By A. B. Hill

Gov. Ed Rendell signed a $27.8 billion budget Oct. 9 that was 101 days overdue. The plan spends $500 million less than last year and does not include any broad-based tax increases.

The Pennsylvania Catholic Conference (PCC) has been following the budget negotiations closely with an eye on education, social services and health care.

Pennsylvania’s public schools fared better than any other group in this year’s difficult budget receiving a 5.7 percent increase in the basic education subsidy. Comparatively, non-public school students do not receive much state funding; but they do benefit from programs that provide textbooks, materials, auxiliary services and special education opportunities.

Initially, the line items that support these programs were proposed to decrease as much as 11 percent; but thanks to the many grassroots contacts from advocates, they were funded at the same level as last year. Because a cut was imposed in the middle of fiscal year 2008-2009, in effect the line items increased by 2.6 percent for textbooks and materials, and 2.1 percent for auxiliary services and special education, compared to the actual amount received last year. Although the final number falls short of equal consideration with public schools, the restored funding is a welcome and needed outcome for schools that have been on hold since classes began this fall.

Unfortunately, another program that benefits non-public school students suffered a $15 million cut. The Educational Improvement Tax Credit (EITC) program provides businesses with a tax credit for their donations to nonprofit scholarship or educational improvement organizations, which in turn provide scholarships to students to attend the non-public school of their choice. The EITC is scheduled to be cut by another $10 million next year unless state revenues improve.

This disappointing outcome means many generous businesses will not be able to participate in the tax credit. There have always been more families applying for scholarships than dollars available. The cuts to EITC will force scholarship organizations to say “no” even more frequently. It is estimated that as many as 6,000 nonpublic school students may lose their EITC scholarships.

The PCC will lobby extensively to reverse the scheduled cut in EITC for fiscal year 2010-2011.

Social Services
Local social services agencies, such as Catholic Social Services, were held hostage for the past several months during the budget impasse. Many have laid off staff, halted programs or borrowed money at interest to bear with the loss of state funding.

In the final budget, most social services programs were funded at similar levels as last year. But some, such as the Human Services Development Fund and homeless prevention programs, were cut.

The state’s alternatives to abortion program, Real Alternatives, will receive the same funding as last year.

Health Care
Pennsylvania’s Catholic hospitals and long-term nursing facilities receive significant payments through Medical Assistance. Although the final budget numbers were better than initially proposed, Medical Assistance payments to hospitals will be lower than what was spent in fiscal year 2008-2009.

The budget creates additional challenges for Catholic hospitals already coping with the economic downturn. The revenue side of the budget will dip into accumulated funds usually targeted for health care; but this year those funds will be used to balance the Commonwealth’s deficit. This strategy may jeopardize the availability of some hospital services. Concerned groups have initiated legal action regarding the use of these funds.

Next Steps
State officials promise to work overtime to get the overdue payments paid to local recipients as soon as possible.

A. B. Hill is Communications Director of the Pennsylvania Catholic Conference – the public affairs arm of the Catholic bishops of Pennsylvania.