Running out of money

Officials with the Northern Potter School District in Ulysses are poised to borrow $5 million to fund school district operations as the state budget impasse drags on.

On Tuesday, that school district appeared on a list released by Auditor General Eugene DePasquale of school districts that already borrowed funding — but Superintendent Scott  Graham told The Era the school board is slated to approve a resolution to take out a loan during  a meeting set for Oct. 12.

On that same day, Gov. Tom Wolf vetoed a spending measure and accompanying bills approved by state lawmakers that called for $11 in funding to schools and social service organizations across the state.

At this point, Northern Potter’s solicitor is discussing options with the First Citizen Community Bank of Ulysses for a loan, Graham said. The $5 million would ideally carry the district through the year, if needed, he said.

“We’re getting everything ready to go,” said Graham who is not surprised with having to take out a loan.

But if the school district has a good October with local tax dollars coming in, then school officials would dip into the borrowed funds after Thanksgiving, he predicts. As the money is used, though, he wonders if the school district would be reimbursed for the loan’s interest.

“Our students have returned to their schools, but much-needed state funding is stalled by the budget impasse in Harrisburg. It’s causing financial insecurity in schools across Pennsylvania and already forcing some to borrow money,” DePasquale said in a prepared statement. “Instead of focusing on education, schools across the state are having meetings to try and figure out how to get by every month, and shopping banks for loans that will hopefully allow them to keep the lights on.”  

The Northern Potter School Board is expected to approve a resolution to borrow funding during a meeting that starts at 7:30 p.m. Oct. 12 in the children's school library.

Meanwhile, as the budget crisis continues, school officials have ordered bills according to importance, something Graham calls unfortunate. Not getting paid are Public School Employees' Retirement System and cyber school, he said.

By itself, cyber-school costs the school district around  $150,000 a year, he said. Ten or 11 students are enrolled in cyber school, Graham said.

If officials paid those two categories of bills, the district would already be out of money, he said.

No matter, as the budget impasse carries on, Graham said school officials will focus on the children and keeping the school district open.

“I certainly regret the impact this is having on our schools, which is why I supported a budget in June that increased funding for public education by $100 million,” said state Rep. Martin Causer, R-Turtlepoint. “It’s why I voted in support of overriding the governor’s veto of education funding in that budget, an effort that failed due to the lack of Democrat support. And it’s why I voted for the emergency funding bill last week. As budget negotiations continue, I will continue to support efforts to get needed funding to our schools and human service agencies, while also ensuring the final product is respectful of the taxpayers who foot the bill.”

And when the budget does get approved, Graham said he is hoping for a significant boost in state funding. As it is, the district doesn’t receive enough local taxes to even bring the district on solid footing, Graham said.

In fact, officials have had to bring salaries almost back to 2004 levels and reduce staff through attrition over the last decade, Graham said.

“I just hope they can come together,” said Graham.

So does DePasquale.

“Even if the Commonwealth repays the borrowing costs to the districts and IUs — and that is not guaranteed — the money has to come from somewhere, and that could eat into other parts of the education budget,” he said. “This is already a huge problem affecting districts in rural, suburban, and urban areas. And it is going to turn into a crisis if the budget doesn’t get passed now.”

Nathan Benefield, vice president of policy analysis for the Commonwealth Foundation, shared similar thoughts on the ongoing battle.

“It’s astonishing that Governor Wolf is blocking immediate funding for students, the disabled, and struggling citizens unless his tax demands, which amount to $1,400 per family of four, are met,” he said in a prepared statement. “The governor claims he’s holding out for increased education funding, but legislative leaders already offered the $400 million increase he requested in his original budget proposal. With these vetoes and rejection of increased education funding, Governor Wolf has demonstrated that he’s really just holding out for higher taxes on Pennsylvania families — families who already bear the 10th highest tax burden in the nation.”

But Wolf feels differently.  

“Instead of seriously negotiating a final budget that funds education with a commonsense severance tax, fixes our deficit without gimmicks and provides property tax relief for middle-class families and seniors, Republican leaders passed a stopgap budget that once again sells out the people of Pennsylvania to oil and gas companies and Harrisburg special interests,” he said in a prepared statement.

As is tradition, he says, Republican leaders are intent on Harrisburg politics and embracing what he calls “a failed status quo that is holding Pennsylvania back.”

“Throughout negotiations, I have tried hard to compromise, and recently, I offered historic reforms to the liquor and pension systems, two areas Republicans say are priorities, and in return, I have received nothing on education, a severance tax or fixing the deficit,” Wolf said. 
Yet, Causer said Wolf’s tax plan includes a 20-percent income tax increase and a 10-percent sales tax increase.

“It also broadens the sales tax to apply to hundreds of products and services not currently taxed,” he said in an email. “When this proposal was brought before the House in June, not ONE member voted for it, Republican or Democrat. No one in the Capitol believes Pennsylvania can afford such a huge tax increase … except for our millionaire governor.”

In a prepared statement, Pennsylvania GOP Communications director Megan Sweeney has called Wolf’s continued efforts to block emergency dollars for schools and social services has caused the state to plunge into an unnecessary crisis.

“Our school districts should not be forced to borrow money because Governor Wolf and Democrats in the State Senate and House view them as political pawns in their
efforts to raise taxes,” she said. “It’s time for Governor Tom Wolf and Democrats in the State Senate and House to join with Republicans in supporting emergency funding for our schools and social services during the ongoing budget negotiations.”