Pennsylvania's House of Representatives on Tuesday approved its own version of a compromise budget for fiscal 2016, sending a $30.3 billion spending plan to the Senate by a 115-86 vote.
The Senate a day earlier approved a $30.8 billion plan, with Pennsylvania in the sixth month of a stalemate between Democratic Gov. Tom Wolf and the Republicans who control both branches of the legislature.
The state has been without a budget since the fiscal year started July 1.
While the Senate is calling for an additional $350 million of spending on basic state aid for education, the House version would only include $150 million extra for schools. Senate legislation includes two companion bills that would move new state and school employees into a hybrid defined benefit-defined contribution plan and tweak the state-controlled liquor-store system.
All three major bond rating agencies downgraded Pennsylvania last year, citing persistent budget imbalance and the state's unfunded pension liability, estimated at up to $57 billion. Moody's Investors Service rates Pennsylvania Aa3 with a negative outlook. Fitch Ratings and Standard & Poor's rate them AA-minus, with stable outlooks.
The Senate pension bill would not change Wolf's plan to borrow through the issuance of $3 billion in pension obligation bonds.
Counties, school districts and social-service agencies, who depend upon state reimbursements, have felt the brunt of the impasse.
Luzerne County and the Scranton School District, both in northeast Pennsylvania needed court approval for emergency borrowing of $20 million and $31 million, respectively. Other counties are under the glare of bond analysts and rating agencies.
Amid confusion surrounding payments to charter schools, state Auditor General Eugene DePasquale's office is auditing the Department of Education's handling of charter school tuition disbursement appeals.
"The ongoing state budget impasse brought to light potential failures in the process the Department of Education uses to handle school districts' appeals of payments to charter schools," DePasquale said. "With more than $1.1 billion of state education funding going toward charter school tuition payments, it is important to make sure all education funding is handled accurately and appropriately."
According to DePasquale, the current education funding system often pits school districts and charter schools against each other.
"The budget stalemate is exacerbating already tense relationships between charters and districts in every region of the state, including Erie, Philadelphia, Pittsburgh, Scranton, and York," he said.