Scranton School District says state budget impasse has left cash tight, seeks short-term borrowing as $8 million in federal funds remains unresolved
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Summary
District finance staff warned the board the general fund could fall to about $1 million by year-end and proposed a short-term tax anticipation note; officials said roughly $8 million in federal ESSA title funds may be held by the Pennsylvania Department of Education and staff will seek answers or legal remedies.
Scranton School District financial staff told the school board on Oct. 27 that the district’s general fund cash balance has declined from about $56 million on July 1 to just under $21 million at the end of October and could fall to just over $1 million by year-end if the state budget impasse continues.
Business office staff said the district is preparing to issue a tax revenue anticipation note (TRAN) of about $30 million, effective Jan. 2, to cover payroll and operating needs through March if state subsidies and other revenue do not arrive when expected. The district also reported a projected cumulative negative operating cash flow of just over $21 million by March under current assumptions.
“So we are monitoring our cash to make it through December 31,” Pat Laffey said during the work session presentation on district cash flow, describing assumptions that state subsidy payments might not begin again until April. Laffey gave the board a month-by-month review showing the district’s general fund falling from $56,000,000 at the start of the fiscal year to an estimated just-over-$1,000,000 balance under the current scenario.
Superintendent Dr. Keating framed the shortfall as an immediate operational problem for schools. “We are victims in this situation,” she said, warning that the district has already reduced after-school tutoring, professional development and some programs to preserve payroll and keep buildings open.
Board members and the solicitor also raised a separate but related concern: whether approximately $8 million in federal ESSA (Every Student Succeeds Act) title funds that local representatives say were released to Harrisburg have actually been forwarded to the district. Attorney Moran said the district will pursue options to obtain funds that officials believe are “rightfully” allocated to Scranton.
“If that is the situation, the answer is yes” to pursuing legal remedies, Attorney Moran said, adding he would first confirm facts with state officials and federal contacts before initiating litigation. Moran also described earlier contacts with federal representatives and said those offices expected the Pennsylvania Department of Education (PDE) to pass through allocated federal funds to districts.
District staff said they have not received federal or state funds since July 1 beyond a small set of reimbursements and bond payments. The business office confirmed the district has been using general fund cash to pay employees who are federally funded until those federal dollars are received and will reimburse the general fund if the withheld funds are released.
Board President Ty Holmes and Vice President Chesak each participated in the meeting; board roll calls on several consent and action items were unanimous among the six members present.
Why it matters: The district’s presentation described a narrow balance between cash on hand and near-term obligations in a $225 million budget; officials said an unexpected large claim or building repair could force additional cuts or emergency measures. Board members and community speakers urged state and federal elected officials to press for a timely release of funds.
Votes at a glance - Resolution urging the Pennsylvania General Assembly to enact a complete state budget and end the impasse: motion adopted; roll call vote 6–0 in favor. - Consent agenda (bill lists, treasurer’s reports, budget transfers, disposals, purchases, etc.): approved 6–0. - Personnel report (assignments, appointments, retirements, resignations, leaves): approved 6–0. - Special-education settlement agreements (case numbers 3006312KE and 200811AM): approved 6–0. - Kelly Educational Services fee reduction (substitute daily rate decrease to $162.50): approved 6–0. - Authorization to engage E-Rate consulting firm: approved 6–0.
The board directed district leadership to continue pursuing clarity from PDE and federal representatives about the status of the $8 million in title funds and to present borrowing proposals for board consideration at the Nov. 12 meeting.
The meeting also included public comments pressing elected officials to resolve the budget impasse and to seek release of federal funds, and district staff said they will follow up with PDE and federal offices and report back to the board.
