DOCUMENT RESUME

ED 416 577 EA 028 898

TITLE Intermediate Units in Pennsylvania: The Role of EducationalService Agencies in Promoting Equity in Basic Education.

INSTITUTION Pennsylvania Joint State Government Commission, Harrisburg.PUB DATE 1997-12-00NOTE 72p.

PUB TYPE Reports - Research (143)EDRS PRICE MF01/PC03 Plus Postage.DESCRIPTORS Administrative Organization; Educational Equity (Finance);

*Educational Objectives; Elementary Secondary Education;*Equal Education; *Public Schools; *Pupil PersonnelServices; *School Organization; *State Surveys

IDENTIFIERS *Pennsylvania

ABSTRACTFor most of its history, Pennsylvania's public school system

has consisted of three levels: the state level, the local school districts,and an intermediate level. In 1970, the intermediate level was reorganizedinto 29 intermediate units (IUs). In 1997 the state's General Assemblydirected the Joint State Government Commission to study how the state's IUscurrently assist schools. It was found that IUs offer a large number ofprograms to school districts and nonpublic schools, covering such areas aspersonnel training, curriculum development, technology, instructionalmaterials, educational planning, pupil instruction and personnel services,special education, cooperative administration projects, and statewideprograms and services. The IUs have no independent taxing authority andreceive most funds from state appropriations, grants, sales of services,contributions, student tuition, and investment income. The Commissionrecommended that the IUs' role in advancing educational equity be enhanced,that the governance of IUs be strengthened, and that state funding to IUs beincreased to maximize their contribution to state education, through programssuch as cooperative administrative projects, services to children and adults,and instructional material services. (RJM)

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Reproductions supplied by EDRS are the best that can be madefrom the original document.

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IN IERMEDIA E NOT ON PENNSY_VANOA

The Rolle ofEducational Service ~agencies

ire Promoting Equity ink >asic Education

_

U.S. DEPARTMENT OF EDUCATIONOffice of Educational Research and Improvement

EDUCATIONAL RESOURCES INFORMATIONCENTER (ERIC)

his document has been reproduced asreceived from the person or organizationoriginating it.

Minor changes have been made toimprove reproduction quality.

Points of view or opinions stated in thisdocument do not necessarily representofficial OERI position or policy.

1

PERMISSION TO REPRODUCE ANDDISSEMINATE THIS MATERIAL HAS

BEEN GRANTED BY

TO THE EDUCATIONAL RESOURCESINFORMATION CENTER (ERIC)

General Assembly of the Commonwealth of PennsylvaniaMONT STATE GOVERNMENT COMMOSSEION

December 1997

2BEST CQPY AVAILABLE

ER

INTERMEDIATE UNITS IN PENNSYLVANIA

The Role ofEducational Service Agencies

in Promoting Equity in Basic Education

General Assembly of the Commonwealth of PennsylvaniaJOINT STATE GOVERNMENT COMMISSION

108 Finance BuildingHarrisburg, PA 17120

December 1997

3

The cover map displays Pennsylvania's 29 Intermediate Units which servethe Commonwealth's 501 school districts and their communities.

1. Intermediate Unit 12. Pittsburgh-Mt. Oliver IU 23. Allegheny IU 34. Midwestern IU 45. Northwest Tri-County IU 56. RivervieW IU 67. Westmoreland IU 78. Appalachia IU 89. Seneca Highlands IU 9

10. Central IU 1011. Tuscarora IU 1112. Lincoln IU 1213. Lancaster-Lebanon IU 1314. Berks County IU 1415. Capital Area IU 15

16. Central Susquehanna IU 1617. BLaST IU 1718. Luzerne IU 1819. Northeastern Educational IU 1920. Colonial Northampton IU 2021. Carbon-Lehigh IU 2122. Bucks County IU 2223. Montgomery County IU 2324. Chester County IU 2425. Delaware County IU 2526. Philadelphia IU 2627. Beaver Valley IU 2728. ARIN IU 2829. Schuylkill IU 29

The release of this report should not be construed as anindication that the members of the Executive Committeeof the Joint State Government Commission endorse all ofthe report's findings, recommendations or conclusions.

JOINT STATE GOVERNMENT COMMISSIONROOM 108 FINANCE BUILDINGHARRISBURG PA 17120-0018

717-787-4397FAX 717-787-7020

e-mail: jntst02@palegis.cmic.state.pa.us

The Joint State Government Commission was created by act of July 1, 1937(P.L.2460, No.459) as amended, as a continuing agency for the development offacts and recommendations on all phases of government for the use of the GeneralAssembly.

JOINT STATE GOVERNMENTCOMMISSION, 1997

OFFICERS

Roger A. Madigan, Chairman

Ivan Itkin, Treasurer

EXECUTIVE COMMITTEE

Senate Members

Robert C. JubelirerPresident Pro Tempore

F. Joseph LoeperMajority Leader

Robert J. MellowMinority Leader

David J. BrightbillMajority Whip

Leonard J. BodackMinority Whip

Noah W. WengerChairman, Majority Caucus

Michael A. O'PakeChairman, Minority Caucus

House Members

Matthew J. RyanSpeaker

John M. PerzelMajority Leader

H. William DeWeeseMinority Leader

Donald W. SnyderMajority Whip

Ivan ItkinMinority Whip

Howard L. FargoChairman, Majority Caucus

Mark B. CohenChairman, Minority Caucus

MEMBER EX-OFFICIO

Roger A. Madigan, Commission Chairman

Conrad C. M. Arensberg, Counsel

David L. Hostetter, Assistant Counsel

WORKING GROUP ONINTERMEDIATE UNITS

John K. Bail lie, Ed.D.Executive DirectorChester County IU 24535 James Hance CourtExton, PA 19341

Patricia A. CabreyAssistant Executive DirectorPittsburgh-Mt. Oliver IU 2Birmingham Towers, Suite 6002100 Wharton StreetPittsburgh, PA 15203

Kay CampbellParent Education NetworkRight to Education Task Force2870 Honey Valley RoadYork, PA 17403

Honorable Ronald R. CowellMinority Chairman Education CommitteeHouse of RepresentativesHarrisburg, PA 17120

Samuel J. CraigheadExecutive DirectorIntermediate Unit 1One Intermediate Unit DriveCoal Center, PA 15423-9642

Edward DonleyFormer ChairmanAir Products & Chemicals, Inc.7201 Hamilton BoulevardAllentown, PA 18195-9501

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Larry FentonSecondary TeacherSteelton-Highspire School District126 Circle DriveHummelstown, PA 17036

Katie FryRight to Education Task ForceUnited Cerebral Palsy

of South Central Pennsylvania308 East Walnut StreetHanover, PA 17331

Edward T. Frye, Ph.D.Executive DirectorCapital Area IU 1555 Miller StreetP. 0. Box 489Summerdale, PA 17093-0489

Honorable Samuel E. Hayes Jr.SecretaryPA Department of AgricultureAgriculture Office Building & Laboratories2301 North Cameron StreetHarrisburg, PA 17110-9408

Earl H. Horton, Ed.D.ChairmanCouncil of Basic EducationState Board of Education321 North Homestead DriveLandisville, PA 17538

Gary W. Ledebur, Ed.D.Executive DirectorFamily Resource NetworkThe School District of Philadelphia21st Street So. of the Parkway Rm. 509Philadelphia, PA 19103-1099

Warren F. LikensBusiness AdministratorBucks County IU 22705 Shady Retreat RoadDoylestown, PA 18901

Joseph Mickley Jr., Ed.D.Executive DirectorColonial IU 206 Danforth DriveEaston, PA 18045-7899

David A. Mowery, D.Ed.SuperintendentGettysburg Area School District900 Biglerville RoadGettysburg, PA 17325-8007

Honorable James J. RhoadesChairman - Education CommitteeSenate of PennsylvaniaHarrisburg, PA 17120

Honorable Jess M. StairsChairman Education CommitteeHouse of RepresentativesHarrisburg, PA 17120

Robert B. Towsey, Ph.D.SuperintendentNorth East School District50 East Division StreetNorth East, PA 16428-1350

Harry W. WirthSuperintendentConestoga Valley School District2110 Horseshoe RoadLancaster, PA 17601-6099

ROGER A. MADIGANChairman

IVAN ITKINTreasurer

EXECUTIVE COMMITTEESENATE MEMBERS:

LEONARD J. BODACKDAVID J. BRIGHTBILLROBERT C. JUBELIRERF. JOSEPH LOEPERROBERT J. MELLOWMICHAEL A. O'PAKENOAH W. WENGER

HOUSE MEMBERS:MARK B. COHENH. WILLIAM DeWEESEHOWARD L. FARGOIVAN ITKINJOHN M. PERZELMATTHEW], RYANDONALD W. SNYDER

ADMINISTRATIVE STAFFCONRAD C. M. ARENSBERG

Counsel717-787-6361

DAVID L. HOSTETTERAssistant Counsel717-783-9376

GENERAL ASSEMBLY OF THE COMMONWEALTH OF PENNSYLVANIA

JOINT STATE GOVERNMENT COMMISSIONROOM 108 - FINANCE BUILDING

HARRISBURG 17120

717-787-4397FAX 717-787-7020

December 1997

TO THE MEMBERS OF THE GENERAL ASSEMBLY:

The Joint State Government Commission is pleased topresent this report on the manner in which the intermediate unitscurrently assist the public schools and the ways by which the lUs

can further help advance the principle of equity by the most cost-effective means for the schools of this Commonwealth.

This report is the result of deliberations of a workinggroup of legislators, educators and other interested publiccitizens, whose names are listed in the report. Let me herebyextend the thanks of the General Assembly for their valuable and

thoughtful assistance.

Respectfully submitted,

Roger A. MadiganChairman

CONTENTS

SUMMARY AND RECOMMENDATIONS 1

INTRODUCTION 5

LEGISLATIVE HISTORY OF THE INTERMEDIATE UNIT 7

Early School Legislation 7

Public School Code of 1949 9

Creation of Intermediate Units 10

Preliminary Studies 10

Christman Study 12

Intermediate Unit Legislation 13

Legislative History of Act 102 15

Amendments to the Intermediate Unit Provisions 18

Funding Provisions 19

EQUITY AND THE PUBLIC SCHOOL SYSTEM 21

Constitutional Challenges 21

The Parameters of Educational Equity 28

Economic Measurement of Efficiency and Equity 30

Efficiency 30

Equity 30

Equity and the Intermediate Unit 31

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CURRENT INTERMEDIATE UNIT OPERATIONS 33

Services 33Training and Development Services 34Technological Services 35Instructional Materials Services 35Educational Planning Services 35

Instruction and Pupil Personnel Services 36Services to Children 36Services to Adults 37

Special Education Services 37Cooperative Administrative Projects 37Statewide Programs and Services 38

Revenues and Expenditures 39

Sources of Funds 39

Uses of Funds 43

Basis for Funding 43Accounting for Funding 47

Economies of Scale 47

RECOMMENDATIONS 49

BIBLIOGRAPHY 51

APPENDIX A: RESOLUTION 57

SUMMARY AND RECOMMENDATIONS

For most of its history, Pennsylvania's public school system hasconsisted of three levels: the State level, the local school districts and anintermediate level. Until 1971, county superintendents supplied the structurebetween the State and local levels. In 1970, the General Assembly passedAct 102, creating a system of 29 intermediate units (Us), which replaced thecounty superintendent offices as of July 1, 1971. The lUs were mandatedto create a broad program of educational services to be offered to public andnonpublic schools, including curriculum development and instructionalimprovement services; educational planning services; instructional materialsservices; continuing professional education services; pupil personnelservices; State and federal agency liaison services; and managementservices. The lUs were created to act as instruments of federal, State andlocal education policies. They were empowered to create new servicesneeded by public and nonpublic schools. The RA were envisioned as beingable to achieve economies of scale in the provision of services. Since thecreation of the lUs, several amendments have expanded the mandatedservices that the lUs are required to provide to nonpublic schools.

Presently, the IUs offer a large number of programs to school districtsand nonpublic schools, in the areas of personnel training and curriculumdevelopment, technology, instructional materials, educational planning, pupil

instruction and personnel services, special education, cooperativeadministration projects and statewide programs and services.

The mandates for IU programs and the funding to support them mustbe evaluated in light of evolving standards of equity and efficiency. Theseconsiderations largely shape the debate on the public schools. A key forumfor this debate is the school funding litigation proceeding in many states andpresently pending in the Supreme Court and the Commonwealth Court inPennsylvania. In other states, appellate courts that have seen fit to reachthe substantive issue have propounded standards of equity and adequacy,with the latter possibly emerging as the more workable approach. At thesame time, increasing emphasis is being placed on quantitative measuresof efficiency and equity to buttress public demands for standards andaccountability. These efforts have resulted in measures of financial

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resources (including funding disparities among school districts), systemicefficiency and educational quality. Evaluation of the recommendations of thisreport should consider whether they promise to improve the lUs'performance as measured in these ways.

The [Us have no independent taxing authority. Their major sourcesof revenues are State appropriations, governmental grants, sales of services,member school district contributions, student tuition, and income frominvestments. IU expenditures are made for employee salaries and benefits,purchases of professional and property services, and supplies andequipment.

In the fiscal year ending June 30, 1996, IU current operatingrevenues totaled about $1.047 billion: $375.2 million (36 percent) wasreceived from the State; $411.4 million (39 percent) from the federal andlocal governments; and $260.4 million (25 percent) from other sources,primarily school districts and nonpublic schools that purchased IU services.IU revenues allocated to the seven specifically authorized service categoriestotaled $48.1 million; to all federal programs $170.7 million; to State specialeducation programs $516.3 million; to State-mandated Act 89 programs$64.8 million; to other State-mandated programs $169.9 million; and toadministration and medical assistance programs $77.2 million.

In the same year, IU current operating expenditures totaled about$1.039 billion. Expenditures related to instruction amounted to two-thirds ofthis total; expenditures related to instructional support accounted for theremaining one-third. Administrative expenses made up 9 percent of totalexpenditures.

The Ills account for their funding by submitting budgets and annualfinancial reports (AFRs) to the Pennsylvania Department of Education. TheAFR is a balance sheet, income statement and flow-of-funds statement. It

contains data on revenue and expenditure dollars, but not units of service.The Ills also produce annual reports and other reports for internal use.

