Thursday, June 26

th
, 2014

Chairman Bill Green
Philadelphia School Reform Commission
440 N. Broad Street
Philadelphia, PA 19130

Dear Chairman Green:

I am writing to provide an update on state budget negotiations and the implications for
the Philadelphia School District. The Pennsylvania State House passed a $29.1 billion
spending proposal on Wednesday night that was contained in an amended version of
House Bill 2328. This bill was then considered and passed out of the Senate
Appropriations Committee earlier today.

Unfortunately, House Bill 2328 fails to provide adequate funding for public education,
including the Philadelphia School District. In fact, the current version of the budget
actually leaves Philadelphia schools worse off than Gov. Corbetts original spending
proposal that was introduced in February.

House Bill 2328 only provides an increase of $70 million statewide to the basic education
subsidy and completely eliminates more than $240 million in the Governors new Ready
to Learn block grant program. It also flat-funds the Accountability Block Grant program
at $100 million. This means that Philadelphia School District would receive more than
$20 million less overall in recurring state funding than Gov. Corbetts initial budget
proposal.

The budget also fails to provide Philadelphia with the authorization to impose the $2-
pack cigarette tax supported by Mayor Michael Nutter and Philadelphia City Council.
This means that Philadelphia schools could miss out on more than $83 million in local
revenue that is desperately needed. I am particularly frustrated that the State House has
both reduced state revenue and failed to provide options to raise funds at the local level.

Lawmakers have also thus far refused to fix the so-called pension double-dip which
would provide $75 million savings for the state budget that could be reinvested in our
local school districts. The lack of action on this issue is particularly confusing because of
repeated statements from the Republican leadership about the need for pension reform.

As you know, Senate Democrats have offered a number of viable alternatives to fully
fund public education. We have identified a list of savings and revenue options that could
generate more than $1.1 billion without raising broad-based taxes. I also plan to continue
to advocate for an appropriate tax on natural gas drilling in the Marcellus Shale, which
would raise more than $700 million in the next fiscal year. We plan to keep pushing for
these items to be included in the final budget agreement.

There is one specific revenue option that I want to make sure to highlight: Medicaid
expansion. Accepting $4 billion in new federal funds to expand our Medicaid program to
insure more than 500,000 low-income Pennsylvanians would generate $400 million in
budgetary savings. Instead of pursuing this option, the Governor is advocating for a
system using private insurers called Healthy PA. His plan would only save $125
million, leaving $275 million on the table. This makes absolutely no sense when we are
in dire need of funds, especially for public education.

Simply put, the level of education funding in the budget passed by the State House is
unacceptable. We all know that our teachers, parents, and students are already operating
in a very difficult environment and the budget passed by the State House will only make
matters worse. I will keep fighting for additional funding for public education to be
included in the final budget agreement.


Sincerely,



State Senator Vincent Hughes

Cc:
Dr. William Hite
Mayor Michael Nutter
City Council President Darrell Clarke