Sipple - Shared Services: A Common Reform that Works
Schafft Marcellus Slides
1. Marcellus Shale Natural Gas
Development and the Implications
for Pennsylvania Schools
Kai A. Schafft
Department of Education Policy Studies
Center on Rural Education and Communities
Penn State University
Potential Impacts of Hydro-Fracking:
What School Districts Need to Know
January 9, 2013
Alfred University, Alfred, NY
2. Why is Marcellus Shale natural gas
development an issue for schools?
Rapid pace and scale of
development;
6. Tioga County
By June, 2012, over 5,500 wells were drilled
Total projected: 60,000-100,000.
7. Why is Marcellus Shale natural gas
development an issue for schools?
Rapid pace and scale of
development;
Uncertainties regarding
school impacts
(e.g., costs, funding, curricula, s
tudent demographics, staffing);
8. Why is Marcellus Shale natural gas
development an issue for schools?
Rapid pace and scale of
development;
Uncertainties regarding school
impacts
(e.g., costs, funding, curricula, st
udent demographics, staffing);
The role of schools in helping
to effectively manage change.
9. Framing of Marcellus Development:
Massive Opportunity or Massive Risk?
Opportunity Risk
• Economic Develop- • Economic Exploitation
ment • Boom-Bust
• Revitalized Communities
Communities • Low Skill Job Creation
• Local Job Creation • Environmental Damage
• Opportunities for & Industrialized
Youth Landscapes
10. Map of Pennsylvania School Districts Showing Marcellus Shale
Coverage, Area of Survey Administration, and Marcellus Wells
* Greyscale = Area of Survey Administration
* Diagonal Hatching = Marcellus Shale coverage
11. Penn State Extension Fact Sheets
Marcellus Shale gas development
and Pennsylvania school districts:
What are the implications for school
expenditures and tax revenues?
http://pubs.cas.psu.edu/FreePubs/PDFs
/ee0022.pdf
Marcellus Shale gas development:
What does it mean for Pennsylvania
schools?
http://pubs.cas.psu.edu/freepubs/pdfs/
ee0019.pdf
12. Opportunities and Challenges
Economic Development & Fiscal
Impacts;
Local Demographic Change;
Housing Impacts;
Physical Infrastructure and
Environment;
Curricular Change & Workforce
Development.
13. Marcellus-related economic development
in economically lagging areas…
PENNSYLVANIA SCHOOL
DISTRICTS
50 Wealthiest 50 Poorest
# of all SDs with
Marcellus 4 out of 50 32 out of 50
drilling
Total # of wells 322 2113
14. Economic Development
Respondents
from High Drilling
Activity Districts
Only All Others N
% reporting significant
activity as a result of
gas industry
development
Job creation 35.6 6.6 316
Local wealth creation 32.2 6.3 311
Business start-up 20.0 4.3 308
15. Economic Development
Respondents
from High Drilling
Activity Districts
Only All Others N
% reporting significant
activity as a result of
gas industry
development
Job creation 35.6 6.6 316
Local wealth creation 32.2 6.3 311
Business start-up 20.0 4.3 308
16. “Although there is some economic
development from the Marcellus
gas industry I am not seeing how
the school districts can benefit
from this.”
- Survey respondent
18. What About Act 13?
The Impact Fee
unfortunately has no fiscal
“impact” for school
districts
19. What About Act 13?
The Impact Fee
unfortunately has no fiscal
“impact” for school
districts
local-level – counties and
60% municipalities hosting wells
IMPACT
FEE
various state agencies
40%
21. What About Local Tax
Revenues?
Heavy reliance on local funding for
schools in Pennsylvania –
Pennsylvania relies more on local property
taxes to fund public schools than all but 4
other states; a total 57% of school funding
comes from local sources.*
* See PA Budget and Policy Center (2009), “Pennsylvania Relies Heavily on
Local Taxes to Fund Education”
22. What About Local Tax
Revenues?
Real estate
tax
98% of total
SD tax
revenues
Earned
income tax
23. What About Local Tax
Revenues?
• Oil & gas reserves exempt
from property tax;
Real estate • Potential devaluation of
tax property values?
98% of total
SD tax
revenues
Earned
income tax
24. What About Local Tax
Revenues?
• Oil & gas reserves exempt
from property tax;
Real estate • Potential devaluation of
tax property values?
98% of total
SD tax
• Levied on wages and
revenues salaries, but non-
Earned
residents will not be
income tax taxed locally;
• Royalties and lease
payments constitute
UNearned income and
are not taxable
25. What About Local Tax
Revenues?
