Without fiscal code, will budget deal be lifeline or loss for Pennsylvania schools?

Major questions remain about the details of Gov. Tom Wolf’s decision Wednesday to end the state’s historically protracted budget impasse — particularly when it comes to funding for public schools.

Almost nine months beyond last year’s budget deadline, Wolf has agreed to allow a $6 billion supplemental spending plan passed by the Republican-held General Assembly to go into effect at the stroke of midnight Monday.

The plan includes $150 million in new basic education spending — far less than the governor had wished.

At a press conference in the Capitol Wednesday, with many districts set to soon run out of cash, Wolf reversed a pledge he made last week to veto the latest budget bill approved by the House and Senate.

“This means that schools will stay open through the end of the year, but unless Harrisburg changes its ways, they won’t have adequate funds for next year,” he said.

In August, Wolf vetoed a similar budget. As the impasse persisted into late December — with schools starved for state aid — he agreed to OK a partial-year plan that included $50 million in new “Ready to Learn” block grant funding and $30 million in new special-education cash.

But he used his line-item veto power to cut school spending and other state priorities in the hopes of securing a larger education funding boost by leveraging Republican leaders back to the negotiating table.

That tactic did not work, and with Wednesday’s action, the new K-12 spending in Wolf’s first year is set to total $230 million.

Both sides, though, quibble with that number.

Both disputes are rooted in the fact that Wolf also signaled Wednesday that he will veto the fiscal code bill.

Fiscal code in doubt

Because the fiscal code acts as a roadmap for how education money is divided, Republicans say that if Wolf follows through on that veto, he will effectively keep new spending in limbo.

“You can’t spend that $150 million without a fiscal code,” said Jenn Kocher, spokeswoman for Senate Republicans.

The Wolf administration disputes that, saying that it will unilaterally distribute funding “in the most appropriate manner possible.”

Just before the Christmas holiday, when the General Assembly left Wolf a budget without having passed a fiscal code, the governor decided how to divide block grant funding.

Then, he favored districts such as Philadelphia that were disproportionately hurt when the legislature in 2011 agreed to Gov. Tom Corbett’s austerity plan that coincided with the expiration of federal stimulus dollars.

Wolf has pushed to make these restorations before implementing the student-weighted funding formula as proposed by a bipartisan commission.

Republicans disagree with that philosophy, and could challenge Wolf in the courts if he now attempts to disperse cash without their consent.

“We would review our options,” said Kocher.

As written, the fiscal code would undo Wolf’s December restorations and mean that the School District of Philadelphia would actually lose money in the new deal.

State Sen. Vincent Hughes, D-Philadelphia, applauded the governor’s decision to reject the code bill, and said he hopes Wolf divides funding in a way that acknowledges the “untenable” stress that he says state lawmakers have placed upon the district.

“At some point an injustice is an injustice, and it’s got to be addressed,” said Hughes.

Bond issue

Wolf disputes the $230 million figure for an entirely different reason.

Inside the fiscal code, lawmakers had also included a plan to take on a $2.5 billion bond to reimburse some districts for nearly $300 million in capital upgrades this year.

Wolf argues it’s a bad idea to pursue borrowing while the state has a structural deficit. His preferred budget plan would have fixed this deficit through tax increases. The Republican-crafted plan, which he’s now letting move forward, does not.

So Wolf opposes the bond, arguing that districts will have to cut classroom spending in order to pay for building upgrades that are already underway.

Because of this, Wolf said,  this budget would actually cut classroom spending by $45 million.

John Callahan, the assistant executive director for public policy with Pennsylvania School Boards Association, disagreed with the governor’s logic.

“That’s a different way of looking at things,” he said. “This is money where it’s needed, and that is not a cut.”

Year one complete

Wolf campaigned for governor on the idea that he’d secure a major statewide funding boost for public education and bring the state’s total share of school spending from about 35 percent to about 50 percent.

To accomplish this, he needed to convince the Republican-held legislature to agree to some sort of tax increase.

In the weeks before the election in 2014, he spoke confidently about his ability to overcome the difficulties of divided government.

“I think I’m sensing that there are enough people in the legislature in both parties who recognize that we need to make some changes,” he said in an October 2014 interview at WHYY. “And a Marcellus Shale tax is an easy one.”

History, so far, hasn’t vindicated this position.

A tax on natural gas drilling came off the table early in the protracted negotiation process.

And although Wolf nearly secured a grand bargain in December that would have raised taxes in order to boost school spending and fix the deficit — all while reforming the state employee pension system and overhauling the state liquor store system — that “framework” agreement collapsed without the support of enough rank-and-file lawmakers.

Reacting to Wednesday’s news, education advocates sent messages of mixed emotions — happy that it seems schools will get enough money to finish the year, but disappointed they weren’t delivered a bigger win.

“Make no mistake, this budget does not solve the state’s long-term school funding crisis,” said Campaign for Fair Education spokesman Charlie Lyons. “The threshold for a successful school funding system should not be whether there is enough money for schools to keep their doors open and the lights on.”