A Pennsylvania state board created to review billions of dollars in tax credits and government spending quietly stopped meeting three years ago and board members won\u2019t say why.<\/p>\n
The state\u2019s widely touted first-of-its-kind Performance-Based Budget Board was formed by law in 2017 with bipartisan support and a simple purpose: to evaluate in public hearings how state departments and tax credits performed and fund them based on whether they met certain goals instead of just automatically updating previous years\u2019 budget numbers, which is what Harrisburg lawmakers were doing at the time.<\/p>\n
The budget secretary, who the governor appoints, was responsible for selecting which agencies to review in the first cycle. The Independent Fiscal Office (IFO), a nonpartisan fiscal watchdog agency, weighed in on the selections and conducted the reviews.<\/p>\n
The game plan was to try this process and regroup every five years to see what could be improved.<\/p>\n
But after a political spat over how the Department of Education\u2019s spending was reviewed, where Democrats changed key facts in the analysis, the board ended its short run in 2023, before the first five-year cycle was completed, without notifying other lawmakers or the public.<\/p>\n
Experts, former board members and advocacy groups called the sudden disappearance of the board concerning.<\/p>\n
George Dunbar, an early advocate of performance-based budgeting and a former Republican House representative, was on the board before he left to lead the Gaming Control Board. He said the goal of the board was not necessarily to cut funding but to bring more transparency to the state budget process, which is mostly done behind closed doors.<\/p>\n
\u201cWe used to take last year\u2019s number, increase or decrease the percentage, and argue whether that\u2019s right or wrong with no mention of the outcomes,\u201d Dunbar said. \u201cThere\u2019s so much money that goes through that budget that nobody knows where it even goes to.\u201d<\/p>\n
Gov. Josh Shapiro, a Democrat, took office in January 2023, and the board met three months later for the last time.<\/p>\n
The Shapiro administration said he did not ask the board to stop meeting, and that his budget secretary was only responsible for scheduling which agencies and tax credits the IFO would review during the first incomplete cycle.<\/p>\n
His office said the whole process was \u201cvery labor-intensive and time-consuming for agency staff and IFO staff.\u201d They blamed the Legislature, saying that many recommendations from the IFO would require changes in the law but they haven\u2019t \u201cseen any movement.\u201d<\/p>\n
\u201cRequiring agencies to continue spending time on reviews without clear direction from the board is not productive and takes away from providing other valuable services to Pennsylvanians,\u201d a spokesperson added.<\/p>\n
IFO Director Matt Knittel agreed it was a time-intensive task but added \u201cit\u2019s not clear if or how\u201d the governor\u2019s office uses performance-based metrics in the state budget process because neither the data or process is publicly disclosed.<\/p>\n
\u201cThat is why legislators\u2019 input is needed,\u201d Knittel said, referring to the board.<\/p>\n
Former Sen. Bob Mensch, R-Berks County, who championed the bill that created it, said the board was to \u201chelp departments justify why they\u2019re asking for money.\u201d But he said he wasn\u2019t surprised by how things played out.<\/p>\n
\u201cThe board can be more or less effective depending upon leadership,\u201d Mensch told PennLive. \u201cSo the governor has to be behind it, has to understand it and has to really reinforce it and not just with rhetoric, but with actual action for it to work.\u201d<\/p>\n
Budget Secretary Zachary Reber declined an interview request and did not respond to questions on why the first cycle wasn\u2019t completed.<\/p>\n
\u201cThey\u2019re actually just thwarting the law, just ignoring the law and not doing this and it could be laziness, but I\u2019m more concerned that they just don\u2019t want to be transparent and really don\u2019t want to be held accountable,\u201d said Nathan Benefield, chief analyst at the conservative Commonwealth Foundation.<\/p>\n
Benefield also said his agency would look into filing a court order forcing the budget secretary to restart the board if \u201cthey don\u2019t act quickly on this.\u201d<\/p>\n
