State begins to miss education, human services payments as budget impasse continues

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HARRISBURG — Nearly a month after Pennsylvania lawmakers failed to meet an annual budget deadline, bills are coming due for education and human services expenses that state officials do not have the authority to pay.

Because of the ongoing impasse, the commonwealth is on track to miss major payments in the coming weeks. These include regularly scheduled disbursements to public schools and to a slew of county-administered services, most notably child welfare programs.

While state officials have the authority to continue making many regular payments during periods in which there is no enacted budget, these areas are critical outliers.

Public universities, community colleges, special education programs, and day care and preschool programs all missed tens of millions of dollars in payments in July, according to the Pennsylvania Department of Education. In August, $1.1 billion in basic education funding to public schools is also expected to be missed.

Counties are bracing to miss payments from the state in the last week of July and the first week of August, said Lisa Schaefer, who heads the County Commissioners Association of Pennsylvania and advocates for county governments’ interests.

Along with child welfare programs, which include investigating alleged child abuse, these payments go toward what Schaefer calls the “core services that counties provide,” like community-based mental health and substance abuse services, assistance programs for unhoused people, and flexible Human Services Developmental Fund programs like meals on wheels, or transportation assistance.

Disbursals for these key programs typically follow a two-month schedule, Schaefer said, which means October payments are also in jeopardy.

Schools and county programs can typically weather short impasses using reserves, though specific financial realities vary greatly between district, county, and program. But when the commonwealth goes without a budget for much longer, many of these organizations must consider cutting services or taking out loans — an especially daunting prospect given high interest rates.

It’s unclear how much longer the budget impasse will continue.

Both the state House and Senate have passed the main budget bill, but it lacks a needed signature from the upper chamber. Without that signature, the bill is unable to go to Democratic Gov. Josh Shapiro’s desk for final approval.

State Senate President Pro Tempore Kim Ward (R., Westmoreland) has kept the chamber out of session for a month. She and other Republicans claim Shapiro betrayed them by backing a private school voucher program then pledging to line-item veto it to win over House Democratic support.

The state Senate isn’t officially scheduled to be back in Harrisburg until mid-September. However, Ward said in a TV interview taped on July 21 that she plans to reconvene her members at some point in August, which would likely forestall many missed payments.

“There will not be an extended budget delay,” she said. “I know that they’re trying to scare people into thinking that they’re never going to get their money, but that’s not true.”

A spokesperson for Ward said a week later that the chamber still aims to reconvene in August.

“Senate Republicans needed time to determine the best way to move forward with a governor who has lost our trust,” Ward spokesperson Erica Clayton Wright told Spotlight PA. “The quickest and best path forward has not changed and that is for Gov. Shapiro to keep his word and sign the budget as passed without vetoing scholarships.”

With an exact return date still unavailable and the precise conditions of the state Senate’s return unclear, officials who administer or oversee education and county-level spending are sounding alarms.

Last week, Pennsylvania’s secretaries of Aging, Drug and Alcohol Programs, Education, Health, and Human Services sent letters to public school districts, county-run health and human services programs, and other entities that get money from their departments, telling them that if the state Senate doesn’t return before mid-September, the state will be unable to disburse an estimated $5.9 billion in state and federal funding.

“This is unlike previous years when our Commonwealth faced budget impasses where the two chambers of the legislature could not agree,” the secretaries wrote in the letters, which were identical other than descriptions of expenditures. “They have already agreed and passed a bipartisan budget. It is now awaiting the necessary, procedural step that only the Senate Pro Tempore can complete.”

Schaefer also said this lack of clarity is difficult for counties. When the commonwealth weathered its previous major budget impasse, in 2015, many organizations took on debt or cut services to stay afloat.

Things are even more tenuous now, she said.

“When you get into September, October, you have to start making some really tough decisions … for all of our human services, but especially in the area of mental health, counties haven’t seen a funding increase in 15 years,” Schaefer said.

“When the impacts hit,” she added, “I think they’re going to hit harder and faster” than they did in 2015.

The impasse that began in 2015 lasted for nine months — a state record. It was partially resolved in January 2016. That month, the commonwealth had to make up just under $5 billion in missed payments, according to state Treasury records shared with Spotlight PA.

The vast majority of that money, $4.4 billion, went to education, including nearly $2.4 billion for basic education, which most notably includes money for the commonwealth’s K-12 schools.

During an impasse, many of the payments the state makes remain mandatory, which means that they’ll be made as usual no matter how long it takes to resolve this year’s budget.

Some disbursements are federally required, and others are considered essential in order to maintain the public health, safety, and welfare of Pennsylvanians. Certain appropriations that were made in a prior fiscal year are also allowed to continue, as are recurring payments not made from the general fund, like ones that come from restricted funds.

These include payments to State Police, prison guards, and state-funded road and bridge maintenance. Disbursal of federal dollars to programs like SNAP and Medicaid also continues, as does debt service and payments to Pennsylvania’s Liquor Control Board and Lottery Fund. State workers have also gotten paid during impasses since 2009, when the Pennsylvania Supreme Court ruled that they must.

While the governor and legislature direct payments, the state Treasury has the ultimate authority to decide whether money leaves state coffers.

The treasurer’s role in budget talks could become important if lawmakers end up passing a spending plan but deadlock over the fiscal code, which is typically passed alongside a budget and directs spending for many social programs.

Erik Arneson, a spokesperson for the Treasury, told Spotlight PA that if “we reach the point where a General Fund budget bill is signed without the code bills that traditionally accompany it, such as the Fiscal Code and/or the Public School Code, that could lead to some payment requests being returned due to a lack of sufficient spending authority.”

Those decisions, he said, would be made on a case-by-case basis.

Some Republicans believe the current treasurer, Republican Stacy Garrity, will handle impasse payments differently than former Democratic Treasurer Joe Torsella, who presided over several shorter state budget impasses during Democratic Gov. Tom Wolf’s tenure.

“Last time we were in this predicament we had a very different treasurer with a different view on where [and] how money should be spent,” said Rep. Seth Grove (R., York), minority chair of the state House Appropriations Committee, during a news conference earlier this month. “I think Stacy Garrity is going to follow the law … This is just not a blanket sign-off as it’s been done in the past that says, ‘We just want to spend money because we feel like spending money.’”

At a separate news conference, Garrity confirmed that she intends to strictly follow the law.

“Generally speaking, if a payment request doesn’t meet any of the legal requirements — such as being a federal mandate, or being necessary to maintain public health, safety, and welfare — it’s going to be declined,” she said.

Stephen Caruso of Spotlight PA contributed reporting for this story.

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