Short-term fix, long-term problem
Many Pennsylvania school districts have begun to cannibalize their long-term reserve funds to balance their operating budgets - a short-term fix that can only lead to more long-term problems. The situation illustrates further than the state government pays an inadequate share of public school funding.
State law properly precludes local school districts from hoarding money, and properly allows districts to keep modest reserves to deal with emergencies, bolster their credit-worthiness and prepare for known impending expenses.
Some of the funding emergencies are the result of the state government's failures. For example, many districts have begun to use reserve funds to meet their exponentially increasing pension expenses, which large are the result of the Legislature's refusal to correct its own incompetence relative to pension policy. Some districts must use reserve funds to pay debt costs resulting from new construction, because the state has imposed long delays on required reimbursements from Harrisburg.
Some lawmakers have noted that the state's 500 school districts collectively have $4.3 billion in reserve funds, and that the money should be used for operations before the state government increases its contributions.
But, as noted by David Davare, director of research for the Central Division of the Pennsylvania Economy League, the reserve fund figure does not simply represent available cash.
Some of the funds are restricted by law for use for specific purposes, others already have been designated by districts for allowed uses.
And districts need reserves in the cause of sound financial management, such as maintaining good credit ratings.
The distribution of the reserve funds is far from uniform. Some districts are in far better shape than others, which already have used reserves to deal with physical repairs, other emergencies, or to stave off tax increases. As reported recently by The Review's sister paper, The Times-Tribune in Scranton, several Northeast Pennsylvania districts already have exhausted reserve funds.
Many districts, including many in NEPA, plan to use reserve funds partially to meet their escalating pension obligations. Lawmakers finally must tackle pension reform to ensure that districts are to meet obligations other than pensions alone.