Pennsylvania’s new school grant programs to address genuine ‘crisis’ in infrastructure

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Asbestos. Lead. Temperatures that reach 115 degrees. Cracks in the ceiling so big you can see the sky. All of these have been found in Pennsylvania’s public schools. 

Pennsylvania lawmakers toured schools around the commonwealth last year, and what they found was “nothing short of shameful,” according to State Representative Peter Schweyer. 

“I was touring schools that still had infrastructure for gas lights in them,” Schweyer said. “I toured schools that had electrical outlets where the [wiring] was run on the outside of the walls because of plaster.”

After decades of underinvestment, Pennsylvania is launching two new grant programs to help schools fund facility improvements. These grants, the state hopes, will encourage districts to spend more money of their own. 

Pennsylvania lawmakers toured schools around the commonwealth last year, and what they found was “nothing short of shameful,” according to State Representative Peter Schweyer.

The first program, the Public School Facility Improvement Grant Program, will reimburse schools for anywhere from $500,000 to $5 million for eligible facility improvements. The program, administered by the Commonwealth Finance Authority, has $100 million to spend on grants this year. 

So far, according to the Pennsylvania Department of Economic and Community Development, two schools have applied for grants since the program began accepting applications on March 1. 

The Public School Environmental Repairs Grant Program, funded at $75 million, will issue grants of up to $10 million to help schools remove environmental hazards. It will begin accepting applications in May. 

“This is step one in a long-term reengagement” with the government in funding education, said Schweyer, a Democrat and the chair of the Pennsylvania House Education Committee. “We have a massive infrastructure problem in education. Massive. It’s bananas.”

Part of the reason schools struggle to fund infrastructure is difficulty in issuing bonds, according to Matt Fabian, a partner at Municipal Market Analytics. 

“Their borrowing costs are pretty low,” Fabian said, but “school districts, even the smallest ones, still struggle to repay the principal.”

The program may motivate districts to issue bonds or help them to borrow more when they come to market, Schweyer said.

For years — dating back to the 1970s — Pennsylvania had the Planning and Construction Workbook, or PlanCon. Schools undertaking renovations could apply for a reimbursement grant from the commonwealth. The grant would be paid over the course of 20 years. 

PlanCon grants could be up to $5 million and required school districts to match 25% of the grant, but districts often paid more. A report last year found schools were spending $17.3 million on average per project and PlanCon’s average reimbursements were around 29.5%. 

PlanCon had critics. Some argued the documentation process was too complicated and onerous, others charged that parts of the program were outdated, while a number of detractors claimed the state government shouldn’t be funding the program at all.

In 2016, PlanCon’s critics won out, and the state budget for school facilities dropped from $300 million per year to zero. 

Schools were no longer allowed to send in new requests for reimbursement, according to Jessica Sites, director of the Pennsylvania Department of Education’s Bureau of Budget and Fiscal Management. In 2019, lawmakers managed to pass an updated version of PlanCon, but the legislature never authorized funding for it.

However, the Department of Education continued to fund requests that were submitted before 2016, Sites said in her testimony before the Pennsylvania Senate last year.

“The Department is funding about 2,800 bonds for 430 school districts and career and technical centers at an estimated cost of $235 million,” Sites testified. “Funding for the PlanCon program comes from a mix of funding annually appropriated under the Authority Rentals and Sinking Fund, and bond funding.”

But in February of last year, this situation, along with the rest of Pennsylvania’s education system, changed.

The Pennsylvania Commonwealth Court ruled that its schools are underfunded to an extent that violates students’ constitutional rights. Pennsylvania’s school funding formula, last revised in the 2016 budget that killed PlanCon, was inequitable and forced poorer schools to rely on property taxes, which were often inadequate. 

Lawmakers assembled a bipartisan Basic Education Funding Commission, which toured schools and spoke to experts. The commission determined at its initial meeting that school funding was $6.2 billion short of what was needed to be equitable. 

Notably, both the judge’s ruling and the commission’s findings called out crumbling school facilities. 

“Outside of charter school issues, facilities were the universally most expressed area of concern among superintendents and teachers,” Schweyer said.

So, the Basic Education Funding Commission mandated that, in some form or another, the commonwealth spend $300 million a year on school facilities. 

Finally funding PlanCon 2.0 was an obvious option, and Gov. Josh Shapiro had proposed a $75 million program to fix schools with toxic substances in them. But Schweyer had reservations about the fairness of those programs.

Schools have to compete for PlanCon grants, and the schools that could have polished proposals as soon as applications opened were likely the schools that were more well off, Schweyer said. 

“If we only do [grants for] toxic schools, we’re only going to hit one type of school district,” Schweyer said. “If we do PlanCon 2.0, we’re going to hit a completely different type of school district.”

The 2023-2024 budget thus included $100 million for a PlanCon-style program and $75 million to help schools with unsafe facilities. The latter included a 50% match and a $10 million maximum grant, and the legislature will have more input over how it is administered.

The programs both have very broad criteria for projects that are eligible for grants and make no requirements for how schools finance the upgrades, Schweyer said. The grants will certainly go toward removing lead and asbestos, replacing boilers and windows. But beyond that, schools in different parts of the commonwealth have wildly different needs. 

In some parts of the commonwealth, like Philadelphia and Allentown, land is very expensive, Schweyer said. Districts in those areas may use grants to completely demolish and replace buildings. 

“We’re not talking about general maintenance,” Schweyer said. “We’re not talking about slapping a new coat of paint on a facility.”

In the 2024-2025 budget, which lawmakers hope to pass in June, Shapiro has requested $300 million for the Public School Facility Improvement Grant Program and $50 million for the Public School Environmental Repairs Grant Program.

Schweyer said it’s likely that some districts will fund their eligible projects through bonds, as schools rarely have up to $5 million available to spend. In fact, the original PlanCon reimbursement procedure was determined based on local bond amortization schedules. 

Fabian said the program may not encourage bonding, at least for this round of applications. The programs were announced in February and the applications are due in May (or June, for the environmental repairs program.) That’s not long enough to prepare to bring bonds to market, Fabian said. 

Going forward, the grants will likely make the biggest difference for schools that didn’t previously have the resources to issue bonds, or who couldn’t issue much when they did, Fabian said. 

“For the poorest issuers, the repayment of the principal is the challenge. That’s what the grant program would get you,” Fabian said.

Evette Caze, senior director of U.S. Public Finance at Fitch Ratings, said the positive credit impact of the grants will also be more pronounced for small schools. 

The grants fit in a larger trend of state support to municipalities as costs increase, Fabian said. Pennsylvania already supports schools that issue bonds through the State Aid Intercept Program and will be required to increase support thanks to the court ruling. 

Other states will also be providing more support on the local level as municipalities face the impact of delaying previous maintenance and preparing for destruction from climate change. 

Going forward, Pennsylvania is required to spend $300 million on school facilities, but Schweyer said that may not always be through a grant program. Direct appropriations, a bond program or federal funds could work as alternatives. Regardless of the funding method, the current program will not be enough.

“It’s going to be oversubscribed. There’s no way that’s enough money, we know that,” Schweyer said. But part of the program’s purpose “is showing everybody how much need really is out there.”

It’s cause for optimism that the commonwealth went from spending nothing on school facilities to $175 million to $300 million within three budgets, Schweyer said. 

“Maybe this will spur school districts to take on other infrastructure projects that aren’t funded by the commonwealth,” Schweyer said. “And I hope they do, because the need is so great.”

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