Question of the day
Friday, Oct 30, 2015 - Posted by Rich Miller
* Things can always be worse. There’s Pennsylvania, for instance…
Though Illinois’ ongoing budget impasse is a credit negative for local governments, things are far worse in a state with similar problems. Moody’s investors services says Pennsylvania is experiencing similar issues during their ongoing budget impasse as Illinois but with a greater impact on local governments and schools.
A report from the investors service says school districts in Illinois are receiving most state aid but in Pennsylvania similar fund distributions are not being made which negatively affects local governments’ budgets. The report also says that community colleges and 4-year public universities are adversely affected in both states. In Illinois Governor Bruce Rauner signed the appropriations measure for K-12 school funding, but no appropriation for higher education has been passed and approved. Moody’s downgraded six public universities in Illinois Tuesday.
State aid for Pennsylvania school districts constitutes 10%-83% of operating revenues, and many schools already face financial pressure from charter schools and rising pension costs. Although Pennsylvania schools received their property taxes in September, districts more dependent on state aid are now relying on cash reserves and short-term borrowing to keep the doors open and pay fixed obligations. As of September, 17 school districts and two intermediate units instructing 169,000 students in the state have borrowed more than $346 million and face a combined $11.2 million in interest fees on these loans. Philadelphia School District (Ba3/negative) alone comprises $275 million of the borrowing, according to the state auditor general.
* The Question: Illinois is to Pennsylvania as ____ is to ____ ?