Forced to tap into fund balances, take out tax anticipation loans and borrow money from other district funds in order to keep operating, officials from several local school districts are starting to lose patience with the state legislators and Gov. Ed Rendell, who have been unable to agree on an education funding plan.
“It’s inexcusable. I think the legislators are not doing what they were elected to do,” said Floyd Geho, business manager for the Uniontown Area School District.
Geho believes legislators are almost acting cavalier about the whole thing in an attempt to show the new governor that they are in charge not him. Meanwhile, district’s like Uniontown are being forced to suffer the consequences.
“It’s disgusting. It’s a disgrace,” said Geho. “People can go to the polls and vote out each and every one of these legislators as far as I’m concerned.”
Because the state hasn’t approved a funding plan, the 501 school districts in Pennsylvania, like Uniontown, are in a holding pattern and have no idea when they will receive their state subsidy payments.
The General Assembly approved Rendell’s education budget in March, but not his proposed taxing package to fund various programs. Without the additional revenue it would provide, Rendell vetoed the entire plan.
The financial situation at Uniontown is troubling to say the least. Geho said a $2 million tax anticipation note the district acquired is down to only $400,000 and that isn’t even enough to make one of the district’s biweekly payroll disbursements of $675,000. Unlike other districts in the area, Uniontown did not have a healthy fund balance. Prior to this most recent crisis, Geho said it was only $900,000.
Due to its current financial situation, the district was forced to borrow $1.2 million from its construction fund.
“Things are very, very bad here,” said Geho. “I’ve never seen things this bad and I’ve been in this job for 26 years.”
Geho said Uniontown is losing money on two fronts because, in addition to paying interest on money it is forced to borrow, the district is using funds that it would normally have invested and be collecting interest on right now. In addition, the state has not guaranteed that districts will be compensated for the lost revenue they would have received from such interest payments.
Another thing that troubles Geho is the fact that the state is so stringent about deadlines it imposes on school districts, but can delay approving a funding plan for this long.
“If school districts are one day late with their budgets, they get chastised vehemently, and yet the state can do this. The state can withhold these funds and basically hold each of the 501 districts hostage,” said Geho.
Although in a little bit better shape financially than Uniontown, officials at Connellsville Area School District are still facing a number of problems due to the delay with subsidy payments. According to Superintendent Gerald Browell, the district has obtained a tax anticipation loan, but hasn’t had to use it yet because of its healthy fund balance.
“Fortunately, we haven’t had to draw down on that note,” said Browell. “But the point is, in essence, we are going broke.”
Browell said the last time school districts faced a crisis like this was back in 1991 — but this one is worse because it has gone on longer. Browell said the district can’t afford to miss another subsidy payment because Connellsville relies heavily on the state.
“Some school districts only rely on the state for 8, 10 or 12 percent of their revenue. Connellsville gets 70 percent of its revenue from the state.”
Regardless of how well districts are doing, Browell said eventually Connellsville and the other districts in Pennsylvania will run out of money.
With a healthy fund balance, Southmoreland School District has been able to survive the ongoing crisis by limiting spending and hasn’t had to borrow any money so far.
“It’s tight right now, obviously, without any state money coming in,” said Superintendent John Halfhill. “We are focusing on meeting the essential expenses like payroll, benefits and transportation. We have cut off all discretionary spending for the time being.”
Although it hasn’t been necessary to obtain a tax anticipation loan, Halfhill said unless a plan is approved soon, the school board will have to discuss it in the near future.
Halfhill said he finds it ironic that one of the proposed education funding plans calls for limiting fund balances when that is the one thing that has enable Southmoreland and other districts to survive the crisis so far.
Having missed the August and September subsidy payments, and certain the district will not receive one in October, Halfhill said he wouldn’t be surprised if funds aren’t released until after the November elections.
“It looks kind of bleak,” said Halfhill. “We are somewhat more fortunate than other districts, but eventually we’ll all be in the same situation. We just can’t keep going like this.”