Schools faces life without state aid
HARRISBURG – What would happen if your paycheck was a month late? Do you have enough savings to get by, or would you have to take out a loan to pay the bills?
Local school district officials will soon confront that scary scenario.
Normally, Pennsylvania school districts would be receiving their first of six payments from the state this Thursday. But because there’s no education budget in place and the General Assembly won’t meet again until next month, state aid checks are going to be delayed indefinitely.
Most local districts have enough of their own revenues from local property taxes to get by for at least a couple months, but they would like to have that state aid now so they can invest it and collect interest. But some districts in other parts of the state say they won’t be able to pay for books, utilities and teacher salaries, unless they get loans in the interim.
“What happens if your paycheck is a month late?” says Constance Crozier, a member of Beaver Area School District, which relies on the state to cover about one-third of its budget.
“Of course it impacts the district. “You just don’t know when the money is coming. You don’t know how much you’re going to get. You’re in limbo. How can you [make spending decisions] when you have to enact a budget by the end of June and you don’t know how much money you’re getting until Harrisburg decides?”
By law, all school districts are required to enact their budgets by June 30. The state Constitution says that the General Assembly should also pass the state budget by then. Typically, lawmakers do that and then recess for the summer.
This year, lawmakers passed most of the budget in March. But partisan politics has delayed the education portion of the spending plan that range from $4 billion to $5.3 billion. The General Assembly held several session days in July, but couldn’t reach a compromise with Gov. Ed Rendell. Lawmakers took off during August and plan to return Sept. 9.
Statewide, state aid accounts for an average of about 38 percent of school budgets. The budget delay will impact some school districts much more than others. In some suburban school districts state aid accounts for less than 20 percent. In some rural areas, state aid accounts for more than 60 percent of school districts’ budgets.
“The state budget not being passed has distracted us from important work and also has the potential for costing us more money,” said Thomas Minett, president of the Riverside School Board.
School officials in the Beaver County district already had a full plate of issues to deal with, including how to meet new federal mandates and how to improve state testing scores. Now, they also have to worry about the budget. The small farming community in Western Pennsylvania has a modest tax base and depends heavily on the state to subsidize its annual budget, which is about $18 million this year.
“We have to borrow money just to stay afloat,” Minett said.
The school board recently authorized borrowing $1.25 million. When the state aid arrives, the district will be able to pay back the loan, but Minett said the district will have to use some of its $900,000 in reserves to pay the four percent interest fee. That’s money he would have preferred to use to buy new books or finance school improvements.
Bristol Township School District in Bucks County is expecting about $20 million in state aid this year. Because the state will miss making its first of six installment payments this month, the district will lose about $30,000 in interest it could have collected by investing the money, said business manager John Vignone.
“Those losses could mount if additional aid payments are delayed. More affluent school districts aren’t in the same bind – yet.
“We’re not in danger of running out of money because by time we get short on funds, the state budget situation will be resolved,” said Chuck Baker, a longtime member of the Central Bucks School District, which is the third-largest district in the state and only receives about 16 percent of its revenues from state aid.
“Right now, we are holding our own,” said Walter Stout, director of business affairs for Central Greene School District, “We would have received a sizeable payment from state on Aug. 28 that more than likely we wouldn’t need to spend right away. But in a normal year, we’d invest that money and earn interest on it. Considering the low interest rates at the moment, there’s not going to be a large loss.”
He added, “It could definitely hurt if there’s no state budget by November. Because, by that point, we’ll have missed two payments. We’d be looking at close to $2 million we wouldn’t have received on a timely basis.”
Jim Scanlon, superintendent of Quakertown Community School District in Bucks County, agrees. “Probably if they go deep into the fall without a budget, I think we’re going to see a number of school districts struggling with their budget.”
The governor’s proposal and separate proposals passed by the House and Senate all call for at least a 2.8 percent increase in basic education funding for this school year. Rendell, a Democrat serving his first year in the office, wants to invest an additional $1.3 billion in early-childhood programs, tutoring assistance and other educational initiatives.
But the General Assembly, which is controlled by Republicans, opposes the 34 percent increase in personal income tax he proposed to fund it. For a person making $50,000, Rendell’s proposed tax increase would be $475 more a year.
“We’ve been trying to negotiate and talk with this governor who has refused to budge,” said Stephen Miskin, spokesman for House Republicans. “His way of negotiating and compromising is, ‘It’s my way or no way.’ He says, ‘I want to negotiate, I want to compromise, but his actions prove far differently. He’s a governor who’s very into theatrics and the media.”
Rendell officials say the governor is willing to lower his proposed tax increase, but won’t abandon his education agenda.
“The Department of Education surveyed all 501 school districts last month and a majority said they are willing to go through short-term pain for an absolutely necessary long-term gain in the form of additional reforms to the system of education,” said Rendell spokesman Tom Hickey.
“Yeah, if there’s more money that’s coming to public education, then it’s worth short-term pain,” Scanlon said. “It’s just a matter of, is that going to happen?”
Baker agreed: “The proof is in the pudding. When we see what we get, then I’ll tell you whether it was worth the wait.”
“Do we really have a choice?” Crozier asked. “When you don’t have a choice, you just resign yourselves to reality and hope for the best.” She added, “It’s an awful way to do a budget.”