Education Funding for Successful Generational Transitions in

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Education Funding for Successful
Generational Transitions in Pennsylvania:
Not Easy
Maureen W. McClure Vera Krekanova
University of Pittsburgh October 3, 2014
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Education is a Core Purpose of
the State: Protects Generations
as They Transition from Youth to
Old Age
 In Pennsylvania, we can no longer take this for granted
 PA is a rapidly aging state and taxes little retirement income,
while more younger people need extra help in school
 Will the growing generational dependencies of the young and
the old contribute to instability in school districts and regional
economies?
 Perhaps
 Need to start a conversation about them
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
We Need to Better Understand
District and Taxpayer Burdens
as Populations Shift
 We need to better understand and assess the
consequences of generational shifts, and how they will
affect regional economies, districts and taxpayers…e.g.,
Will it mean slower economic growth?
 Data analyses of Pennsylvania’s demographic shifts and
associated costs are already available, but are not yet
well coordinated when considering education funding
and strategic planning either at the state or local levels
 It is time to examine funding indicators and how
demographic shifts will affect taxpayers
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
3
State Has a Limited Capacity to
Protect Education Funding from
Generational Shifts
4
 This could lead to trouble :
 Two types of shifts in dependencies: Demographic and
Economic
 Demographic dependencies (children and aging
populations)
 Rapidly growing populations of retirees offset by
 Rapid declines in numbers of taxpaying age groups
with career high incomes
 Economic dependencies (people unable to work in
any age group)
 Unemployed, not in labor force, and those with
disabilities
 All limit the state’s capacities to produce income
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
Generational Shifts are
Politically and Economically
Destabilizing
 For example, the state’s regulation of county
level property assessments has been weak and
unfair for many decades…yet shifts to income or
sales taxes may make things even worse (see
other Consortium papers)
 Aging taxpayers often want to stay in their
homes for as long as they can, but rising school
district property taxes threaten some
 In the past seniors have tended to support
education, but moving forward, that can’t be
taken for granted
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
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6
And…the 65+ Generation Votes
More Often…
Than other age
groups…
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
7
How Big a
Problem is it for
School
Tax Bases?
McClure and Krekanova, School of Education, University of Pittsburgh,
University Consortium to Improve Public School Finance and Promote
Economic Growth, October 3, 2014
8
Education is Dependent
on All Ages
 The shape of a population can be important for government
policy and planning because it forces us to think across
generations and their dependencies
 Education is not an isolated sector – Need to look at the whole
population over time
 First, we will examine demographic dependency ratios - These
measures indicate the number of people who are too young or
too old to work, relative to the number of people of working
age
 Second, we will examine economic dependency ratios -These
measures indicate the employment status of those who are,
who are not, and who are unable to be employed
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
First, How to Read
a Population Pyramid
 Pyramids are a good way to show the shape of a
population
 Age groups broken out by Males on the left and Females on
the right- Youngest at the bottom, oldest at top
 Traditionally this looked like a pyramid, but that started
changing about fifty years ago, especially in developed
countries
 Let’s start with Mexico- It is a transitioning country so notice
the rounding at the base as parents are having fewer
children – but still looks fairly traditional – notice no baby
boom
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
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10
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
11
What Do You Think PA’s
Pyramid Looks Like?
 Take a guess – Mexico’s median age is about 26 -PA is over 40 –
Afghanistan’s is about 18
 Pennsylvanians are living longer – must be a great place to live
 We know baby boomers are already affecting school district
funding as they leave taxpaying jobs and move into tax exempt
retirement incomes
 We also know about one half of children born today are to single
mothers – many with limited resources- extra costs for school
districts in aging state with shifting policy priorities
 So, did you think it would look like this?
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
12
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
13
What Do You See?
 Baby Boom pushing the edges, followed by a
rapid decline, followed by growth created by
their children, the “Echo” generation
 Declining numbers of births again in recent years
 This in contrast with growing numbers of
competing charter schools, cyber-schools and
schools of faith
 Top heavy, a little unstable? Too soon to tell?
