Students are set to return to classrooms all over Pennsylvania this week and next, yet the legislature remains at an impasse on a state spending plan.

Now nearly two months overdue, the lack of a state budget leaves schools, human services, public transit and state-funded colleges and universities to fill the gap.

At stake is $1.7 billion for basic and special education funding; $40 million for preschool programs; and $14 million for libraries, among other delayed allocations.

But local school districts don’t just want an approved spending plan, they emphasize the need to rein in cyber charter schools.

Administrators the commonwealth over say cyber charter school tuition is immensely problematic for public schools because of an outdated funding formula that directs significant money away from local districts to cover students’ tuition at schools that operate privately and online, with no buses, buildings or similar overhead. It is money, often in the millions of dollars, that could otherwise be used for local teachers, supplies and building upkeep.

Smethport Superintendent Brice Benson said, “Part of any common sense budget passed this year must include addressing the wasteful spending due to Pennsylvania’s cyber charter law. The last three state auditors have noted the wasteful spending that is a result of a funding formula which has taken resources away from local school districts and enriched cyber charter schools.”

Revised cyber school policies would be a win for area districts, but at a minimum, administrators just want to see the funding flow.

First-year Bradford Superintendent Erin Waugaman said that “purposeful financial planning” will allow BASD — where state funding represents approximately 60% of the district’s budget — “to withstand a short-term state budget impasse for only a few months.

Erin Waugaman

“Without these funds, (BASD) will delay capital projects, equipment and unnecessary purchases, focusing our limited resources on maintaining educational programs and services.”

In Duke Center, Otto-Eldred Superintendent Matthew Splain said that during the district’s August meeting, the school board was asked for approval to shift internal funds in order to make payroll and pay bills for September.

Benson said Smethport’s budget for the 2025-26 school year anticipated flat funding from the state and intends to adopt conservative non-mandated spending to begin the year.

“If multiple state subsidy payments are delayed, we would be forced to evaluate layoffs and/or borrowing money to cover daily operations.”

Port Allegany Superintendent Paula Newell said the district has a healthy fund balance for now.

“Like all schools, that will only go so far without adequate funding for our schools and adequate support in regulating cyber school tuition,” Newell said.

The impasse is causing Port Allegany administrators to increase scrutiny of budget requests, spend conservatively and examine overall structures to trim costs where possible.

“However,” Newell said, “schools still need to function. We need highly qualified personnel, safe and adequate facilities, and resources for our students to receive the education they deserve.”

Matthew Splain

Splain pointed out that Otto-Eldred, like most districts, has set funds aside to help cover future expenses but that, unlike charter schools, there are limits and oversight to how those funds can be used or even how long they can be held. The limits are based on a district’s total annual budget. Waugaman also pointed to the limitations of districts’ use of their unassigned fund (like a personal checking account) balances.

O-E plans to use Act 85 of 2016 to access state funds to pay its debt service in September.

“If there is no progress on the budget within a month, we are hopeful to have enough property tax revenue to make payroll and pay bills for October,” Splain said.

He noted that O-E’s aid ratio is about 84%, “meaning we heavily rely upon the state for funding. Our tax base is limited, so we are basically a state-funded public school.”

There’s no end in sight to the legislature’s stalemate as neither chamber plans to reconvene until September. The most recent attempt at a compromise was rejected by the House of Representatives, after the Senate on Aug. 12 passed a $47 million level-spending budget to distribute those funds while leaders negotiated contested provisions.

“Negotiations are continuing and the dialogue is respectful and productive,” Budget Secretary Uri Monson was quoted in an article the The Center Square. “However, finding agreement can be slow moving and we have not yet come to final agreement on these critically important issues.”

Gov. Josh Shapiro’s administration sent a letter to school districts indicating it would “expeditiously” distribute funding once a budget is approved. The hangup, this year, is Shapiro’s ask for an additional $300 million for mass transit that Democrats would fund by diverting revenue from state sales tax, while Republicans would prefer to tap the $2.4 billion Transportation Trust Fund.

Splain said, “There is an ill-informed perception by many in Harrisburg that public schools are sitting on excess funding,” and that lawmakers do not understand the challenge a delayed budget brings to small, rural districts.

“I would invite those legislators to take a visit to a typical small/rural district to get a better understanding of public school operations,” Splain said. “Instead of focusing on our students and planning or programming, our district offices are focused on prioritizing bills and finding funding.”