Pennsylvania agencies warn of mounting damage as state enters its 4th month of a budget stalemate

Pennsylvania’s counties, school districts and social service agencies are warning of mounting layoffs, borrowing costs and damage to the state’s safety net as the politically divided state government enters its fourth month of a budget stalemate.

The stalemate entangling Democratic Gov. Josh Shapiro, the Democratic-controlled House and the Republican-controlled Senate has stalled billions of dollars from going to schools and social services, and it has no certain end in sight as the federal government careened toward a shutdown.

The finger-pointing in Pennsylvania’s statehouse has fallen along partisan lines. Now it is a campaign trail topic as Republican state Treasurer Stacy Garrity prepares to challenge Shapiro’s bid for a second term in 2026’s election.

Budget standoff has big effect

The fight in the statehouse over things like public school funding and curbing the rising cost of Medicaid doesn’t involve most of the money in a roughly $50 billion budget.

But the effect is being felt broadly.

The grant-funded Jefferson-Clarion Head Start has laid off more than 50 staff while more than 300 families who had slots in state-funded pre-kindergarten programs have had to line up other arrangements, quit jobs or find ways to work from home.

One parent, Taylor Miller, said she is relying on babysitting help from her children’s grandparents who live a half-hour away while she completes her coursework to become a phlebotomy assistant. Her 3-year-old lost her six-hour daily preschool class, and her 18-month-old lost her weekly home-visit session with a teacher.

“This is the one thing that most children have, and they make friends, they socialize, they love to read and to learn and it’s just a great environment for the kids — and to have that taken away, only two weeks into the school year, it affects them, it hurts them,” Miller said.

The nonprofit Jefferson-Clarion Head Start, meanwhile, is on track to max out a $750,000 line of credit and has no guarantees that families and laid-off employees will return once state aid starts flowing again, executive director Pam Johnson said.

As October begins, county officials and human services providers say the damage is accelerating.

Lines of credit and reserves are running out, meaning deeper layoffs and more service shutdowns are inevitable, they say.

“Things are going to get exponentially worse in October,” said Kristen Rotz of the United Way of Pennsylvania, which surveyed over 100 social services agencies. “The impacts of this impasse are going to become much more real.”

Meanwhile, organizations that are using reserves to plug budget holes are missing out on the investment income on the cash that helps support their finances, officials say.

Without the governor’s signature on a new spending plan, Pennsylvania state government lost some of its spending authority starting July 1, and there is no trigger in the law to funnel aid to schools, counties or social services without an agreement.

The state is legally bound to make debt payments during a stalemate, cover Medicaid costs for millions of Pennsylvanians, issue unemployment compensation payments, keep prisons open and ensure state police are on patrol.

All state employees under a governor’s jurisdiction are typically expected to report to work and be paid as scheduled, so state offices are open.

But schools are missing out on an estimated $3.8 billion so far. The school board in Philadelphia, the state’s largest district, authorized the district to borrow up to $1.5 million, or three times the normal amount this time of year.

Universities, libraries and county health departments are also missing payments, Shapiro’s administration has said.

Armstrong County shut down senior centers and furloughed staff there, Westmoreland County issued furlough notices to 125 employees, and Lancaster and Chester counties warned that they will stop fronting entire reimbursements for social service providers.

Smaller social service agencies hit hard

Some smaller social services agencies have been hit hard.

Safe Berks, a domestic violence and sexual assault-prevention program serving Berks County, laid off several staff, took on debt and isn’t paying some bills or filling vacant positions, its CEO said.

County commissioners say waiting times for social services are growing, and laid-off caseworkers, counselors or social workers are unlikely to return to their jobs.

“How long does it take to train one of those workers, one of the social workers, the case workers, to get back out in the field?” said Dave Glass, a Clearfield County commissioner. “You could be losing a year or more.”