North Penn School District keeping watch for federal funding cuts

With national headlines nearly every day about spending cuts, downsizing and DOGE, what’s the impact to the North Penn School District?

District officials have seen a breakdown of what could happen if certain federal programs are cut, or the entire Department of Education is eliminated, and how the impact to the district could be in the millions.

“We know it’s been a crazy time, with all of the executive orders that have happened, and what that means for federal funding,” said Zachary Trump, currently the district’s Interim Assistant Director of Business Administration, who immediately made it clear he is not related to the president.

During their finance committee meeting on Feb.11, North Penn’s board heard from Trump, who said he is “not related, and does not have any inside information” from the current administration. District CFO Steve Skrocki said Trump is currently “on loan” to the district from a similar role working for the Montgomery County Intermediate Unit.

In the 2024-25 budget, Trump told the board, “the vast majority” of North Penn’s $322 million in total revenue comes from local sources: 77 percent or just over $248 million from local taxes, another 21 percent or $67 million from state sources, and roughly $6.3 million from federal sources, roughly two percent of the total annual budget.

Of that $6.3 million, roughly $2.7 million is allocated via the federal Individuals with Disabilities Education Act, which dates back to 1975, and is meant to ensure that “children with disabilities have access to a free and appropriate public education;” those funds are administered by the federal DOE, Trump said.

The DOE also administers the second-largest line item: just over $2 million in Title I funding, which is allocated based on the Elementary and Secondary Education Act of 1965 as financial aid for students from low-income families.

Another roughly $428,000 comes via DOE in federal Title II funding, meant to improve the quality and effectiveness of teachers and principals, which is also allocated based on the 1965 ESEA act last updated in 2015. The same act created Title III, supplemental funding that funds language instruction for English language learners, of which the district received $346,000 in 2024-25; Title IV, which provides federal financial aid for post-secondary students, was created by the 1965 Higher Education Act and the district received roughly $127,000 in 2024-25 from DOE under that law.

One last large line item: $500,000 in federal funding comes to North Penn via the School-Based Access Program administered by the Centers for Medicare and Medicaid Services, which reimburses districts “for services such as physical therapy, occupational therapy, speech therapy, and mental health services,”  plus another $50,000 in Medicaid reimbursements.

Executive orders and more

Trump detailed a timeline of executive orders, lawsuits filed, and court orders and stays starting in late January that froze all federal funding, then ordered some released:  “Currently, we’re at a point where the federal funding has begun to flow again. There’s  some issues with access, and some other things that may or may not be linked to all of this, it’s kind of unknown,” he said.

He then addressed several questions: can federal funding be limited or cut? Yes, if the president and both chambers of Congress agree to do so, and generally only for funds that are not yet “obligated.”

“Obligated, unobligated, awarded, these are all significant, and they carry very significant meaning when it comes to federal funds. Unobligated federal funds means, this money has been designated in the federal budget, but hasn’t been awarded, or issued or promised, to any programs yet,” Trump said.

Can a specific federal grant be terminated on the grounds that it doesn’t comply with policies of a new administration? That depends on the specific terms and conditions of that grant, and when it was made: “for all of the Title funding, those awards are pretty solid in what they’re for, they’re very targeted to the exact language of the legislation that created the programs, so it would be my opinion that no, you’re not really going to see anything happen to those grants, in regards to them being able to walk back money that was already awarded.”

Can new terms and conditions for revised policies be placed on existing grants? “It would take an act of Congress to do so. There’s different ways they can do it, but generally because all of the title funds, and federal funds, that North Penn receives, it’s pretty well-enshrined, and the goals of those programs are pretty well-established,  and are “not really what has been in the conversation” of cuts at the federal level.

“They’re really not in the crosshairs of what he’s trying to pull funding from,” Trump said, referring to President Donald Trump.

Timeline twists

Another consideration is the lag between federal, state and local budgets: the 2024-25 district budget was based on federal funds designated in the 2024 federal budget that was passed in fall 2023, then obligated to Pennsylvania in spring 2024, and awarded to local districts in July 2024 after the state budget was finalized.

“Those funds are pretty locked in, they’re not really going to be taken away. You might see some delays in receipt of those funds from the state, but it’s unlikely that the federal funding for this year will be reduced in any way,” Trump said.

For the upcoming schoolyear, the timeline may be different, but that depends on the federal government.

“For ’25-26 budgeting, federal funds that would be for the ’25-26 schoolyear were due to be designated in the federal budget that should have been passed this past October. Currently it isn’t passed yet, they’re still in negotiations on it, they’re due to be obligated to the state at some point in the coming spring,” Trump said.

As the district develops its 2025-26 budget, local officials are planning to have the same allocations in federal funds as the prior year. Worth keeping in mind, Trump said, those Title funds are all based on laws passed before the federal DOE was established in 1979, which may be significant if that department disappears.

“All of this funding existed prior to the U.S. Department of Education. What does that mean? Worst case scenario: the U.S. Department of Education goes away, how does that affect this funding? Nothing really happens to the money, because it was enshrined in legislation long before the U.S. Department of Education was around,” he said.

“There’s a lot going on, we’re going to hear a lot more, but really the big takeaway is there’s going to be delays in receiving funding, but most likely not loss of funding, specifically in the short term. Long term’s a different scenario. Two years out is really unknowable at this time,” he said.

Board has plenty of questions

Board member Christian Fusco asked how the $2.7 million in federal funds for special education costs compared to overall district expenditures, and Skrocki said total district costs are “somewhere around $52 million” in that category.

    North Penn CFO Steve Skrocki, inset, shows a chart of the state-set Act 1 index of tax increases allowed without a voter referendum, during the school board finance committee meeting on April 23, 2024. (Screenshot of NPTV video)
  

Board member Al Roesch said he saw only negatives for district taxpayers if the federal funds are cut: “That, to me, means we’re going to have to tax our local taxpayers to make up for those lost funds.” Skrocki replied that the answer is not that simple.

“If the desire of the board is to maintain the same level of services, the additional funding needs to come from somewhere. And since the vast majority of our revenues come from local sources, that means taxes, yes. But you’re still capped by that Act 1 index, and perhaps you don’t have the ability to tax enough to make up all the federal revenue, if all the federal revenue would disappear tomorrow,” Skrocki said.

Roesch replied: “So what you’re saying is, we would have to cut services to specific portions of our population, if we can’t raise the revenue we need,” and Skrocki replied: “In all likelihood, yes.”

Finance committee chair Juliane Ramic asked for specifics on how the title funding is used, and Superintendent Todd Bauer said those uses are overseen by Assistant Superintendent D’Ana Waters: “in general, our Title II and Title IV is utilized for professional development: learning coach positions, professional development materials and resources.”

    North Penn CFO Steve Skrocki, inset, shows possible tax increases for 2024-25 and the resulting revenue and projected deficit, during the school board finance committee meeting on April 23, 2024. (Screenshot of NPTV video)
  

Board President Cathy McMurtrie asked if staff have “a plan on the shelf” if and when program cuts would need to happen, and if developments could move more quickly than monthly board meetings. Trump said they’d follow the lead from the Pennsylvania Department of Education, and keep the board as informed as possible.

“It feels emergent, but generally you have some time to adjust. I wouldn’t be concerned that tomorrow, you wake up and find there’s no federal funds. That’s highly unlikely,” he said.

North Penn’s finance committee next meets at 6 p.m. on March 11 and 18 and the full school board next meets at 7 p.m. on Feb. 20 and March 11; for more information visit www.NPenn.org.

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