For some Pa. schools, fiscal hardship will drag on

Pennsylvania schools represent a growing chunk of the school districts with the most desperate finances in the country, according to one credit rating agency.

 

Moody’s Investors Service has downgraded the credit of eight Pennsylvania school districts since March, and it says the worst of those aren’t likely to recover anytime soon.

The rating agency points to a crushing mix of rising costs due to delayed pension payments, growing charter schools, alongside a failure – or inability – to squeeze much more out of their local residents with higher property taxes. Many districts are also waiting for the state to reimburse them for years-old construction projects.

Jeff Ammerman, with the Pennsylvania Association of School Business Officials, said low interest rates haven’t helped the dismal situation.

“There used to be investment income that school districts could count on to close that gap,” Ammerman said. “But with interest rates being close to zero, they don’t have that money.”

Moody’s pegs the worst credit rating on four school districts. Philadelphia is one. The others are in the Pittsburgh suburbs — McKeesport Area, East Allegheny, and Penn Hills. They have all struggled due to weak local tax bases.

For the most desperate schools, even a big boost in state aid is unlikely to turn things around quickly.

“These districts are going to have to deal with the pension costs, and other costs going up for at least the next couple of budgets,” Ammerman said. “So it’s not something where outside economic influences are necessarily going to turn around in the short term.”