Schools need adequate reserves

Thursday, August 21, 2014

Many Pennsylvania school districts have begun to cannibalize their long-term reserve funds to balance their operating budgets — a short-term fix that can only lead to more long-term problems. The situation illustrates further that the state government pays an inadequate share of public school funding.

State law properly precludes local school districts from hoarding money, and properly allows districts to keep modest reserves to deal with emergencies, bolster their creditworthiness and prepare for known impending expenses.

Some of the funding emergencies are the result of the state government’s failures. For example, many districts have begun to use reserve funds to meet their exponentially increasing pension expenses, which largely are the result of the Legislature’s refusal to correct its own incompetence relative to pension policy. Some districts must use reserve funds to pay debt costs resulting from new construction, because the state has imposed long delays on required reimbursements from Harrisburg.

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