PSBA Special Report:
State Budget, Fiscal Code, School Code Bills Final
 This week the General Assembly finalized and sent to Gov. Tom Wolf a $25.1 billion General Fund budget for Fiscal Year 2020-21. The early state budget under House Bill 2387, passed well before the June 30 deadline, is an interim spending plan that provides five months of funding for most state agencies and services but contains full-year funding for education, a provision sought by PSBA. The short-term budget allows the state to provide immediate funding for necessary programs while allowing time for the state to ascertain the fiscal impact of the COVID-19 pandemic over the course of the next year. PSBA supports the budget passed by the General Assembly because it provides subsidies for the full fiscal year with no cuts, enabling school districts to move forward with the needed certainty from the state on matters of funding so they can plan appropriately at the local level.
The General Assembly also took action on budget-related bills amending the Fiscal and School codes, as well as other bills featured in this report.
Education budget: The general appropriations budget under House Bill 2387 recognizes the importance of public education in these difficult times by providing full-year funding for schools and maintaining investments without reductions in critical state subsidies. This includes level funding of the basic education funding (BEF) subsidy at $6.74 billion and the special education subsidy at $1.186 billion. The Ready to Learn Block Grant remains at $268 million, career and technical education at $99 million, and $5.5 million for career and technical education grants. Pupil transportation is being funded at $612 million under House Bill 2387, and while this may appear to be a reduction, a supplemental appropriation for the 2019-20 fiscal year brought the allocation in line with costs and now represents level funding.
Click here to see the district-by-district subsidies for basic and special education and estimated Ready to Learn Block Grant, and School Safety and Security eligibility amounts
Omnibus Fiscal Code amendments (property tax relief/school safety): Also passed by the General Assembly and on its way to the governor is House Bill 1083 which amends the state Fiscal Code to make various changes. Of interest to school districts is language authorizing transfer of up to $300 million in federal funding from the CARES Act to the state Property Tax Relief Fund (under Act 1 of 2006), which is normally funded by state gaming revenues, enabling the state to restore up to $621 million to provide property tax relief to homestead and farmstead properties.
In April, an initial certification from the budget secretary indicated that $621 million would be available for property tax reduction allocations. However, with state gaming revenues down due to the pandemic, the certification was revised in May at just $400 million, significantly less than had previously certified in April. A reduction in available gaming revenues for homestead/farmstead property tax credits would have decreased the amount of those credits and resulted in increased property tax bills for millions of Pennsylvania homeowners.
As negotiations on House Bill 1083 unfolded, PSBA along with other concerned groups continued to work with the General Assembly and Wolf Administration to highlight concerns with the allocations. The association supports the solution in the bill and is grateful for the work done to address the concerns. By using federal funds to supplement the Property Tax Relief Fund, this unintended consequence of the pandemic can be avoided.
The bill also contains funding for school safety grants as described in a separate section.
Omnibus School Code amendments: The third budget-related bill on its way to the governor is House Bill 1210 which contains the omnibus amendments to the School Code, and includes these provisions relating to K-12 schools:
- Special Education Funding Commission -- Extends the deadline for the Special Education Funding Commission to make its report from November 30, 2019, to September 30, 2020.
- Basic Education Funding Commission -- Provides for the reconstitution of the Basic Education Funding Commission to review the funding formula to provide basic education funding to school districts no later than July 1, 2022, and requires the commission to issue its report not later than November 30, 2023.
- Conversion to payroll tax (Scranton School District) - Allows this district to replace a mercantile or business privilege tax with a payroll tax that generates the same amount of revenue as the last full fiscal year preceding the levy of the payroll tax. The imposition of a payroll tax will not be subject to a referendum requirement. These provisions are applicable to Scranton School District.
- Extension of the PlanCon moratorium -- Extends the moratorium prohibiting the PA Department of Education (PDE) from approving new school building construction or reconstruction applications for Fiscal Year 2020-21. Extends the applicability date for provisions contained in Act 70 of 2019 that provides for the new PlanCon program from July 1, 2020, to July 1, 2021.