• Royalties and lease
payments DO however
contribute towards the
wealth measure used
by the state to
distribute state aid to
school districts
26. What About Local Tax
Revenues?
…Increases in unearned income
• Royalties and lease (e.g. from leasing and royalties)
payments DO however within a district can increase the
contribute towards the measured wealth of a district
wealth measure used and consequently result in
by the state to potentially LESS state aid (even
distribute state aid to though this new wealth will not
school districts… increase a district’s tax base).
As SD wealth …decreases
in state aid
increases…
are likely
27. Percent Change in Marcellus Region School District Finances by Level
of Marcellus Drilling Activity, 2007-08 to 2010-11 (Number of Wells)
Amount of Marcellus Shale Drilling Activity, 2007-
2008 to 2010-11 (Number of Wells)
Tax Revenues 0 Wells 1-4 Wells 5-19 Wells 20-66 Wells 67+ Wells
Earned Income 6.9% 3.6% 5.6% 6.5% 13.0%
Tax (71) (51) (56) (62) (59)
Per Capita Tax -4.0% -3.6% -1.9% -5.0% -5.6%
(47) (29) (36) (38) (39)
Real Estate -25.4% -20.6% -9.2% -5.3% -3.6%
Transfer Tax (69) (50) (57) (62) (61)
Collected Real 3.1% 0.5% 0.3% -0.8% 1.4%
Estate Tax (73) (53) (58) (62) (62)
Total Local -4.6% -7.9% -6.2% -5.9% -6.4%
Revenue (60) (46) (44) (45) (44)
28. Percent Change in Marcellus Region School District Finances by Level
of Marcellus Drilling Activity, 2007-08 to 2010-11 (Number of Wells)
Amount of Marcellus Shale Drilling Activity, 2007-
2008 to 2010-11 (Number of Wells)
Tax Revenues 0 Wells 1-4 Wells 5-19 Wells 20-66 Wells 67+ Wells
Earned Income 6.9% 3.6% 5.6% 6.5% 13.0%
Tax (71) (51) (56) (62) (59)
Per Capita Tax -4.0% -3.6% -1.9% -5.0% -5.6%
(47) (29) (36) (38) (39)
Real Estate -25.4% -20.6% -9.2% -5.3% -3.6%
Transfer Tax (69) (50) (57) (62) (61)
Collected Real 3.1% 0.5% 0.3% -0.8% 1.4%
Estate Tax (73) (53) (58) (62) (62)
Total Local -4.6% -7.9% -6.2% -5.9% -6.4%
Revenue (60) (46) (44) (45) (44)
29. Percent Change in Marcellus Region School District Finances by Level
of Marcellus Drilling Activity, 2007-08 to 2010-11 (Number of Wells)
Amount of Marcellus Shale Drilling Activity, 2007-
2008 to 2010-11 (Number of Wells)
Tax Revenues 0 Wells 1-4 Wells 5-19 Wells 20-66 Wells 67+ Wells
Earned Income 6.9% 3.6% 5.6% 6.5% 13.0%
Tax (71) (51) (56) (62) (59)
Per Capita Tax -4.0% -3.6% -1.9% -5.0% -5.6%
(47) (29) (36) (38) (39)
Real Estate -25.4% -20.6% -9.2% -5.3% -3.6%
Transfer Tax (69) (50) (57) (62) (61)
Collected Real 3.1% 0.5% 0.3% -0.8% 1.4%
Estate Tax (73) (53) (58) (62) (62)
Total Local -4.6% -7.9% -6.2% -5.9% -6.4%
Revenue (60) (46) (44) (45) (44)
30. Percent Change in Marcellus Region School District Finances by Level
of Marcellus Drilling Activity, 2007-08 to 2010-11 (Number of Wells)
Amount of Marcellus Shale Drilling Activity, 2007-
2008 to 2010-11 (Number of Wells)
Tax Revenues 0 Wells 1-4 Wells 5-19 Wells 20-66 Wells 67+ Wells
Earned Income 6.9% 3.6% 5.6% 6.5% 13.0%
Tax (71) (51) (56) (62) (59)
Per Capita Tax -4.0% -3.6% -1.9% -5.0% -5.6%
(47) (29) (36) (38) (39)
Real Estate -25.4% -20.6% -9.2% -5.3% -3.6%
Transfer Tax (69) (50) (57) (62) (61)
Collected Real 3.1% 0.5% 0.3% -0.8% 1.4%
Estate Tax (73) (53) (58) (62) (62)
Total Local -4.6% -7.9% -6.2% -5.9% -6.4%
Revenue (60) (46) (44) (45) (44)
31. Shale gas development and dropouts?
% agreeing or strongly Respondents from
agreeing High Drilling Activity All
Districts Only Others N
Marcellus-related
workforce demands has
increased dropout
likelihood 17.4 11.0 319
32. Has there been a change in Marcellus Region
dropout rates since development began?
