Predicting state funding for local budgets tricky

Government budgets can be tricky in Pennsylvania.

Local government bodies generally receive money from the state, while the state receives money from the federal government.

This trickle-down of funding from federal to local level is complicated, however, when you consider federal, state and local bodies work on different budget years, and the lowest level in the pyramid often has the earliest budget deadline.

For instance, the federal fiscal year runs from Oct. 1 until Sept. 30 of the following year, meaning a budget should be in place by the end of September of each year to govern the next year’s expenses. Meanwhile, Pennsylvania’s fiscal year runs from July 1 to June 30 of the following year, meaning the state needs to have a budget in place three months prior to the federal budget which provides a significant amount of its funding. This is further complicated when a local government body has an earlier start to a fiscal year than the state. For instance Warren County runs on a Jan. 1 to Dec. 31 fiscal year, but receives state funding.

For school districts in the commonwealth, this has become a perennial problem. School districts have to adopt a final budget by June 30. While a district doesn’t have to submit that budget to the Pennsylvania Department of Education until July 15, after the budget is adopted by June 30, figures for spending are locked in. Meanwhile, if the state budget is adopted on time, it relies on a deadline the same day, June 30.

Since budgets can’t be formulated and passed in a single day, the question arises, how do school districts formulate a budget that relies on money from the state before the state has passed a budget outlining what it will receive?

“Many times a school district will calculate without taking into account state dollars,” state Rep. Kathy Rapp said. “It will help our school districts calculate based on what they have as far as state funds.”

“Over 55 percent of our District’s revenues come from the state,” Warren County School District Board President Arthur Stewart pointed out. “Thus the only way we can make an accurate local budget is to know the level of state funding before we adopt our local school budget.”

In a 200-0 vote this week, the Pennsylvania House of Representatives passed House Bill 1141, which aims to help districts cope with just that problem.

The bill is brief, containing only a one-paragraph amendment to the public school code.

The amendment adds a single sentence and accompanying heading which reads, “Reopening of the School District Annual Budget. – Notwithstanding any other provision of law, a board of school directors of a school district may reopen its annual budget for a period of 30 days after the annual state general appropriation act is enacted, to reflect federal and state allocations for the current fiscal year provided by the annual state general appropriation act.”

In other words, if a district passes a budget before the state passes its budget, the school district can reopen the budget to make changes based on what it will receive from state and federal funds.

“The law requires us to adopt that local budget by June 30,” Stewart added. “If the State has not adopted its budget by that time then the proposed bill is the only method that will let us arrive at the level of accuracy the Board strives for and that the public expects.

“The problem with the bill is that the delay in adopting a final budget means we are starting an academic year with potentially serious questions still pending. Thus, while our primary desire is be for the State to pass its budget in a timely way, the proposed bill is better than no remedy.”

The bill will now move to the Pennsylvania Senate for consideration.