Houlahan’s funding freeze alarm doesn’t add up

U.S. Representative Chrissy Houlahan (D) sent a newsletter last month to her constituents in Berks and Chester Counties alerting them to a federal education funding freeze for certain programs and the potential consequences of this action based on her belief that school districts do not have budget surpluses to rely upon.

“To be clear, ALL students will suffer from these cuts,” wrote Houlahan. “Our public schools do not have a budget surplus to fall back on and frequently, the one area that can be cut is school personnel. Fewer dollars means fewer teachers which translates to larger class sizes. Fewer programs translates to less opportunity for kids to learn.” [emphasis original]

While Houlahan reports that schools do not have a budget surplus to fall back on, data from the Pennsylvania Department of Education (PDE) shows otherwise. School districts in Berks and Chester Counties collectively have over $685 million dollars in their reserve funds.

The Representative cited an article in the Philadelphia Inquirer that referenced the impact on Phoenixville Area School District.

“Our Commonwealth of Pennsylvania stands to lose $230 million, with more than $7 million dollars stripped away from Chester and Berks Counties schools,” wrote Houlahan. “The Philadelphia Inquirer reported that Phoenixville alone is losing $193,000 in funding for English language learners, arts, music, health and wellness programs, and professional development.”

Based on PDE’s data, Phoenixville has plenty of reserve funding — over $42 million or 39 percent of their overall budget — to cover the potential $193,000 loss or delay of funds. The chart below shows the reserves held by every Berks and Chester County school district based on the most recent published data by the state.

School District Reserves

Meanwhile, Phoenixville School Board President Scott Overland said earlier this year that federal funding makes up “just over one percent of the district’s budget,” and he might be willing to risk it in order for the district to “stick up for its values,” referring to diversity, equity, and inclusion practices.

The Inquirer further reported Overland’s willingness to use the district’s reserves if necessary.

“He said he’d even support standing up to Trump ‘if we have to dip into our rainy day fund or reserves to avoid giving into threats.’”

Houlahan said in her newsletter that school districts in Pennsylvania were at risk to lose $230 million dollars based on the freeze, yet the districts collectively are holding over $7 billion dollars in reserves. She warned her readers of potentially dire consequences while leaving out the fact that every district in her region has significant funds in their reserves to cover costs.

“Administrators now face the almost impossible choice: come up with thousands of dollars to bridge the gap in their budgets or cut vital personnel and programs before school starts again in one month.”

There was never an “impossible choice” for district administrators — every single district could have used their reserves to maintain services and programming.

Houlahan criticized the Trump administration and praised the Shapiro administration for their handling of the situation despite the fact — one that she acknowledged in her letter — that the funding was being withheld “pending a ‘review’ by the Administration.” It was not stated that the funding would be cut or stopped permanently.

“I’m grateful that Governor Shapiro has also taken action, and joined 25 other governors and the Mayor of Washington, D.C. in suing the Trump Administration to release the money owed to their school districts,” wrote Houlahan. “Governors and Attorneys General have the legal standing to sue, and I will continue to do everything in my power to support Governor Shapiro’s efforts and to push back against the Trump Administration’s illegal and unconstitutional actions.”

Ultimately, the funds were released to the school districts; however, the districts could have funded the programs with their reserves if necessary. 

Houlahan may have been justified in her concerns about the funding freeze, but her newsletter was disingenuous when it said that districts would be forced to stop programs because they have no surplus money. Even the district she highlighted — Phoenixville — acknowledged the existence of reserves and their availability.

The issue of massive school district reserves was raised over two years ago by Auditor General, Tim DeFoor, and yet, the funds continue to grow. The Commonwealth Foundation has highlighted the excessive reserves in light of declining academic performance and created a tool based on the PDE data to show the reserve fund balance for every school district in the state.

Beth Ann Rosica resides in West Chester, has a Ph.D. in Education, and has dedicated her career to advocating on behalf of at-risk children and families. She covers education issues for Broad + Liberty. Contact her at barosica@broadandliberty.com.