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School districts await construction reimbursement money from state

Mary Ann Thomas
| Saturday, May 7, 2016, 11:20 p.m.

When the state's nine-month budget impasse ended in March, money for Pennsylvania's 500 school districts was released, but the state's contribution remained short.

About $266 million short.

The budget Gov. Tom Wolf allowed to become law without his signature did not include any money for “PlanCon,” the state program that reimburses districts for a portion of their education-related construction costs.

The budget impasse blocked the release of PlanCon money. While both Democrats and Republicans agreed to fund it, they disagreed on how to pay for it.

The result is schools likely won't get any PlanCon money before the school year ends June 30.

And because the state may borrow $2.5 billion to pay for the program, it's unclear when and how much money schools can expect.

The state fiscal code authorizes the borrowing of up to $2.5 billion for 2015-16 PlanCon and to pay for other construction projects in the program.

“Everybody gets their money, but it may not be as much money as everyone wants now,” said state Rep. Jeff Pyle, R-Ford City.

That's because a seven-member board of the Commonwealth Financing Authority, an independent agency of the state Department of Community and Economic Development, has to decide the best time to borrow, said department spokeswoman Heidi Haven.

The delay — coupled with the uncertain timing of the bond — has made 2016-17 budget planning difficult.

“From the school district standpoint, this is just another example of (the state's) very inadequate school funding system and another example of state government failing to fulfill its responsibility for ... education costs,” said Ron Cowell, president of The Education Policy and Leadership Center, an independent nonprofit organization in Harrisburg.

“At the moment, school districts have no certainty ... on when they will get the money and how much,” he said. “The current fiscal year is almost over, and districts have to pay their bills (without) the state share.

“Until funding is provided, this falls on the backs of local taxpayers.”

Hannah Barrick, director of advocacy for Pennsylvania Association of School Business Officials, said PlanCon has been a problem for a number of years.

“It's a burdensome, complicated process,” she said. “There is a backlog.”

New Ken-Arnold short nearly $1M

The New Kensington-Arnold School District had expected almost $955,000 from PlanCon this year. That's the equivalent of more than seven mills of property tax.

Superintendent John Pallone,a former Democratic state representative who served on the House Education Committee, said the district tightened its belt for this school year because of the long wait for general education funding and its pending PlanCon payment.

“We've been able to maintain our full battery of extracurricular activities and maintain our curriculum programs.”

But he said not knowing when PlanCon money will arrive impacts budget planning.

The school board this month announced it may lay off 21 teachers for the next school year.

Deal not sealed

The Commonwealth Financing Authority loan is controversial, too.

“The state's continuing fiscal imbalance has made the normal lenders more cautious about providing large sums of money,” said Bill Patton, spokesman for House Minority Leader Frank Dermody, an Oakmont Democrat.

“The deal probably will get done, but at a much greater cost to taxpayers with higher interest rates.”

This year credit agencies Standard & Poor's, PNC and Moody's warned the state to solve its budget problems or face higher borrowing costs.

“We have received several warnings. If we don't balance our budget with sustainable revenue, we might suffer ... downgrades,” said Jeff Sheridan, Wolf's press secretary.

The governor and the Legislature remain at loggerheads over how to balance the 2016-17 budget, which will be due on June 30.

“It is pretty obvious this is a poor time to borrow money because of the state's bond rating,” said Cowell. “All of this is brought on by the inability and unwillingness to make timely decisions to honor its obligation to fund public education.”

Mary Ann Thomas is a Tribune-Review staff writer. She can be reached at 724-226-4691 or mthomas@tribweb.com.

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