Posted on 11/24/2003 4:45:00 AM PST by Born Conservative
The state Legislature's failure to pass an education budget has left Pennsylvania's 501 school districts scrambling to pay their bills, with many that have dipped into reserve funds taking out loans to survive.
Northwest Area School District has held off taking out a loan since the budget impasse began in July. But with only eight legislative session days left in 2003, Northwest Area Superintendent Nancy Tkatch isn't optimistic that the district will cover its expenses much longer without the state's subsidy payments.
"We're probably good until the middle of December," Tkatch said. "We're just hoping we won't have to take out a loan and incur more debt with interest."
She said the district has already applied for a $4.5 million tax anticipation note through the district's bank, PNC, although she hopes it doesn't come to that.
Northwest Area wouldn't be alone. Crestwood and Wilkes-Barre Area have each taken out tax anticipation notes to make ends meet.
For districts that are nearly broke and can't take on any new debt, Gov. Ed Rendell has offered another option - take out a state-backed loan through PNC Bank.
The loans, he said, would be a last resort for struggling districts needing money to keep their doors open. As an added incentive, he said the state would pick up the tab for the interest.
But that's not a sure thing.
Although lawmakers on both sides of the aisle acknowledge they want to help districts that incur extra debt because of the budget crisis, they say it's up to them - not Rendell - to decide whether or not to reimburse districts for interest.
How much might those costs be?
According to the state Department of Education, the interest rate on the special PNC loans stands at 1.67 percent for a 60- to 90-day loan. Interest charges on a loan of $5 million - about the average of loans taken out so far by area districts - would run about $83,500.
Senate Republicans this week unveiled their "starting point" for budget negotiations, which includes $2 million to repay districts for loan interest charges.
So far, 15 districts have requested loan applications from the state - none from Luzerne, Wyoming or Lackawanna counties.
Whether or not the state picks up the interest charges, it's ultimately the taxpayers who will pay the bill, officials said.
"It is a unique and unfortunate situation that we have put our schools into, and we're telling Pennsylvania's taxpayers that you'll have to pay more," said state Rep. John Yudichak, D-Nanticoke. "But if we can accomplish $1.5 billion in property tax reform at the end of this process, and if we can get early childhood education at this end of this process, I'm going to say it's worthwhile."
Critics argue that Rendell should support a bill passed by the state Senate that provides stopgap funding for education - essentially the same level of funding districts received last year - to free schools of financial burden during the stalemate.
But Rendell has said stopgap funding would eliminate any sense of urgency in reaching an agreement on his early-childhood education proposals and would take away his political leverage in the process.
Others have said Rendell should simply allow schools to close for lack of funding, forcing the Legislature's hand. The governor dismissed that, as well.
"This is a fight for education," Rendell said. "And you tell me the only way I can win a fight to improve education in the long run is by making kids suffer in the short run? It doesn't make sense."
Got it wrong again Fast Eddy!
You're the one who said during the elections that you could increase spending to the schools without raising taxes! That lie is what got you elected! So if you can't keep your promise then vacate the office!
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