School district to borrow millions due to Pa. budget impasse

THE PHILADELPHIA School District will be forced to borrow millions of dollars to meet payroll through the end of the year because of the state budget impasse, officials said yesterday.

With no end in sight to the stalemate between Gov. Wolf and Republican lawmakers in Harrisburg, the cash-strapped district - by far Pennsylvania's largest - is seeking a short-term loan to pay administrators, teachers and staff through December, according to spokesman Fernando Gallard.

The size of the loan is unclear, Gallard said, as the district is still negotiating with lenders to determine its capacity to borrow.

A special School Reform Commission meeting to approve the loan was originally scheduled for today, but has been postponed until a deal is reached, he said.

The grim news comes one day after Wolf told reporters that the state wouldn't advance funds to school districts in danger of running out of money. He said he could not authorize payments until a spending plan has been approved. The state budget has been overdue since July 1, delaying funding to public schools, counties and nonprofit agencies that provide social services.

At least one district has already asked the state for an interest-free advance to avoid taking out a bank loan. Officials with the Erie School District requested $47 million to keep the doors open.

Any borrowing would increase the district's already-high debt costs. In 2013-14, the district spent nearly 10 percent of its budget, or $271 million, on debt payments.

There's a slight chance the district could avoid borrowing if a budget is adopted next week, Gallard said. But that would depend on how quickly the state aid would be disbursed.

"I'm extremely frustrated and extremely concerned," said Marjorie Neff, School Reform Commission chairwoman, "not just for the School District of Philadelphia but for all of the school districts across the commonwealth [that] are having to borrow money in order to continue operating.

"The debt [payments] on this money is money that will not be spent on children."

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