School districts owed millions from state
Delinquent state reimbursements may force school districts to hit taxpayers with increases, cut staff and programs or deplete meager reserves to make up the shortfall.
The state owes Carbondale Area, Mid Valley and Western Wayne school districts more than $2.6 million in reimbursements for projects completed as many as three years ago. The districts budgeted debt service payments based on what was expected from the state. State officials claim there is not enough state revenue to make the promised payments.
"We did all the financial planning that was necessary to build this building," said Western Wayne Superintendent Clay LaCoe, Ed.D. "We followed the rules by the state. They're not following through on their obligation."
When districts start a building project, they can apply for reimbursement from the state through a process called PlanCon, an acronym for Planning and Construction Workbook. After being approved for PlanCon A through PlanCon H steps, gradual reimbursement begins. The percent districts receive varies based on each project. A moratorium on new PlanCon projects that started in 2012 still exists, and districts starting new projects are not guaranteed reimbursement.
The 2013-14 budget includes $296.2 million for reimbursements. As of last month, about half of the appropriation had been distributed. Gov. Tom Corbett's proposed 2014-15 budget also calls for an appropriation of $296.2 million.
As of now, the state estimates that to pay for the 347 projects in Part A through Part G of PlanCon, $1.7 billion is needed. The estimate does not include any project that has received Part H approval and is starting to receive reimbursement.
The state has not told area districts when they can expect payment.
The $296.2 million is in addition to nearly $10 billion in state funding that is provided to schools through other line items in the state budget, Department of Education spokesman Tim Eller said.
"Perhaps, if pension reform is achieved, additional dollars could be redirected to construction reimbursements," he said in an email.
The Pennsylvania School Boards Association has called for a more sustainable process for construction reimbursements and supports a bill in the House that would simplify PlanCon.
Area legislators said addressing the backlog for reimbursements must be a priority.
Rep. Kevin Haggerty, D-112, Dunmore, compared the problem to a homeowner being promised a $100,000 loan from a bank to build a home. After the person builds the home and owes contractors, bank officials tell the homeowner they do not know when the money will come through. Haggerty said he has sent a letter to the Department of Education, asking for answers.
"We want clarity and a timeframe for these reimbursements," he said. "It's just unacceptable. This is our state government. This is not something that our schools are hoping to receive. They were promised."
Rep. Sid Michaels Kavulich, D-114, Taylor, said the problem goes back to the overall lack of funding for education in the state, and once again brings up the need for natural gas severance fees and closing the Delaware tax loophole as ways to find more revenue.
"We've got to do something to alleviate the burdens on the school districts," he said.
Sen. John Blake, D-22, Archbald, said the responsibility of funding is with the executive branch and Corbett. The Legislature can try to force the funding, but ultimately, the governor must sign any bill.
"It's extremely upsetting to me that the commonwealth is not meeting its obligation," he said.
Carbondale expected to receive as much as 35 percent back on its $15 million high school renovation project. The district has paid $2.5 million back of its 2010 bond, and the state should have reimbursed the district $750,000 so far. Instead, it has received nothing.
"If the moratorium had been announced, we would not have done the project or would have scaled it back significantly," said David Cerra, the district's business manager. "It's crippling, and it's severe, and it looks like it will continue."
Reimbursements for ongoing school projects, such as projects in North Pocono and at the Career Technology Center of Lackawanna County, remain unclear.
Mid Valley expected to receive a reimbursement of 17 percent, or $2.7 million, for the $15.9 million expansion and renovation of the elementary school. Officials estimate they are behind about $700,000 in reimbursements.
"It's been a lot of work to try to make up for that and not take away from your kids," Superintendent Jim Tallarico said.
Western Wayne's EverGreen Elementary School opened in 2011, and the district is already $1.2 million behind in the $6 million reimbursement expected.
"It's very problematic for us right now," Dr. LaCoe said. "It's a bill we have to pay. It's a mortgage for us, essentially."
The district is now asking the state for exceptions to be able to raise property taxes above the index rate, and may have to ask voters via referendum to raise taxes by as much as 6 percent because of the lack of reimbursements and skyrocketing state pension costs.
"The fiscal climate of schools is bleak," Dr. LaCoe said. "The pension crisis is bad enough."
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