School districts in Butler County may have to resort to loans if the Pennsylvania General Assembly doesn’t pass a budget in the near future.

Legislators missed another monthly payment to school districts and other public agencies at the end of September, its third since the General Assembly missed its own budget deadline. That’s money places like Butler Area and Karns City Area school districts heavily relies on.

“For us, it’s even more challenging ... We’re about 67% state funded,” Karns City superintendent Eric Ritzert said. “It gets our attention very quickly that that money is drying up.”

Ritzert said his district has not yet applied for a tax anticipation note — a type of loan issued to schools and municipalities — while Butler Area School District is nearly ready to start the process of getting a tax anticipation note.

Both Ritzert and Butler Area superintendent Brian White anticipate they can make it through the end of the calendar year. White is already taking action.

“If we run out of money, (it) would be some time in January,” White said. “We’ve had conversations with a banker, and if there is not a budget by the end of October, we’ll start in November the process of getting a tax anticipation note, taking a loan out.”

Ritzert said his district has been preparing for this and delaying the purchase of everything that is not critical. He hopes his district can rely on fall property tax revenue through the end of the year. If nothing changes in the near future, however, Karns City would likely need to join Butler Area in pursuing a loan.

“It’s not a quick process to go ... but the reality is, we are looking into that, and hopefully we won’t need to, but we are prepared, because even in a smaller district like ours, our payroll’s $1 million a month,” Ritzert said.

White said the process to get the loan fully set up and approved would take around six weeks, and it would have to be authorized at a school board meeting in December.

The missed payments are the result of the ongoing state budget impasse, with the Pennsylvania General Assembly failing to reach an agreement on a budget for the 2025-26 fiscal year. Though the amount of the state budget allocated to Butler County schools budget varies by district, each relies on a significant portion of its revenue from the state.

The Pennsylvania State Education Association said in a news release Thursday that it estimates the commonwealth’s school districts are waiting on $3.76 billion in state funding after this third missed monthly payment of state funding.

June 30 was the state’s deadline to approve a budget — more than 90 days ago. As the impasse has dragged on, the lack of a budget has had far-ranging, financial consequences for public schools in Pennsylvania, including here in Butler County.

“School districts across Pennsylvania are feeling dramatic financial pressures because of the state’s failure to pass a budget,” PSEA president Aaron Chapin said in the release. “Without a budget agreement, more public schools are going to have to make tough decisions, like delaying building projects, shutting down education programs, and taking out costly loans.”

Meanwhile, school districts had to approve and submit their own budgets by the end of June. They did this while having to project how much money the state would allocate for education.

“We were required by law to have a budget in place by June 30, yet they don’t play by the same rules,” Michael Panza, Moniteau School District’s board president, said. “They’re still getting paid.

“The bottom line is, who’s getting hurt here? The kids.”

The impasse lasting into October was not entirely unexpected. Butler County Community College president Megan Coval said at a Sept. 17 board of trustees meeting that community college presidents statewide hoped it would come sooner, but their lobbyists later expected it would last into October. Colleges, secondary schools and public agencies alike are all cash-strapped as the impasse drags on.

Having to take on tax anticipation notes would create other financial headaches, too. With tax anticipation notes, the state does not reimburse school districts for fees or interest paid.

“The losers here are the taxpayers. Because the interest rates will get passed along, the cost from the loans gets passed on, and every Pennsylvanian loses,” White said.

In addition, school officials say they can’t simply make cuts or furlough employees, the way other agencies affected by the impasse can and continue to operate.

“We have an educational responsibility, a safety responsibility, irregardless of the state budget. We are required to operate 180 days a year,” White said.

For some districts, Ritzert said, departments such as transportation could be cut, but that’s not realistic in a rural community like Karns City. With limited options, he instead looks to delay purchases, or otherwise take a loan.

“A large bulk of costs is paying people and services,” Ritzert said.

Up to this point, House Democrats, Senate Republicans and Gov. Josh Shapiro’s office have failed to come to an agreement on the budget.

School officials have regularly described the situation, and the moods of everyone bearing the brunt, as “very frustrated.” Some have directly criticized state politicians for letting the impasse last this long and putting schools’ operations at risk.

“We tell children to settle their differences and get along,” Panza said. “Our leaders in Harrisburg need to set an example. Please, settle your differences. The adults we look to for leadership will need to resolve differences for the benefit of our children.”