Pa. schools' reserve funds now top $4 billion

Posted: July 22, 2014

THIS IS NOT a plea for more school funding.

Not even as Philly kids, teachers and parents await word on whether schools are shuttered in September for lack of funding.

This is a reminder that the money's already there.

It's a reminder of how Pennsylvania's vast, expensive public-education system hoards tax dollars in multiple and movable accounts.

It's about how public officials at every level who don't want to seem "anti-education" allow the hoarding - unquestioned, unchallenged.

This is not a judgment of city schools, the School Reform Commission or district claims that there's never enough.

No. This is about a complex shell game played out across the state with your tax dollars and the Legislature's blessing.

It's been going on for decades. It's an issue I've written about before.

When I do, many express surprise. Some suggest action. But no one does anything.

Here's the deal.

Ninety-seven percent of Pennsylvania's 500 school districts have "reserve-fund" balances accruing interest in up to three accounts each.

The statewide total, according to current Department of Education data, is $4.27 billion. That's billion, with a B.

That amount, despite constant cries of underfunding, is $690 million more than the prior year. It's more than double the total eight years ago.

There are no restrictions on its use. And districts can legally raise property taxes to get more money no matter how much they hold in reserve.

That's because although the law limits amounts a district can have in order to raise taxes, the limit applies only to one of the three accounts. And districts can transfer funds from one account to another, thereby beating the threshold.

Only 15 of 500 districts, including Philly's, have no such funds. The only other district in the region without reserves is Coatesville Area, Chester County.

Other districts in Philly's four collar counties have reserves of about $880 million.

Tops in each county are: Lower Merion, Montco, $55.9 million; Neshaminy, Bucks County, $32.2 million; Downingtown, Chester County, $29.5 million; Radnor Township, Delco, $19.2 million.

But liquidity isn't just local or suburban.

East Stroudsburg Area in Monroe County has $56.9 million. Altoona has $50.3 million. And Pittsburgh has $163 million.

The Pennsylvania School Boards Association and the Pennsylvania State Education Association, the state's largest teachers union, defend reserve accounts.

They say reserves are good business practice, necessary to meet high pension costs and, in some cases, slated for specific improvement projects.

And last year they said reserves of (then) $3.5 billion would be spent down because of cuts by the Corbett administration.

Instead, reserves rose.

No one wants to talk about this.

Legislative education-committee chairmen - Sen. Mike Folmer, R-Lebanon County; Rep. Paul Clymer, R-Bucks County - told me seven months ago that it "might be" something to look into and that "maybe" there should be public hearings.

Since then? Crickets.

Are reserves protected because so many education-related dollars fill campaign coffers of candidates, officeholders and political committees of both parties?

Is a law in place for so long just ignored even as taxpayers continue to feed growing reserves and pay higher property taxes and while poorer districts suffer?

Philly Sen. Anthony Hardy Williams, a 26-year legislative incumbent at the center of a fight to get more funds for city schools, says, "I don't have a plausible answer."

He adds that if significant reserves not under contract are simply collecting interest, "It's an obvious omission on our part as policymakers."

(State data show reserves of nearly $3 billion not committed to specific use.)

Philly Rep. Dwight Evans, a 34-year incumbent and former chairman of the House Appropriations Committee, says there was an effort to force spend-downs in 1991: "It didn't happen. We couldn't get it done." He says there's been no effort since.

There is surely a prudent reserve amount that districts can hold for projects and pension costs. Just hard to imagine it exceeds $4 billion and grows every year.

No money for schools? No way to cut property taxes?

Or is it more a matter of no guts, no political will, no appetite for taking on what insiders call "the educational-industrial complex"?


Email: baerj@phillynews.com

Blog: ph.ly/BaerGrowls

Columns: ph.ly/JohnBaer

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