One district has $38 million in 'rainy day fund'
By Jim Panyard | PA Independent
HARRISBURG — Faced with $400 million in cuts proposed by Gov. Tom Corbett, the state’s 501 school boards have about $2.5 billion in designated and undesignated reserves to help them weather the potential storm.
The reserves are built up from unspent funds accumulated by the districts from year to year. If Corbett’s cost-cutting proposal passes the Legislature, it will be the first time in decades the state’s primary and secondary schools have not received an increase from the state. The majority of funding for K-12 comes from local property taxes.
The undesignated funds amounted to slightly more than $1.6 billion in 2009 and the designated funds totaled $872 million.
Revenue figures for 2010 are due in the next few weeks.
David Davare, director of research for the Pennsylvania School Board Association, said those funds are used for designated projects or set aside for “rainy days,” such as the soon anticipated spike in teacher pension costs or rising health care costs in the various districts. They have been traditionally used as a type of contingency fund, Davare said.
Thirteen of the 501 school districts have no reserve funds. The largest single fund is $38 million in the Abington School District in Montgomery County.
Some districts only have a few thousand dollars in reserve funds.
State Rep. James Roebuck, D-Philadelphia, minority chair of the House Education Committee, said districts with small reserve funds cannot be helped by those with larger cushions.
“It would be nice if you could somehow take all those reserve funds and put them in a single pot and redistribute them,” Roebuck said. “But those funds come from individual tax dollars in those specific communities.”
In the past, Senate Republicans have sent letters to school districts to warn them of difficult budget situations and advising them to check reserve funds for possible uses.
Erik Arneson, spokesperson for Senate Majority Leader Dominic Pileggi, R-Chester, said no letters have been sent this year, but they still might go out.
However, he said, the concept remains the same.
“School districts have a responsibility to taxpayers to check their reserves for possible use and examine every possible cost savings, before even considering a tax increase,” Arneson said.
