PA. SCHOOLS As districts miss 2nd installment, state promises to help with funds

State education officials said no schools are in danger of closing.
HARRISBURG (AP) -- Pennsylvania's 501 school districts missed out on their second installment of state aid Thursday because of ongoing legislative wrangling over spending, but the Education Department vowed to help needy districts secure low-interest loans so they can stay open.
Education Secretary Vicki Phillips sent a letter to superintendents late Wednesday asking them to contact her if they are having cash-flow troubles.
She said the department has come up with several funding options, including using low-interest loans with the state reimbursing the districts for their interest expenses.
"The fact is that many schools are facing financial hardship, and the governor has vowed not to let any schools close," said Kate Philips, spokeswoman for Gov. Ed Rendell. "We're going to work with districts who are cash-strapped if they can't obtain money from local lenders."
Will be paid back
Once a budget is passed, the administration will determine how much interest was incurred by districts as a result of the impasse and pay them back, Philips said.
The Pennsylvania School Boards Association estimates that more than $1 billion has not reached local districts, based on subsidy payments made by this time last year.
Rendell has held up more than $4 billion in public school subsidies since March to force lawmakers to consider a package of education initiatives to expand early childhood education, reduce class sizes through third grade, and provide more tutoring.
The dispute has left Pennsylvania as the only state without a completed budget, one-third of the way into the state's fiscal year.
Rendell originally sought $560 million for his education plan, but later agreed with leaders in the state House of Representatives on a $250 million plan. It is being considered by the Senate, where the Appropriations Committee cut $50 million.
So far, the schools have remained open with the help of local property tax revenue, cash reserves or borrowed money. None are in imminent danger of closing, said David Davare, director of research services for the school boards association.
"The districts are attempting to do everything they can to keep the schools open. I have not heard of anybody who has missed a bond payment or a payroll yet," Davare said.
Survey results
An association survey of 411 districts found about 200 that would either continue to use local tax revenue or withdraw more money from their fund balances if the state missed making its October subsidy payment.
Ninety-five others said they would borrow money or seek a line of credit to fill funding gaps.
The Pennsylvania Association of School Business Officials performed its own survey and found 44 districts that expected to have depleted their local revenue and another 55 with only enough tax revenue to carry them through the end of November.
In one of the state's poorest districts, Chester-Upland, officials have taken out a $5 million tax-anticipation note and expect to exhaust their $2 million fund balance. The Delaware County district depends on the state aid for roughly half its $84 million budget.