No comprehensive study has been made of the overall cost savingsattributable to Ws. Examples of specific cost saving programs have beencomputed and would appear to indicate that the Ms do generate significantcost savings for school districts and nonpublic schools.

As a result of the study of the current operations of the Ws and themandate of House Resolution No. 89, the following recommendations aresubmitted for consideration:

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1. Enhance the Role of the lUs in Advancing the Principle ofEducational Equity. IU services mandated by federal, Stateand local governments have been made available to schooldistricts and private schools, regardless of their size or wealth.Marketable services developed by the lUs have been madeavailable to schools that would not otherwise be able to providethem, and to schools that are willing to pay for them. IUservices and programs have apparently saved the schools aconsiderable amount of money. Thus the lUs have contributedto both equity and cost efficiency. The role of the lUs increating equity and efficiency--as instruments of Stateeducation policy, and as entrepreneurs of creative andmarketable services and programs--has been realized to asignificant degree and should be expanded. Strengtheningcollaboration among lUs and their function as conduits forinnovative new programs developed by the Department ofEducation, the school districts and the lUs, already veryimportant, should allow them to play an even greater role inpromoting educational equity process.

2. Strengthen the Governance of the lUs for GreaterEffectiveness and Accountability. A central office should beestablished in the Department of Education to provide forstandardization of administration and compliance enforcementand measurement of the Ills. This office would act as a voicefor the lUs within State government and serve as a central pointfor dispersing State policy initiatives to the Ills. Revised andconsistent reporting requirements for IU finances, and newreports for IU input and output units, would improve themeasurement of the lUs' contributions to equity and costefficiency, and make the lUs more accountable. Revisedbudget approval methods for the lUs should be adopted. Thesenew methods should reflect more closely the sources andimportance of IU funding; they should also hold the lUs moreaccountable. An attempt should be made to standardize thequality of programs among the lUs. Standardized IU serviceswould contribute to equity by making comparable resourcesavailable to all Pennsylvania students.

3. Increase State Funding to the His to Maximize theirContribution. To insure the existence of the (Us as a system,the State should provide an equal dollar subsidy for a coreoperation in each IU, such as a director, business manager and

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basic support staff, adjusted only for regional differences incosts. This State operating subsidy would guarantee a basiclevel of IU services to each member school district or privateschool, regardless of its size or wealth. Additional operatingrevenues for IU operations which exceed the core could still beassessed to member school districts based on their size andwealth. For services mandated by the State, funding should beprovided directly by the State, tied to average statewide IUservice or program costs, and adjusted by the size and wealthof the school districts that make up the lUs. Expanded servicesmandated and funded by the State, provided by !Us to studentsregardless of their ability to pay, would directly contribute toequitable educational access and adequacy. For pilotprograms to establish new educational programs approved bythe Department of Education, the State should give seedmoney to !Us for program start-ups. These funds would bephased out as the programs become self-sustaining. Thesetemporarily subsidized programs, which might otherwise not beimplemented, could lead to innovative new solutions toeducational inequities.

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INTRODUCTION

For most of the history of the public school system in thisCommonwealth, the system has consisted of three levels: viz., the Statelevel, the local school districts and an intermediate level. Until 1970 thecounty superintendents supplied the structure between the State and locallevels, but in that year, the intermediate level was reorganized into 29intermediate units (lUs). In recent years, questions have arisen regardingwhat the proper role of the lUs should be and whether the lUs are carryingout that mission in the context of the reform movement to improve the qualityand equity of American public education.

In order to assist the Pennsylvania General Assembly in consideringthese issues, the House of Representatives adopted House Resolution No.89 on April 7, 1997.1 The resolution directed the Joint State GovernmentCommission as follows:

RESOLVED, That the Joint State GovernmentCommission conduct a study and report to the GeneralAssembly as to how intermediate units currently assistschools and recommend specific strategies and methods forthe intermediate units to further help advance the principleof equity in the availability of basic education programs andservices for Pennsylvania students in the most cost-effectivemanner; and be it further

RESOLVED, The Joint State GovernmentCommission select a working group of legislators,Intermediate Unit Executive Directors, other educators, andother interested public officials and private citizens to assistin the development of this report; and be it further

'The complete text of the resolution is included as Appendix A of this report.

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RESOLVED, That the Joint State GovernmentCommission report its findings to the General Assembly nolater than December 1, 1997.

Accordingly, the Commission designated a working group of 19members to deliberate upon the issues presented by the resolution. Theworking group met on August 20, September 24 and November 14, 1997.The members, listed on page iv, brought their knowledge and experience tobear on the subject. The group also benefitted from the views expressed bythe legislative members and staff who participated at these meetings.

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LEGISLATIVE HISTORYOF THE INTERMEDIATE UNIT

The IU was created by the act of May 4, 1970 (P.L.311, No.102) toreplace the county boards of directors and county superintendents, whichconstituted the intermediate level between the State and the local district formost of the history of Pennsylvania's public schools.

EARLY SCHOOL LEGISLATION

The Commonwealth's tripartite system of basic education wasestablished by the act of May 8, 1854 (P.L.617, No. 610).2 At the local level,all municipalities were required to provide for common schools under apopularly elected school board, which was given the power to tax. At theState level, the Secretary of the Commonwealth was designated theSuperintendent of Public Schools.

Between the State and local levels, the 1854 act provided for countysuperintendents elected at a triennial convention of the school directors ineach county. The directors were required to select as county superintendent"one person of literary and scientific acquirements and of skill andexperience in the art of teaching" (§ 39). The county superintendent wascharged with the duty to periodically visit the public schools of the county and

to oversee the instruction together with the local directors "so that eachschool shall be equal to the grade for which it was established, and thatthere may be as far as practicable, uniformity in the course of studies inschools of the several grades respectively" (§ 37). The countysuperintendent was charged with assuring that competent teachers wereprovided for all the required subjects. The county superintendent was alsoresponsible for examining and certifying the teachers in the school districtand could annul a teacher's certificate at his discretion upon ten days notice

2The act of June 13, 1836 (P.L.525, No.166) required all municipalities

outside Philadelphia to constitute school districts.

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to the teacher and the board (§ 41). His other duties included collecting thereports of the local districts and forwarding them to the State superintendent,along with his own report on the condition of the schools and his suggestionsfor improvements in the school system (§ 42). The county superintendentswere certified by the State superintendent, who also had the power toremove a county superintendent and to fill any vacancies in that office untilthe next triennial convention.'

The act of May 18, 1911 (P.L.309) constituted a much moreelaborate and comprehensive school code than the consolidation of 1854,but the structure of the school system remained fundamentally similar. Theoffice of Superintendent of Public Instruction had been mandated as acabinet appointee by Article IV, §§ 1 and 8 of the Constitution of 1874. The1911 code gave him general supervisory power over the public schools. TheState superintendent was assisted by a new six-member State Board ofEducation, appointed by the Governor (§§ 901-912). In addition to itsadvisory powers, the board was given the power to "equalize, throughspecial appropriations for this purpose, or otherwise, the educationaladvantages of the different parts of this Commonwealth" (§ 905).

The school code of 1911 provided for county superintendents electedto a four-year term by all the school directors of the school districts in thecounty (§ 1104). The county superintendents were included in the samearticle with the district and assistant superintendents, and in severalprovisions the same duty was assigned to both county and district levels.The electoral procedure was specified in detail (§§ 1105-1118) andcomprehensive requirements regarding eligibility for appointment wereestablished (§§ 1102 and 1103). The instructional supervisory duties wereretained from the 1854 code (§ 1123); in addition, the county superintendentwas charged with the duty of inspecting the school grounds of all districtsunder his supervision and reporting to the directors of the affected districtany violations of the provisions of the school code relating to "sanitary orother conditions" (§ 1124). He was also required to call an annual teachers'institute lasting at least five days for the purpose of training and to direct thatmeeting (§ 2101 et seq.). Depending upon the number of teachersemployed in the county, the county superintendent was authorized to appointassistant superintendents, subject to confirmation by the five officers of thecounty school directors' association (§§ 1126 and 1127).

'Ibid., § 40 (certification); § 46, ¶ VII (removal); § 44 (filling of vacancies).

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A county superintendent could be removed by the Statesuperintendent "for neglect of duty, incompetency, immorality, or otherimproper conduct" or for violations of the school code upon notice of thegrounds and a hearing (§ 1119). Any vacancies in the office of countysuperintendent were filled by the State superintendent after consideration ofnominations by the officers of the county school directors' association(§ 1120).

PUBLIC SCHOOL CODE OF 1949

The act of March 10,1949 (P.L.30, No.14) enacted the Public SchoolCode of 1949, which, with numerous amendments, constitutes the bulk of thelaw presently governing public education in this Commonwealth.

The provisions regarding the county superintendents wereremarkably similar to those of the 1911 code.4 The eligibility qualificationswere tightened somewhat by increasing the professional experiencerequirement to six years, including three in administration or supervision, andadding a requirement of completion of a graduate course in education(§ 1003). The most important change was a requirement that all districtsemploy a supervisor of special education (§ 1052). In counties employing550 teachers or more, the supervisor of special education was required to befull-time. In counties with fewer than 550 teachers, a part-time supervisorwould be appointed and shared with other small counties, but no supervisorwas allowed to serve more than three counties. The State Council ofEducation was responsible for determining which counties would be servedby a part-time supervisor.

4Election and term of office, § 1021; election procedure, §§ 1022-1033;qualifications, §§ 1002 and 1003; instructional supervision, § 1037; inspection ofbuildings and grounds, § 1038; appointment of assistant superintendents,§§ 1051-1060; removal for cause, § 1034; vacancies, § 1035.

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CREATION OF INTERMEDIATE UNITS

Preliminary Studies

As part of the Joint State Government Commission's continuing studyof the public schools, a special committee under Senator Paul L. Wagner ofSchuylkill County examined the local administration of the schools in 1954.The committee's recommendations called for "limitation of the administrativestructure of the public schools to three levels, local, intermediate, eithercounty or regional, and state" and for "reorganization of the countysuperintendent's office (with the approval of the State Council of Education)with respect to personnel in order to furnish essential educational andsupervisory services and to eliminate nonessential services."' A briefsummary of findings, presented to the Commission on December 9, 1954,concluded that apparently jointures had transferred many of the countysupervisor's duties to the district superintendents, associate superintendentsand supervising principals.'

On April 14 and 15, 1955, the Pennsylvania Conference onEducation was held in Harrisburg. About 500 education officials and otherinterested citizens participated in this meeting, which was held in conjunctionwith the White House Conference on Education. Among the six discussiongroups was one dealing with the issue: "How Can We Organize OurEducational System Most Efficiently and Economically?" The meetingadopted the following resolution:

Whereas, the present organization of administration forschool management in the State of Pennsylvania hasevolved by accident rather than by planned pattern, and;

Whereas, this procedure has resulted in a state ofconfusion and a lack of clarification of the responsibilities oflocal administrators, county superintendents, and the StateDepartment of Education, and;

5"Summary of Proceedings, Meeting of Special Committee on District andCounty Administration of Public Schools, November 22, 1954," 2. This material isin the files of the Commission.

6"Report of Executive Committee to Joint State Government Commissionon Continuing Study on Public Schools," 3. This material is in the files of theCommission.

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Whereas, this confusion is essentially due toconsiderable permissive legislation attempting to safeguardthe principle of local autonomy, thus resulting in duplicationof effort, dissipation of professional energies, and a waste of

tax dollars;

Therefore, be it resolved that this conferencerecommend that the State Council of Education present aproposed plan to the Legislature for identifying agencies ofthe State to serve as an extension of the State's educationalauthority at an intermediate level and to function as a serviceand leadership agency in the interest of all local unitsincluded in the intermediate plan.

It is further recommended that in order to promote thisplan with a minimum amount of disturbance, the existingcounty administrative organizations that now have sufficientpupil populations to justify these services, should bedesignated as an intermediate unit, and where existingcounty school population is inadequate, counties or parts ofcounties shall be combined to form an intermediate unit ofsufficient size to perform properly the function of this office.

The State Council shall establish such standards ofservices needed, and the qualifications and certification ofthe personnel to staff these intermediate units commensuratewithin the scope of its responsibilities!

The State Council of Education was mandated under the act ofMay 31, 1956 (P.L.1937, No.650) to "prepare a statewide plan for thereorganization of counties, or parts thereof, into intermediate units of school

administration. . ." and submit the plan and implementing legislation to the

Commission by December 1, 1956. The council's plan divided theCommonwealth into 37 proposed districts for regional school service areas,comprising 16 single counties and 21 combinations of counties. Theseregional areas were developed through application of the following criteria:minimum population (75,000); minimum market value of taxable property($150 million); maximum area (1,000 square miles); minimum enrollment(15,000 pupils); and minimum staffing (500 professional employees). An

'Pennsylvania Department of Public Instruction, Reports of GroupRecorders, Pennsylvania State Education Conference, July 12, 1955, 28-29.

area was required to meet at least three of these criteria in order to qualifyas a viable district. The report included draft legislation adding a new ArticleIX-A to the Public School Code.

The State Council's findings and conclusions stated that effectiveorganization of a State system of public schools requires "a sound patternof organization at the State level; a sound organization of administrative unitsat the local level; and an organization of intermediate units, for the solepurpose of supplying special services when, where, and as needed by thelocal administrative units."8

Christman Study

The initiative that proximately resulted in the establishment of the IUoriginated with a study mandated by 1965 Appropriation Act No 83-A. Inresponse to that legislation a Committee on Kis was assembled, composedof eight members of the General Assembly and 15 professional educatorsand other citizens, chaired by Dr. Paul S. Christman. The Committee'sreport, An Intermediate Unit for Pennsylvania, was issued in January, 1967.Noting that reorganization had reduced the number of school districts to 466,the report outlined the purpose of the "middle echelon" in the structure of thepublic school system:

The development of school districts staffed by morecompetent persons, more adequately financed, large enoughto provide many basic services, and with a strong communitycommitment to education has also brought about areassessment of the present middle echelonthe countyoffice. Mass communication developments permit direct andrapid communication between the Department of PublicInstruction and each school district. Improved transportationfacilities place local and State administrators within a fewhours of each other. Clearly there is little need for a middleechelon to administer or operate schools.

