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Remarks by Fred Botterbusch, PSBA President and school board member in Dallastown Area School District
Good morning, my name is Fred Botterbusch and I am the president of the Pennsylvania School Boards Association and a member of the school board of the Dallastown Area School District.
We are here today to mark the passing of the second state subsidy payment to school districts, a subsidy payment, which, like the first one a month ago, will be missed because of the lack of a state budget. In the aggregate, school districts will have missed an estimated 1.3 billion dollars in subsidy payments because of the two missed subsidy payments. That’s 1.3 billion dollars that could have been put to work hiring teachers to create and expand programs for our children, 1.3 billion dollars that would have meant the difference between cutting programs and keeping them, 1.3 billion dollars that would not have to be made up by school districts scrambling to find other sources of income to help keep them afloat.
Forty-two percent, or 209 of the commonwealth’s 500 school districts receive 50% or more of their total funding from the state. Of these, 75 districts have fund balances of less than 1 million dollars. It is these 75 districts that are on the front line and are at risk of running out of operating funds if something is not done quickly. These districts receive such a large share of their funding from the state because their local tax bases are relatively worse than those of other school districts. The tax bases of these districts are characterized by the lack a strong commercial property base and lower than average valued residential properties.
Consequently, many of them make a high local tax effort, meaning that their millage rates are higher because it takes a higher tax rate to generate the same amount of revenue that a much smaller tax rate would yield in a more prosperous school district.
Like their colleagues around the state, these districts are borrowing money through loans and tax anticipation notes in order to keep a positive cash flow. These options will cease to continue to be viable options much sooner in these districts than they will in districts that have greater property tax revenue and reserves to sustain them in the face of the lack of funding from the state.
But simply passing a budget is only half the issue. The budget that is passed must be the right budget. It must be a budget that includes at least 300 million new dollars for basic education subsidy. That way, school districts can sustain those programs they might otherwise cut, and operate without fear of financial distress for the 2009-2010 school year.
It should be noted that the funding for school districts under SB 850, a budget measure approved by the Senate and the House, will begin to flow to school districts in the next few weeks. The funds to be provided to school districts under that legislation are categorical funds appropriated under the federal stimulus bill and not blue-lined by the governor. As a reminder, under SB 850, those were the only funds provided for the basic education subsidy line item. There were no additional state funds included.. The fact that so many school districts face uncertain financial futures in the coming weeks and months, despite the release of those funds, is testimony to the inadequacy of using them as the sole means of funding the basic education subsidy for school districts for the 2009-10 fiscal year.
We need a state budget that provides school districts with enough resources to pay their employees, to pay their bills and to maintain the kinds of programs that will help all of our students to succeed for the 2009-10 school year. We urge the General Assembly to do so before school districts find themselves with no operating funds and no means to serve the children for whom they are responsible.
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