PA budget delay snares $1.1B in state funding · Spotlight PA

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HARRISBURG — Nearly three weeks after Gov. Josh Shapiro signed Pennsylvania’s main state budget legislation, the code bills that will enable more than a billion dollars in spending remain in a legislative morass.

This spending is slated for initiatives that range from supplemental funding for the poorest school districts in the commonwealth to a popular home repair program to new money for public defense.

Because of a disagreement between the GOP-controlled state Senate and the Democratic governor and state House leaders over a private school voucher program, talks on the code bills that would allow this money to be doled out have been at an impasse.

This week, state Senate GOP leaders announced they plan to return to Harrisburg in late August to try and hammer out code language — though made it clear that talks aren’t finished. State Senate President Pro Tempore Kim Ward (R., Westmoreland) said in a statement that some matters “continue to be negotiated.”

Beth Rementer, a spokesperson for state House Democrats, also said talks between the legislature and governor have been ongoing behind the scenes, and added that while the state House isn’t scheduled to return before Sept. 26, “we are not foreclosing on the possibility that we may return sooner if an agreement is reached.”

Groups that are waiting on state money say they face real challenges.

John Neurohr, a spokesperson for PA Schools Work, a coalition of groups that support supplemental state funding for poor school districts, said that if money isn’t allocated soon, it “will hurt kids … in rural, urban, and suburban communities across the state.”

For most state programs, the lack of code language isn’t a big deal — they either don’t need it or can continue running using last year’s. The roughly $1.1 billion in spending that is stuck in limbo, however, needs code bills because the programs are either new and don’t have existing language, or the previous wording that governed their spending must be updated.

This stalled spending can be broken into a few primary categories, and is all subject to the legislature’s ongoing negotiations. Depending on the way code bill talks unfold, some could remain in limbo for the foreseeable future.

Education programs

Education programs make up a significant portion of Pennsylvania’s budget, and they also dominate the list of programs with stalled funding.

Significantly, $100 million for Level Up, a two-year-old program that sends supplemental money to the commonwealth’s 100 poorest public school districts, can’t be allocated without code language.

These districts span the commonwealth. Donna Cooper, who heads advocacy group Children First, told Spotlight PA that Level Up traditionally hasn’t been controversial given every state senator and most state representatives have Level Up schools in their districts.

The funding, Cooper noted, largely goes toward hiring teachers in order to shrink class sizes, as well as securing other personnel like reading specialists and counselors, and procuring equipment like books.

She’s dismayed that Level Up could be at the center of partisan negotiations this year. Cooper expects that in the coming weeks, the $100 million allocated in the main budget bill could be used as a bargaining chip for lawmakers who want to extract more money for Educational Improvement Tax Credits, or EITC — a school choice program that offers incentives to businesses that fund scholarships to private schools.

“This has not historically been a partisan issue,” Cooper said.

Any increase to EITC, which is currently capped at $340 million, must happen as part of the code bills, not in the main state budget bill. After passing that legislation in June, GOP leaders in the state Senate said they had budgeted for increasing the cap for EITC and a second, related tax credit by $150 million.

Advocates for alternatives to traditional public education have held out the program as a priority — particularly after Shapiro scuttled their hopes that a school voucher program would be included in the budget.

Also in code bill purgatory is $10 million to provide student teachers with stipends, as well as $100 million for school mental health services — a program that was already the subject of some legislative consternation.

The $100 million for student mental health comes from federal dollars that had already been earmarked for adult mental health services. Lawmakers who lobbied for that latter program have argued that by rerouting the federal funds, the budget shortchanges adults in need of mental health care, and also takes away recurring funds for student mental health.

The money, when it can be spent, is slated for a grant program that can fund efforts such as suicide intervention, bullying prevention, and counseling.

Emergency services, hospital relief

The programs held up by code bill negotiations also include two that were priorities for the health care industry: $50 million in emergency relief for hospitals, and $20.7 million to increase mileage rates for ambulance services.

The latter would allow first responders to get higher reimbursements when they transport patients. First responders have increasingly pushed for that change, citing generally low reimbursement rates from insurers.

The hospital emergency relief, meanwhile, is funding that the Hospital and Healthsystem Association of Pennsylvania, or HAP, has been asking for in the wake of the pandemic.

“Pennsylvania hospitals are in severe financial stress coming out of the pandemic,” said Chris Daley, a HAP spokesperson. “State data shows that last year 39 percent of the commonwealth’s hospitals operated at a loss and another 13 percent’s margins were so narrow that they are not considered sustainable for the long term.”

Daley said that as soon as code bills are passed and the money is approved for use, HAP “looks forward to working with policymakers” on implementation.

These health care initiatives could see smoother sailing than the other programs tangled in code bills. In her statement on the state Senate’s imminent return to Harrisburg, Ward noted that while some programs are still being negotiated, “next steps will include funding for emergency medical services and hospital and health system relief.”

Public defense and home repairs

The two other programs in code bill limbo are outliers, but are some of the most prominent elements of this year’s budget.

One is the Whole-Home Repairs Program, which offers grants and forgivable loans of up to $50,000 for homeowners and small landlords to fix problems like leaking roofs and water damage.

Last year, lawmakers approved $125 million in federal pandemic aid for the new program. It had rare bipartisan support from progressives fighting gentrification and displacement in cities, and conservatives addressing blight in their rural districts.

Another $50 million for the program was included in this year’s budget — this time from state revenue. The effects of the delayed code bill vary from county to county. Some haven’t launched their programs to spend the first round of funding yet; others, including Dauphin and Erie, experienced such high demand that they have already stopped taking new applications.

“It is very likely that the enormous need for Whole-Home Repairs will quickly overwhelm this year’s budget appropriation, too,” said Natasha Cahill, a spokesperson for state Sen. Nikil Saval (D., Philadelphia), who first introduced legislation to create the program.

The other program is Pennsylvania’s first-ever line item for public defense.

The $7.5 million allocation is a long time coming. For years, Pennsylvania has notoriously been the only state in the country that provides no funding for public defense of people who can’t afford a lawyer.

That state of affairs left counties responsible for funding public defense completely on their own, and led to what criminal justice advocates called insufficient and inconsistent defense across the commonwealth.

Many have said this new appropriation is a key starting point for increasing funding even more in the future.

Spotlight PA’s Charlotte Keith contributed reporting.