Average
0 Wells 1-4 Wells 5-19 Wells 20-66 Wells 67+ Wells
Dropout Rate
23.6% 17.5% 18.8% 20.1% 20.1%
(Percent)
07-08 1.07% 1.21% 0.84% 1.21% 1.52%
(73) (53) (58) (62) (62)
08-09 0.97% 1.17% 0.82% 1.07% 1.31%
(73) (53) (58) (62) (62)
09-10 0.97% 1.08% 0.86% 1.03% 1.45%
(60) (47) (44) (45) (44)
10-11 0.90% 0.98% 0.76% 0.93% 1.40%
(60) (47) (44) (45) (44)
Mean Differences
(calculated by cases) -.12 -.21 -.12 -.23 -.07
07-08 to 10-11
33. Has there been a change in Marcellus Region
dropout rates since development began?
Average
0 Wells 1-4 Wells 5-19 Wells 20-66 Wells 67+ Wells
Dropout Rate
23.6% 17.5% 18.8% 20.1% 20.1%
(Percent)
07-08 1.07% 1.21% 0.84% 1.21% 1.52%
(73) (53) (58) (62) (62)
08-09 0.97% 1.17% 0.82% 1.07% 1.31%
(73) (53) (58) (62) (62)
09-10 0.97% 1.08% 0.86% 1.03% 1.45%
(60) (47) (44) (45) (44)
10-11 0.90% 0.98% 0.76% 0.93% 1.40%
(60) (47) (44) (45) (44)
Mean Differences
(calculated by cases) -.12 -.21 -.12 -.23 -.07
07-08 to 10-11
34. Local Demographic Change
Respondents from
High Drilling
Activity Districts All
Only Others N
% reporting significant
activity as a result of gas
industry development
New in-migrants 24.1 3.8 318
Enrollment increases 4.3 1.8 318
35. Has there been a change in enrollment since development
began in Marcellus Region schools?
Average Change Student Enrollment in Marcellus Region School
Districts, by Level of Marcellus Drilling Activity,
2007-08 to 2010-11
Amount of Marcellus Shale Drilling
Activity
1-4 5-19 20-66 67+
0 Wells
Wells Wells Wells Wells
23.6%
17.5% 18.8% 20.1% 20.1%
Change in
Student -7.15% -8.46% -8.01% -7.28% -5.98%
Enrollment (60) (46) (44) (45) (44)
Grades 7-12
36. Marcellus drilling activity and changes in student enrollment in
school districts through the end of the 2009–2010 academic year
37. Local Housing Impacts
Respondents from
High Drilling Activity All
Districts Only Others N
% reporting significant
activity as a result of gas
industry development
Increased rents 40.0 7.1 288
Housing shortage 35.1 5.0 295
Increased property values 29.1 6.7 290
Displacement of low/fixed
income residents 20.0 2.4 308
38. Physical Infrastructure and
Environment
Respondents from
High Drilling Activity All
Districts Only Others N
% reporting significant
activity as a result of gas
industry development
Road congestion/wear &
tear 53.3 16.2 319
Water and/or
environmental problems 33.3 9.6 288
39. Physical Infrastructure and
Environment
Respondents from
High Drilling Activity All
Districts Only Others N
% reporting significant
activity as a result of gas
industry development
Road congestion/wear &
tear 53.3 16.2 319
Water and/or
environmental problems 33.3 9.6 288
40. Opportunities and Challenges
Road Safety Concerns
“The biggest thing we want to do
is work with these truck
companies ... work with the gas
companies, work with everybody
that’s hauling — to educate
them, to let them know when
we’re out there, look out for the
kids”
- BEASD Business Office staff person
43. Curricular Change and
Workforce Development
School District Respondents CTCs
% agreeing or strongly High Drilling High Drilling
agreeing: Activity Activity
Districts Districts
Lack sufficient info about
workforce needs to make
curricular changes
61.4 76.8 41.6
Investing in workforce
development is risky given
uncertain time horizon of
Marcellus jobs 47.1 47.5 30.4
44. “What happens after the shale is
depleted of natural gas? Does the
industry leave us high and dry like
the coal barons did?”
