When Moody's Investors Services downgraded the credit rating of the Philadelphia Corp. for Aging this week, it cited the tax-exempt organization's unwillingness to adjust to the lack of state funding during Harrisburg's nearly six-month budget stalemate.
"I'm sorry, I'm not going to close programs," PCA's president, Holly Lange, said Thursday. "They can say I'm a poor manager, they can say whatever they want, I'm not going to close programs."
Instead, PCA has burned though a $10 million line of credit and a $4 million temporary increase in its credit line.
That spending of borrowed money persuaded Moody's to downgrade PCA in October and again on Monday. The latest rating is B1, which is considered "very weak and very speculative," down from Baa2 in September.
"Because of the budget, our credit is worthless. We cannot borrow any more money," Lange said.
PCA, which administers programs designed to keep the elderly in the community rather than in nursing homes, is one of many social service organizations that are being starved for money by the inability of politicians to agree to a state budget.
On Wednesday, the General Assembly sent a scaled-down $32.3 billion budget to Gov. Wolf, but it was unclear Thursday whether he would sign it or force legislators to keep negotiating. Some schools have said they will not be able to reopen after the holidays without a budget.
Lange estimated that the state would have paid her agency a bit more than $25 million in the first six months of the fiscal year if a budget had been in place on time.
But the budget impasse has left much in limbo, including PCA's audited financial statements for the year ended June 30. In fiscal 2014, PCA had $94.45 million in revenue.
Another unresolved issue for PCA and other agencies that have borrowed money to sustain operations in the absence of state funding is how to account for the short-term interest cost.
"We don't know if the interest is going to be an allowable expense. If it is, we don't know if there's going to be extra money for the interest or it has to be taken off your regular allocation," Lange said.
The same question applies to late fees for telephone and other services.
PCA had $17.2 million bond debt on June 30, 2014. It borrowed $22.26 million in 2001 to buy its headquarters at 642 N. Broad St. That building has a market value of $21 million, according to Philadelphia's Office of Property Assessment.
Even after a budget is passed, it will take 15 to 45 days for PCA and other agencies to get their back payments, Lange said.
"We still have to limp along," she said. "Maybe they can speed it up, I don't know."