The School District of Philadelphia will run out of money if lawmakers fail to pass a state budget by January, district officials say.
Superintendent William Hite, in a letter this week, told staff the money will dry up Jan. 29.
“After that date, our ability to keep schools open, issue paychecks and pay bills is uncertain,” he said.
For months, school officials have warned lawmakers that without state funding Pennsylvania school districts face a ticking fiscal time bomb. Philadelphia charter schools have pointed to January as a drop-dead point, when they would have to make tough decisions and maybe close schools. Private schools, which have been depleted of scholarship funds from tax incentive programs, are sounding alarms, too.
“The prospect of running out of operating funds is dire,” Hite said. “We are exploring all options for contingency planning with our lenders and considering possibilities across many fronts to provide for students’ uninterrupted education.”
The district has borrowed more than $500 million since the budget stalemate began July 1. In October, the district took out a $275 million loan; last month it borrowed another $250 million to pad down part of its $3 billion budget.
State Auditor General Eugene DePasquale estimates Pennsylvania schools have borrowed a total of $900 million in that time, racking up $14 million in lender fees.
If a budget isn’t passed by next month, the total borrowed by schools could top $1 billion, DePasquale said. DePasquale for the past three months has told lawmakers that, without a budget, Pennsylvania students will be caught in the political crossfire.
“Harrisburg’s budget showdown has grown from a quagmire, to a crisis, to a full-scale emergency,”Philadelphia Federation of Teachers President Jerry Jordan said in a statement.
Last week, Standard & Poor’s said Pennsylvania schools may have maxed out their borrowing power because of the state’s uncertain financial future, saying the “budget stalemate has led us to conclude that Pennsylvania’s state aid payments are no longer a reliable and stable source of funds.”
Philly charter schools, which have been financed through the district during the course of the budget stalemate, would also face a dire situation next month.
KIPP Philadelphia, which maintains three local charter schools, was planning to dig into its reserves and a $1 million line of credit, which, CEO Marc Mannella told Watchdog, could carry them into early 2016.
In Philadelphia, there’s a huge divide between school choice advocates and charter school opponents. But the budget impasse is in danger of impacting all local schools, and if a resolution isn’t reached, students — no matter what kind of school they attend — could be affected.
“Both sectors are feeling the budget strain in unique and challenging ways,” Amy Ruck Kagan, executive director of Philadelphia Charters for Excellence, told Watchdog. “We applaud the district for their openness and transparency with the charter sector as a whole during this process.
“We ultimately stand with the district in calling on our state legislators to pass a budget and restore the flow of critical state funds that will make our financial picture whole once again,” she added. “We remain hopeful that a budget will be passed before the new year.”