First Payment of More Than $416 Million to Pennsylvania School Districts Halted Due...

First Payment of More Than $416 Million to Pennsylvania School Districts
Halted Due to Budget Impasse

Department of Education legally prohibited from funding districts until new
budget is in place

HARRISBURG, Pa., July 30 /PRNewswire-USNewswire/ -- Today's scheduled monthly
payment of more than $416 million to Pennsylvania's 500 school districts will
not occur due to the lack of a state budget, Education Secretary Gerald L.
Zahorchak announced.

"Until a budget is in place, the Department of Education cannot legally
authorize payments to districts, meaning the districts will have to operate
without the state's share of education dollars until lawmakers approve a
spending plan," the secretary said.

The subsidy payments that were scheduled to go out today would have been the
first major payments of the 2009-10 fiscal year, which began on July 1. Most
schools will begin the school year within the next three to four weeks.

The next monthly subsidy payment is scheduled for Aug. 27, but the timeliness
of that payment also could be impacted by the budget impasse, according to the
secretary, because it takes about two weeks to authorize payments after a
budget is enacted. The August subsidy payments would total more than $876
million.

The subsidy payments represent the state's share of public education funding,
including appropriations such as basic and special education funding, charter
school reimbursement, pupil transportation and the accountability block grant.
Districts rely on the monthly payments in determining their annual budgets, as
well as payment schedules to district vendors.

"The impact of missed subsidy payments will undoubtedly vary from district to
district, depending upon the contingency plans each has in place, but
obviously any missed payments represent a fiscal hurdle for those districts,"
Secretary Zahorchak said.

Education funding has played a critical role in the ongoing budget
discussions. Today's missed payment occurs as the legislative conference
committee met to discuss school funding and its impact on increasing student
achievement and keeping local property tax increases to a minimum.

"Democratic leaders in the House and Senate are standing up for our students
and taxpayers by fighting to properly invest stimulus funds to fulfill the
second year of Pennsylvania's school funding formula," Secretary Zahorchak
said. "With historic gains in student achievement in reading and math at every
grade level, we simply cannot afford to lose momentum now."

For details on Governor Rendell's school funding plan, or for a list of July
subsidy amounts by school district, visit the Department of Education Web site
at www.pde.state.pa.us.
CONTACT: Michael Race(717) 783-9802

SOURCE Pennsylvania Department of Education

Michael Race of the Pennsylvania Department of Education, +1-717-783-9802