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Schafft Marcellus Slides

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Presentation on jan 9, 2013 at Alfred State University as part of a panel speaking to the impact of Marcellus Shale on schools.

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Schafft Marcellus Slides

  1. 1. Marcellus Shale Natural GasDevelopment 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. 2. Why is Marcellus Shale natural gasdevelopment an issue for schools? Rapid pace and scale of development;
  3. 3. Alfred, NY
  4. 4. Alfred, NYBy June, 2012, over 5,500 wells were drilled Total projected: 60,000-100,000.
  5. 5. Bradford CountyBy June, 2012, over 5,500 wells were drilled Total projected: 60,000-100,000.
  6. 6. Tioga CountyBy June, 2012, over 5,500 wells were drilled Total projected: 60,000-100,000.
  7. 7. Why is Marcellus Shale natural gasdevelopment an issue for schools? Rapid pace and scale of development; Uncertainties regarding school impacts (e.g., costs, funding, curricula, s tudent demographics, staffing);
  8. 8. Why is Marcellus Shale natural gasdevelopment 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. 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. 10. Map of Pennsylvania School Districts Showing Marcellus ShaleCoverage, Area of Survey Administration, and Marcellus Wells * Greyscale = Area of Survey Administration * Diagonal Hatching = Marcellus Shale coverage
  11. 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.pdfMarcellus Shale gas development:What does it mean for Pennsylvania schools?http://pubs.cas.psu.edu/freepubs/pdfs/ ee0019.pdf
  12. 12. Opportunities and Challenges Economic Development & Fiscal Impacts; Local Demographic Change; Housing Impacts; Physical Infrastructure and Environment; Curricular Change & Workforce Development.
  13. 13. Marcellus-related economic development in economically lagging areas… PENNSYLVANIA SCHOOL DISTRICTS 50 Wealthiest 50 Poorest# of all SDs withMarcellus 4 out of 50 32 out of 50drillingTotal # of wells 322 2113
  14. 14. Economic Development Respondents from High Drilling Activity Districts Only All Others N% reporting significantactivity as a result ofgas industrydevelopmentJob creation 35.6 6.6 316Local wealth creation 32.2 6.3 311Business start-up 20.0 4.3 308
  15. 15. Economic Development Respondents from High Drilling Activity Districts Only All Others N% reporting significantactivity as a result ofgas industrydevelopmentJob creation 35.6 6.6 316Local wealth creation 32.2 6.3 311Business start-up 20.0 4.3 308
  16. 16. “Although there is some economicdevelopment from the Marcellusgas industry I am not seeing howthe school districts can benefitfrom this.”- Survey respondent
  17. 17. What About Act 13?
  18. 18. What About Act 13? The Impact Fee unfortunately has no fiscal “impact” for school districts
  19. 19. What About Act 13? The Impact Fee unfortunately has no fiscal “impact” for school districts local-level – counties and 60% municipalities hosting wellsIMPACT FEE various state agencies 40%
  20. 20. What About Local Tax Revenues?
  21. 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 onLocal Taxes to Fund Education”
  22. 22. What About Local Tax Revenues? Real estate tax98% of total SD tax revenues Earned income tax
  23. 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. 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. 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. 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. 27. Percent Change in Marcellus Region School District Finances by Levelof 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. 28. Percent Change in Marcellus Region School District Finances by Levelof 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. 29. Percent Change in Marcellus Region School District Finances by Levelof 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. 30. Percent Change in Marcellus Region School District Finances by Levelof 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. 31. Shale gas development and dropouts?% agreeing or strongly Respondents fromagreeing High Drilling Activity All Districts Only Others NMarcellus-relatedworkforce demands hasincreased dropoutlikelihood 17.4 11.0 319
  32. 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. 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. 34. Local Demographic Change Respondents from High Drilling Activity Districts All Only Others N% reporting significantactivity as a result of gasindustry developmentNew in-migrants 24.1 3.8 318Enrollment increases 4.3 1.8 318
  35. 35. Has there been a change in enrollment since developmentbegan 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. 36. Marcellus drilling activity and changes in student enrollment inschool districts through the end of the 2009–2010 academic year
  37. 37. Local Housing Impacts Respondents from High Drilling Activity All Districts Only Others N% reporting significantactivity as a result of gasindustry developmentIncreased rents 40.0 7.1 288Housing shortage 35.1 5.0 295Increased property values 29.1 6.7 290Displacement of low/fixedincome residents 20.0 2.4 308
  38. 38. Physical Infrastructure and Environment Respondents from High Drilling Activity All Districts Only Others N% reporting significantactivity as a result of gasindustry developmentRoad congestion/wear &tear 53.3 16.2 319Water and/orenvironmental problems 33.3 9.6 288
  39. 39. Physical Infrastructure and Environment Respondents from High Drilling Activity All Districts Only Others N% reporting significantactivity as a result of gasindustry developmentRoad congestion/wear &tear 53.3 16.2 319Water and/orenvironmental problems 33.3 9.6 288
  40. 40. Opportunities and ChallengesRoad Safety Concerns“The biggest thing we want to dois work with these truckcompanies ... work with the gascompanies, work with everybodythat’s hauling — to educatethem, to let them know whenwe’re out there, look out for thekids”- BEASD Business Office staff person
  41. 41. Note that roadsurface is flush withbottom of guard rail!
  42. 42. Curricular Change and Workforce Development School District Respondents CTCs% agreeing or strongly High Drilling High Drillingagreeing: Activity Activity Districts DistrictsLack sufficient info aboutworkforce needs to makecurricular changes 61.4 76.8 41.6Investing in workforcedevelopment is risky givenuncertain time horizon ofMarcellus jobs 47.1 47.5 30.4
  43. 43. “What happens after the shale isdepleted of natural gas? Does theindustry leave us high and dry likethe coal barons did?”- survey respondent
  44. 44. 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
  45. 45. Jonah/Anticline Fields Direct Workforce Through The Three Phases:Graph: Ecosystem Research Group/Jacquet
  46. 46. 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;
  47. 47. 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?

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