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
Quick Look at
Demographic Dependencies
Around the State
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 First, my home borough, Oakmont
 Then my school district, Riverview, where I am on the school
board – emphasis on the population over 80, more likely to
have disabilities, still vote
 Next at the county level which indicates a larger economy than
a school district – and has elected officials who make
economic development policies that affect the region
 Finally, return to the Pittsburgh MSA regional economy as a case
that examines the economic dependencies created by
employment opportunities
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
15
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
16
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
How Will These Changes Affect
School Districts?
17
 Scale problems - Districts may be more prone to financial
instability because most are relatively small
 Even “gated” districts may be vulnerable because they are still
nested inside larger regional economies
 Elderly may support education, but they may need to shift it to a
lower priority as taxes increase
 Poorer districts are likely to take the biggest hit because:
 Aging populations are likely to be women who have limited
access to Social Security because they weren’t in the workforce
 If they were in the workforce, they generally made less money
than men and will have more limited access to pensions…they
live longer, and they vote…
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
18
Counties: Building Regional
Economic Growth
 Counties are likely to face problems as the costs of generational
transitions rise with aging populations
 Older workers retiring later out of concerns for economic
stability… Are they shutting out younger workers?
 Younger workers with education debt and limited access to
jobs may leave
 Let’s look at counties around the state with some growth
potential: Allegheny County, Pike (rapid growth), Bucks
(wealthy suburban) and Lycoming (Marcellus Shale)- Do they
face generational issues? If so, are they enough to limit
capacities for additional taxation to share with other, poorer
counties?
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
19
Allegheny
County
A little less stable than the state
McClure and Krekanova, School of Education, University of Pittsburgh,
University Consortium to Improve Public School Finance and Promote
Economic Growth, October 3, 2014
20
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
21
Pike County
What happened? Hollow core….
McClure and Krekanova, School of Education, University of Pittsburgh,
University Consortium to Improve Public School Finance and Promote
Economic Growth, October 3, 2014
22
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
23
Bucks County
Now too expensive
for young people to move in?
McClure and Krekanova, School of Education, University of Pittsburgh,
University Consortium to Improve Public School Finance and Promote
Economic Growth, October 3, 2014
24
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
25
Lycoming County
Marcellus Shale country…
Notice skewed growth of young males
McClure and Krekanova, School of Education, University of Pittsburgh,
University Consortium to Improve Public School Finance and Promote
Economic Growth, October 3, 2014
26
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
27
The Future Is Here …Now…
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
Pittsburgh MSA
Region as a Case
 Regional cases are also important to
understanding education tax capacities because
economies are regional
 Not all those of employable age….are….
 Different age cohorts have different combinations
of workers and non-workers –Need to look at
employment status, compensation and disabilities
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
28
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Look at Four Economic
Dependency Indicators
 Unemployed
 Low-wage employed
 Not in labor force
 People with disabilities
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
Employment Status by Age
Male
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
30
Female
31
Employed: Hourly Wages
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
32
Disabilities Can Also
Limit Ability to Pay Taxes
DISABILITIES 0 TO 75+
MALE
12.2%
FEMALE
13.7%
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
65+
32.6%
36.4%
33
And Then There
Is This One Other
Thing …
Time Shifts…
McClure and Krekanova, School of Education, University of Pittsburgh,
University Consortium to Improve Public School Finance and Promote
Economic Growth, October 3, 2014
34
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
Significant Population
Shape Shifts in Only Five
Years
 Baby boomers moving into retirement age and
out of higher earning tax brackets
 Shortfall in number of eligible taxpayers in higher
earning age groups
 Baby boom “echo” showing similar disruptions
 Need to better account for the shape of
taxpayer populations
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
35
So What Does This Mean?
36
 “Shape shifting” generational cohorts matter to the state’s
education funding and strategic planning functions
 Rising dependency rates may financially destabilize some
school districts – gain of elderly + loss of income earners
 Seniors should be at the table now – because they will vote
later
 We also need to attract and retain younger cohorts so they
don’t leave – build on strengths of higher education in PA
 We need a broader conversation about trans-generational
education funding policies
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
Should Demographic and
Economic Dependency Ratios
Be Part Of The Education
Funding Solution?
 Yes. Need better indicators of the roles of
generational shifts in education funding today
 Can dependency ratios used in other sectors
be adapted to meet educational needs?
