Harrisburg deadlock keeps $416M from schools, millions in cuts proposed for education budget

Pennsylvania's budget mess got messier yesterday and the fallout doused the state's 500 school districts.

The monthlong budget impasse has introduced new math to the school districts: No budget equals no state funding for the schools this month, amounting to delayed payments of more than $416 million that was supposed to be doled out yesterday.

Each district should have received its share of that funding yesterday as the first monthly state subsidy of the 2009-10 fiscal year, which began July 1.

The School District of Philadelphia had the most coming - just under $78.3 million.

But state Education Secretary Gerald L. Zahorchak said that no checks would be mailed until a budget is in place.

That means, he said, that "the districts will have to operate without the state's share of education dollars until lawmakers approve a spending plan."

Gov. Rendell's budget calls for using federal stimulus money to increase statewide basic education funding by $418 million this year.

The recession led to a gaping budget deficit, however, and state Senate Republicans propose slashing about $728 million from Rendell's education budget and using stimulus funding to plug the hole created by those cuts.

If the final budget is less than what Rendell proposed, the payments passed over yesterday may be cut.

Districts depend on state funding to help make payroll, pay vendors and cover numerous other expenses such as student transportation and charter schools.

About 53 percent of the Philadelphia district's $3.2 billion 2009-10 budget is to come from the state.

The next monthly state payment to the districts is scheduled for Aug. 27. That money, $876 million, also could be affected by the budget impasse, Zahorchak said, because it takes about two weeks to authorize payments after a budget is enacted.

Michael Masch, chief business officer for the Philadelphia district, said that the decision to borrow $400 million on July 3 at a cost of $9 million has, for the moment, forestalled a crisis here.

The district always borrows in the summer to make ends meet until city funding arrives in February or March, but more than usual was borrowed this month due to the state budget situation, said Masch, Rendell's former budget secretary.

If the district doesn't get its August payment of $260 million, Masch said, things will begin to tighten.