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decided: March 14, 1979.


No. 78 January Term, 1978, Appeal from the Decree of the Commonwealth Court at No. 781 C.D. 1977.


John R. McConnell, Morgan, Lewis & Bockius, Philadelphia, for appellants.

Allen C. Warshaw, Deputy Atty. Gen., Harrisburg, for appellees.

Eagen, C. J., and O'Brien, Roberts, Pomeroy, Nix, Manderino and Larsen, JJ. Pomeroy, former J., did not participate in the decision of this case. Manderino, J., filed a dissenting opinion in which Nix, J., joins.

Author: Roberts

[ 484 Pa. Page 418]


Appellants allege that because the Philadelphia School District has and can expect to have inadequate revenues, the statutory system by which the School District of Philadelphia is funded violates Article III, section 32*fn1 and Article

[ 484 Pa. Page 419]

III, section 14*fn2 of the Pennsylvania Constitution. Appellants, the School District of Philadelphia and parents of children attending Philadelphia public schools, filed a Petition for Review in Commonwealth Court in April 1977. The Petition alleged that because expenditures exceeded revenues for the 1976-77 school year, the School District of Philadelphia would be compelled to close its schools early unless it received additional state funds. The predicted early closing did not occur and on June 23, 1977, appellants filed an Amended Petition for Review. Their amended petition alleges that although the School District would be able to operate for a full school year in 1977-78, estimated expenditures exceeded estimated revenues by $158,537,299 and the School District would be able to offer its students only a "truncated and uniquely limited program of educational services."

Appellants seek a decree enjoining and restraining appellees, the State Treasurer and State Secretary of Education, from making payments of state funds to any school district other than Philadelphia until (a) "sufficient funds are made available to the School District of Philadelphia to enable it to furnish the children of Philadelphia in the 1977-78 school year and thereafter with a normal program of full educational services, or (b) the funds subject to defendants' disposition are so distributed that the programs of educational services furnished the children of the Commonwealth of Pennsylvania in the 1977-78 school year and thereafter are substantially uniform throughout all the school districts of the state."*fn3

[ 484 Pa. Page 420]

Appellees filed preliminary objections to both the original and Amended Petitions for Review on the grounds that appellants had failed to state a cause of action and that the School District of Philadelphia was without standing. Commonwealth Court sustained appellees' preliminary objections and dismissed the action. Danson v. Casey, 33 Pa. Commw. 614, 382 A.2d 1238 (1978).

In reviewing Commonwealth Court's determination we must accept as true every well and clearly pleaded fact and all reasonable inferences therefrom. Gekas v. Shapp, 469 Pa. 1, 364 A.2d 691 (1976); Buchanan v. Brentwood Federal Savings and Loan Assn., 457 Pa. 135, 320 A.2d 117 (1974). We need not accept as true, however, the conclusions drawn from those facts or the averments of law contained in the pleadings. Borden v. Baldwin, 444 Pa. 577, 281 A.2d 892 (1971). When viewed in this light it is clear that appellants have failed to state a justiciable cause of action. We therefore affirm the decree of Commonwealth Court dismissing the action.*fn4


Appellants' constitutional challenge to the state financing system is broad and general. They do not purport to challenge any particular portion of either the state subsidy or local taxation aspects of the scheme. Instead, appellants' basic constitutional claim is that, viewed as a whole, the Pennsylvania system of school financing fails to provide Philadelphia's public school children with a thorough and efficient education and denies them equal educational opportunity solely because of their residence in the School District of Philadelphia.

The statutory scheme by which Pennsylvania's public schools are financed creates two primary sources of funding

[ 484 Pa. Page 421]

-- state subsidies and local taxation.*fn5 State subsidies are distributed by appellees, the State Treasurer and State Secretary of Education, to each of Pennsylvania's 505 school districts pursuant to a complex statutory formula. See generally, School Code, 24 P.S. §§ 25-2501 et seq.

For each child enrolled in school, districts are eligible to receive a percentage of the median statewide actual instructional expense per student.*fn6 This percentage is computed by dividing the market value of the district's real estate and its personal income tax bases by the number of the district's students and comparing it to the state average real estate and income tax bases per student.*fn7 If the district and state tax base are equal, the district receives fifty percent of actual or median student cost, whichever is lower.*fn8 If the district's tax base is higher than the average state tax base, state support is lower.

This basic instructional subsidy is supplemented by dollar payments for each poverty-level or welfare student. "Density" and "sparsity" payments are made to districts with certain levels of either high or low population per square mile. In addition to the instructional subsidy, each school district also receives state funds earmarked to help defray the cost of specific services incidental to instruction such as, inter alia, health care, transportation, drivers education, and technical and special education.

Local tax revenues, however, are the major source of school financing in Pennsylvania. Generally, the power to

[ 484 Pa. Page 422]

    levy local school taxes is vested in the local elected school board which has direct control over local educational programs. Section 507 of the School Code, Act of March 10, 1949, P.L. 30, § 507, 24 P.S. § 5-507, vests in each school district "all the necessary authority and power annually to levy and collect, in the manner herein provided, the necessary taxes required, in addition to the annual State appropriation" and "all necessary power and authority to comply with and carry out any or all of the provisions of this act." Despite broad language vesting power to levy and collect "the necessary taxes required," the school board's power to levy taxes is not unlimited. The General Assembly has imposed strict ceilings on the amount of taxes most school districts may levy and collect. School Code, 24 P.S. § 6-672.

Philadelphia is Pennsylvania's only school district of the first class. See School Code, 24 P.S. § 2-201. Pursuant to statutory authority, the voters of Philadelphia have adopted a home rule school district. See Act of August 9, 1963, P.L. 643, §§ 1 et seq., 53 P.S. §§ 13201 et seq.; Educational Supplement to the Philadelphia Home Rule Charter (hereinafter Charter). While boards of education of other classes of school districts must be elected, School Code 24 P.S. §§ 3-301 et seq., section 12.12-201 of the Charter authorizes appointment of Philadelphia's school board by the Mayor of Philadelphia. See also School Code, 24 P.S. § 3-301. Because the General Assembly may delegate its legislative power to levy taxes only to elected officials, the Philadelphia School Board does not have direct power to levy local taxes. Wilson v. Philadelphia School District, 328 Pa. 225, 195 A. 90 (1937). The School District of Philadelphia is, therefore, in a unique position with regard to local taxation.

The Educational Supplement to the Philadelphia Home Rule Charter grants the Board of Education indirect power to levy local taxes to provide funds for current operation of the Philadelphia public schools. "At least sixty (60) days prior to adoption of the annual operating budget, the Board shall adopt and submit to the Mayor and Council a lump sum statement of anticipated receipts and expenditures for the next fiscal year and a request for authority to levy taxes to

[ 484 Pa. Page 423]

    balance its budget for the year." Charter § 12.12-303(b). Section 12.12-305 of the Charter mandates that the local tax levy be sufficient to finance the school district's operations adequately for the fiscal year.*fn9

By statute, City Council is empowered to authorize the School Board to levy taxes sufficient to balance the school district's annual operating budget on "any persons, transactions, occupations, privileges, subjects, and real and personal property" which are taxable by the city. Act of August 9, 1963, P.L. 640, § 1, as amended, November 16, 1967, P.L. 500, § 1, 53 P.S. § 16101. Subject to certain limited exceptions, levies may also be made upon "income of all kinds from the ownership, lease, sale or other disposition of tangible and intangible real and personal property of persons who are residents of the school district, whether or not such income may presently be subject to tax by the city for general revenue purposes . . . ." Id. Levies may also be imposed, ...

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