Backlog of PlanCon reimbursements to school districts has grown to $1.2 billion
As Pittsburgh-area school districts plan their budgets for the next school year, any that have built or renovated schools in the past few years will have a big question mark: Will this be the year the state resumes reimbursing them for construction projects?
Since 2012, there has been a moratorium on applications for the state's Planning and Construction Workbook, or PlanCon, process. More than 350 school districts that applied before then await compensation for projects under construction or completed.
“Our application that triggers payment is sitting on an administrator's desk somewhere,” said Jan Klein, finance director for the Mt. Lebanon School District, which is awaiting $1.8 million in state reimbursement and will be owed $643,000 more next year.
A report the state compiled in May put the estimated backlog of payments at $1.2 billion for 354 projects statewide, said Timothy Eller, spokesman for the Department of Education.
The moratorium began in October 2012 and was slated to expire this summer, but the same report recommends extending the moratorium until the system can be reformed.
Hannah Barrick, director of advocacy for the Pennsylvania Association of School Business Officials, said the backlog built up, in part, because the state's budget for reimbursing districts remained level at about $296 million a year the past four years — down from $330 million in the 2009-10 budget. In addition to many districts applying for a share of the money for construction projects, reimbursements for charter school leases were being drawn from the same fund, Barrick said.
The amount the state would give each district was based on a formula accounting for project costs, the number of students in each classroom and a district's relative wealth. Payments can be scheduled for up to 30 years as districts pay back the projects' bonds.
Some districts, such as Mt. Lebanon and Bethel Park, have “optimistically” included the compensation they were expecting from the state in each year's budget, making up for the lack of it with other revenue, cuts or reserves throughout the school year, said Mt. Lebanon's Klein. So far, her district has covered the debt service on the ongoing $109.65 million high school renovation project but has to make cuts and raise taxes as the lack of PlanCon compensation gets added to other budget pressures such as rising retirement contributions.
The district is weighing a 0.55-mill tax increase this year.
Bethel Park expected about $490,000 a year going back to the 2010-11 school year as compensation for its new $94.29 million high school, which opened in January 2012, said spokeswoman Vicki Flotta.
“We've been told we're in the system; we're just waiting for once they open the pipeline up,” she said.
Other districts' expected compensation from the state has been smaller, such as the $118,000 owed to the Avonworth School District over the past two years for a $27.2 million primary center project expected to be completed this August.
“(There are ) no budget issues yet, but (it) could create a cash flow issue if it drags out another three years or more,” said district spokeswoman Dana Hackley.
Deer Lakes School District awaits about $30,000 a year for an elementary school project, said business manager Dennis Thimons.
“It's been budgeted to be covered out of other operation funds,” he said. “It's not the monumental number that other school districts were facing, so we were able to do that.”
Thimons joined the district last year and could not recall how far back the state's obligation on that project went, but said it's been long enough that the district refinanced the bonds for that project at a lower interest rate, which could lower future payments from the state to $20,000 or $25,000 a year if the funding starts flowing again.
Barrick said the state Legislature is considering legislation that would reform PlanCon, add to the annual budget for compensation and restart payments to school districts, with interest. A public hearing on that bill, House Bill 2124, is scheduled for Monday in Harrisburg.
“It's not going to be a lot, and it's not going to fix the whole problem, but it's at least going to acknowledge that the state made a promise,” Barrick said.
The primary sponsor of the bill, Rep. Seth Grove, R-York County, said his goal is to get funding flowing again and reform a system so outdated that it required districts to send copies of their designs to the state on microfilm instead of an electronic format.
“I am very fearful that if we do nothing, we'll get sued,” Grove said. “And if we get sued, we have a $1.2 billion liability to school districts.”
Matthew Santoni is a staff writer for Trib Total Media. He can be reached at 412-380-5625 or email@example.com.