On the other hand, increased demands are beingmade of the education system, resulting in the need forhighly specialized services which cannot be provided well

8[State Council of Education], "Summary of Findings and Conclusion" (Item4), 3 [syntax modified].

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either by the Department or a school district. The growth ofsuch activities as national curriculum development projects,research and development centers at universities, regionallearning laboratories, and many new State-served activities,creates the need for a better system of coordinating theseactivities and bringing them to a school district. Thesedevelopments suggest the need for some kind ofintermediate unit to provide services to school districts.9

The report outlined a detailed plan for the creation of the lUs, includinggovernance, program, staffing, financing and geographical assignment.'°The report divided the Commonwealth into 25 IU districts based on a goal of

a maximum of 100,000 pupils, modified to permit ease of travel.

Intermediate Unit Legislation

The lUs were established by the act of January 14, 1970 (1969P.L.468, No.192), which abolished the county board of school directors, the

county superintendents and other county-level school officers andtransferred their responsibilities to the IU, and the act of May 4, 1970(P.L.311, No.102), which added Article IX-A (Intermediate Units) to thePublic School Code. Act 102 divides the Commonwealth into 29 lUs and

specifically assigns each school district to a unit. The operation of the (Uscommenced on July 1, 1971 (Public School Code §§ 901-A and 902-A).Provision is made to permit the transfer of a school district from one IU toanother (§ 903-A) and for the merger of two or more lUs (§ 904-A). To the

IU is transferred all responsibility formerly vested in the county boards with

respect to special pupil services (§§ 908-A and 914-A(7)) andvocational-technical education (§§ 909-A and 914-A(7)). Each IU isgoverned by a board composed of thirteen school directors serving within its

territorial jurisdiction (§ 910-A(a)). The board of directors selects the officersand the executive director and has statutory power of approval over otherprofessional staff (§§ 912-A, 913-A, 914-A and 915-A). The chief schooladministrators within the IU's jurisdiction comprise the IU council to advisethe executive director (§ 916-A). In order to take effect, the IU budget mustbe adopted by the IU board of directors and approved by a majority of the

'State Board of Education, An Intermediate Unit for Pennsylvania(Harrisburg, 1967), 1.

10 Ibid, 9-12.

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school districts within the IU and a majority of the "proportionate votes" of theschool directors, with votes weighted in proportion to student enrollment ofthe respective districts (§ 914-A(6)).

lUs are charged with the duty of providing the services formerlyprovided by the county boards of school directors and of developing aprogram of services to be submitted to the Secretary of Education" byMay 1, 1971, to be annually updated thereafter for budgetary approval(§ 906-A). The board is specifically authorized to adopt a program ofservices covering curriculum development and instructional improvementservices; educational planning services; instructional materials services;continuing professional education services; pupil personnel services; Stateand federal agency liaison services; and management services. Additionalservices can be added to the program upon approval by a majority of all theboards of school directors comprising the IU (§ 914-A(5)). Each IU is alsorequired to provide for and conduct programs and services authorized by theState Board of Education and to take over the responsibilities formerlyvested in the county boards of school directors with regard to education ofexceptional children, educational broadcasting, audio-visual libraries,instructional materials centers, and area technical and vocational-technicalschools, subject to applicable laws (§ 914-A(7)).

The original enactment contained detailed provisions regarding thefunding of IU operations. The share each IU received from the "Governor'sbudget for the succeeding fiscal year for the support of intermediate units"was determined by a formula based on the weighted average dailymemberships (WADMs) of the school districts within the IU and the aid ratiodetermined in the same manner as for school districts (§ 917-A).12 The Illsare required to submit their budgets to the Secretary of Education, who isrequired to estimate the amount payable to each IU and pay the State'sobligation to the lUs in two payments, the first in July and the second inDecember (§ 918-A). In addition the Commonwealth was obligated to payeach IU a capital subsidy to defray leases approved by the Statesuperintendent for "office space, classrooms, buses, garages, warehousespace, equipment and similar facilities" (§ 919.1-A).

"Under the act of July 23, 1969 (P.L.181, No.74), the Department of PublicInstruction became the Department of Education and the Superintendent of PublicInstruction became the Secretary of Education.

12lnsofar as this provision implies that an appropriation can be made by theGovernor without enactment of an appropriation bill by the General Assembly, theprovision appears to violate article III, § 11 of the Pennsylvania Constitution.

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Where the IU operating budget exceeds State support, the schooldistricts are required to make up the difference under a formula determiningeach district's share by its WADMs and aid ratio (§ 920-A(a)). Provision isalso made for payments from school districts to lUs for services performedby the IU to individual districts but not authorized by the majority of districtsfor the entire IU and for relieving school districts of the obligation of makingthose payments if the district operates the program itself (§ 920-A(b) and

(c)).

Legislative History of Act 102

Act 102 generated extensive debate on the floor of the GeneralAssembly. The prime proponent of the legislation in the House ofRepresentatives was Representative Max H. Homer of Allegheny County,who described its purpose as follows:

The reason for the intermediate unit legislation is to provideall students within that intermediate unit all of the advantages

of good, progressive educational facilities, such as,

vocational technical schools, schools for exceptionalchildren, retarded children, health services, and so forth.'

[T]he purpose of the intermediate unit is to consolidatesmaller counties which are not now spending the moneyadequately, or as adequately as they could if they werejoined together in the one common cause of providingneeded services that the school districts on a local level do

not provide.

Mr. Speaker, the purpose of the intermediate unit is toallow the smaller counties to join their facilities together inone common effort to provide better services, using the sameamount of money that they are now spending individually, butbecause of their limits, by joining their money and resourcestogether, with the same amount of money they can providebetter services for the students, and especially thosestudents to whom I referred, the exceptional children."

13Legislative Journal-House, February 17, 1969, 148."Ibid., March 3, 1969, 241.

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Representative Homer drew a connection between this mission andthe provision of equal educational opportunity:

The intermediate unit legislation has been pending nowfor the last couple of years. I think it is a step in the rightdirection to help the children of the State of Pennsylvaniabecause today facilities are quite lacking in smaller countiesbecause the smaller counties cannot provide the facilitiesnecessary for the retarded children, the retarded educables,the retarded trainables. They cannot provide the necessaryfacilities for the vocational technical training that isnecessary. If Pennsylvania is indeed going to be a leader inthe field of education, equal opportunity for all childrenshould be had, and this is a very important step in providingthis equal opportunity for education for all children in allcommunities whether large or small and in all countieswhether large or small. I think this is of major importance,not so much whether it be 20, 30, 50 or 100 thousands ofdollars needed to set up a wonderful thing for children, butwhat is going to happen to the children of this State if we donot move into progressive educational legislation and intothese intermediate units.15

As these remarks indicate, the legislative process culminating in theenactment of Act 102 was protracted, and there was considerable oppositionin both Houses. It was objected that the Ills lacked a clear-cut mission, thatthe program would add another layer of bureaucracy to the school systemand that the real purpose of the program was to provide a sinecure for thecounty educational officials.16 The bulk of the objections, however, werefiscal in nature, especially to the allegedly unlimited potential for growth in

15Ibid., December 2, 1969, 1547.16lbid., February 17, 1969, 145-46 (Rep. Benjamin H. Wilson); Legislative

JournalSenate, November 18, 1969, 702 (Sen. Robert O. Beers).

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the cost of the program.' Several members referred to the fiscal crisisfacing the State at that time. Senator Clarence D. Bell of Delaware Countyvoiced concern that the forecast cost of the program ranged from $200,000to $70 million.' He added that the lUs had the power to spend moneywithout the duty to levy taxes and that the effect of the program on a poorschool district could be to transfer its resources into programs favored byother districts in the IU.19 Senator William G. Sesler of Erie County defendedthe legislation by emphasizing the economies in the administration ofservices afforded by the IU structure in reducing the number of officesfurnishing county-wide services from 67 to 29; in his view, the IU represented"a logical outcome of reorganization."'

'Senator Robert 0. Beers of York County was particularly vehement in his

opposition to Ills as a potential runaway program:One of the reasons why State Government costs so much is that,from time to time, there appears above the surface a very minuteportion of a periscope and somebody, who feels that the periscoperepresents some great good to the Commonwealth, recommendsthat the State Legislature buy it. So, they buy that tip of theperiscope and, then, the atomic submarine surfaces and blasts the

countryside and then consumes vast quantities of greenbacks,making the brontosaurus consumption of vegetation look like apicnic. Ibid., 701.18Ibid., 700.19Ibid., 701-703, passim.20Ibid., 701.

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Amendments to the Intermediate Unit Provisions

Since its original enactment, 24 statutes have been passedamending or adding various provisions relating to lUs.21 Several of thesehave extended the kinds of services that may be provided by lUs.

The act of August 1, 1975 (P1.180. No.89), mandated that thelUs furnish a broad range of auxiliary services to nonpublic schoolchildren attending school within the IU.22 The program is fundedby a special allocation to the lUs from the department.23 Since1977, the amount of the allocation has been tied to the medianannual instruction expense per WADM.

Three amendments added specific services to be furnished tononpublic schools if similar services are afforded public schoolstudents: the act of November 26, 1975 (P.L. 460, No.129)(services for diagnosis and correction of speech and hearingdefects); the act of September 26, 1978 (P.L.771, No.147)(§ 923.1-A) (diagnostic and evaluative psychological services);and the act of October 10, 1980 (P.L.924, No.159) (§ 923.2-A)(diagnostic, evaluative and instructional visual services).

21This count includes the act of November 26, 1975 (P.L.460, No.129).While technically a free-standing act, it is in substance an amendment to Article IX-A,as it adds the furnishing of speech and hearing services to nonpublic school childrento the mandate of the Us.

Five of these amendments dealt exclusively with the manner of electing theIU boards of directors. Three amendments dealt in whole or in part with additionalpowers of the IU board of directors: act of December 6, 1972 (P.L.1417, No.308)(assignment of school districts to area vocational-technical attendance areas); actof April 6, 1980 (P.L.86, No. 30) (purchase and lease of motor vehicles; and act ofJuly 10, 1986 (P.L.1270, No. 117) (ownership of office space and warehousefacilities).

22The act of July 12, 1972 (P.L.863, No.195) added § 923-A to the PublicSchool Code, which directed the Department of Education to loan textbooks,instructional materials and instructional equipment to nonpublic school children,either directly or through the Us and subject to monetary limitations on the cost ofthe materials purchased and loaned. The act of August 1, 1975 (P.L.183, No.90)deleted provisions in this section authorizing the purchase for loan of instructionalequipment. Under the Department of Education regulations, the Department, ratherthan the lUs, is the responsible agency for providing these services. 22 Pa. Code§§ 114.21 and 115.21.

23Public School Code, § 922.1-A. Act 89 replaced § 922 of the PublicSchool Code, which was added by the act of July 12, 1972 (P.L. 861, No. 194).

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The act of April 6, 1980 (P.L.86, No.30) (§ 914.1-A) granted lUsand school districts the power to contract with private residentialrehabilitative services for the provision of educational services to

children placed in those institutions pursuant to judicialproceedings under the Juvenile Act. This provision has beenamended five times to clarify the reimbursable services and thefiscal responsibility for the costs involved. Under the act of July11, 1996 (P.L.633, No.107), the school district of residence mustpay the actual cost of the educational services, up to one and one-half times the otherwise applicable tuition charge.

The remaining amendments to Article 1X-A dealt with administrativeand fiscal matters. The act of April 4, 1974 (P.L.243, No.57) (§ 924-A)required the Secretary of Education to issue an annual report to the GeneralAssembly on the operation of the IU program; however, this requirementceased as of June 30, 1980.

Funding Provisions

The budgetary provisions relating to the lUs have changedsignificantly since the enactment of Act 102. It appears that the original 1970legislation gave each IU a share of a predetermined operating budget based

on the WADMs and the aid ratios in each of the 29 IU jurisdictions (§§ 917-A

and 918-A). In addition, the Ws received a capital subsidy to defrayapproved leases for office space, classrooms, buses and other facilities(§919-A). The difference between the Commonwealth's allocation to the IU

and the IU operating budget is made up by contributions from the schooldistricts comprising the IU (§ 920-A(a)). The act of August 24, 1977(P.L.199, No.59) changed the formula for computing the Commonwealth'sgeneral operating allocation to provide a cap of 0.45 percent of the totalstatewide instruction expense and to phase in an allocation based on theproportion of ADMs in each IU (§ 917.1-A). The capital subsidy was alsochanged to cap the total allocation at 0.03 percent of total statewideinstruction expense (§ 919.1-A). The act of July 10, 1986 (P.L.1270,No.117) reduced the total general operating allocation to 0.4 percent of totalstatewide instructional expense and made the allocation of increasedamounts over 1985-86 payable half equally for each IU and half proportionalto their respective ADMs. The act of July 11, 1996 (P.L.633, No.107) cut theCommonwealth's IU general operating allocation by 50 percent, and the actof June 25, 1997 (P.L.297, No.30) froze the IU allocation and capital subsidyfor 1997-98 at the level of the previous year.

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EQUITY AND THE PUBLIC SCHOOL SYSTEM

House Resolution No. 89 directs this study to examine how lUs can"help advance the principle of equity" in the provision of basic education inthe Commonwealth. In recent years the public debate over equity in publiceducation has in large measure been shaped by the outcome of courtlitigation on the issue of public school financing. This section will examinethe course of this litigation to reveal the principles by which the statesupreme courts have tested school funding and performance, then willdiscuss the measures used in judging efficiency and equity in the publicschool context. The section will conclude by pointing out the substantial rolethe lUs play in helping to assure that the Constitution's pledge of a thoroughand efficient education will be fulfilled for all the schoolchildren in thisCommonwealth.

CONSTITUTIONAL CHALLENGES

Beginning in California with Serrano v. Priest, 487 P.2d 1241 (Cal.

1971), a series of cases has challenged the constitutionality of the method

of funding the public school system in several states. While differing indetail, each of these challenges alleges that the traditional method of fundingthe educational system, depending as it does on the property tax, createsdisparities in the quality of education between the richer districts and thepoorer, resulting in an educational system that deprives the students of the

poorer districts of the level of education guaranteed by their respective stateconstitutions. This litigation has given courts in some states an opportunityto set forth their views on what constitutes equity in the context of the publicschools and what level of equity is required to comply with their respective

state constitutions.