- School safety grants - see details in the following section.
- Minimum number of school days -- Provides that beginning with the 2020-21 school year, the 180-day minimum required number of school days shall apply even during a disaster declaration issued by the governor.
- Basic education funding (BEF) -- Provides for each school district to receive a basic education funding allocation in the same amount as it received in the 2019-20 fiscal year.
- Special education funding -- Provides for each school district to receive a special education funding allocation in the same amount as it received in the 2019-20 fiscal year.
- Special education funding (IUs) -- Provides for intermediate units to be funded at an amount equal to 5.5% ($65,275,000) of the Special Education Funding appropriation, the same percentage amount as in Fiscal Year 2019-20.
- Assistance to districts in financial recovery status or identified for financial watch status - Allows the Department of Education to use up to $7 million in undistributed funds to assist school districts in financial distress or identified for financial watch status.
- Pupil transportation reporting - Beginning with the 2020-21 fiscal year, the secretary of education must report on a quarterly basis in person to the secretary of the budget chairpersons and minority chairpersons of the Appropriations Committees of the House and Senate, information documenting all payments from the appropriation for pupil transportation during the fiscal year and a revised estimate of the funds needed to make the required payments for the remainder of the fiscal year.
- School employees' Social Security -- Beginning with the 2020-21 fiscal year, the secretary of education must report on a quarterly basis in person to the secretary of the budget chairpersons and minority chairpersons of the Appropriations Committees of the House and Senate, information documenting all wages from which payments are calculated for payments on account of Social Security deductions for the fiscal year, the required payment amounts during the fiscal year and a revised estimate of the funds needed to make the required payments for the remainder of the fiscal year. PDE must ensure payments made from the appropriation for basic education funding are reported separately in the commonwealth's accounting system.
- Repeal of outdated provisions - Includes the original provisions of the legislation that repeal numerous outdated mandates and provisions of the School Code that are no longer necessary or relevant. PSBA supported the original bill.
School Health and Safety Grants: The budget provides a significant boost to schools for school safety and mental health initiatives. A combined $215 million is allocated for the grants under different bills, with the bulk of the funding coming from the $2.6 billion that Pennsylvania received under the federal CARES Act.
Senate Bill 1108 makes supplemental appropriations from the COVID-19 Response Restricted Account to distribute these federal funds. Included in that bill is $150 million earmarked for transfer to the School Safety and Security Fund. House Bill 1083, the Fiscal Code bill previously mentioned, authorizes the transfer of nearly $50 million in federal stimulus funds to the fund. The balance comes from state funding.
House Bill 1210, the School Code bill, allows the School Safety and Security Committee to provide for 2020-21 COVID-19 Disaster Emergency School Health and Safety Grants. The funding provided to school districts can be used for:
- Purchasing of cleaning and sanitizing products that meet Center for Disease Control (CDC) or Department of Health criteria;
- Training and professional development of staff on sanitation and minimizing the spread of infectious disease;
- Purchase of equipment, including personal protective equipment, thermometers, infrared cameras and other necessary items;
- Modification of existing areas to effectuate appropriate social distancing to ensure the health and safety of students and staff;
- Providing mental health services and supports, including trauma-informed education programs for students impacted by the COVID-19 disaster declaration;
- Purchasing education technology for distance learning to ensure the continuity of education; and,
- Other health and safety programs, items or services necessary to address the COVID-19 disaster emergency.
The committee must allocate grants to each school entity that applies on or before July 15, 2020. Each school district will receive a minimum of $120,000 and each intermediate unit, career and technical center, charter school, regional charter school and cyber charter school receives $90,000. Any funds remaining after these minimum distributions will be distributed to school districts pro rata based on the districts' 2018-19 average daily membership. The bill also outlines provisions concerning applications and audit and monitoring and stipulates that these grants need not be included when school districts calculate the amount to be paid to charter schools.
