HARRISBURG — Administrators across Pennsylvania say they’re cutting after-school programs, freezing hiring, and taking on costly loans as the state fails to make significant payments thanks to the nearly four-month-late budget.
This is the case in districts big and small, rural and urban, and everything in between. The impact is being felt especially hard in districts that serve poorer areas, which have less robust tax bases and tend to get a bigger percentage of their budgets from the state.
“This impasse is kinder and gentler in communities that aren't like mine, in communities where they have a significant fund balance because they're capable of raising taxes, local taxes, every year,” said Greater Johnstown School District Superintendent Amy Arcurio.
The district is in Cambria County and primarily serves the struggling former steel city for which it is named. It was a plaintiff in a landmark lawsuit that argued the state’s education funding system was so inequitable that it violated the Pennsylvania Constitution. In 2023, Commonwealth Court agreed and ordered lawmakers to fix it.
Lawmakers have since devised a formula that routes extra funds to schools identified as under-investing in students, like Johnstown. This money, along with billions in regular K-12 education payments, is being held up by the impasse.
That’s doing real damage in Johnstown. In its latest budget, the district got only $12.6 million of its $45.6 million revenue from local taxes; $25.9 million came from the state.
Johnstown isn’t alone.
During a virtual news conference with superintendents and advocates for public education in late October, Sherri Smith of the Pennsylvania Association of School Administrators warned lawmakers that schools are nearing a tipping point.
Heading into November, she said, more and more districts will “not [be] in a place where all programs can continue.”
Officials from at least six districts at the event reported freezing new hires, pausing planned capital improvement projects, and delaying payments to charter schools. And three superintendents from other districts who spoke with Spotlight PA said they’ve either already cut programming for students or are planning to take out loans to make it through the year.
It’s not the first time state lawmakers have missed the June 30 deadline — Pennsylvania’s budget has been late every year since Gov. Josh Shapiro took office — but this year marks the longest impasse during Shapiro’s tenure.
Recent impasses have been resolved by the fall, allowing schools to obtain state funding by the time students return. However, this year’s stalemate has stretched two months into the school year, forcing an increasing number of districts to make difficult funding decisions.
‘We have to be so fiscally conservative’
Without state funding, all school districts have roughly the same set of unappealing options. Those with robust reserves can spend them down — those without can pursue loans, cut programming, or furlough staff.
At Scranton School District, administrators already cut after-school and before-school tutoring for students and professional development classes for teachers at the start of the school year, and they are not authorizing overtime. This, they told Spotlight PA, will ensure the district can keep paying its teachers and keep the lights on through the end of the calendar year.
Scranton is a relatively large urban school district that serves a poor community — more than 80% of its students are considered economically disadvantaged. It benefited from the legislature’s additional dollars for chronically underfunded schools last year, receiving $8.4 million in supplemental dollars — the sixth-largest allotment in the state.
Erin Keating, the district’s superintendent, told Spotlight PA that she wants to preserve as much of the core school day as possible, but that means cutting down “auxiliary spending.” She told every administrator to “assume they have $0 in every budget.”
“We have to be so fiscally conservative right now to ensure that we can make it through payroll and benefits for the end of this year,” Keating said.
The impact has already been significant, Keating said — particularly when it comes to the district’s decision not to authorize overtime payments.
Already, it has meant stopping meetings of a faculty council that reviews curriculum initiatives and strategies.
Keating said the district plans to take out a loan as soon as possible in the new year. Public entities like school districts have the ability to take out a specific kind of loan, called a tax revenue anticipation note, that is paid back with future tax revenue. They typically are paid back within a year.
The district operates on a calendar-year budget rather than a fiscal-year budget, meaning its annual budget plan spans from January to December rather than June to July. As state law requires districts to have balanced budgets, any loans taken out at the start of the school year would have to be paid back by December.
In the meantime, Keating is walking a tightrope — relying on remaining revenue and hoping that no unexpected expenses arise.
At the October news conference, other districts said they have taken similar steps.
Norristown Area School District, which serves a relatively large, diverse Montgomery County area in the Philadelphia suburbs, has been forced to “pause hiring” and “delay purchasing instructional materials,” Superintendent Christopher Dormer said.
Franklin Area School District, a small rural district in Venango County, in northwest Pennsylvania, is scaling back or suspending “critical programs,” according to Sabrina Backer, who heads the district’s board. That includes “after-school enrichment, behavioral health partnerships, early childhood education, and critical infrastructure investments,” she said.
Schuylkill Haven Area School District in the Coal Region is now in a “discretionary spending freeze,” said Superintendent Shawn Fitzpatrick.
“Every nonessential line item — professional development, certain maintenance projects, non-emergency purchases — all have been paused,” Fitzpatrick said at the news conference. “Repairs that should have been addressed months ago remain unfinished, and we've delayed replacing some teachers lost to other school districts to preserve what funds we have.”
Even districts that have so far been able to maintain their programming are bracing for hard decisions if the impasse continues into 2026.
The rural Keystone Central School District, which stretches across Clinton, Centre, and Potter Counties, will be able to make it through the rest of this calendar year mostly unscathed, thanks to its relatively robust local tax revenue, Superintendent Frank Redmon said.
Roughly half of the district’s $92 million budget comes from local taxes, while the other half comes from the state.
But Redmon says starting in the new year, the district will need to either spend down its reserves or take out a loan. The choice between the two, Redmon says, “comes down to the numbers.”
If the district takes out a loan, it will have to reallocate funds from other budget line items to repay that money — with interest. Spending down the district’s reserve cash would avoid that extra cost, but it would also reduce the amount of money available to earn interest.
The big question, Redmon said, is: “Would we pay more in interest [on the loan] than we're earning in interest with our investments?”
Still, not even a new infusion of cash may keep the district from cutting programs, such as professional development, purchases of school supplies or materials, and field trips, for the rest of the school year.
That’s also the situation that Amy Arcurio, the Johnstown superintendent, has found herself in.
Earlier this month, after legislative representatives indicated to district officials that the impasse could last into 2026, Johnstown took out a $10 million loan. That loan, she said, will be enough to cover payroll and benefits and keep the lights on in schools through the end of the school year, but the district is still implementing additional cost-saving measures like a hiring freeze, canceling after-school tutoring programs, and scrapping trips for students to tour colleges and universities.
The loan isn’t going to be cheap. The interest that the district will have to pay is going to cut into other programs. Social workers, therapists, and mental health professionals will likely be the “first programs that would have to go,” according to Arcurio.
It’s a problem. But an even bigger problem, Arcurio said, is that she has no confidence this impasse is a one-off.
“I am really fearful for what next year is going to be like,” she said. “Is this setting up the stage for the new norm for public education that we are just waiting with bated breath day after day, month after month?”