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March 01, 2016

Pennsylvania provides school districts a how-to for closing mid-year

Pennsylvania budget impasse poses financial challenge for some districts

The Pennsylvania Department of Education has issued a memo to school districts providing guidelines for a mid-year closure, a possibility it described as an "unprecedented event that has not been contemplated in the Public School Code."

PDE officials stressed that no school district is in imminent danger of closing its doors. But given the state budget stalemate and the diminishing financial resources of districts across Pennsylvania, some school boards might find themselves facing that possibility this spring.

The memo, issued via Intermediate Units last week, contains 11 suggestions that PDE estimated will take at least 60 days to complete due to federal WARN Act requirements.

In the absence of a state budget, many school districts have been forced to borrow money, cut expenses or miss payments to charter schools, pension payment obligations and vendors, according a survey conducted by the Pennsylvania School Boards Association.

"I think there could be some districts that might be in danger of shutting down before the end of this year," PSBA spokesman Steve Robinson said. "Certainly, districts have been taking out loans to keep from doing that. I have heard anecdotally of some districts saying they're not able to take out any more loans. The banks just won't give it to them."

Last week, school districts received the final cut of a $2.5 billion appropriation included in an emergency funding budget signed Dec. 29 by Gov. Tom Wolf. He used a line-item veto in that same budget to cut another $3.1 billion for education, arguing the school system needs $3.4 billion.

The PDE memo encouraged districts to calculate the amount of state funding that would be lost if they do not meet the 180-day or hourly class time requirements. It also suggested districts review collective bargaining agreements, develop plans to meet educational needs and consult with solicitors to examine associated legal issues.

"Though we are not aware of any imminent school closures, PDE has worked closely with districts over the past several months, offering assistance to help them manage this crisis," PDE press secretary Nicole Reigelman said in a statement. "However, despite that help, schools may be faced with making the difficult decision of closing their doors in the coming months. The considerations document for schools was developed by PDE by a team of experts and stakeholders after the Department received inquiries for assistance from school districts around the commonwealth."

The PSBA survey, released in February, found that 63 percent of responding districts would not be able to get through the school year without borrowing money, if a budget is not passed. The majority of districts reported borrowing at least $1 million already. The average borrowing amount was even higher, at $3.5 million.

Many districts also cut professional development, instructional materials, technology purchases, building maintenance and remediation. Another 87 percent said they would be forced to raise local tax revenue next school year to meet state education mandates.

The districts that receive at least 50 percent of their funding from the state are hurting the most, Robinson said. But he said he did not know of any districts expecting to close.

"I think they're all doing their very best to stay open as long as they can, depending on their own unique financial situations," Robinson said.

The School District of Philadelphia has taken out $550 million in loans and also used an $88 million budget surplus to remain open, WHYY reported last week.

The Chester Upland School District in Delaware County, which heavily relies on the state for funding, anticipates making payroll through May thanks to some assistance from vendors, spokeswoman Becky Taylor said. But she said the district will not be able to cover June's payroll without the state passing its budget.