October 28, 2015

Auditor General: School District Borrowing Due To Budget Impasse Now $431 Million

With the state’s budget impasse entering its fourth month, Auditor General Eugene DePasquale Wednesday said that the stalemate has now prompted an additional 10 school districts to borrow $85 million, bringing to the total borrowed to date to $431 million.
Interest and fees on the money borrowed to date could potentially reach $14 million.
In late September, Auditor General DePasquale initially reported that the state budget impasse forced at least 17 school districts and two intermediate units to borrow more than $346 million to meet expenses and keep classrooms open.
“We are now entering the fourth month of this logjam,” DePasquale said. “The governor and the legislature must end this damaging stalemate and come up with a budget that provides adequate — and fair — funding for educating students.”
To date, Department of the Auditor General staff members spoke with officials at more than 320 school districts across the state. The department will continue to reach out to school districts and release updated borrowing figures every month until the final budget is signed into law.
“We are now up to at least 27 school districts and two intermediate units forced to take out loans to keep students in the classroom,” DePasquale said. “Based upon our discussions with school officials, that number is going to jump by 54 more districts as they anticipate borrowing funds by Thanksgiving if this needlessly long budget impasse is not resolved.”
DePasquale noted that in addition to borrowing, school districts, charter schools and IUs are spending down reserve funds.  Some also are withholding payments to charter schools, postponing hiring, delaying payments to vendors, delaying staff paychecks, and withholding payments to retirement funds.  
The impasse is forcing some school districts and charter schools and to shorten school days or weeks, cut programs and even consider closing schools.
The Department of Education did not make its September of October payments to schools and is not likely PDE will make the November scheduled payment.
More than 200,000 students are enrolled in the school districts and intermediate units that reported borrowing through October.
A list of the school districts and intermediate units that have borrowed through October or expect to borrow though November is available online.