Pennsylvania may provide only minimal additional aid for the Philadelphia School District this fiscal year, which has sent off layoff notices to 20% of its staff due to its financial problems.
The district was hoping for at least an additional $180 million in aid to avert what it called its “doomsday budget,” which started July 1. Facing a possible $304 million deficit, it enacted the budget with the layoffs.
On Monday, the state's House of Representatives approved fiscal-code legislation that would give the city an additional $45 million in state aid compared with Gov. Tom Corbett's proposed budget of February. This is based on the federal forgiveness of $45 million in loans.
Corbett is expected to sign this legislation, said Bill Patton, spokesman for House minority leader Frank Dermody. However, one news story reported that the governor’s office said the aid is not a done deal.
The $45 million would be a one-time gift.
The state legislature has also approved extending a 1% increase in the city’s sales tax for the schools. This had been scheduled to elapse in 2014. It is permitting the city to this year borrow $50 million on the added anticipated future years’ sales tax revenues.
Finally, beyond diverting the loan payment to the district, the state has raised its own contribution to the school district by $2 million. In total the state’s actions increase aid to the district by $97 million in the current fiscal year, compared with Corbett’s February budget.
The state is also encouraging the city to improve collection of taxes, which would yield an extra $30 million in city aid this fiscal year for its schools.
This fall a state legislator expects to propose an additional tax on cigarettes to benefit the school district. This would lead to $45 million a year. The legislature reconvene on Sept. 23. The proposal, however, stalled in the legislature this summer.
The state will provide $984 million in state basic education funding this fiscal year, which the district considered when it created its budget with layoffs. Corbett announced most of this aid in February.
In future years, the state’s permission to extend the 1% sales tax increase will lead to an additional $130 million a year for the district. If the cigarette tax is approved, that would add an additional $45 million a year.
The district has about $3.1 billion in debt outstanding. It spends more than 10% of its operating budget on debt service.