Bernie Gallagher from the progressive Keystone Research Center said while performance-based budgeting isn\u2019t a one-size-fits-all solution, there is \u201cabsolute value in having an independent public analysis on whether programs are performing and whether public dollars are accomplishing what policymakers intended.\u201d<\/p>\n
House Majority Leader Matt Bradford, D-Montgomery County, chaired the board right before it went dark. He did not respond to multiple interview requests for this story.<\/p>\n
The Board Was \u2018Really Important\u2019
Five powerful public officials who have significant influence in the state budget make up the board: the Governor\u2019s budget secretary and the four House and Senate appropriations chairs.<\/p>\n
The IFO did a lot of the grunt work. It collected all kinds of data from agencies, analyzed costs and compared them with performance metrics, and synthesized all of it into a digestible report with recommendations for the board to approve or reject.<\/p>\n
The approved reports were publicly posted on the IFO website, and shared with the governor and the Legislature to incorporate in the state budget process, involving tens of billions of dollars.<\/p>\n
John Wetzel, who was secretary at the Department of Corrections until 2022, recalled a budget hearing where lawmakers used the performance-based budget report as \u201cone of the better hearings I\u2019ve ever had in my time at DOC.\u201d<\/p>\n
He said he was \u201ca big proponent\u201d of the board\u2019s process, especially because the DOC historically had an \u201copaque kind of operation.\u201d<\/p>\n
\u201cAnd so having this objective and transparent process where you have to quantify how you measure success in your operation, I thought that was really important and aligned with trying to invest more in treatment to improve incarcerated people\u2019s lives,\u201d Wetzel said.<\/p>\n
In its five active years, the board made significant strides in identifying wasteful spending.<\/p>\n
Three tax credits that cost taxpayers millions of dollars were flagged after the board found they were not benefiting the people they were intended to serve, Spotlight PA reported in 2020<\/a>. A tax credit is a deduction on the amount of taxes an entity owes to the state.<\/p>\n The IFO found that:<\/p>\n A broadband tax credit, which was created to increase broadband access in rural areas, didn\u2019t mandate companies to invest in those areas.Another credit to increase bone marrow donations hadn\u2019t been used in five years.The Keystone Innovation tax credit was conceived to create jobs in the state but didn\u2019t come with requirements to actually collect data on how many jobs were created.The board\u2019s findings also facilitated changes in law.<\/p>\n The Education Tax Credit previously mandated its recipients to use 80% of funds for scholarships, allowing them to use 20% however they wanted. But after the board flagged it, the Legislature changed the law to reduce the discretionary portion to 10%.<\/p>\n Knittel, who leads the IFO, called the board\u2019s sudden quitting \u201cunfortunate.\u201d<\/p>\n \u201cGiven the amount of money that\u2019s being used for these incentive and tax credit programs, it\u2019s appropriate that an analysis be done to see if the spending is having its intended outcomes,\u201d Knittel said.<\/p>\n Stan Saylor, a former board member and representative from York County, said responsible spending of taxpayer dollars can\u2019t happen \u201cwithout holding people who fail accountable.\u201d<\/p>\n \u201cWhen you talk about performance, of course somebody\u2019s ox is getting gored and certain people don\u2019t like that,\u201d Saylor said. \u201cBut it\u2019s the people who are in charge now that don\u2019t want to see it perform.\u201d<\/p>\n The Beginning of the End And in 2022, a review of the Department of Education\u2019s funding created controversy. Dunbar and Saylor, two former board members, said this hearing contributed to the board\u2019s sudden inactivity.<\/p>\n The IFO calculated the cost per student in all traditional public schools and compared it with test scores to see how funding compared with student achievement. The report found \u201clittle to no correlation.\u201d<\/p>\n The board tabled the report in January and asked the IFO to change its cost-per-student calculations to include the fair funding formula to provide a more accurate cost. It increases per-student costs for those in poverty and minority groups, who typically need more resources to educate.<\/p>\n But the board also asked the IFO to add charter school funding, which dramatically reduced the overall cost per student for school districts with low-income students.