The school funding litigation has proceeded in three distinct waves.

The first alleged a violation of the Equal Protection Clause of the Fourteenth

Amendment to the United States Constitution. This strategy met decisivedefeat, however, when the United States Supreme Court ruled that equal

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protection afforded by federal law only required that state educationalfunding systems meet the rational basis test, that is, bear a rationalrelationship to advancing a legitimate state interest.' The second wave wasbased on both the equal protection and education clauses of the stateconstitutions and stressed the disparity of resources between the richer andpoorer school districts. This initiative was given considerable impetus whenthe Supreme Court of New Jersey declared that state's system invalid inRobinson v. Cahill, 303 A.2d 273 (N.J. 1973). The third and current wave,in which Pennsylvania figures as a key battleground, focuses on theeducation clauses of the state constitutions. In some of these cases, theplaintiffs have shifted from an argument based on equality to one based onadequacy: a claim that the state is failing to provide the disadvantagedpupils with an education that adequately prepares them for their future livesas citizens and economic producers.25

One commentator has advanced four reasons for the apparent shift

from the equality approach to the adequacy approach in school financereform litigation. In his view, adequacy is less complex and exhibits greaterappeal to accepted principles of fairness and opportunity; decisions basedon adequacy do not threaten local control of schools; adequacy litigationappeals to urban school districts, especially those that actually expend moreper pupil than the State average; and the adequacy approach harmonizeswell with the trend toward evaluating school outputs.26

The Education Clause of the Pennsylvania Constitution (Article III,§ 14) states: "The General Assembly shall provide for the maintenance andsupport of a thorough and efficient system of public education to serve theneeds of the Commonwealth."27 The leading case interpreting the EducationClause is Danson v. Casey, 484 Pa. 415, 399 A.2d 360 (1979), in which thePennsylvania Supreme Court dismissed a challenge to the system of fundingPennsylvania's schools as applied to Philadelphia, where the plaintiffsclaimed that the pupils in Philadelphia were denied a thorough and efficient

24San Antonio Independent School District v. Rodriguez, 411 U.S. 1

(1973).25Michael Heise, "State Constitutions, School Finance Litigation, and the

'Third Wave': From Equity to Adequacy," 68 Temple Law Review 1151 (1995);William E. Thro, Note, "To Render Them Safe: The Analysis of State ConstitutionalProvisions in Public School Finance Reform Litigation," 75 Virginia Law Review 1639

(1989).26Heise, 1174-76.'Eighteen other states have similar constitutional provisions. Thro,

75 Virginia Law Review 1639, 1663 (1989).

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public education. The Court declined to entertain the claim concluding thefunding scheme as established by the Legislature did not prevent the schooldistrict of Philadelphia from fulfilling its constitutional duty. The Court alsonoted it could conceive of no judicially manageable standard for defining andevaluating the components of a thorough and efficient education, other than

a mandate for equal expenditure for each pupil. This alternative is precludedbecause the debates at the time of the adoption of the present constitutionallanguage made clear that the drafters had considered and rejected arequirement of uniformity in order to permit a substantial degree of localcontrol to meet differing local needs.

The school finance cases necessarily involve a determination as tothe relative powers and duties of the judicial and legislative branches withrespect to education. Some courts in other states confronted with challengesbased on constitutional provisions similar to Pennsylvania's have noted thatthe "thorough and efficient" standard does not provide the courts muchguidance, and that a declaration of unconstitutionality may create aconfrontation between the judiciary and the legislative branch, may involvethe courts in arguably political issues they are ill-equipped to decide, andmay require remedies that are beyond the institutional competence of thecourts to enforce. Consequently, some courts have taken a restrained view

of the enforceable requirements of the "thorough and efficient" standard. InHornbeck v. Somerset County Board of Education, 458 A.2d 758 (Md. 1983), the

Maryland Supreme Court held that the Thorough and Efficient Clause did notrequire equality of resources, but only that efforts be made by the state "tominimize the impact of undeniable and inevitable demographic andenvironmental disadvantages on any given child."

Pau ley v. Kelly, 255 S.E.2d 859 (W.Va. 1979) represents a relatively

early attempt to give greater substantive content to the "thorough andefficient" standard. Decided after Rodriguez, it also illustrates the approachthe more aggressive state courts adopted in response to the second waveof school finance reform litigation. The plaintiffs relied on both the stateEqual Protection Clause and the Thorough and Efficient Clause to argue that

education was a fundamental right and that the funding statutes musttherefore withstand strict scrutiny if the plaintiffs could prove that aconstitutionally mandated thorough and efficient education was provided in

some districts but not in others. The Court looked to dictionary definitions of"thorough" and "efficient," the record of the debates preceding the adoptionof the provision in West Virginia and in Ohio (which was the first state toadopt this standard), and the cases in other states. The Court formulatedthe constitutional mandate as follows:

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We may now define a thorough and efficient system ofschools: It develops, as best the state of education expertiseallows, the minds, bodies and social morality of its chargesto prepare them for useful and happy occupations,recreations and citizenship, and does so economically.28

Anticipating the adequacy approach, the Court identified eight categories ofsubject matter that must be included and noted that the system must provideadequate physical infrastructure, materials, personnel, and supervision ofefficiency and competency.

A more demanding statement of the standards required by theThorough and Efficient Clause was set forth by the New Jersey SupremeCourt in Abbott v. Burke, 575 A.2d 359 (N.J. 1990), where the Court heldthat the educational legislation enacted in response to its invalidation of theprior funding system was itself invalid as applied to the poorest urban schooldistricts. This decision is likely to figure prominently in Pennsylvania'sconsideration of the current system of public school financing, whether or notthe Court chooses to follow its reasoning. As with the other decisionsinvalidating state educational systems, the New Jersey Court emphasizedthat the Constitution conferred the ultimate responsibility for the adequacyof the system on the state, not the local districts. The Court held that thestate must amend its system of financing the public schools so as toguarantee that the poorest urban school districts receive funding at a levelsubstantially comparable to that afforded the wealthy suburban districts andthat additional funding be provided by the state to offset the negative impactthat socioeconomic disadvantage has had on the pupils in the poorest schooldistricts. The Court based these directives on its prior holding in Robinsonv. Cahill that the constitution required the state to provide all public schoolstudents with "that educational opportunity which is needed in acontemporary setting to equip a child for his role as a citizen and as acompetitor in the labor market."' Therefore, "poorer disadvantaged studentsmust be given a chance to be able to compete with relatively advantagedstudents."3°

In Rose v. Council for Better Education, Inc., 790 S.W.2d 186 (Ky.1989), the Kentucky Supreme Court held education a fundamental right and

28Pauley v. Kelly, 255 S.E.2d 859 (W.Va. 1979)29Abbott v. Burke, 575 A.2d 359, 372 (N.J. 1990), quoting Robinson v. Cahill

(/), 303 A.2d 273 (1973).30Abbott v. Burke, 575 A.2d 359, 372.

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invalidated that Commonwealth's entire school system under the mandateof the Kentucky Constitution to "provide an efficient system of public schoolsthroughout the state."' The Court gave a detailed listing of theconstitutionally required characteristics of the public educational system:

The essential, and minimal, characteristics of an"efficient" system of common schools, may be summarizedas follows:

1) The establishment, maintenance and funding ofcommon schools in Kentucky is the soleresponsibility of the General Assembly.

2) Common schools shall be free to all.

3) Common schools shall be available to allKentucky children.

Common schools shall be substantially uniformthroughout the state.

5) Common schools shall provide equal educationalopportunities to all Kentucky children, regardless ofplace of residence or economic circumstances.

6) Common schools shall be monitored by the GeneralAssembly to assure that they are operated with nowaste, no duplication, no mismanagement, and withno political influence.

7) The premise for the existence of common schoolsis that all children have a constitutional right to anadequate education.

8) The General Assembly shall provide fundingwhich is sufficient to provide each child in

Kentucky an adequate education.

31Ky. Const. § 183.

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9) An adequate education is one which has as itsgoal the development of the seven capacitiesrecited previously. 32

While there are assurances of equality in this standard, the emphasis hasshifted toward the substantive content of the education provided thestudents, as compared with the New Jersey Court's decision that based aremedy on equality of resources. (In any case, the Kentucky Court's stanceon equality is somewhat undercut by its statement that the GeneralAssembly may "empower [local school entities] to enact local revenueinitiatives to supplement the uniform, equal educational effort that theGeneral Assembly must provide.")33 A similar set of educational standardswas also adopted by the Alabama Supreme Court in Opinion of the Justices,624 So.2d 107 (Ala. 1993).

A major recent case applying the Thorough and Efficient Clause ofthe Ohio Constitution invalidated that state's funding system.34 This case issignificant not only because a large neighboring state has applied a similarConstitutional provision to Pennsylvania's, but also because the Court hadupheld Ohio's previous funding scheme in Board of Education of Cincinnativ. Walter, 390 N.E.2d 813 (Ohio 1979). For purposes of this discussion, themost important feature of DeRoiph is its focus on resources rather thanoutcomes. The state, which bears the responsibility for educational qualityunder the Constitution, fails in its obligation if school districts are starved forfunds or lack teachers, buildings or equipment. The state's school systemis not thorough and efficient if "a school district [is] receiving so little local andstate revenue that the students [are] effectively being deprived of educationalopportunity."' The Court recognized that disparities in educationalresources between districts are inevitable, that equal educational opportunityis unrealistic as a judicial mandate, and that wealthier districts should not bediscouraged from providing a school system that goes beyond theConstitutional minimum. Under this approach, an institution, such as an IU,

"Rose v. Council for Better Education, Inc., 790 S.W.2d 186, 212-13 (Ky.1989). The "capacities" identified by the Court were oral and writtencommunications skills; knowledge of economic, social and political systems;understanding of governmental processes; self-knowledge and knowledge of thestudent's own "mental and physical wellness"; grounding in the arts; training inacademic or vocational fields; and academic and vocational skills.

33Ibid, 212.'DeRolph v. State, 677 N.E.2d 733 (Ohio 1997).35Ibid., 741.

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that permits resources in the poorer districts to afford greater educational

benefits significantly assists the state in meeting its educational

responsibility.

By expanding the conceptual framework used to define equity, thosecourts that have spoken to equity issues are attempting to address theinverse relationship perceived between need and resource allocation.Rather than rely on strictly economic definitions of equity, courts havecombined economic, educational and social objectives, in effect requiringthat school systems provide the resources needed to assure a sufficientsocial investment in each unit of service rendered to students. Where

resources are inadequate to this task, courts have held state efforts toprovide a thorough and efficient education to be inadequate, either at theschool district or state level. Review and criticism of an educational system'sinternal elements is one way to promote a more rational and inventiveapproach to meeting identified need; definitions of educational need in recent

court decisions reflect ideological differences among state courts concerningthe relationship between funding and other elements of the system, and howthis relationship affects the system's capacity to produce thorough andefficient outputs.

As of this writing, Pennsylvania's system of public school funding is

the subject of two lawsuits that challenge the system under the Thoroughand Efficient Clause. Pennsylvania Association of Rural and Small Schoolsv. Casey, 11 M.D. 1991 (Pa. Commw. Ct.) was filed on behalf of 215districts; Marrero v. Commonwealth, 182 M.D. 1997 (Pa. Commw. Ct.) wasfiled on behalf of the pupils in the Philadelphia School District.36 In addition,

the litigation regarding desegregation of the Philadelphia School Districtunder the Pennsylvania Human Relations Act has dealt with the issue ofrequiring increased funding for the Philadelphia schools; this case is nowpending in the Pennsylvania Supreme Court.' Thus it remains to be seenwhat effect, if any, the recent cases applying various judicial standards topublic school financing will impact the consideration of equity in the publicschools of this Commonwealth.

36A history of the latter suit may be obtained on the Internet athttp://www.ezonline.com/parss/eqtime.htm.

'Pennsylvania Human Relations Commission v. School District of

Philadelphia, Pa. Commw. , 667 A.2d 1173, 1183-85 (Pa. Commw. Ct.

1995).

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Whatever the outcome of this litigation, the growth of emphasis onoutput that has manifested itself in school funding litigation has taken firmhold in the administration of the public schools of this Commonwealth, as isevident in such initiatives as the Department's promulgation of tightenedstandards of school assessment, student learning outcomes and schoolperformance incentives.' At the same time, recent legislation has focusedon increasing funding for those school districts with high marketvalue/income aid ratios (i.e., the poorer school districts)39 and creatingservice programs that provide greater assistance to disadvantaged schooldistricts, such as distance learning40 and Project Link to Learn.'" The publicschool system has to some extent responded to both the performanceadequacy and resource equity strains shown in the school funding litigationin other states.

THE PARAMETERS OF EDUCATIONAL EQUITY

There appears to be growing consensus regarding the criteriaconsidered relevant to and useful for measuring economic, educational andsocial inputs and outputs both in the context of educational equity litigationand in the broader public discussion on policies to improve the quality andfairness of the public school system. These criteria can be loosely groupedinto three general categories: those assessing funding schemes andfinancial resources; those relating to system efficiency; and those describingefficacy or the quality of education delivered.

Measures used to describe equity in economic terms focus on theamount of State and local revenue allocated per pupil. These include pupilpopulation, property wealth, property tax, personal income, overall municipaltax burden and number of pupil recipients of Aid to Families with Dependent

38See 22 Pa. Code §§ 5.202, 5.222, 5.231 and 5.232 and Public SchoolCode § 2502.34.

39Public School Code §§ 2502.29, 2502.33 and 2509.5(m)-(o).°Public School Code §§ 784.2 and 2597.41Public School Code § 1501-A et seq.

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Children.' In conducting economic analyses, courts and commentatorshave considered these factors, then examined the effect of State funding onwealth disparities existing at the district level.

Measures of systemic efficiency address both quantitative andqualitative aspects of equity. Monitoring implementation and compliancewith educational goals, objectives, and standards relating to acceptablecurricular program content; staffing ratios; faculty experience and training;staffing and special resources have been considered in this context.Analyses of efficiency describe the relationship between these measures andthe economic criteria described above, as well as to various povertyindicators describing the district and student population.

