updated: April 28, 2012

This article appeared in the April 2012 Rural Policy Matters.

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Pennsylvania State Representatives Doyle Heffley (R-Carbon), Joe Emrick (R-Monroe), and Mario Scavello (R-Monroe) announced earlier this month that they plan to challenge the constitutionality of the school funding formula. All three hail from fast-growing regions of the state and claim that their school districts have been shortchanged as a result of the formula’s “hold harmless” clause which is designed to help slower-growing districts and those losing population from falling behind by guaranteeing that they will not receive less money each year than they did before.

The representatives assert that a political solution is unlikely since many legislators’ districts benefit from the provision, and that the entire formula needs to be thrown out. Since the announcement, other legislators have joined the suit.

Persistent declining enrollment can cause significant challenges for schools and districts. If the enrollment decline is chronic, it generates serious financial distress because of the loss of per-pupil state revenue. This reduction usually results in deeps cuts in programs, staff, and resources. Small rural schools are especially vulnerable to these problems, since they have proportionally less leeway in finding cost-saving areas. Hold harmless provisions help cushion the impact of declining enrollment for rural and small districts.

Education advocates across Pennsylvania have acknowledged that the state’s funding system needs work. Despite an overhaul of the school finance formula in 2008, districts are facing serious funding cuts. The formula change came with a six-year plan to fully fund the new education formula with an additional $2.6 billion, but federal stimulus funds were used for the increases and those funds have since been depleted. A current school funding proposal would move a large part of education funding into a block grant system, which small and rural districts say dilutes provisions meant to address differences in their districts’ population and wealth.

The 2008 formula changes also included the addition of a location cost metric (LCM). An analysis by the Rural Trust found that the LCM tended to favor lower-poverty districts by increasing overall funding to those districts where professional salaries and housing costs are high. (Editor’s note: You can read more about this study here.)

The Pennsylvania Association of Rural and Small Schools brought a school finance lawsuit in 1991 claiming the formula was unconstitutional, but the state’s high court eventually held in 1999 that education funding was a political issue that must be addressed in the legislature. The legislators who are set to bring this year’s challenge characterize that lawsuit as a plea for additional funding and say that their suit will succeed because they are asking for redistribution instead.

Rep. Scavallo has said that he will foot the cost for the lawsuit, and that he is still working to add plaintiff school districts to the suit. He expects the lawsuit to be filed by the summer. The suit will also ask for reimbursement of millions of dollars to the faster-growing districts.

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Read more from the April 2012 Rural Policy Matters.