Federal Stimulus Warped PA’s Education Spending in Both Directions

By: Eric Boehm | PA Independent

Editor’s Note: This story appears as part of the PA Independent’s Year in Review series. This week, we will re-post several of our top stories from 2012. The article below was originally published on March 5, 2012.

HARRISBURG — Beginning in the 2009-10 budget year, Pennsylvania school districts received a boost in funding from the federal stimulus. At the state time, the state reduced its spending level for basic education, allowing the federal dollars to make up the difference.

Now, in the first state budget after the federal stimulus has disappeared, a $500 million reduction in state spending on education is the result of the federal stimulus increasing, and then decreasing, education dollars.

Lawmakers and school districts are left to grapple with the problem.

In many state districts, Education Secretary Ron Tomalis said Monday, the federal stimulus was folded into the general operating costs, creating a hole when the temporary funds vanished.

“It basically created the scenario where the difficulties we’re addressing today should have been addressed years ago,” Tomalis said during a budget hearing with the House Appropriations Committee. “It just kicked the can down the road, and it delayed the impact.”

Since Corbett is unwilling to crank up state spending to make up for the difference, school districts will have to deal with the overall funding reduction by either cutting services or increasing local property taxes.

Democratic lawmakers slammed Tomalis and Gov. Tom Corbett for reducing education funding from its pre-stimulus levels of $5.8 billion.

“If you look at the main line items that fund K-12 education in Pennsylvania, getting away from the semantics and urban legend, it looks to all of us like … our support for our schools has gone down,” said stateRep. Matthew Bradford, D-Montgomery.

Making an apt comparison, Pennsylvania spent about $5.8 billion on basic education in the year before the federal stimulus arrived. This year, Corbett has proposed spending about $5.3 billion for basic education.

But most of that reduction took place in previous budgets, though it was hidden by the federal stimulus funds, and the gap is only now becoming apparent, Tomalis said.

“State support for K-12 public education went down quite a bit a couple of years ago,” Tomalis said. “It was back filled with federal funds and then grown with federal funds on, in essence, a credit card that was going to go away.”

In 2009, the Legislature and then-Gov. Ed Rendell, a Democrat, approved a budget that used about $650 million in federal stimulus money for education, although the state cut spending on education by about $350 million.

As a result, school districts in the state saw more than $300 million in additional dollars, but the state’s cost for education decreased by about $350 million. Lawmakers hid the decrease behind the federal stimulus.

From the perspective of a school district, however, dollars are dollars. And now that the federal money is gone, the reduction in state spending is causing problems, said state Rep. Matt Smith, D-Allegheny.

“If you’re a school district….and you’re getting $5 million or $10 million, your concern isn’t really where that money is coming from,” Smith said.

Federal Education Secretary Arne Duncan and state lawmakers warned the districts about using the stimulus dollars wisely, Tomalis said, since the money would go away after a few years.

Some districts followed that guideline, but others did not, and now each one has a different story, said StateRep. Bill Adolph, R-Delaware, chair of the House Appropriations Committee.

“When that stimulus money was appropriated, school districts were informed that it was one-time money,” Adolph said. “Some used it for what it was for and others created some programs, and they are now looking for where the money comes from.”

Some local school district officials said they were never given such specific instructions about how to use the stimulus dollars that were connected to basic education formula. So, unlike other federal money that goes to one-time costs, the stimulus funds in the basic education subsidy were treated like state dollars.

“It was never really described to us in that way,” said Patricia Bader, business manager at East Stroudsburg School District in Monroe County. “I think it was a little disingenuous for them to say that.”

Bader said the district is grateful for any amount of funding from the state and federal levels, but it is taking some time to adjust to the cutbacks.

Tomalis said the department wants to give schools more local flexibility because the largest cost driver for districts is generally labor costs, which are negotiated at the local level.

The Pennsylvania State Education Association, the state’s largest teachers’ union, has been sharply critical of Corbett’s proposed budget and has warned that districts will be forced to increase property taxes.

Part of the confusion also has to do with changes made in how the state will fund basic education this year. Corbett has proposed combining a series of previously-separate line items into a single “Student Achievement Education Block Grant” program, which, the administration said, would give school districts more flexibility in how state dollars are spent at the local level while reducing funding by about $20 million from last year for that collection of line items.