Pennsylvania School Districts Feel Effects of Budget Impasse

Pennsylvania schools have a new source of disparity: A state budget impasse that has driven some districts to borrow while others expect no problems for months.
by | September 25, 2015 AT 10:30 AM

By Karen Langley, Mary Niederberger and Eleanor Chute

Pennsylvania schools have a new source of disparity: A state budget impasse that has driven some districts to borrow while others expect no problems for months.

School districts missed more than $1 billion in payments in August and expected to miss another $700 million in September, according to estimates by the Pennsylvania Association of School Business Officials.

How the state's 500 school districts are absorbing the loss depends on their reliance on local resources and existing budget reserves.

"I believe firmly 10 percent of the districts have had to go borrow," said Jay Himes, executive director of the association. "Some districts, the 'have' districts, probably can ride this out for an extended period of time, but every month we'll pick up a segment of districts that didn't or can't."

Locally, the Sto-Rox school board took out a $7.3 million line of credit earlier in the summer, and that, coupled with the district's tax revenue, will carry it until the end of the year, said superintendent Terry DeCarbo. The board of the Clairton School District has taken out a tax anticipation note, and other arrangements will have to be made "very shortly," according to spokeswoman Alexis Trubiani.

"We only took out so much, and now we are getting further in," Ms. Trubiani said. "So we are going to need to make more arrangements for our day-to-day operations.

"Like with every other school district, this is a hot topic right now, and I wish I could see an end in sight," she said. "And the big question is who is going to pay the interest on the loans."

Gov. Tom Wolf has proposed including money in the final budget to reimburse school districts and small not-for-profit organizations for interest payments on loans taken out because of the budget impasse.

Officials in other school districts say they can manage the loss of state funding for months before resorting to borrowing. Representatives of the Bethel Park and Mt. Lebanon school districts said they will not encounter problems before spring. In West Mifflin, where officials originally thought they might hit a roadblock in October, a recent review showed they can make it through the calendar year with local tax revenue, said superintendent Dan Castagna.

"Most of our financing is through tax revenue, (70 percent local) which is coming in now," he wrote in an email. "That money will dwindle as the year continues. We do not yet have a plan or really any idea what we can do if this impasse continues into 2016."

Pittsburgh Public Schools wrote to brick-and-mortar charter schools last week to say that, starting in October, they will receive only 54 percent of monthly tuition payments -- the portion funded by local money -- until a state budget is approved.

At City Charter High School, Downtown, CEO and principal Ron Sofo said the school has a fund balance that will allow it to last two or three months into the next calendar year without borrowing.

"After that, it's going to be a challenge," he said. "I would hope the responsible state legislature and the governor could come to a budget agreement to fund the necessary functions of government."

In Erie, superintendent Jay Badams is hoping for strong collections of property taxes but also is considering a $30 million loan to get the district through the end of the calendar year. But he said he believes Mr. Wolf should veto a stopgap spending measure that Republicans are sending his way in order to push for the higher levels of school funding the governor has proposed.

"I'm just looking for some resolution to this crisis so we have funding to continue school," Mr. Badams said. "But I also understand this negotiation and how important it is, and I believe the governor's proposal would be a great thing for public education in Pennsylvania."

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