Worth a try
 Need for generational fairness on all sides to
avoid competing interests
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
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38
Education is An
Essential Solution
To the Rapidly Growing Complex
and “Wicked” Problems of
Successful Generational Transitions
McClure and Krekanova, School of Education, University of Pittsburgh,
University Consortium to Improve Public School Finance and Promote
Economic Growth, October 3, 2014
39
Thank You
Maureen W. McClure
Associate Professor
Administrative and Policy Studies
School of Education
University of Pittsburgh
Pittsburgh, PA 15260
Phone: 412.648.7114
E-mail: [email protected]
Data Sources: US Census Summary File 1: QT-P1,
Three Rivers Workforce Investment Board, and
The Center for Rural Pennsylvania
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
APPENDIX
McClure and Krekanova, School of Education, University of
Pittsburgh, University Consortium to Improve Public School Finance
and Promote Economic Growth, October 3, 2014
40
Education for Whom?
41
 What kinds of jobs does the next generation need to be
successful?
 PA business is not a monolith and education funding policies
need to better recognize these differences
 PA has different kinds of industries with different kinds of jobs
 High Wage – High Employment/ High Wage – Low Employment
 Low Wage – High Employment/ Low Wage – Low Employment
 Will older workers with good jobs be replaced by younger
workers? Or will many current good jobs disappear?
 Not only a “skills gap,” also a “good jobs gap”
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
42
Good Jobs
Aging Out?
About 1/5 on high wage
jobs will age out soon
McClure and Krekanova, School of Education, University of Pittsburgh,
University Consortium to Improve Public School Finance and Promote
Economic Growth, October 3, 2014
43
All Businesses Are Not Created Equal:
Higher Wages = More Older Workers
Description of PA Industry
High Wages –
High Employment
Construction
Educational Services
Finance and Insurance
Government
Health Care and Social Assistance
Manufacturing
Transportation and Warehousing
Wholesale Trade
High Wage –
Low Employment
Information
Mining, Quarrying, and Oil and Gas
Extraction
Management of Companies and
Enterprises
Utilities
2014 Earnings
2014 Jobs
2010-2014
Change
$66,506
$64,315
215,104
168,757
9,541
(10,472)
88%
40%
12%
60%
15%
20%
$96,915
$79,035
$54,993
$72,370
$51,826
$75,795
242,042
681,998
926,751
561,366
210,749
198,155
(2,290)
(47,677)
40,121
935
14,710
1,915
37%
44%
21%
74%
71%
72%
63%
56%
79%
26%
29%
28%
17%
20%
18%
21%
18%
19%
$86,343
82,253
(7,575)
57%
43%
17%
$94,643
33,054
9,463
91%
9%
15%
$137,728
$139,149
131,410
21,298
16,632
(434)
51%
80%
49%
20%
19%
25%
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
Male
%
Female
%
Age
55-64 %
44
Good Jobs Gap
Many young people in low wage
industries… how many will be able to
overcome “skills gap” and make the
leap to higher paying industries?
McClure and Krekanova, School of Education, University of Pittsburgh,
University Consortium to Improve Public School Finance and Promote
Economic Growth, October 3, 2014
45
All Businesses Are Not Created Equal:
Lower Wages = More Younger Workers
2014
Jobs
20102014
Change
Male
%
$19,278 444,725
34,774
43%
57%
7%
Age
Female 55-64
%
%
Description of PA
Industry
Low Wage - High
Employment
Accommodation and
Food Services
Administrative and
Support and Waste
Management
2014
Earnings
$39,082 268,456
23,205
60%
40%
13%
Retail Trade
Low Wage – Low
Employment
Arts, Entertainment,
and Recreation
Agriculture, Forestry,
Fishing and Hunting
Other Services (except
Public Administration)
$31,618 632,611
8,082
48%
52%
14%
$36,574
99,165
10,823
54%
46%
13%
$37,010
22,898
282
70%
30%
10%
$33,852 185,346
4,771
46%
54%
17%
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
46
Generational Transition
Problems are “Super Wicked”
 Defined as a mega-wicked problem where
in addition to being wicked (can’t be
“solved,” but must be dealt with)…
 Time is running out
 Weak or no central authority
 Those seeking solutions are causing the
problem
 Policies discount the future irrationally (Levin
et al 2012)
McClure and Krekanova, School of Education, University of Pittsburgh, University
Consortium to Improve Public School Finance and Promote Economic Growth,
October 3, 2014
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