Philadelphia\u2019s school board on Thursday night approved a measure to borrow up to $1.5 billion to enable the district to pay its bills through December. <\/p>\n
The move comes at a steep price \u2014 $30 million in borrowing costs \u2014 and comes amid a continuing budget stalemate in Harrisburg.<\/p>\n
So far, the district is short about $400 million in state payments that should have been made in July and August, money that was promised to cover essentials, including basic and special education services and student transportation. <\/p>\n
Statewide, school districts have missed more than $2 billion in expected payments from Harrisburg.<\/p>\n
The school system\u2019s borrowing costs \u201cwill never be reimbursed, and will never reach the classroom,\u201d board member Whitney Jones told the public Thursday. \u201cThe budget delay is costing our schools money that we do not have, and it\u2019s further limiting what we can provide to students.\u201d<\/p>\n
The board approved the temporary borrowing, but expressed frustration, anger, and worry about the extraordinary step they said they were forced to take.<\/p>\n
Board member Joan Stern, a public finance lawyer with decades of experience who has drafted debt and finance legislation enacted in Pennsylvania and New Jersey, said the board\u2019s action was \u201cunprecedented.\u201d<\/p>\n
\u201cWhat the state\u2019s doing is unconscionable,\u201d said Stern.<\/p>\n
Joyce Wilkerson, another school board member, called the need to borrow \u201ca disgrace.\u201d<\/p>\n
Why does the district have to borrow?<\/p>\n
The district is not new to temporary borrowing \u2014 it\u2019s had to issue so-called tax and revenue anticipation notes in 38 of the past 40 years.<\/p>\n
That\u2019s because of its setup \u2014 Philadelphia is the only school system in the state that cannot raise its own revenue, so it relies on the city and state and their timelines to take in money. <\/p>\n
Teachers have to be paid regularly, and charter school payments must also be made on time, but the city\u2019s real estate tax, for instance \u2014 a major source of district revenue \u2014 is due March 31 and the district\u2019s portion of that comes soon afterward.<\/p>\n
For a time, the district typically completed its temporary borrowing in July. In recent years, as the district\u2019s financial fortunes improved slightly, it\u2019s been able to delay that to later in the year, and borrow less, with a smaller debt service cost.<\/p>\n
The Thursday borrowing figure represented roughly three times what the district typically has to procure.<\/p>\n
The school board authorized borrowings of up to $775 million from two separate banks, PNC and Bank of America. <\/p>\n
The temporary borrowing will hold the district if the impasse continues into December. Board members asked Mike Herbstman, the district\u2019s chief financial officer, what happens if the stalemate lasts longer?<\/p>\n
\u201cWe are already beginning to look at all possible options,\u201d Herbstman said. The district has to prioritize paying employees and vendors, making debt service payments, and making payments to charter schools, and \u201cwe anticipate doing that in the future … but there is a point that we will reach, if this continues, where it will be more difficult to continue to borrow.\u201d<\/p>\n
A Pennsylvania problem<\/p>\n
Though Philadelphia\u2019s vulnerability to delayed state aid is more pronounced than other districts\u2019, it\u2019s not alone in being put in a tough spot.<\/p>\n
Mackenzie Christ, a spokesperson for the Pennsylvania School Boards Association, said districts across the state are delaying hiring, putting off repairs and technology upgrades, and more because of the uncertainty.<\/p>\n
\u201cThis is not a result of poor planning or mismanagement at the local level; rather, districts are being asked to operate without the tools they need to succeed,\u201d Christ said in a statement. <\/p>\n
Borrowing is becoming more common, Christ said.<\/p>\n
\u201cWhile PSBA does not maintain a list of districts that have borrowed due to the impasse, we have heard anecdotally that this is occurring across the commonwealth,\u201d she said. \u201cDespite the delay in state funding, districts are still required to meet payroll and cover operational costs. Borrowing to cover these expenses comes at a cost \u2014 and unless the final state budget includes provisions to reimburse districts for these borrowing costs, that burden will fall on local taxpayers.”<\/p>\n
Philadelphia school board members beseeched members of the public to push lawmakers hard to pass a budget quickly.<\/p>\n
\u201cThe stakes cannot be higher,\u201d Jones said.<\/p>\n","protected":false},"excerpt":{"rendered":"Philadelphia\u2019s school board on Thursday night approved a measure to borrow up to $1.5 billion to enable the…\n","protected":false},"author":3,"featured_media":219345,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5132],"tags":[5229,119601,1448,2830,1311,67,586,132,5230,68,2969],"class_list":{"0":"post-219344","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-philadelphia","8":"tag-america","9":"tag-hiladelphia-school-borrowing-money-pennsylvania-budget-delay","10":"tag-pa","11":"tag-pennsylvania","12":"tag-philadelphia","13":"tag-united-states","14":"tag-united-states-of-america","15":"tag-unitedstates","16":"tag-unitedstatesofamerica","17":"tag-us","18":"tag-usa"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115188172369247109","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/219344","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=219344"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/219344\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/219345"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=219344"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=219344"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=219344"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}