School Districts Foresee Financial Shortfall (PA)
June 8, 2010
School districts across the state are facing serious financial shortfalls for the coming school year, according to the Pennsylvania School Funding Campaign.
"It doesn’t matter where you are. It doesn’t matt er if you’re urban, suburban, rural, small, big or in between," said Jay Himes, executive director of the Pennsylvania Association of School Business Officials.
"It is literally across the board."
Mr. Himes said that the cuts school districts are planning to make as a result are "unprecedented at least over two decades."
Mr. Himes based his conclusion on a statewide survey in which 256 of the state’s 500 school districts — 51.2 percent — responded.
Two-thirds said they will cut the number of instructional staff in 2010-11.
In Pennsylvania, professional staff cannot be cut solely for economic reasons, but districts can reduce staff by eliminating programs or if enrollment has declined.
The Pennsylvania School Funding Campaign, a statewide coalition that advocates for equity and adequacy in state school funding, is releasing the study today.
Extrapolating from the survey answers, the study estimated that the 500 school districts combined lost $343 million in local revenues in 2009-10, including:
• $220 million in interest earnings because of lower rates.
• $74 million in realty taxes because of fewer property sales and lower property values.
• $49 million in earned income tax because of unemployment and reduced incomes.
Many of the districts reported this was not their first year of falling revenues. Some are using money from their reserve funds to fill the gap.
"We believe they’r e at dangerous levels because multiple years of relying on fund balances usually results in very significant property tax increases down the road," Mr. Himes said.
Mr. Himes said some districts faced difficult economic times in the early 1990s, but they rebounded fairly quickly.
"This has not had a quick rebound to it. In most cases, the factors we found weren’t necessarily limited to one year. They were multiple years, beginning last year," he said.
He said major challenges lie ahead, including steep increases in the employer contributions to the state school employee pension plan and the loss of federal economic stimulus money in 2011-12.
"I think we’re on this three- to five-year period of some very difficult financial circumstances," he said.
The organization is pushing the state to continue phasing in a new basic education subsidy formula aimed at greater equity and adequacy.
The next phase would require an additional $355 million for basic education subsidy in 2010-11, something that was proposed by Gov. Ed Rendell but has not yet been acted on by the Legislature.