House Bill 1210 also provides $7.5 million for grants to be targeted to nonpublic schools by allowing intermediate units to make applications to the School Safety and Security Committee on behalf of nonpublic schools within the IU. The committee must allocate grants to IUs on behalf of nonpublic schools that make applications for grants by August 1, 2020. Each grant will be limited to no more than $10,000. In addition, House Bill 1210 provides $7.5 million in grants to be distributed from the School Safety and Security Fund by the School Safety and Security Committee for programs to reduce community violence.
Other legislation moving this week
Headed to the governor:
Hunter education in public schools - The Senate passed House Bill 102 (Rep. Maloney, R-Berks), which requires school districts to make a classroom or instructional facility available to the PA Game Commission upon request for the purpose of conducting a hunter education course. The bill is now headed to the governor's desk. Under House Bill 102, classes may occur as an after-school or weekend function or any other day when school is not in session. The Game Commission will work with the school to schedule classes for a time that best suits both the commission and the school. The commission must compensate the school for the actual cost incurred by the school for the use of the facility. Fees may not be charged to the public for this service.
Approved by the House Consumer Affairs Committee:
Expanding broadband access/funding -- House Bill 2438 (Rep. Owlett, R-Tioga) would allow electric cooperatives to use their existing poles to deploy fiber lines for broadband. Currently, some easements held by electric cooperatives do not specifically permit them to attach fiber lines to those poles to provide broadband, even though their members want this service. The bill would clarify that if a cooperative intends to add fiber lines to their existing infrastructure they cannot not change the physical use of the easement, interfere with or impair any vested rights of the property owner subject to the easement, or place an additional burden on the property or interests of the owner. House Bill 2348 (Rep. Causer, R-McKean) would establish the "Unserved High-Speed Broadband Funding Program," a competitive grant program administered by the Commonwealth Financing Authority (CFA). The program would provide financial assistance to private vendors for projects that support the proliferation and availability of high-speed broadband service to unserved areas, particularly rural areas, in Pennsylvania.
PSBA supports both House Bill 2438 and House Bill 2348. The COVID-19 pandemic has brought to light the extreme connectivity disparities that hamper efforts to provide continuity of education across the state. These bills would help provide school districts and students with the tools to succeed in a modern educational environment.
Approved by the House Local Government Committee:
Tax anticipation notes -- House Bill 2536 (Rep. Lee, R-Venango) amends the Local Government Unit Debt Act (LGUDA) to authorize special short term debt to help local government units, including school districts, manage cash flow during the current pandemic. Under the bill, a local government unit is authorized to obtain tax anticipation notes (TAN) with a longer date of maturity at the conclusion of the next fiscal year which ends between 15 and 26 months from the effective date of this proposal. Under current law, these TANs can only be financed for a period of one year. For most entities, the end of the applicable year would be December 31, 2021 or June 30, 2022, depending on whether the entity follows a calendar or fiscal budget year.
As part of PSBA's new campaign, PSBA supports the additional flexibility and support to school districts that may experience cash flow issues because of the severe downturn in local revenues due to the crisis.
Passed by the Senate:
School district fertilizer applications - Senate Bill 915 (Sen. Yaw, R-Lycoming) updates the Fertilizer Act and provides for standards regarding the application of fertilizer. The bill requires businesses and public entities including school districts, colleges, government and other entities to annually obtain a license for fertilizer application on their property, playgrounds and athletic fields. The cost of the application would be $100 per location. Entities would also be required to keep detailed records of each application of fertilizer on their grounds.
PSBA advocacy news:
Prohibition on amusement tax - The House Finance Committee passed over consideration of House Bill 2519 (Rep. Gleim, R-Cumberland) prohibit a school district or municipality from assessing or collecting an amusement or admission tax under the Local Tax Enabling Act for two calendar years following the effective date. PSBA successfully raised concerns over the bill with committee members, emphasizing that the loss of revenue would be detrimental to school district budgets.
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