The third type of measures attempt to represent the quality of theeducation delivered. Overall performance, or output, of educational systemsmust be examined in light of the economic, historical, social and culturalcontext in which the services they provide are delivered, according to thedegree to which they are responsive to changing expectations concerningwhat constitutes a sufficient level of education. Criteria include student skills

as indicated by performance on standardized tests, failure rate, dropout rate,quality of facilities, and patterns of differential course offerings relative to

district wealth. More general social indicators affecting the quality ofeducation students receive include family participation and support,community involvement, violence, poverty, and availability of role models;these are considered factors which may affect students' ability to realize their

innate educational potential.

Taken as a whole, these criteria have been used to define relativeeducational need, and have served as justification for courts mandating and

for observers to advocate more equitable funding schemes. These criteriamay suggest approaches by which Ws can address equity issues in

Pennsylvania.

42The Temporary Assistance for Needy Families (TANF) program, Title I of

Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of1996 (P.L. 104-193), replaced the Aid to Families with Dependent Children (AFDC)

with a new block-grant program to the states. The AFDC program in Pennsylvania

was replaced by TANF in March 1997.

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ECONOMIC MEASUREMENT OF EFFICIENCY AND EQUITY

A salient feature of the recent efforts to reform public education hasbeen the attempt by economists and accountants to devise quantitativemeasures of efficiency and equity. These efforts have provided specificcontent to demands by public officials, parents and other citizens to improvethe accountability of the public schools. The following standards may be

applied to the !Us.

Efficiency

In the current structure of !Us, efficiency is difficult to measurebecause the lUs do not report either output units (e.g., students served) orinput units (e.g., employees) to the State or any other public forum. Thesemeasures, when combined with corresponding dollars, could be used tocompare unit revenues and costs, both among lUs and between lUs andother educational service agencies across the country. At present, input andoutput units are apparently tabulated within the individual lUs, a special studywould be required to collect and summarize this data for all lUs.

School districts and nonpublic schools have the option of producingspecial education services themselves, rather than procuring them from Kis.Properly, the costs of these district programs should also be computed andcompared to the equivalent costs of the Kis. Differences between the twomay represent differences in efficiency but could also measure differencesin program quality. Quality of services is much more difficult to measure than

quantity of services.

Equity

Equity is also difficult to measure because equity is difficult to define.At present, the lUs sell services to school districts and nonpublic schools atprices related to costs; the lUs must compete with their school districts andother customers as producers. Therefore, IU prices have to be competitive.In general, each IU charges the same price for the same service to all of itscustomers, regardless of the customer's location, size or ability to pay.Therefore, equity defined as equal access to IU services is assured in onesense--equality of prices. But not all school districts or nonpublic schools

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have an equal ability to purchase IU services, and the students in thosedistricts that have less ability to pay may face a relative deprivation ofeducational opportunity.

Prices differentiated by ability to pay (e.g., school district size, wealthor tax effort) would not seem to provide equity. School district revenues,largely derived from taxpayer revenues and the Commonwealth's basiceducation subsidy, are already determined by these same equity variables.Therefore, differentiated prices would seem to duplicate the equity effortalready in place in existing State and local funding mechanisms.

The recent evolution of the definition of equity in education fromaccess to adequacy expands the appropriate measure of equity from a focuson inputs (expenditures on students) to include outputs (results fromeducation). In turn, the emphasis on educational results will renew the focuson the quality of education achieved in the most cost-efficient way.

EQUITY AND THE INTERMEDIATE UNIT

The lUs constitute a unique component in the Commonwealth'seducational system. Unlike the 501 school districts, they form a statewidenetwork of manageable size that facilitates the communication of ideas from

one unit to the next and readily permits collaboration. Because of this theyare ideally positioned to augment the effectiveness of any State program thatcontributes to equity. At the same time, IU staff has an intimate connectionto the classroom, which allows them to become as involved and aware ofequity issues as the districts themselves. In view of the rapid changes ineducational practices in response to the current educational reform

movement, the entrepreneurial orientation of the Ws confers a uniqueadvantage that complements the other components of our public schoolsystem. The !Us have a substantial impact in improving the efficiency andquality of educational offerings by obviating the duplication of effort thatwould be required if each district were to perform each task on its own.

The following section lists dozens of specific programs that the lUsengage in; many of these contribute substantially to making the educationalsystem more equitable. The working group indicated that lUs provideservices that school districts are incapable of providing themselves; amongthe most important of these roles as identified by the working group werestaff development, curriculum development and technological initiatives,

-31-

such as distance learning. The broad program of auxiliary services tononpublic schools helps assure that all Pennsylvania children receive somebenefit from the public school system. The lUs are active in providinginstruction in English as a second language, thus helping to remove a barrierto the success of immigrant pupils.

At the same time, the lUs assist school districts by consolidatingadministrative services, from strategic planning to payroll administration.Bulk purchasing through the !Us cuts costs by permitting school districts totake advantage of quantity discounts from suppliers. In addition, the lUshave been instrumental in making teachers aware of the Commonwealth'snew professional and curriculum standards.

-32-Alt

CURRENTINTERMEDIATE UNIT OPERATIONS

The 29 Pennsylvania lUs serve as an intermediary between thePennsylvania Department of Education and school districts and nonpublicschools. As noted above, the lUs were created to act as instruments offederal, State and local education policies and to achieve economies of scalein the provision of needed services to school districts and nonpublic schools.

This section of the report details the current operations of the IUs.Services provided are summarized and briefly discussed. Revenues andexpenditures are summarized and analyzed in several different ways.

SERVICES

Ws offer a wide variety of resources and services to school districtsand nonpublic schools on the basis of locally identified needs. In general,they coordinate and perform instructional, assessment, instructionalenhancement and development, professional development, technical, and

administrative functions.

The Public School Code specifically authorizes lUs to adoptprograms and services under seven general categories:

curriculum development and instructional improvement services

educational planning services

instructional materials services

continuing professional education services

pupil personnel services

43§ 914-A(5); 24 P.S. § 9-964(5).

-33-

4 2

State and federal agency liaison services

management services

The Ills are responsible for the programs related to exceptionalchildren, educational broadcasting, audio-visual libraries and instructionalmaterials." The IU board may operate an area vocational-technical schoolif designated by the school's directors as the responsible agent.45

The following summary of services currently offered by Ws has beencompiled from literature provided by the 11.1s and from interviews with thestudy working group. The list does not correspond directly to the servicecategories listed above; rather, it more closely reflects programs andservices as grouped by the kis.

Training and Development Services

interpret education research trends and develop professionaleducation programs for teachers

offer seminars covering educational programming, subject-relateddevelopments, technological and communication skills, and othertopical issues affecting administrators, teachers, supportpersonnel and school directors

provide leadership training to schools and communities

maintain resource centers which house learning materials forteachers

offer training to parents on systemic and budgetary changes andon behavioral management resources

encourage dialogue and enhance communication between andamong school districts, educators and parents

44§ 914-A(7); 24 P.S. § 9-964(7).45§ 1850.2; 24 P.S. § 18-1850.2.

-34-

43

Technological Services

offer instruction for teachers and students in use of computer,audio and video technology (for example, the Technology MentorTraining Program)

conduct induction workshops

secure equipment enabling students with disabilities tocommunicate and function in school and at home

coordinate distance learning, whereby instruction at one sitereaches multiple sites simultaneously

conduct telecommunications, computing, teleconferencing,courier services, and technology assessments

provide computerized record-keeping for students in specialeducation programs

promote proposed statewide technology initiatives, e.g., projectLink to Learn

promote and establish broadband computer networks

Instructional Materials Services

maintain instructional materials centers and media librariesthrough the joint purchase of films, videos, laser discs and othernon-print media

offer other production facilities

provide equipment repair and technology consultation services

Educational Planning Services

facilitate collaborative curriculum development approaches andframeworks, program objectives and standards

-35-

interpret and ensure implementation of state regulations andstandards

develop and implement curriculum and associated assessmentprocedures, providing local level and on-site technical assistance,if desired

provide assistance in strategic planning and instructionalleadership; for example, through consortium arrangementsaddressing grant writing, mathematics and science instruction,and drug and alcohol education and prevention

identify and develop business-education partnerships creatingeducational opportunities

act as communication link or bridge between local districts andDepartment of Education

Instruction and Pupil Personnel Services

Services to Children:

evaluate children to determine eligibility for early interventionservices; provide student tracking

provide instruction for at-risk youth in teen parenting, drug andalcohol prevention, and alternative education programs

provide continuum of instruction for students with disabilities:special classroom; community based instruction; transitionalplanning; instructional support; and assistance in mainstreamclass

oversee and provide vocational education and instruction formigrant children

manage coordination and collaboration among schools andservice agencies (for example: partial hospitalization programsfor students with emotional disturbances, and service integrationwith mental health providers)

purchase transportation services

-36-

4 5

offer health services and crisis intervention and support

operate latch-key and extended day programs

run job placement and school to work statewide support initiatives

Services to Adults:

offer English as a Second Language, basic education, literacyand GED instruction

provide training programs for business and industry, and theunemployed

conduct parent education seminars for parents of students withspecial needs

Special Education Services

develop educational program models for public schools

develop procedure and infrastructure to achieve compliance withfederal legal mandates

offer educational programs, including: preschool/earlyintervention; multihandicapped support; support for hearing andsight impaired; occupational/physical therapy; emotional, autistic,and life-skills support; learning, and speech/language support;and gifted support

Cooperative Administrative Projects

promote cost savings by acting as vendors of educational andsupport services to local school districts and through jointpurchasing of school supplies and equipment

provide audio-visual and microcomputer equipment repair

provide consultation for administration and management of

schools

-37- 4 6

establish educational foundations to enhance resources

offer insurance and employee health benefits

provide computerized services for school administration, e.g.,payroll

create natural gas, electric and fuel oil consortiums

create teacher recruiting consortiums

provide management systems analysis and design services

conduct personnel support and salary surveys

provide public and government relations assistance

provide assistance in meeting state and federal mandates, forexample: technical assistance in implementation of Americanswith Disabilities Act, Right to Know, AHERA (asbestosregulations), and compliance with Office of Civil Rightsregulations

provide space for administering programs and communitymeetings with public officials

collect data for the Department of Education and collect anddistribute data to the Department of Public Welfare

Statewide Programs and Services

promote Governor's Schools for talented high school students

establish consortiums for technology purchases

provide technical assistance and resources for programs inspecial education, instructional support and at-risk programs

establish cooperative ventures with the Department of Education

assist in aid to nonpublic schools (Act 89 programs):guidance/counseling and testing; psychological services; services

-38-

4 7

for exceptional children, remedial reading and math; speech andhearing services; and services for the educationallydisadvantaged children

administer federal programs for students attending nonpublicschools

REVENUES AND EXPENDITURES

lUs have no independent taxing authority. The major sources ofrevenues are governmental grants, sales of services, member school districtcontributions, student tuition, and income from investments. Expendituresare made for employee salaries and benefits, purchases of professional andproperty services, and supplies and equipment. Fund balances smooth outminor year-to-year mismatches between budgeted and actual revenues and

expenditures.

Sources of Funds

Tables 1 and 2 show IU revenues categorized by program type; thedata are for the fiscal year ending June 30, 1996, and are taken from theAnnual Financial Reports prepared by the lUs. Included are the two IU fundtypes which contain the bulk of their current operating and dedicated fundrevenues: the General Fund and Special Funds.

For fiscal year 1996, IU General Fund revenues totaled $360.8million (Table 1). Funding for the seven service categories specificallyauthorized under Public School Code § 914-1(5) represented about $48.1million, or 13.3 percent of total General Fund revenues. Funding for federallyfunded programs provided by the lUs made up nearly half, and Act 89

Tab

le 1

PE

NN

SY

LVA

NIA

INT

ER

ME

DIA

TE

UN

ITS

GE

NE

RA

L F

UN

D R

EV

EN

UE

S, B

Y P

RO

GR

AM

TY

PE

FIS

CA

L Y

EA

R E

ND

ING

JU

NE

30,

199

6

Cur

ricul

um

deve

lopm

ent

and

Con

tinui

ngS

tate

inst

ruct

iona

lE

duca

tiona

lIn

stru

ctio

nal

prof

essi

onal

Pup

ilan

d fe

dera

lM

edic

al

Inte

rmed

iate

uni

t no.

and

nam

eA

dmin

istr

atio

nim

prov

emen

t'pl

anni

ng'

mat

eria

ls'

Man

agem

ent'

educ

atio

n'pe

rson

nel'

liais

on'

Fed

eral

assi

stan

ceA

ct 8

9T

otal

1In

term

edia

te U

nit 1

$2,0

97,1

11$1

06,9

35$0

$45,

188

$0$0

$0$0

$3,3

09,4

85$4

0,60

9$9

48,6

556,

547,

983

2P

ittsb

urgh

-Mou

nt O

liver

739,

094

00

00

00

504,

857

5,18

5,60

20

2,68

0,05

39,

109,

605

3A

llegh

eny

2,64

8,22

771

10

14,5

59(4

01)

