Pandemic-Related Costs Wreaking Havoc on PA School District Budgets

The state’s school districts faced many financial challenges due to the coronavirus pandemic, including soaring mitigation costs and decreasing local tax revenues.

Around this time last year, the Bensalem Township School District finally had a balanced budget and an optimistic financial outlook.

The school district in Bucks County had struggled for years with multi-million dollar deficits, said District Superintendent Samuel Lee.

Then the coronavirus pandemic hit and plunged Bensalem right back into a budget shortfall.

“To date, $1,827,581 has been invested to mitigate COVID-19 and support continuity of education,” Lee said during a recent public hearing about education during the pandemic.

The pandemic has brought many financial challenges to all of Pennsylvania’s 501 school districts. Costs related to COVID-19 have soared while local revenue sources districts heavily relied on have decreased. 

State and federal stimulus funding have helped districts deal with the costs of the pandemic. But more is needed.

Some help could come in the American Rescue Plan, the latest pandemic relief package, proposed by President Joe Biden. If it is approved, it would provide $170 billion to K-12 schools to help address the various impacts of COVID-19, reduce class sizes, and address trauma and learning loss. The bill has been passed by the US House and awaits Senate approval. 

Schools Used Pandemic Relief Funds Quickly 

Art Levinowitz, a school board member of the Upper Dublin School District in Montgomery County, said the district encountered a host of additional and new pandemic-related costs. The district used stimulus money for technology, cleaning equipment/supplies, and programs to supplement online learning. Costs for overall staffing increased as the district added positions to keep class sizes down.

It was the same in the Bensalem district, which quickly used CARES Act funding for PPE, technology, cleaning supplies, and HVAC modifications, Lee said.

“We spent less last spring and early fall during remote instruction,” Lee said, “but those savings stand to be eclipsed by anticipated future revenue shortfalls. We are doing the best we can.”

The Pandemic Has Increased School Expenses

One of the fastest growing mandated costs for school districts in a normal year is charter school tuition. The pandemic has only exacerbated this expense as more students have enrolled in charter schools and added $350 million more in payments in 2020-21, according to the Pennsylvania Association of School Business Officials’ 2021 School District Budget Report. This is an increase of about $475 million from 2019-20.

School Revenues Decreased During Pandemic

While costs continued to climb, economic repercussions of the pandemic caused district revenue streams to decrease.

Property tax payments are the most heavily-relied on income for schools. Many districts extended payment discount periods, did away with penalties, and didn’t raise property tax rates over the last year to help struggling taxpayers. These efforts resulted in a decrease of approximately $1 billion in local tax revenue, according to the budget report.

Districts also are experiencing a decrease in aggregate assessed values.

Lee said Bensalem’s budget took a hard hit with a decline in aggregate assessed value of $8.9 million and the associated local revenue loss of almost $1.5 million.

These School Budget Problems Will Remain

Previous coronavirus relief packages saved schools districts—their programs and staff—across the country.

The American Rescue Plan could do the same.

But after the pandemic is over, schools will still need help to resolve systemic funding concerns related to pensions, special education, building maintenance, and charter school tuition.