HARRISBURG – Pennsylvania schools and social services are still feeling the devastating effects of Tom Wolf’s nine-month budget crisis even as the Commonwealth moves into the next budget season.
According to an article from Newsworks, Wolf’s veto leading to the budget impasse has made it harder for dozens of Pennsylvania’s most distressed school districts to borrow critical funds due to a “lack of commitment” from the Commonwealth. Today, a new survey from the Pennsylvania Association of Nonprofit Organizations, the United Way of Pennsylvania and the Greater Pittsburgh Nonprofit Partnership also found that last year’s budget impasse, which started with a full budget veto from Tom Wolf, has cost the Keystone State’s non-profits $532,000 in loan interest payments alone.
“The effects of Tom Wolf’s disastrous first year in office are still being felt by Pennsylvania’s schools and social services,” Republican Party of Pennsylvania Communications Director Megan Sweeney said. “For nine months, Tom Wolf held our kids and non-profits hostage looking to force massive tax hikes to pay off his special interest friends. While Tom Wolf may want to put his budget vetoes behind him, Pennsylvania’s most vulnerable citizens are left cleaning up the mess he created.”
Survey: Pennsylvania Budget Impasse Cost Nonprofits Thousands
Due To The Wolf Budget Crisis, Forty-Five Organizations Will Need To Pay Back A Collective $532,000…In Interest. “Among the findings: 45 organizations will need to pay back a collective total of $532,000 in interest…” (Kate Giammarise and Joyce Gannon, “Survey: Pennsylvania budget impasse cost nonprofits thousands,” Pittsburgh Post-Gazette, 5/31/2016)
- Wolf’s Budget Crisis Cost The Equivalent Of 360 Employees Their Paychecks “…the equivalent of more than 380 full-time employees were laid off, furloughed or had their hours, pay or benefits eliminated or reduced, according to the survey, which was jointly conducted by the Pennsylvania Association of Nonprofit Organizations, the United Way of Pennsylvania and the Greater Pittsburgh Nonprofit Partnership. (Kate Giammarise and Joyce Gannon, “Survey: Pennsylvania budget impasse cost nonprofits thousands,” Pittsburgh Post-Gazette, 5/31/2016)
- 17,100 Pennsylvanians “Received No Or Reduced Services As A Result Of The Impasse” The survey also found 17,100 clients served by 22 organizations in all 67 counties received no or reduced services as a result of the impasse, and 135 organizations had to borrow money, whether it was from their own cash reserves, borrowing from banks or ‘borrowing’ from their vendors by delaying payments.” (Kate Giammarise and Joyce Gannon, “Survey: Pennsylvania budget impasse cost nonprofits thousands,” Pittsburgh Post-Gazette, 5/31/2016)
Dozens of Pa. School Districts Face Tougher Time Borrowing After Budget Impasse
Wolf’s Budget Crisis Caused Pennsylvania’s “Intercept” Program To Lose Its Credit Rating. “Dozens of Pennsylvania’s most distressed school districts are finding it harder to borrow money in the wake of the state’s historically protracted budget impasse. In December, as lawmakers entered a sixth month without a state budget, S&P global withdrew its rating of Pennsylvania’s “intercept” program, through which the state guarantees loans for school districts that don’t have high credit ratings.” (Kevin McCorry, “Dozens of Pa. school districts face tougher time borrowing after budget impasse,” Newsworks.org, 5/30/2016)
The Intercept Program Made It Easier For Distressed Schools To Receive Loans. “Through the program, if a district says it cannot meet its loan obligations, the state promises to pay the lender out of the pot of cash the district is set to receive from the Department of Education. The promise that the state will “intercept” this payment, makes banks more willing to lend. But if there’s no state budget, there’s no pot of cash from which to draw.” (Kevin McCorry, “Dozens of Pa. school districts face tougher time borrowing after budget impasse,” Newsworks.org, 5/30/2016)
Now, The Credit Agency Won’t Reinstate The Program Because It’s Lost “Confidence” In PA’s Government. “Now, although the budget finally wrapped up in late March, the rating agency’s confidence in state government has not grown. ‘At this point, we’ve told the market and our clients that we don’t expect to reinstate the program,’ said Sugden.” (Kevin McCorry, “Dozens of Pa. school districts face tougher time borrowing after budget impasse,” Newsworks.org, 5/30/2016)
As A Result, School Districts May Be Forced To Pay Higher Rates…Or Get “Locked Out Of The Market Entirely.” “That means the 57 districts and community colleges that had been taking advantage of the program are in a tighter position, and will either be locked out of the market entirely or forced to pay higher interest rates.” (Kevin McCorry, “Dozens of Pa. school districts face tougher time borrowing after budget impasse,” Newsworks.org, 5/30/2016)
- Erie School District Superintendent: “We’re Teetering On The Edge Of Insolvency.” “These districts include Philadelphia, Reading, Coatesville, Hazelton and Erie — where Superintendent Jay Badams says the system can’t get through the summer without short term borrowing…‘So we’re teetering on the verge of insolvency,’ he said.” (Kevin McCorry, “Dozens of Pa. school districts face tougher time borrowing after budget impasse,” Newsworks.org, 5/30/2016)
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