015

54

19,5

16,3

7811

,023

,413

4,93

6,53

538

,139

,580

4M

idw

este

rn1,

209,

726

105,

535

103,

399

500,

440

584,

542

109,

257

012

4,66

913

,474

,644

2,80

3,57

095

9,31

419

,975

,095

5N

orth

wes

t Tri-

Cou

nty

246,

151

120,

427

051

6,85

099

,974

00

2,35

3,41

37,

244,

937

10,7

532,

291,

863

12,8

84,3

68

6R

iver

view

2,35

5,97

10

00

00

00

3,27

4,69

20

505,

790

6,13

6,45

3

7W

estm

orel

and

4,88

9,67

515

3,91

10

143,

181

273,

274

00

00

01,

005,

852

6,46

5,89

4

8A

ppal

achi

a2,

150,

075

00

00

026

4,90

40

4,00

5,04

768

,878

1,55

4,66

78,

043,

570

9S

enec

a H

ighl

ands

253,

182

91,1

530

303,

738

80,3

990

46,4

2951

9,32

63,

467,

963

047

8,91

95,

241,

109

10C

entr

al91

9,08

630

9,41

859

3,71

223

4,78

10

52,6

730

74,0

193,

562,

028

135,

949

365,

710

6,24

7,37

6

11T

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rora

671,

482

137,

108

017

7,22

389

,516

00

1,26

7,24

04,

780,

953

61,3

2132

3,95

77,

508,

799

12Li

ncol

n1,

948,

891

928,

676

00

00

02,

659,

056

7,42

3,43

693

,726

1,52

4,95

714

,578

,743

13La

ncas

ter-

Leba

non

1,79

2,95

234

0,07

30

769,

074

815,

500

242,

991

2,24

4,39

80

11,2

75,0

7595

2,11

13,

381,

796

21,8

13,9

68

14B

erks

Cou

nty

1,68

1,76

976

,525

40,3

0271

8,00

989

,123

91,6

6619

2,76

40

10,2

53,2

1317

2,49

01,

206,

212

14,5

22,0

73

15C

apita

l Are

a2,

635,

009

345,

307

079

7,71

00

083

,718

4,33

6,25

531

,039

1,92

8,74

010

,217

,804

16C

entr

al S

usqu

ehan

na1,

096,

687

6,91

10

368,

473

373,

464

283,

662

04,

990,

358

12,2

47,4

9578

,790

890,

939

20,3

36,7

78

17B

LaS

T1,

371,

146

06,

660

316,

603

00

04,

565

2,83

2,65

312

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503,

722

5,04

7,95

2

18Lu

zem

e2,

571,

777

00

00

00

02,

269,

065

8,10

02,

155,

524

7,00

4,46

6

19N

orth

east

ern

Edu

catio

nal

4,24

4,01

425

5,87

51,

693

397,

363

00

00

2,94

0,70

10

1,53

5,65

39,

375,

299

20C

olon

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orth

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on1,

089,

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169,

371

028

5,55

117

2,66

90

00

3,15

5,26

60

1,72

4,02

46,

595,

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21C

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high

1,60

3,74

719

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6,50

50

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2,58

9,37

349

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1,30

5,57

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592,

278

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Cou

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2,66

5,01

443

5,91

90

483,

987

265,

315

425,

296

012

9,58

64,

246,

033

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569,

871

12,2

21,0

21

23M

ontg

omer

y C

ount

y52

8,59

715

1,92

30

1,67

5,93

65,

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971

00

95,8

519,

711,

451

264,

622

6,79

0,25

624

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24C

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er C

ount

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225

035

6,01

672

1,37

47,

300,

113

00

118,

510

7,41

9,98

431

,645

2,18

4,61

221

,200

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25D

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are

3,56

2,65

30

00

00

00

3,64

0,95

55,

379,

917

4,64

5,34

717

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,872

26P

hila

delp

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00

00

952,

625

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012

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3,99

5,03

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31,7

21,2

04

27B

eave

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alle

y72

2,65

90

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974

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470,

987

2,68

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2

28A

RIN

1,57

3,35

596

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9,31

52,

203,

110

030

4,04

14,

805,

659

29S

chuy

lkill

1,56

9,31

551

2,82

30

00

00

02,

230,

771

064

1,51

04,

954,

420

Tot

al51

,904

,594

4,36

4,42

91,

101,

781

8,50

7,94

416

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,614

1,26

6,11

02,

748,

649

13,5

34,4

8617

0,74

0,52

725

,288

,142

64,7

99,1

0836

0,81

9,38

4

Per

cent

age

of to

tal

14.4

%1.

2%0.

3%2.

3%4.

6%0.

3%0.

8%3.

8%47

.3%

7.0%

18.0

%10

0.0%

1. S

ervi

ce c

ateg

orie

s in

clud

ed in

Pub

lic S

choo

l Cod

e, §

914

-A(5

).

NO

TE

: Det

ails

may

not

sum

to to

tals

bec

ause

of r

ound

ing.

SO

UR

CE

: Pen

nsyl

vani

a D

epar

tmen

t of E

duca

tion,

Com

ptro

ller's

Offi

ce, I

nter

med

iate

Uni

t Ann

ual F

inan

cial

Rep

orts

, Fis

calY

ear

End

6/3

0/96

.

Tab

le 2

PE

NN

SY

LVA

NIA

INT

ER

ME

DIA

TE

UN

ITS

SP

EC

IAL

FU

ND

RE

VE

NU

ES

, BY

PR

OG

RA

M T

YP

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ISC

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G J

UN

E 3

0, 1

996

Inte

rmed

iate

uni

t no.

and

nam

eS

peci

aled

ucat

ion

Tra

nspo

rtat

ion

Ear

lyin

terv

entio

nIn

stitu

tiona

lized

child

ren

Tot

al

1In

term

edia

te U

nit 1

$19,

056,

915

$3,8

50,6

73$1

,266

,920

$0$2

4,17

4,50

8

2P

ittsb

urgh

-Mou

nt O

liver

55,5

32,9

724,

594,

244

1,84

9,28

165

5,56

862

,632

,065

3A

llegh

eny

32,5

78,5

351,

293,

891

4,89

6,46

743

6,75

539

,205

,648

4M

idw

este

rn8,

273,

870

573,

135

1,72

1,82

965

2,98

711

,221

,821

5N

orth

wes

t Tri-

Cou

nty

13,0

16,8

541,

474,

888

1,66

0,06

671

,982

16,2

23,7

90

6R

iver

view

4,76

9,22

575

9,23

593

2,92

928

6,61

96,

748,

007

7W

estm

orel

and

16,7

47,5

902,

042,

221

1,32

2,48

517

8,82

220

,291

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8A

ppal

achi

a9,

504,

547

2,85

8,12

31,

769,

302

227,

869

14,3

59,8

40

9S

enec

a H

ighl

ands

7,23

9,74

964

9,05

573

3,73

40

8,62

2,53

8

10C

entr

al4,

039,

614

1,99

1,70

21,

460,

865

123,

471

7,61

5,65

2

11T

usca

rora

1,12

4,52

447

7,40

33,

874,

647

05,

476,

575

12Li

ncol

n25

,554

,369

4,29

6,92

42,

541,

885

1,57

1,30

833

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ncas

ter-

Leba

non

14,8

13,9

002,

996,

576

2,71

4,67

10

20,5

25,1

47

14B

erks

Cou

nty

2,98

4,57

11,

299,

181

1,82

2,27

274

,916

6,18

0,94

0

15C

apita

l Are

a14

,731

,459

4,14

2,90

32,

968,

743

1,41

7,63

523

,260

,740

16C

entr

al S

usqu

ehan

na5,

279,

735

584,

880

1,25

5,24

036

9,28

47,

489,

140

17B

LaS

T2,

380,

561

64,2

2977

1,03

023

8,76

83,

454,

589

18Lu

zern

e8,

762,

039

1,17

0,09

30

09,

932,

132

19N

orth

east

ern

Edu

catio

nal

12,0

96,2

993,

613,

816

1,43

8,24

64,

048,

312

21,1

96,6

73

20C

olon

ial N

orth

ampt

on9,

460,

373

1,58

3,90

42,

252,

066

114,

002

13,4

10,3

45

21C

arbo

n-Le

high

7,70

5,70

31,

686,

795

1,66

7,62

40

11,0

60,1

22

22B

ucks

Cou

nty

16,8

50,6

302,

715,

921

3,56

0,90

04,

364,

963

27,4

92,4

14

23M

ontg

omer

y C

ount

y12

,181

,767

3,78

4,16

25,

856,

477

1,56

6,15

123

,388

,557

24C

hest

er C

ount

y13

,867

,672

2,74

2,24

42,

653,

750

388,

719

19,6

52,3

85

25D

elaw

are

14,6

90,0

9110

,900

3,86

6,53

52,

489,

299

21,0

56,8

26

26P

hila

delp

hia

159,

270,

978

21,9

15,6

5015

,412

,872

468,

772

197,

068,

272

27B

eave

r V

alle

y4,

685,

925

273,

283

651,

055

962,

023

6,57

2,28

6

28A

RIN

5,65

3,47

01,

890,

545

605,

909

08,

149,

924

29S

chuy

lkill

13,4

67,5

231,

589,

796

746,

412

015

,803

,732

Tot

al51

6,32

1,46

076

,926

,375

72,2

74,2

1220

,708

,225

686,

230,

273

Per

cent

age

of to

tal

75.3

%11

.2%

10.5

%3.

0%10

0.0%

NO

TE

: Det

ails

may

not

sum

to to

tals

bec

ause

of r

ound

ing.

SO

UR

CE

: Pen

nsyl

vani

a D

epar

tmen

t of E

duca

tion,

Com

ptro

ller's

Offi

ce, I

nter

med

iate

Uni

t Ann

ual F

inan

cial

Rep

orts

,

Fis

cal Y

ear

End

6/3

0/96

.52

programs' and administrative revenues added another one-third, to theGeneral Fund total. IU Special Funds totaled $686.2 million (Table 2). Overthree-quarters of this total was related to the special education programsprovided by the lUs. Other Special Fund revenues were used for specialeducation transportation, and programs for early intervention andinstitutionalized children.

Special education programs provided by the lUs include bothprograms funded directly by the State, and programs purchased from the lUsby school districts. In fiscal year 1995, about $1.034 billion was budgeted bythe State to the school districts for special education. One-third of thesefunds were redirected to the lUs for purchasing special education services;the remainder was used for special education programs provided by theschool districts themselves. However, the percentage of special educationprograms provided for school districts by lUs varied significantly across lUs,from a low of 3 percent to a high of 93 percent. Moreover, the percentageof special programs provided for school districts by lUs does not appear tobe strongly related to either school district enrollments or to school districtwealth (MV/PI aid ratios); in fact, there is a weak positive relationshipbetween this percentage and school district wealth. Apparently, the use ofIlls for special education by the school districts depends on factors otherthan school district enrollment and wealth. With regard to special education,the Ills do not primarily serve small or poor school districts.

Combined, IU General Fund and Special Funds revenues totaledabout $1.047 billion in fiscal year 1996.

'Act 89 refers to the act of August 1, 1975 (P.L.180, No.89), which added§ 922.1-A (25 P.S.§ 9-972.1) to the Public School Code. The provision directs thelUs to provide a program of auxiliary services to nonpublic school students attendingnonpublic schools within the IU's jurisdiction. Auxiliary services are guidance,counseling and testing services; psychological services; visual services; services forexceptional children; remedial services; speech and hearing services; services forthe educationally disadvantaged; and "such other secular, neutral, nonideologicalservices as are of benefit to all school children and are presently or hereafterprovided for public school children of the Commonwealth" (§ 922.1-A(b)). In thecase of psychological services and visual services, the Department of Educationmay choose to deliver the services directly, without using the lUs. Services in allcases are limited to those that are provided to public school children. The purposeof the program is to provide educational services to nonpublic school children insuch a fashion as to comply with the Establishment Clause of the First Amendment.The program is funded by an allocation from the Department of Education to the lUsof $72 for each nonpublic school student enrolled within the IU. This amount is

adjusted "whenever there is an increase in the median annual instruction expenseper WADM" (§ 922.1-A(d)).

-42-

53

Table 3 shows total IU revenues categorized by source. Staterevenue sources made up the largest portion, and included direct Statefunding for the Special Fund programs shown in table 2, Act 89 programs,transportation, and general operating and capital subsidies. State revenuesare also used for IU employer Social Security and retirement contributions.Local sources included funding from local government units, tuition fromstudents, and revenues from community activities. Federal sources includedfunding for the various programs mandated by federal laws. Other sourcesincluded member school district and local education agency payments for IUservice.

The sources of funding for the lUs vary widely and depend on the mixof services offered by each unit.' In the case of Pittsburgh-Mt. Oliver andPhiladelphia, the IU and school district are the same; therefore, IU revenuesmust be viewed together with school district revenues.

Uses of Funds

Table 4 shows IU expenditures categorized by type; again, the dataare for fiscal year 1996, and are taken from IU Annual Financial Reports.For fiscal year 1995-96, IU General Fund and Special Funds expenditurestotaled $1.039 billion.

Expenditures for instruction accounted for nearly two-thirds of total

current operating expenditures, with salaries and benefits equaling almostone-half of total IU expenditures. Expenditures for instructional supportmade up most of the balance. Administrative and business expendituresamounted to about 9 percent of total IU expenditures; miscellaneousexpenditures amounted to another 2 percent of total expenditures.

For fiscal year 1995-96, IU operating revenues exceeded IUoperating expenditures by about $8.0 million. This amount was added to IU

fund balances.

Basis for Funding

The major sources of nonmarket revenue for the lUs are local, Stateand federal program grants, and the State general operating subsidy.

'Revenues may also vary because of data reporting inconsistencies by the

lUs. Administrative expenses are a prime example of such inconsistencies. Theextent of this variation is not known.

