Pennsylvania budget delay would have only minor effect on schools

A delayed Pennsylvania budget would only have a minor effect on school districts and charter schools, S&P Global Ratings said Wednesday.

Democratic Gov. Tom Wolf and leaders of the Republican-controlled legislature have been negotiating Wolf’s proposed $32 billion fiscal 2018, and how to seal a roughly $3 billion deficit, throughout the week.

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“Generally, we don't expect K-12 public school ratings will be affected by a state budget delay so long as school district management can adequately plan for cash needs,” said analyst Lisa Schroeer.

“Those with slim cash and reserves, which in our view make up less than 3% of our rated universe, are the most vulnerable.”

Charter schools rely on funds that flow through their respective school districts. Most most school districts, said S&P, continued to make charter school payments.

“We did not see funding delays across our rated schools during the prior budget impasse in 2016, though we are uncertain how funding might be affected if there is another budget delay,” said analyst Avani Parikh.

S&P Global Ratings and Fitch Ratings assign AA-minus ratings to Pennsylvania’s general obligation bonds. Moody’s Investors Service rates them Aa3.

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