A key trade that sealed a budget deal between Gov. Tom Wolf and Republicans who control the Legislature was a $100 million injection of cash into Pennsylvania’s poorest public schools in exchange for the governor backing off a regulatory expansion of eligibility for overtime pay.
Wolf, a Democrat, had sought more than $1 billion in new, higher funding for public schools, but met Republican resistance.
He settled for $300 million extra for school district operations and instruction, including the unique idea of setting aside $100 million of that strictly for school districts historically disadvantaged by how Pennsylvania distributes aid to schools.
In exchange, Wolf agreed to a provision repealing a regulation he won approval for in 2020 to expand the ranks of lower-wage salaried workers who must receive time-and-a-half pay for any time they work over 40 hours in a week, said York County state Rep. Stan Saylor, the House Appropriations Committee chairman.
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Asked about the exchange, Wolf's administration said the provision is just one part of a budget package that provides critical support for underfunded school districts.
It emerged in the hours before lawmakers voted on a package of budget legislation that passed Friday and Wolf was expected to sign this week.
The first step of the regulation was scheduled to take effect in October.
Politics
It would have boosted the overtime threshold by $5,000 from the federal threshold to about $40,600 a year, and then again in October 2022 to $45,500 a year.
When Wolf won regulatory approval for it last year, he called it “an important victory for thousands of workers” and ”absolutely the right thing to do.”
Only a few states have overtime eligibility thresholds higher than the federal minimum.
Labor unions had backed the expansion of overtime eligibility, even though it typically applies to salaried managers at non-union businesses. But Wolf's agreeing to repeal the expansion stunned officials at the Pennsylvania AFL-CIO.
Rick Bloomingdale, the labor federation's president in Pennsylvania, said he told Wolf when they met Monday that “190,000 people just got screwed out of overtime pay."
Wolf, Bloomingdale said, told him that House Democrats had insisted on the $100 million in so-called “level-up” school funding in the budget deal, and that House Republicans, in exchange, had insisted on the repeal of the overtime expansion regulation.
In writing the overtime regulation, the Wolf administration had pointed to third-party estimates that it would expand overtime pay eligibility to 82,000 of the very lowest-paid salaried workers, giving them between $20 million to $23 million a year in increased earnings.
There were about 2.2 million total full-time salaried employees in Pennsylvania, Wolf’s administration estimated in 2019.
The Pennsylvania Chamber of Business and Industry had made repealing the overtime regulation a top priority.
“Ending it is a big deal,” said Gene Barr, the chamber's president and CEO.
Stymied by Republicans in his efforts to raise the minimum wage, Wolf in 2018 began pursuing the expansion of overtime eligibility as an alternative, but also to get Republicans to raise the minimum wage.
Republicans held out.
Even the Pennsylvania Chamber of Business and Industry saw a minimum wage increase as a cheaper alternative and, in 2019, fruitlessly asked Republicans to endorse it to get Wolf to drop the overtime regulation.
On Friday, every Democrat voted against the bill repealing the overtime regulation.
The $100 million in “level-up” school funding will go to 100 school districts, including $39.5 million to Philadelphia and about $6.5 million for Reading and Allentown apiece.
Initially, budget negotiators had agreed to distribute the $100 million through Pennsylvania's six-year-old funding formula.
Changing it to the “level up” distribution scheme brought Philadelphia an extra $26 million — up from $13 million — while Reading and Allentown also received more.
The 11th-hour change secured House Democrats votes to pass the budget package.
Rep. Peter Schweyer, D-Lehigh, said he had no knowledge of an exchange for the overtime regulation.
But Schweyer had planned to vote “no” on budget bills before he learned that the "level-up" provision would bring more money to his hometown of Allentown, he said.
“That’s a staggering amount of money for my school district,” Schweyer said. "'Level-up' absolutely changed my mind.”
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Follow Marc Levy on Twitter at https://twitter.com/timelywriter.
