Few will defend the quality of Philadelphia's public school system. Out of more than 500 school public school districts in Pennsylvania over the last five years, only two or three districts scored lower than Philadelphia in math and three or four in reading. When did the school scores begin to drop• Would more money have made a difference• With the state Legislature examining how to reform property taxes, getting the answers right is more important than ever. The city's Pennsylvania System of School Assessment test scores actually rose slightly relative to the rest of the state in the early 1990s, peaking during 1993-94, then declining slowly but steadily for the rest of the decade by 3 percent to 4 percent. Some have pointed to declining spending as lowering educational quality and blame the drop in funding on reduced state support. Others point to the high level of child poverty. Yet neither factor explains Philadelphia's declining educational fortunes when the pattern is examined in a statistically rigorous way that accounts for these factors. Nor can other obvious factors beyond the city's control, such as income or demographics, explain the decline. Indeed, the decline discussed earlier is after all these factors have been accounted for. Calls to blame the state are understandable, but the evidence indicates that Philadelphia's educational woes were of its own making during the mid to late 1990s. THE NUMBERS After accounting for inflation, Philadelphia's per pupil expenditures did indeed fall 9 percent over the 1990s, but the relative drop in test scores was even greater than expenditures. To get some perspective, Philadelphia's spending is now at about the national average, and fifth out of the 10 largest school districts in the country. In Pennsylvania, which is a high-expenditure state, 167 school districts still spent less. Outside funding had nothing to do with the funding drop. State aid changed by only a few percentage points and combined state and federal aid actually rose by 37 percent. In fact, Philadelphia gets more money per pupil from the state and federal government than 390 other Pennsylvania school districts. Spending fell only because the money the city devoted to education declined much faster than outside aid was increasing. STABILIZING CITY FINANCES City funding has been marked by wild swings, not a gradual decline. It fell by 17 percent during Mayor Ed Rendell's administration and then sharply rebounded under Mayor John Street. The untold story of Philadelphia's finances during the 1990s is how city finances were stabilized by dramatically cutting public school spending. Child poverty is a serious problem in Philadelphia, but it was improving during the late 1990s. It cannot explain the declining test scores. In addition, despite many school districts having much worse child poverty rates, their students tend to score much better on state tests. For example, Pittsburgh has a higher child poverty rate but its test scores from 1996 to 2001 average about 7 percent higher on math and 8 percent higher on reading. Indeed, 90 percent of school districts with worse poverty rates had higher test scores. STRIKING INEFFICIENCIES The inefficiencies in Philadelphia's school system were striking. During the 1990s, our best estimates indicate that even an additional $1,000 increase per pupil would have raised average test scores of around 1100 by less than one point. Out of Pennsylvania's more than 500 districts, Philadelphia got just about the least bang in improved test scores per dollar spent. Whether the new educational system imposed on city schools this year works won't be known for at least a few years, but clearly the city was not doing its job. The money that was spent under the old school regime essentially disappeared without any sign that it had ever been there. The city of Philadelphia had been unique in Pennsylvania for the complete power that the city had over its public school system, so at least escaping blame for what happened during the 1990s is not so easy. We thus have to agree with Pennsylvania Auditor General Robert Casey when he said during the Democrats' gubernatorial primary this spring that the city's "record reflects a failure in public education." John R. Lott Jr. is a resident scholar and Brent Mast is a research associate at the American Enterprise Institute.

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