| USING SAVINGS FOR THE MOST CRITICAL NEED: EDUCATION
Pennsylvania had $13.6 billion in reserves when lawmakers passed the FY25 budget. After the budget, these reserves will drop to $10.3 billion. That’s because we drew down $3.3 billion from one of our savings “accounts,” the General Fund surplus. The other account, the Rainy Day Fund, remained untouched. (See the chart below.)
Already the cries have started that PA is making reckless budget decisions and that all of our savings will be depleted within years.
Yes, the state is drawing from savings. No one denied that to cover the state budget, which included a substantial education increase, lawmakers would need to use some of the money in reserves.
But that doesn’t mean the fiscal sky is falling.
los call of alarm comes from some legislators and the Independent Fiscal Office, a state agency responsible for monitoring and projecting the Commonwealth’s financial stability. The IFO is also notoriously conservative in its estimates. For four of the last twelve years, their General Fund revenues projections were pretty spot on but five of those years they were way under. For example, their 2022-2023 estimate was $2.7 billion below what the state collected.
State law requires that our Rainy Day Fund balance doesn’t dip below 6% of state spending (currently that’s $2.7 billion), so the $7.4 billion in that account – which grew by $740 million from a FY25 budget allocation – is nowhere near panic mode. The Commonwealth operated for years without an adequate Rainy Day Fund, which just a few years ago was only $22 million.
So, the Governor and Legislature did what every day Pennsylvanians do – they used savings to fund urgent needs. What’s more urgent than the future of our children?
Providing every child, regardless of their zip code, with a high-quality education is imperative. Even the Commonwealth Court agrees, as do millions of parents statewide. We have enough money for next year and the year after that to fund our schools before we need to make any tough decisions. Then, one way or another, we’re going to have to make sure we’re not abandoning our constitutional obligation to fully fund education.
As election season heats up, don’t be fooled by the inevitable drumbeat that we have to choose between investing in kids or risking our state’s financial stability. The real numbers debunk those claims, and now you can too. |