-43-r- A4

Tab

le 3

PE

NN

SY

LVA

NIA

INT

ER

ME

DIA

TE

UN

ITS

TO

TA

L G

EN

ER

AL

FU

ND

AN

D S

PE

CIA

L F

UN

D R

EV

EN

UE

S, B

Y S

OU

RC

EF

ISC

AL

YE

AR

EN

DIN

G J

UN

E 3

0, 1

996

Inte

rmed

iate

uni

t no.

and

nam

eLo

cal

sour

ces

Per

cent

age

of to

tal

Sta

teso

urce

sP

erce

ntag

eof

tota

lF

eder

also

urce

sP

erce

ntag

eof

tota

lO

ther

sour

ces

Per

cent

age

of to

tal

Tot

al

1In

term

edia

te U

nit 1

$17,

216,

328

56%

$9,0

58,6

6129

%$3

,232

,257

11%

$1,2

15,2

454%

$30,

722,

492

2P

ittsb

urgh

-Mou

nt O

liver

528,

896

122

,161

,970

315,

058,

847

743

,991

,957

6171

,741

,670

3A

llegh

eny

34,7

22,9

0145

23,6

76,9

4631

17,4

41,0

4523

1,50

4,33

62

77,3

45,2

28

4M

idw

este

rn9,

147,

849

298,

764,

337

2812

,609

,246

4067

5,48

52

31,1

96,9

16

5N

orth

wes

t Tri-

Cou

nty

12,4

02,8

0943

9,16

4,87

031

7,09

7,57

024

442,

909

229

,108

,158

6R

iver

view

961,

841

75,

092,

185

402,

842,

998

223,

987,

436

3112

,884

,460

7W

estm

orel

and

15,8

41,3

5159

7,67

1,55

629

2,76

8,20

110

475,

906

226

,757

,013

8A

ppal

achi

a9,

464,

794

428,

765,

804

393,

877,

355

1729

5,45

71

22,4

03,4

10

9S

enec

a H

ighl

ands

6,75

4,69

149

3,38

7,13

324

3,36

1,95

324

359,

869

313

,863

,647

10C

entr

al1,

083,

939

85,

579,

218

403,

609,

752

263,

590,

119

2613

,863

,028

11T

usca

rora

1,03

3,70

38

6,66

4,48

651

4,71

9,56

036

567,

625

412

,985

,374

12Li

ncol

n25

,925

,737

5314

,021

,145

297,

707,

386

1688

8,96

02

48,5

43,2

27

13La

ncas

ter-

Leba

non

17,1

27,6

6140

13,1

69,3

8531

11,0

27,6

0626

1,01

4,46

32

42,3

39,1

15

14B

erks

Cou

nty

3,93

1,63

219

7,26

7,19

835

6,92

0,01

433

2,58

4,17

013

20,7

03,0

13

15C

apita

l Are

a13

,699

,762

4113

,929

,423

423,

900,

043

121,

949,

316

633

,478

,544

16C

entr

al S

usqu

ehan

na2,

743,

309

107,

567,

986

2711

,647

,607

425,

867,

016

2127

,825

,918

i'17 18

BLa

ST

Luze

rne

1,57

2,67

38,

389,

806

18 502,

954,

305

6,01

2,65

335 36

2,05

3,00

62,

190,

463

24 131,

922,

558

343,

676

23 28,

502,

541

16,9

36,5

98

19N

orth

east

ern

Edu

catio

nal

1,69

4,67

76

13,1

45,4

5543

2,94

0,70

110

12,7

91,1

3842

30,5

71,9

72

20C

olon

ial N

orth

ampt

on94

7,43

45

8,04

4,51

440

2,60

1,19

213

8,41

3,09

242

20,0

06,2

32

21C

arbo

n-Le

high

6,58

5,77

540

6,78

2,61

541

2,63

8,56

016

645,

449

416

,652

,400

22B

ucks

Cou

nty

16,5

29,8

5842

17,0

82,4

3843

4,14

1,66

410

1,95

9,47

45

39,7

13,4

35

23M

ontg

omer

y C

ount

y2,

321,

082

525

,139

,372

528,

989,

735

1911

,557

,976

2448

,008

,164

24C

hest

er C

ount

y'4,

586,

741

1213

,464

,482

267,

025,

446

1915

,776

,193

4340

,852

,863

25D

elaw

are

16,1

52,7

2242

15,6

91,0

4241

3,63

9,26

210

2,80

2,67

07

38,2

85,6

96

26P

hila

delp

hia

490,

403

088

,108

,257

3916

,374

,803

712

3,81

6,01

354

228,

789,

476

27B

eave

r V

alle

y54

7,56

76

3,50

7,59

438

1,39

2,74

315

3,80

7,42

441

9,25

5,32

8

28A

RIN

982,

159

84,

638,

462

362,

203,

110

185,

131,

852

3912

,955

,584

29S

chuy

lkill

11,8

11,3

9957

4,72

0,58

423

2,23

0,77

111

1,99

5,39

710

20,7

58,1

52

Tot

al24

5,19

9,49

923

375,

234,

078

3616

6,24

2,89

716

260,

373,

180

251,

047,

049,

654

Ave

rage

8,45

5,15

512

,939

,106

5,73

2,51

48,

978,

385

36,1

05,1

60

Per

cent

age

of to

tal

23.4

%35

.8%

15.9

%24

.9%

100.

0%

551.

In th

e C

hest

er C

ount

y IU

, the

Cen

ter

for

Art

s an

d T

echn

olog

y (A

VT

S c

ampu

ses)

is a

Com

pone

nt U

nit.

For

fisc

al y

ear

endi

ng J

une

30, 1

996

the

CA

T h

ad r

even

ues

as fo

llow

s: L

ocal

sou

rces

, $96

9,51

2; S

tate

sou

rces

, $94

8, 4

37;

Fed

eral

sou

rces

, $0;

Oth

er s

ourc

es, $

6,91

4,87

0; T

otal

, $8,

832,

819.

The

se r

even

ues

are

noti

nclu

ded

in th

e

tabl

e. T

hey

are

repo

rted

on

PD

E F

orm

205

7.

NO

TE

: Det

ails

may

not

sum

to to

tals

bec

ause

of r

ound

ing.

SO

UR

CE

: Pen

nsyl

vani

a D

epar

tmen

t of E

duca

tion,

Com

ptro

ller's

Offi

ce, I

nter

med

iate

Uni

t Ann

ualF

inan

cial

Rep

orts

, Fis

cal Y

ear

End

6/3

0/96

.

Tab

le 4

PE

NN

SY

LVA

NIA

INT

ER

ME

DIA

TE

UN

ITS

TO

TA

L G

EN

ER

AL

FU

ND

AN

D S

PE

CIA

L F

UN

DS

EX

PE

ND

ITU

RE

S, B

Y T

YP

EF

ISC

AL

YE

AR

EN

DIN

G J

UN

E 3

0, 1

996

Pur

chas

edpr

ofes

sion

alan

d te

chni

cal

serv

ices

Sal

ary

and

othe

rT

otal

Adm

inis

trat

ion

Oth

erT

otal

Oth

er

Inte

rmed

iate

uni

t no.

and

nam

ean

d be

nefit

sin

stru

ctio

nin

stru

ctio

nan

d bu

sine

ssT

rans

port

atio

nsu

ppor

tsu

ppor

tex

pens

esT

otal

1In

term

edia

te U

nit 1

$18,

581,

442

$1,5

82,3

82$2

0,16

3,82

4$1

,677

,506

$3,8

03,7

34$3

,936

,539

$9,4

17,7

79$9

02,2

33$3

0,48

3,83

6

2P

ittsb

urgh

-Mou

nt O

liver

3,10

2,90

465

,255

,317

68,3

58,2

211,

029,

884

02,

524,

247

3,55

4,13

278

,835

71,9

91,1

88

3A

llegh

eny

41,1

46,4

027,

840,

349

48,9

86,7

516,

962,

957

1,31

4,14

618

,871

,054

27,1

48,1

561,

037,

154

77,1

72,0

62

4M

idw

este

rn12

,473

,565

7,74

4,23

720

,217

,802

2,47

4,18

657

3,11

66,

613,

038

9,66

0,33

987

5,44

230

,753

,583

5N

orth

wes

t Tri-

Cou

nty

16,0

51,7

751,

899,

318

17,9

51,0

932,

678,

111

1,55

8,35

86,

510,

295

10,7

46,7

6435

7,49

229

,055

,349

6R

iver

view

6,02

5,61

962

7,90

96,

653,

528

2,06

3,56

268

2,26

93,

154,

741

5,90

0,57

220

3,27

312

,757

,373

7W

estm

orel

and

16,5

58,0

881,

430,

253

17,9

88,3

412,

368,

293

2,14

3,77

13,

737,

273

8,24

9,33

637

6,28

626

,613

,963

8A

ppal

achi

a8,

901,

841

1,37

6,39

210

,278

,233

3,46

6,20

22,

820,

753

4,95

4,88

211

,241

,836

1,06

5,32

922

,585

,398

9S

enec

a H

ighl

ands

8,68

3,73

386

0,31

49,

544,

047

1,05

7,29

367

7,65

22,

288,

651

4,02

3,59

697

,548

13,6

65,1

90

10C

entr

al4,

994,

384

1,46

7,49

66,

461,

880

2,51

3,40

91,

694,

989

2,80

0,58

27,

008,

980

013

,470

,860

11T

usca

rora

2,84

1,77

551

7,39

93,

359,

173

2,55

4,32

743

4,10

76,

453,

838

9,44

2,27

228

1,57

713

,083

,022

-IL

12Li

ncol

n25

,038

,416

3,84

9,15

528

,887

,571

4,50

4,66

94,

323,

904

10,5

37,9

6519

,366

,538

288,

417

48,5

42,5

26

(TI

13La

ncas

ter-

Leba

non

17,8

43,5

403,

116,

408

20,9

59,9

4810

,488

,111

2,96

3,49

47,

280,

347

20,7

31,9

5134

0,36

642

,032

,266

14B

erks

Cou

nty

4,39

8,49

991

9,30

95,

317,

808

3,63

5,62

81,

521,

850

5,68

8,11

110

,845

,589

4,67

4,20

120

,837

,599

15C

apita

l Are

a13

,132

,746

3,21

2,56

416

,345

,310

4,40

9,64

44,

073,

997

6,47

6,03

914

,959

,680

1,73

9,43

633

,044

,426

16C

entr

al S

usqu

ehan

na7,

963,

874

1,40

3,20

39,

367,

078

3,30

5,68

870

4,39

013

,470

,890

17,4

80,9

6868

1,50

327

,529

,548

17B

LaS

T2,

712,

528

1,16

9,40

73,

881,

935

2,04

9,95

567

,314

2,00

8,01

24,

125,

281

52,5

508,

059,

766

18Lu

zern

e9,

347,

401

621,

801

9,96

9,20

21,

264,

631

1,19

4,89

04,

271,

423

6,73

0,94

415

6,08

116

,856

,227

19N

orth

east

ern

Edu

catio

nal

15,3

58,9

4176

7,53

416

,126

,475

3,65

7,79

73,

681,

022

4,82

2,85

712

,161

,677

2,24

9,28

930

,537

,441

20C

olon

ial N

orth

ampt

on9,

429,

447

1,42

3,27

210

,852

,719

2,82

0,75

61,

580,

286

4,40

3,89

58,

804,

937

135,

149

19,7

92,8

05

21C

arbo

n-Le

high

7,76

8,55

71,

830,

922

9,59

9,48

01,

894,

414

1,44

7,02

73,

137,

807

6,47

9,25

038

2,67

616

,461

,404

22B

ucks

Cou

nty

19,9

65,7

935,

149,

044

25,1

14,8

373,

529,

677

2,79

9,45

46,

408,

230

12,7

37,3

612,

041,

431

39,8

93,6

29

23M

ontg

omer

y C

ount

y19

,281

,625

5,82

0,56

225

,102

,187

6,84

5,44

33,

488,

493

11,7

00,1

5922

,034

,095

281,

061

47,4

17,3

43

24C

hest

er C

ount

y'15

,761

,024

6,23

4,78

621

,995

,810

4,30

6,51

12,

947,

397

8,96

8,03

916

,221

,946

1,82

9,69

240

,047

,449

25D

elaw

are

16,2

52,3

705,

168,

523

21,4

20,8

933,

939,

234

12,5

1910

,282

,798

14,2

34,5

502,

566,

488

38,2

21,9

31

26P

hila

delp

hia

143,

757,

141

31,0

37,6

8317

4,79

4,82

46,

887,

708

21,6

31,3

9021

,759

,764

50,2

78,8

6214

,275

225,

087,

961

27B

eave

r V

alle

y5,

412,

290

671,

951

6,08

4,24

11,

025,

604

451,

269

1,86

7,23

33,

344,

106

09,

428,

347

28A

RIN

5,65

1,18

358

3,44

56,

234,

627

1,84

2,19

41,

866,

568

2,41

8,55

76,

127,

319

670,

186

13,0

32,1

33

29S

chuy

lkill

10,3

10,8

5573

3,56

811

,044

,423

2,97

0,35

11,

589,

796

3,54

8,23

78,

108,

384

1,41

6,11

520

,568

,922

Tot

al48

8,74

7,75

916

4,31

4,50

365

3,06

2,26

298

,223

,746

72,0

47,9

5519

0,89

5,50

136

1,16

7,20

224

,794

,082

1,03

9,02

3,54

6

Per

cent

age

of to

tal

47%

16%

63%

9%7%

19%

35%

2%10

0%

1. In

the

Che

ster

Cou

nty

IU, t

he C

ente

r fo

r A

rts

and

Tec

hnol

ogy

(AV

TS

cam

puse

s)is

a C

ompo

nent

Uni

t. F

or fi

scal

yea

r en

ding

Jun

e 30

, 199

6 th

eC

AT

had

exp

endi

ture

s as

follo

ws:

Sal

ary

and

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The State general operating subsidy to each IU has threecomponents: (1) a constant amount related to the Commonwealthappropriation to the former county superintendent offices; (2) one-half of theremaining total appropriation to all lUs, multiplied by the IU's share of thetotal statewide Average Daily Membership; and (3) the other half of theremaining total appropriation to all !Us, divided by 29. Presumably, thegeneral operating appropriation is made by the State to insure the existenceof each of the 29 Ills.

The following table compares the Pennsylvania's general operatingappropriations to lUs to the State's general basic education budgets from1971-72 to the present.'

STATE APPROPRIATIONSFOR IU GENERAL OPERATING BUDGETS

COMPARED TO GENERAL EDUCATION BUDGETS

TotalIU

funding

Total basiceducation

funding

Percentage,IU fundingto basic

education

AverageIU

funding

Fiscal year (000s) (000s) funding (000s)

1971-72 $7,290 $1,397,886 0.52% $251

1975-76 8,713 1,888,806 0.46 300

1979-80 7,193 2,230,291 0.32 248

1983-84 9,562 2,763,664 0.35 330

1987-88 13,400 3,899,579 0.34 462

1991-92 14,175 4,817,986 0.29 489

1995-96 11,500 5,630,781 0.20 397

1996-97 5,500 5,703,214 0.10 190

1997-98 5,500 5,828,210 0.09 190

SOURCE: Commonwealth of Pennsylvania, Governor's ExecutiveBudget.

In their first year, the lUs received 0.52 percent of the total basiceducation budget for operations; in fiscal year 1996-97, they received only0.09 percent. Over their 27 year history, the IUs received an average of 0.33percent of the total basic education budget. The highest point came in

years."The data are presented in four-year intervals, except for the last three

-46-

1990-91, when the (Us received $14.175 million.. The largest drop inoperations funding came in fiscal year 1995-96, when IU funding fell bynearly 53 percent. The lUs have experienced a nearly continual decline inproportional funding levels since their inception.

State program grants are generally related to students served in thevarious IU programs. Since 1991, State special education grants for mostprograms have been made directly to school districts; in prior years, thegrants went to the lUs which provided the special education services toschool districts. After this funding change, school districts could eitherproduce the programs themselves, or purchase them from the lUs. Act 89grants are determined by the number of nonpublic school students enrolledwithin each IU. Transportation grants are determined by the number ofstudents transported by each IU. Federal program grants are similarlyrelated to students served. State and federal grants are made to lUs as theinstruments of State and federal educational policies.

