Groups Send Letter to City Leaders That Shows Problems with Splitting the 1% Sales Tax Extension
PHILADELPHIA (May 2nd, 2014) – Splitting sales tax revenue between Philadelphia schools and City pensions would do little to improve the city’s pension crisis and would take away approximately $500 million from the Philadelphia School District. A group of five leading education organizations sent a letter to city leaders urging them to pass ordinances to provide $195 million to the District by the end of June. The letter from the Education Law Center, Education Voters of Pennsylvania, Pennsylvania Budget and Policy Center, Philadelphia Education Fund and Public Citizens for Children and Youth reads in part:
“The School District’s recent budget presentation indicates that $216 million is needed to avoid an additional 1,000 layoffs of both teachers and other critical school personnel. To avoid these devastating cuts, we ask that Council pass the bills that will result in $195 million in recurring, predictable and certain funds for the District. Chief among the options for these funds is an ordinance that would extend the current sales tax rate and shift to the District at least $120 million annually.”
The groups point out that the current legislation passed by the State legislature already provides significant relief to the City’s pension crisis. The organizations wrote “Given that the current law provides $800 million and reaches an 80% pension debt funding level in 2030, the diversion of hundreds of millions of dollars from the District to hit the same 80% pension fund target only two years sooner does not make fiscal sense.”
A review of the City of Philadelphia Finance Director’s summary of the updated 2014 Actuary Valuation Report finds:
- Current legislation: District Share = $1.92 billion through 2030, 80% pension funding target met in 2030
- 50/50 split: District Share = approx. $1.4 billion through 2030, 80% pension funding target met in 2028
- Incremental split plan: District Share = approx. $1.5 billion though 2030, 80% pension funding target met in 2028 or 2029
Splitting the sales tax extension would take away approximately $500 million from the District through 2030. It would also require new legislation from the state. The Education Law Center, Education Voters Pennsylvania, The Pennsylvania Budget and Policy Center, the Philadelphia Education Fund and PCCY are united in their call for the passage of City ordinances to provide a total of $195 million for the district. PCCY plans to hold action days throughout May and June to urge City leaders to make this happen.