This section is from the "The Subvention In The State Finances Of Pennsylvania" book, by Frederic B. Garver.
This rule proved unacceptable and at the next session of the legislature its application was limited to questions involving the sale or purchase or mortgaging of real estate, or the expenditure of the state appropriation for a purpose not specifically designated by the legislature or for the surrender of the franchise of the corporation. *139 Later the state sought to increase its control by increasing its representation on the boards to one-half the membership of each.140
But even with increased representation, this method of control proved largely ineffectual in important matters. This was true because, for many years, the state's representatives were appointed from among the stockholders of the institution, a choice that was practically unavoidable when a majority of the prominent men in the district were also stockholders. Later this practice was discontinued. *141
But the principal defect in the method was inherent in the decentralized district-system under which the schools operated. With thirteen separate boards, each of which was an independent body, practically no uniformity was possible in matters of financial policy, qualifications of teaching staff, or efficiency of instruction. Furthermore, since the boards were local in character, local politics and local jealousies often dictated their policies and reduced the efficiency of the schools. *142
139 Act 24 March, 1877, P.L. p. 37.
140 Supt. of Public Instruction, Report (1910), p. x.
141 Ibid. The superintendent states that when the schools were established practically every man of means took stock. His defense of the practice described above seems a little weak.
The other method of control, that of giving the state superintendent the authority to approve or reject the curricula of the schools and to name the board of state examiners, which passed upon applicants for graduation, was undoubtedly more effectual for influencing standards of performance. But it did not apply to the financial policies of the schools.
By 1913 the total indebtedness of the corporations controlling the schools amounted to $2,604,859. *143 Of this amount 31,624,587 was owed to the state and secured by mortgages, while the remainder was due individual creditors. *144 Now it had been thought during the years 1874 to 1887 that the appropriations made by the state would enable the schools to clear themselves of debt; and during the period the tendency was for them to pay off the claims of private persons. But from 1899 to 1913, however, just the reverse was true. In the former year the total indebtedness of all the schools to individuals was about $351,000. *145 During the next four years the amount of such indebtedness increased nearly threefold, in spite of the fact that the legislature assisted directly with appropriations.
The cause of the growing debt was apparently the need for new buildings and additional equipment. The money for these improvements could not, apparently, be secured by increasing the stock of the corporations; for, although the schools were privately owned, they were not profitable investments for the stock holders. In 1899 the amount of stock held by individuals as reported by the state superintendent was 3383,440, and in 1913 it was $323,928. *146
The problem confronting the trustees of the schools and the state was how to provide for progress. The state could hardly be expected to appropriate more liberally as long as it had so little actual control over the conduct of the schools. Yet, on the other hand, it was impossible to enlist the support of private capital in such an unprofitable undertaking. The solution reached by the legislature in 1913 was to buy out the interests of the stockholders and to make the schools state institutions.
143 Supt. of Public Instruction, Report (1913), p. 611.
144 $668,343 of the amount due individuals was secured by mortgages; the re-remainder was in the form of floating indebtedness.
145 Supt. of Public Instruction, Report (1899), pp. lxvi-lxvii. 146 Ibid; Report (1913), p. 611.
The act of that year provided that 3400,000 should be placed at the disposal of the State Board of Education for the purpose of purchasing such schools as they might select. The board was not permitted, however, to distribute to the stock holders of any school an amount in excess of that which was originally paid for the stock. *147 The wording of the law is such as to give the board considerable latitude in dealing with the stockholders. They may purchase any school at any figure not in excess of a maximum fixed by the actual contribution of the stockholders. Furthermore, they may select the schools to be taken over. In 1914 the state superintendent reported that four of the schools had been purchased, *148 but no further purchases were reported in his annual reports in 1915 and 1916.
147 Act 25 July, 1913, P.L. p. 1294. The governor reduced this amount to $100,000.
148 Report (1914), p. 3.