- survey respondent
45. Three Phases of Natural Gas Development
Development Phase (Short Lived/Labor Intensive)
• Well-pad and Access Road Construction
• Local collection pipeline Construction
• Drilling of the Well
• Fracturing of the Well
• Reclaiming some Disturbance
Production Phase (Long lived/Small & Steady Labor Force)
•Trucking Water and condensate from Well Site
• Monitoring Production
• Occasional Well Work-Overs (partially re-drill/re-frac)
Reclamation Phase
•Dismantle and Reclaim well-sites
Source: Jacquet
47. Summing Up
Housing Impacts & Residential
Displacement;
New Issues in Recruiting and Retaining
Staff;
Unevenness of Impacts depending on
location and drilling activity;
Physical Infrastructure and
Environment;
48. Conclusions
• Rapidly changing conditions – environmentally,
economically, politically – make outcomes highly
unpredictable;
• How can Marcellus development be part of a
longer term strategy for economic (and
environmental) sustainability in PA communities?
• How can schools as educational institutions (and
not simply providers of workforce development)
help to manage the challenges and opportunities
associated with rapid gas development?
Hinweis der Redaktion
Bradford has about 62,000 residents. Even if only the current wells permitted are drilled, that’s over 3,300 wells – approximately 1 well for every 20 residents! Similarly Tioga County has about 42,000 residents. Current permitted and drilled wells in Tioga County account for approximately 1 well for every 16 residents!
Bradford has about 62,000 residents. Even if only the current wells permitted are drilled, that’s over 3,300 wells – approximately 1 well for every 20 residents! Similarly Tioga County has about 42,000 residents. Current permitted and drilled wells in Tioga County account for approximately 1 well for every 16 residents!
Bradford has about 62,000 residents. Even if only the current wells permitted are drilled, that’s over 3,300 wells – approximately 1 well for every 20 residents! Similarly Tioga County has about 42,000 residents. Current permitted and drilled wells in Tioga County account for approximately 1 well for every 16 residents!
Depending on how Marcellus Development is framed it can appear as a situation representing massive opportunity or massive risk
That said, when the industry was in its infancy in PA as many as 75% of new workers were from out of state. That number has reversed however and now about 60-75% of new hires are from PA.
Percentile Group of NumberWell Frequency Valid Percent Percent Valid 1 23.6 23.6 2 17.5 41.1 3 18.8 59.9 4 20.1 79.9 5 20.1 100.0 n= 309 100.0
Percentile Group of NumberWell Frequency Valid Percent Percent Valid 1 23.6 23.6 2 17.5 41.1 3 18.8 59.9 4 20.1 79.9 5 20.1 100.0 n= 309 100.0
Percentile Group of NumberWell Frequency Valid Percent Percent Valid 1 23.6 23.6 2 17.5 41.1 3 18.8 59.9 4 20.1 79.9 5 20.1 100.0 n= 309 100.0
Percentile Group of NumberWell Frequency Valid Percent Percent Valid 1 23.6 23.6 2 17.5 41.1 3 18.8 59.9 4 20.1 79.9 5 20.1 100.0 n= 309 100.0
Change= Mean Differences, or the mean of the difference between each case/SD Dropout Rate
Higher dropouts rates are found in quartile five, or the school with the highest number of gas wells in and near their school district. What other factors are there to consider? 1) Do Q5 SDs have lower populations which might affect percent change?Change= Mean Differences, or the mean of the difference between each case/SD Dropout Rate
* Enrollment is used because the ADM files for 10 on are in PIMS and I’m still waiting on PDE to get back to me. I have contacted them again, but am still waiting.
When thinking about the economic and employment impact of natural gas, its vital to keep in mind the varying labor needs throughout the phases of natural gas production.There are three distinct phases, which have very different impacts requirements:
This slide is from Wyoming, so ignore the specific numbers. But the concept applies equally to Pennsylvania. Note how employment needs vary, based upon the phases of development. During the drilling and pipeline building process, lots of jobs are created. But once all the wells are drilled, the ‘surge’ of employment passes. There are a steady number of jobs (typically well paying ones), but not at the same level as early.The number of jobs in the development phase depends critically upon the number of rigs operatingThe length of the Development Phase may be 15 – 30 years here in Marcellus – but at some point it will end, with the major decline in labor.This variation in employment needs creates planning questions/issues- how ensure enough housing for the ‘boom’ time, without over building so you have too many during the later stages? It creates a difficult tradeoff:Do you build housing for the workers, only to see a housing glut when the major employment demands go away? OR…If you DON’T have places for the workers to stay, the local economic impact of Marcellus will be much less for you since the worker dollars won’t be staying in your community.So which do you do?