Accounting for Funding

The lUs prepare two reports on an annual basis for submission to thePennsylvania Department of Education (PDE): the Administrative, Summaryand Program Budgets (PDE Form 2054) and the Annual Financial Report(PDE Form 2056). Both reports standardize IU revenues and expendituresfor the Department of Education comparison and analysis, but contain onlydollars, not related output or input units. The Annual Financial Report is abalance sheet, income statement and flow-of-funds statement. TheDepartment of Education, in turn, collects and summarizes the datacontained in the Annual Financial Reports from the lUs and forwards thetotals to the U.S. Census Bureau. The lUs also produce annual reports, aswell as other internal reports, for distribution to their boards, member schooldistricts and the public.

Economies of Scale

An explicit goal of Act 102 was the achievement of economies ofscale for school districts through the joint purchasing, administrative andservice programs provided by the lUs. These programs could includeservices provided to a large number of school districts, such as personnel,repairs, transportation, printing and copying, as well as management,curriculum development, instructional media services, federal program liaison

and technology systems development. No comprehensive study of the

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60

overall cost savings attributable to lUs has been made. However, examplesof specific cost saving programs are included in a report to the HouseEducation Committee.49 These examples would appear to indicate thatsignificant cost savings have been realized from the IU programs.

"Pennsylvania Association of Intermediate Units, PennsylvaniaIntermediate Unit System Report to the House Education Committee, March 4, 1997.(This paper was presented by Executive Directors of the Intermediate Units ofPennsylvania at the committee's hearing on that date.)

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61

RECOMMENDATIONS

From its study of the legislative history of the lUs, the recent courtdecisions regarding the definition and implementation of educational equityand their application to the lUs, and the current operations of the 11.1s, the

Joint State Government Commission offers the following findings andrecommendations.

1. Enhance the Role of the lUs in Advancing the Principle ofEducational Equity. IU services mandated by federal, Stateand local governments have been made available to schooldistricts and private schools, regardless of their size or wealth.Marketable services developed by the Ws have been madeavailable to schools that would not otherwise be able toprovide them, and to schools that are willing to pay for them.IU services and programs have apparently saved the schools

a considerable amount of money. Thus the Ws havecontributed to both equity and cost efficiency. The role of theUs in creating equity and efficiency--as instruments of Stateeducation policy, and as entrepreneurs of creative andmarketable services and programs--has been realized to asignificant degree and should be expanded. Strengtheningcollaboration among Us and their function as conduits forinnovative new programs developed by the Department ofEducation, the school districts and the Ills, already veryimportant, should allow them to play an even greater role inpromoting educational equity process.

2. Strengthen the Governance of the lUs for GreaterEffectiveness and Accountability. A central office shouldbe established in the Department of Education to provide forstandardization of administration and compliance enforcementand measurement of the Ills. This office would act as a voicefor the lUs within State government and serve as a centralpoint for dispersing State policy initiatives to the lUs. Revisedand consistent reporting requirements for IU finances, andnew reports for IU input and output units, would improve the

-49-

62

measurement of the lUs' contributions to equity and costefficiency, and make the lUs more accountable. Revisedbudget approval methods for the Ws should be adopted.These new methods should reflect more closely the sourcesand importance of IU funding; they should also hold the Msmore accountable. An attempt should be made tostandardize the quality of programs among the lUs.Standardized IU services would contribute to equity bymaking comparable resources available to all Pennsylvaniastudents.

3. Increase State Funding to the lUs to Maximize theirContribution. To insure the existence of the IUs as a system,the State should provide an equal dollar subsidy for a coreoperation in each IU, such as a director, business managerand basic support staff, adjusted only for regional differencesin costs. This State operating subsidy would guarantee abasic level of IU services to each member school district orprivate school, regardless of its size or wealth. Additionaloperating revenues for IU operations which exceed the corecould still be assessed to member school districts based ontheir size and wealth. For services mandated by the State,funding should be provided directly by the State, tied toaverage statewide IU service or program costs, and adjustedby the size and wealth of the school districts that make up thelUs. Expanded services mandated and funded by the State,provided by lUs to students regardless of their ability to pay,would directly contribute to equitable educational access andadequacy. For pilot programs to establish new educationalprograms approved by the Department of Education, theState should give seed money to Ws for program start-ups.These funds would be phased out as the programs becomeself-sustaining. These temporarily subsidized programs,which might otherwise not be implemented, could lead toinnovative new solutions to educational inequities.

BIBLIOGRAPHY

Alexander, Kern, and Richard G. Salmon. Public School Finance. NeedhamHeights, Mass.: Allyn and Bacon, 1995.

California Association of County Superintendents of Schools, HolmesCommission on County Office of Education Services. Basic Menu ofServices Provided by California County Offices of Education andCalifornia Educational Service Regions. Riverside County Office ofEducation, 1990.

Commonwealth of Pennsylvania. Governor's Advisory Commission onAcademic Standards. Foundations for Our Children's Future: TheProposed Academic Standards from the Governor's Commission.Harrisburg, 1997.

Commonwealth of Pennsylvania. Governor's Committee of One Hundred forBetter Education. Recommendations for Legislation Leading to anImproved Program for Education in Pennsylvania. Harrisburg, 1963.

Commonwealth of Pennsylvania. Governor's Committee on Education. EPluribus Unum: A Statistical Study of Pennsylvania School Districtsin 1960. Educational Research Monograph No. 5. Harrisburg, 1960.

Commonwealth of Pennsylvania. Joint State Government Commission.Public School Attendance Areas. Harrisburg, 1951.

Commonwealth of Pennsylvania. Pennsylvania Department of Education.Selected Expenditure Data for Pennsylvania Public Schools, 1994-

95. Harrisburg, 1996.

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64

Commonwealth of Pennsylvania. Pennsylvania Department of Education.Selected Revenue Data and Equalized Mills for Pennsylvania SchoolDistricts, 1994-95. Harrisburg, 1996.

Commonwealth of Pennsylvania. Pennsylvania Department of PublicInstruction. Reports of Group Recorders, Pennsylvania StateEducation Conference. Harrisburg, 1955.

Commonwealth of Pennsylvania. State Board of Education. AnIntermediate Unit for Pennsylvania. Harrisburg, 1967.

Fielding, Glen. Education Service Districts in Oregon: A Review of theLiterature and an Analysis of Policy Issues. Marion EducationService District: Oregon State Board of Education 1991.

Frye, Edward T. "Moving to Market Driven ESAs." Perspectives 3(September 1997): 1-7.

Galvin, Patrick. "The Physical Structure of Regional Educational ServiceAgencies: Implications for Service and Equity Goals," Journal ofResearch in Rural Education, 2 (Fall 1995): 105-113.

Harding, Edie and Thomas Sykes. Washington's Educational ServiceDistricts: Design for an Evaluation. Olympia, Wash.: WashingtonState Institute for Public Policy, Evergreen State College. 1994.

Heise, Michael. "State Constitutions, School Finance Litigation, and the'Third Wave': From Equity to Adequacy." 68 Temple Law Review1151 (1995).

McMahon, Walter W. and Terry G. Geske, eds. Financing Education.Urbana, III.: University of Illinois Press, 1982.

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65

Montgomery, Deborah. "A Profile of Special Education Finance Reform inOregon." Center for Special Education Finance, 1995.

Morrison, Linda. "Improving School Accounting: A Catalyst for Reform."The Commonwealth Foundation for Public Policy Alternatives(October 1997): 1-19.

Myers, John L., Terry N. Whitney and John Augenblick. Final ReportEducation Equity in Pennsylvania. National Conference of StateLegislatures (NCSL), 1992.

National Education Association. The Community School and TheIntermediate Unit. Washington, D.C., 1954.

Pennsylvania Association of Intermediate Unit Executive Directors.Pennsylvania Intermediate Unit System Report to the PennsylvaniaLegislature, November 1992. [Photocopy].

Pennsylvania Association of Intermediate Units. Pennsylvania IntermediateUnit System Report to the House Education Committee March 4,

1997. [Photocopy].

Pennsylvania General Assembly. Legislative Budget and FinanceCommittee. A Review of the Commonwealth's Early InterventionPrograms, Summary and Recommendations. Harrisburg, 1996.

Pennsylvania General Assembly. Legislative Budget and FinanceCommittee. Report on the Pennsylvania Intermediate Unit System.

Harrisburg, 1976.

Research for Better Schools, Inc. Directory of Regional EducationalResource Organizations in the Mid-Atlantic Region. Philadelphia,1990.

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66

Service Centers 2000 Task Force Report. Presented to the Commissionerof Education. Austin, Tex., 1996.

Shaw, Glen David. "Characteristics of Effective Educational ServiceAgencies: A Study Using the Nominal Group Technique and DelphiMethodology." Ph.D. diss., University of Minnesota, 1993.

Stanley, Malchan Craig. "Analysis of Potential Effectiveness of EducationalCollaborative Service Expansion." Ph.D. diss., Boston College,1992.

Stephens, E. Robert. A Brief History of State-Sponsored InterdistrictCoordination and Some Conjectures About the Future Direction ofthis Policy Strategy. San Francisco: Far West Laboratory forEducation Research and Development, 1989.

. "Developments in State Performance AccountabilitySystems for Educational Service Agencies," [Photocopy]. AmericanAssociation of Educational Service Agencies, Monterey, Cal. 1997.

. "The Design of Standards and Performance Measuresfor Educational Service Agencies." Institute for Regional and RuralStudies in Education, Edmund, Okla., 1997.

Stephens, E. Robert, and Lee Christiansen. "Filling the Vacuum: TheBeginnings of a National Database on Educational ServiceAgencies." Perspectives 1 [1995]: 1-8.

Stephens, E. Robert, and Hobart L. Harmon. "Cost Analysis Studies ofPrograms and Services of State Networks of ESAs." Perspectives2 (September 1996): 7-21.

Stephens, E. Robert, and Walter G. Turner, Approaching the NextMillennium: Educational Service Agencies in the 1990s. Arlington,Va.: American Association of Educational Service Agencies, 1991.

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67

Thro, William E. "To Render Them Safe: The Analysis of StateConstitutional Provisions in Public School Finance Reform Litigation."75 Virginia Law Review 1639 (1989).

Yin, Robert K., and Gwaltney, Margaret K. "Organizations Collaborating toImprove Educational Practice." Cambridge, Mass.: Abt Associates,Inc., 1981.

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68

APPENDIX A: RESOLUTION

-57-

6 9

CORRECTIVE REPRINTPRIOR PRINTER'S NO. 1030 PRINTER'S NO. 1184

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE RESOLUTION

No. 89Session of

1997

INTRODUCED BY STAIRS, COWELL, SCHULER, EGOLF, HERMAN, STEVENSON,ROBINSON, C. WILLIAMS, STEELMAN, L. I. COHEN, BROWN, BAKER,LYNCH, TIGUE, HERSHEY, GEIST, SAYLOR, CAPPABIANCA, BROWNE,RAMOS, MILLER, LAUGHLIN, RUBLEY, STERN, E. Z. TAYLOR,RAYMOND, GRUPPO, BUNT, YOUNGBLOOD, ITKIN, SHANER, WALKO,GIGLIOTTI, TRELLO, SAINATO, ROBERTS, MELIO, PISTELLA,READSHAW, CIVERA, NICKOL, TRUE, DONATUCCI, HALUSKA,FAIRCHILD, DALLY, B. SMITH, PESCI, JAROLIN, YEWCICAND ROSS,MARCH 18, 1997

REFERRED TO COMMITTEE, ON RULES, MARCH 18, 1997

A RESOLUTION

1 Requiring a study of the Commonwealth's Intermediate Units and

2 their role in equity.

3 WHEREAS, The principle of equity in the delivery of basic

4 education programs and services has become a serious public

5 policy issue throughout Pennsylvania; and

6 WHEREAS, Equity should be pursued through a combination of

7 public policy measures; and

8 WHEREAS, There is a continual need to provide high quality

9 educational programs and services in a manner that is cost-

10 effective for the 501 school districts and the taxpayers of this

11 Commonwealth; and

12 WHEREAS, It is necessary to identify methods that provide the

13 most equitable utilization of scarce financial resources; and

14 WHEREAS, the 29 intermediate units were created statutorily

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70

1 by the General Assembly in 1970 to provide all those essential

2 services for school districts formerly provided by the 67 county

3 superintendent offices; such essential services include

4 curriculum development and instructional improvement,

5 educational planning, instructional materials services,

6 continuing professional development, pupil personnel services,

7 Federal and State liaison services and general management

8 services; and

9 WHEREAS, These intermediate units are regional

10 infrastructures that assist public school districts and

11 nonpublic schools by providing a vast array of basic education

12 programs and services at a considerable cost savings; and

13 WHEREAS, The intermediate units offer a more favorable

14 economy of scale than is available to individual schools in the

15 delivery of certain basic education programs and services; and

16 WHEREAS, The intermediate units are providing cost-effective

17 educational programs and services in a manner that supports

18 local school autonomy and the neighborhood school concept; and

19 WHEREAS, There is a need to identify additional methods of

20 promoting the principle of equity in student classrooms across

21 Pennsylvania and to help attain the most cost-effective

22 distribution of educational programs and services; and

23 WHEREAS, The intermediate units can implement educational

24 change in an expeditious manner; therefore be it

25 RESOLVED, That the Joint State Government Commission conduct

26 a study and report to the General Assembly as to how

27 intermediate units currently assist schools and recommend

28 specific strategies and methods for the intermeidate units to

29 further help advance the principle of equity in the availability

30 of basic education programs and services for Pennsylvania

19970H0089R1184 -2-

-60-

1 students in the most cost-effective manner; and be it further

2 RESOLVED, The Joint State Government Commission select a

3 working group of legislators, Intermediate Unit Executive

4 Directors, other educators, and other interested public

5 officials and private citizens to assist in the development of

6 this report; and be it further

7 RESOLVED, That the Joint State Government Commission report

8 its findings to the General Assembly no later than December 1,

9 1997.

B19L82JAM/1997/0H0089R1184 -3-

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