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Which mandated costs have Act 1 referendum exceptions?

Which mandated costs have Act 1 referendum exceptions? While the three major areas of annual expenditure growth for school districts have been the mandated costs for pension, charter schools and special education, many school districts (as we've previously reviewed) have been able to cover their local share of mandated costs through cuts to other programs and increases in property taxes.

As reviewed yesterday, Act 1 provides an option for school districts with extraordinary mandated cost growth to exceed their Act 1 index cap to fulfill these expenditure obligations through the approval of a referendum exception from the PDE. Considering the significant role and impact schools have in shaping their local communities, school districts face a difficult annual challenge in providing a quality education for all children while mitigating the impact of state and federal mandated costs on taxpayers.

When mandated costs necessitate a school district to seek approval from the PDE for a referendum exception, the school district can seek approval for two of the three largest areas of growth in mandated costs: special education and pensions.

One mandated cost referendum exception prescribed in Act 1 is for special education. According to the PDE, if mandated costs for special education programs and services for students with disabilities increased by more than the school district’s Act 1 index between the prior two fiscal years, the school district is eligible for an exception equal to the increase in the school district’s share of expenditures (i.e. the costs in each year not offset by the state's Special Education Funding) that exceed its Act 1 index.

In 2018-19, 87 school districts received PDE approval for a special education referendum exception. The median exception approved was equal to 1.375% of the prior year's (2017-18) property tax levy.
 
Click on the image link below to view our map illustrating which schools districts received exceptions for mandated special education costs and the magnitude of these exceptions relative to property taxes.

The other mandated cost referendum exception prescribed in Act 1 is for pensions (retirement contributions). According to PDE, if the anticipated increase in the school district’s (i.e. local) share of payments to the Public School Employees’ Retirement System between the current year and the upcoming year is greater than the school district’s Act 1 index, the school district will be eligible for an exception equal to the portion of the estimated payment increase that exceeds its index.

Due to Act 25 of 2011, it's important to note that, for most school districts, the impact of the pension exception is limited and rapidly diminishing. The exception calculation uses total school district compensation from 2011-12, so the exception provides value to fewer and fewer school districts. 

In 2018-19, 43 school districts received PDE approval for a pension referendum exception. The median exception approved was equal to 0.024% of the prior year's (2017-18) property tax levy.

Click on the image link below to view our map illustrating which schools districts received exceptions for mandated pension costs and the magnitude of these exceptions relative to property taxes.