State sending checks, but budget angst persists in Pennsylvania
Published 3:15 pm Wednesday, January 6, 2016
- Stock photo/ MorgueFile
HARRISBURG – Relief is on the way in Pennsylvania.
The state Treasury is sending the first of $6 billion worth of checks to school districts, counties and social service groups in light of Gov. Tom Wolf’s partial approval of a budget passed by the Legislature before Christmas.
John Kurelja, superintendent of the Warrior Run School District, said the money means he won’t have to go to the bank to keep the lights on.
“We were prepared to borrow, but this allocation will allow us to halt the process,” he said.
School officials and others finally seeing money first expected back in July aren’t completely satisfied, though.
Without a path to a final budget, the state’s payments are creating anxiety that the impasse between Wolf and Republicans in the Legislature will drag on.
“I do have grave concerns that distributing this money will prolong the budget finalization,” Kurelja said.
The state’s bungled budgeting is forcing schools to start planning for the 2016-17 year, which begins July 1, without knowing the full amount of this year’s state aid, he said.
In Greenville, school officials considered staying closed after Christmas to reduce costs. They eventually abandoned that plan and took out a $4.2 million loan.
“This will buy us some additional time. With the funds do to be released from the state, we should be in a better position until June,” said Greenville Superintendent Mark Ferrara.
Wolf has only released six months worth of basic education money for schools, which means Greenville will be getting just $3.3 million of a full-year payment close to $7 million.
If a final deal is months away, Ferrera said the school district may need to explore borrowing more.
“Time will tell,” he said.
The Education Department said the state will divide $2.78 billion among 500 school districts. That includes basic education money, along with $250 million from the state’s Ready to Learn grant, a fund aimed at boosting academic performance in the elementary grades. About a quarter of the grant money is being used to reimburse districts for charter school costs.
The governor’s move freed up all money owed to counties their vendors.
That’s welcome news for the likes of Pam Jarrell, executive director of the Center for Family Services in Meadville.
But with a final budget elusive, and no clear timetable for setting one, Jarrell is also among those bewildered as to why the state kept people waiting for so long.
“I’m glad they figured it out,” she said. “But what they approved, they could have done six months ago.”
Her center’s food pantry will soon get about $93,000 – three-quarters of what the state normally provides in a year – through an Agriculture Department program.
The state food-purchase program spends more than $17.4 million to feed 1.3 million Pennsylvanians a year. In Meadville, the money provides monthly food boxes to 3,000 to 4,000 people, Jarrell said.
As the budget impasse dragged, Jarrell’s center turned to the community for help.
It also looked for more frugal options when packing boxes.
“Proteins are the most expensive,” she said. “So we didn’t give them as much.”
Payments now on the way to counties and social service agencies will solve a lot of problems.
A batch of 16,400 expedited payments, worth an average of $201,219, were due to start arriving Tuesday. Another 35,000, worth an average of $77,000, are expected within the next two weeks.
But for local leaders, the budget puzzle still misses key pieces, said Douglas Hill, executive director of the County Commissioners Association of Pennsylvania.
For one, it’s unclear if counties will be reimbursed interest costs for short-term loans they took to pay bills.
The commissioners group estimates that about one-third of the state’s counties have borrowed, though interest is hard to calculate because much of it was through lines of credit.
Schools borrowed more than $900 million because of the budget impasse, according to Auditor General Eugene DePasquale.
Cambria County officials face a $1 million interest payment on loans due at the end of the month, said County Controller Ed Cernic Jr.
The county got court approval to borrow up to $12 million. The state has already paid the county $400,000, and Cernic said he’s expecting as much as $4.5 million within in the next two weeks. That is about half of what he expects the county to get by the end of the fiscal year.
Interest from loans is only part of the fallout from the state budget crisis.
Selinsgrove schools didn’t borrow but instead raided interest-bearing savings accounts, said Jeff Hummel, the district’s business manager. Counties and schools across the state employed similar tactics.
“So, instead of borrowing from the banks and paying interest, they were borrowing from taxpayers and losing the interest they would have earned,” Hill, at the county commissioners’ group, said.
The county commissioners are lobbying the state to repay not only interest on bank loans, but the income that counties and schools lost when raiding savings accounts.
John Finnerty covers the Pennsylvania Statehouse for CNHI’s newspapers and websites. Reach him at jfinnerty@cnhi.com.