<\/p>\n However, this new analysis didn\u2019t include charter school students\u2019 test scores.<\/p>\n Instead, the board directed the IFO to compare this new lower cost per student to traditional public school test scores only, a methodological flaw that data experts said undermined the analysis.<\/p>\n The flawed method made it seem as if lower costs per student resulted in worse test scores.<\/p>\n Justin Ortagus, professor of higher education and public policy at the University of Texas, has worked with performance-based budgeting in higher education. He said the new calculation \u201cdoes not make sense.\u201d<\/p>\n \u201cWhenever you look at the influence of input on output, you want to be sure that what you\u2019re measuring for the input is similarly matched for what you\u2019re measuring for the output,\u201d Ortagus said.<\/p>\n \u201cSo if you are going to include charter and public school students, one would expect that that would be in the output, or you would do an apples-to-apples comparison between public school cost per student and public school test outcomes only,\u201d he added.<\/p>\n The board also directed the IFO to remove the sentence from its original report which said there was \u201clittle or no correlation\u201d between public school spending and test scores.<\/p>\n House Majority Leader Bradford, who chaired the board, did not respond to a detailed list of questions on why the IFO was directed to change its calculations or remove the sentence from its original report.<\/p>\n The IFO also only looked at one year\u2019s worth of education data but for in-depth analyses, experts look at least a decade\u2019s worth of data, which IFO Director Knittel acknowledged \u2014 but noted that\u2019s not what the agency was asked to do.<\/p>\n In May of 2022, the board met to review the amended report. Less than a minute into the hearing, Bradford made a motion to approve the report. Former Democratic Budget Secretary Gregory Thall seconded it.<\/p>\n \u201cAll in favor, say aye,\u201d Bradford, a Democrat, continued hastily, before being interrupted by former Republican Rep. Torren Ecker from Adams County.<\/p>\n Ecker expressed concern about the new analysis and asked the IFO to publish both analyses on its website.<\/p>\n The report was approved 3-2 with the Democratic lawmakers and the budget secretary voting yes, and the Republican lawmakers voting no.<\/p>\n Six months after this hearing, Democrats flipped the state House after 12 years of Republican control.<\/p>\n The board met in early 2023 for the final time to review and approve spending for the rest of the agencies<\/a> in its first cycle.<\/p>\n Soon after, the IFO prepared a report on how to improve the performance-based budget process by surveying all the agencies that were reviewed in the first five years. This report was then sent to the board for review. But the board never met again and the IFO got no further information.<\/p>\n One year later, Shapiro came up with his own process to weed out wasteful spending: the Resource Evaluation and Mission Alignment (REMAP) initiative. But it\u2019s an internal process where the governor\u2019s office works with agencies with minimal public input. It\u2019s also not required by law or subject to Pennsylvania\u2019s public records law, unlike the Performance Based Budget board.<\/p>\n Shapiro\u2019s office didn\u2019t respond to a request from a reporter to see the data his office uses to come up with REMAP reports.<\/p>\n Karen Shastri, an accounting professor at the University of Pittsburgh who\u2019s taught performance-based budgeting, said transparency is key.<\/p>\n \u201cThis is the kind of information that should be public so that people can assess what\u2019s actually going on and make our own conclusions about whether or not we think it\u2019s being done correctly,\u201d Shastri said.<\/p>\n Dunbar, the former board member, said it comes down to being responsible with taxpayer dollars.<\/p>\n \u201cBecause sometimes when you know you\u2019re being looked at, in a public setting, you put a little more effort, maybe do a better job with public dollars,\u201d Dunbar said.<\/p>\n \u00a92026 Advance Local Media LLC. 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Like most things at the Capitol, the board wasn\u2019t immune from politics. Because the governor appoints the budget secretary, Democrats held majority control of the board throughout its tenure.<\/p>\n