Schools were supposed to receive more than $1 billion in state subsidy payments last week for Basic Education Funding, transportation payments and employee benefit reimbursements appropriated in the new state budget. However, the budget impasse has held back the funding, creating financial uncertainty for school districts across Pennsylvania.
"With a state subsidy payment expected each month, more school districts will incur additional borrowing costs for loans if the budget impasse continues," said Jay Himes, PASBO executive director.
"The $1 billion in state funding that school districts will not receive will be particularly painful for less wealthy school districts, and it will only get worse. Every month of missed state funding will see growing financial pain by school districts, intermediate units and career and technology centers, creating real consequences for students across the state."
In the absence of state dollars, school districts are looking at short-term borrowing and delaying expenditures to supplement the use of reserve funds during the impasse, according to a recent survey of PASBO members.
Of the 171 respondents, 83% are using fund balance or may use fund balance to cover the lack of state subsidy payments, while half of the respondents said they have borrowed or are considering borrowing to avoid any cash flow difficulties.
Many other respondents have delayed or are considering delaying payments to vendors, facility maintenance and filling vacant positions, PASBO said.