In a speech Tuesday, Pennsylvania Gov. Tom Wolf (D) will lay out his vision for the 2016-17 fiscal year. It’s a normal political act with one large, abnormal feature lurking in the background.
Pennsylvania still doesn’t have a budget for the current fiscal year – the one that’s already about 60 percent over.
It’s the first time that any governor of the Commonwealth has given a forward-looking budget address without a concrete spending plan in place for the present, according to the author of a book about the state legislature’s history.
The near-record impasse has created immense problems for schools up and down the state. The current academic year has been marked by the threat of school closures, forestalled time and again by extraordinary financial measures at the local level to paper over the failures in Harrisburg.
School districts have taken a variety of steps to stave off closures since the budget process collapsed last summer. Some have decreased non-classroom programs, canceling field trips and extracurricular activities in order to prioritize learning fundamentals. Others have skipped scheduled payments to pension funds, charter schools, and service vendors, deferring those costs to some future date when the money has materialized. Many have had to issue debt to cover their operating costs, generating new red ink on district balance sheets that could have lingering consequences for students and staff alike.
Just two months ago, the crisis that began last June seemed on the cusp of resolution. Republican leaders in the state Senate struck a compromise with Wolf that won a handful of Democratic votes in the upper chamber as well. Schools would see a funding boost over the 2014-15 budget, potentially salving the damage caused by almost half a year of budget chaos.
But House Republicans revolted, saying that a provision to make public worker pensions less generous in the future did not go far enough. Neither the $30 billion spending package nor the still-unwritten details of a $1.2 billion tax hike to help pay for everything could go ahead after all. Wolf instead issued a line-item veto of many parts of the House GOP’s budget, allowing half a year’s worth of school funding to get sent out just in time to prevent numerous school closures around the state that had been forecast for January. The partial budget also restored funding to crisis centers and other key social services that had begun to go dark for lack of funding.
Partial-year funding doesn’t fix things for schools, however. It only puts time back on fiscal countdown clocks in districts around Pennsylvania. As Wolf delivers his vision for the future on Tuesday, the men and women who run public education in his state will still be staring at an ugly and uncertain present.
The Pennsylvania School Boards Association (PSBA) surveyed districts earlier this year to get a snapshot of how exactly districts are coping. A little more than one third of the state’s 500-plus districts responded. About one in five of those districts have cut back on professional development programs for teachers, canceled plans to update teaching materials or purchase classroom supplies, or reduced their technology purchases. One district of every seven has canceled its tutoring and remediation programs for students. More than a quarter have canceled building maintenance projects. Pre-school has been canceled in 9 percent of the districts that responded.
Administrators can only do so much to keep the budget wolves away from actual classroom doors. “Districts are doing a good job of making sure that the budget impasse isn’t impacting students and staff directly,” PSBA spokesman Steve Robinson said in an interview. But there’s no perfect shield. “It’s field trips being canceled, maybe, or certain programs getting put on hold until the budget dollars are there. You might see classes using curriculum from last year because they can’t afford to buy new books. It’s those kinds of things down at the classroom level,” Robinson said.
Many schools have had to take more than one such step, in addition to drawing down emergency reserve funding. And even if Wolf and the holdout Republicans in the state House struck a deal this very afternoon, and withheld money arrived in district accounts overnight, the damage caused by the budget crisis wouldn’t just disappear.
“Many of these districts have saved up fund balances for other purposes: pension costs, future construction plans, maintenance projects on their buildings,” said Robinson. “They’re not going to be able to build that up again overnight. There’s going to be long-term consequences for this budget impasse. How does a district pay their pension costs? What happens to those school construction projects they had planned now that they used up the money they had put aside for those purposes?”
And lots of districts haven’t even been able to call on reserve funding and cancel or delay their development plans to cover short-term crisis costs. Many have issued bonds, adding debts to their balance sheets to keep the lights on today at the expense of extra and ongoing budget pressure until the loans are repaid. The state’s Auditor General said in early December that districts had already borrowed a combined $900 million since the fiscal year began in July, a figure that will likely top a billion dollars later this spring if the impasse drags on. The PSBA’s survey indicates that roughly two-thirds of all districts expect to borrow this spring even after the partial-year funding was disbursed at the turn of the year.
All that borrowing by desperate school districts has harmful knock-on effects for both state and local governments. Pennsylvania’s bond rating is starting to slip and its borrowing costs are up significantly since last January. Pennsylvania is getting the third-worst deal on bond funding of any of the states Bloomberg tracks for financing costs, ahead of only Illinois and New Jersey.
Fraying The State’s Political Fabric
These are large headaches that distract administrators from their core work crafting educational institutions that deliver good results for children, parents, and the state as a whole. But they’re only one year’s worth of headaches. And they’re about to be compounded, Robinson said, as Wolf tries to sketch out a 2016-17 budget vision in Tuesday’s speech.
“Districts have to put their budgets together weeks before the governor even announces what he’s asking for,” Robinson said. Under normal circumstances it’s straightforward to develop a local plan before the budget address and then finalize a district budget by the end of the fiscal year on June 30. ”But districts are working doubly blind now, not knowing what they’re going to get this current fiscal year or what to expect for the next,” he said.
The nature of the political crisis that’s prompted all this mess likely also makes it hard for the men and women who work in the Pennsylvania public sector to feel like they’re in good hands for the longer term. Take the public workers whose pensions have become a sticking point in negotiations for example. The deal on offer would ask future workers to shoulder much more risk of dying poor in order to shore up the system as whole. It’s a common dynamic in such fights, but it leaves room for future legislatures and governors to skip payments, muck up the retirement fund’s balance sheet, and create a renewed sense of crisis that will lead to further cuts to worker benefits. If elected officials can’t be trusted with basic annual budgeting, why should workers believe they’ll keep their pension commitments?
Such suspicions can scuttle the coalition-building that’s essential to governing. And that kind of wariness is already on display from the PSBA. The group sued Wolf, the legislature, and other state officials last month over withheld state and federal school funding. The suit argues that education is critical to the health, safety, and welfare of Pennsylvanians, and that holding out on school districts while a legislative standoff plays out is therefore a violation of both the Pennsylvania and United States Constitutions.
The move would help protect local schools from shenanigans in the capitol, while also taking away one more tool from future state lawmakers who are trying to strike deals with their political opponents.
“If we’re successful and, God forbid, this happens again,” Robinson said, “the Commonwealth would not be allowed to hold any federal money that’s supposed to be a pass-through to districts.”