At a raucous meeting Thursday, the School Reform Commission approved a $2.5 billion operating budget for next year that relies on more than $200 million in borrowing and counts on $94 million from the city that has yet to materialize – all to maintain a minimal level of educational services.
Listen to Benjamin Herold's radio report for WHYY.
Check out a slideshow of photos from the meeting on WHYY/NewsWorks.
“We determined what was a bare-bones level of services and programs and we built a firewall around those expenditures,” said Chief Recovery Officer Thomas Knudsen at a pre-meeting briefing for reporters. “That’s why we are … borrowing to maintain the academic programming in the schools.”
Knudsen said he had no other options.
As SRC members voted yes on three budget-related resolutions, including short- and long-term capital plans, the crowd shouted them down. Pedro Ramos, Feather Houstoun and Lorene Cary were present; Joseph Dworetzky and Wendell Pritchett participated by phone.
Knudsen also disclosed that he has been unable to close a $22 million gap in this year's budget, although he said that accounting rules may yet allow for it to be technically balanced.
From the start and throughout the meeting, which lasted more than two hours, District officials got an earful from the audience.
Parents at the meeting presented the SRC with a "no confidence" petition signed by 54 parent organizations, representing 49 schools. Helen Gym of Parents United for Public Education and Delores Solomon of the Home and School Council read a roll call of the schools that signed on. Gym decried the leadership's transformation plan for focusing on organizational restructuring rather than on "finding efficiencies and savings."
“Restoring the cuts should be the number-one thing," she said.
Gym and Solomon were the first of six speakers, including Philadelphia Federation of Teachers president Jerry Jordan, to address the SRC about the budget.
As the crowd cheered him on, Jordan said, "We want adequate, stable funding spent in schools and classrooms -- not millions of dollars wasted on no-bid contracts, overpaid executives and pricey consultants."
In the pre-meeting briefing, Knudsen reiterated that the budget situation left the District with few options.
“My answer to those who would say that somehow this is no confidence: I don’t know what else to do. I don’t know where else to go,” Knudsen said.
At the start of the meeting, hundreds of union members, student activists, and others packed the auditorium, drowned out speakers with loud chants of “save our schools,” and demanded that the SRC ask for more money from Harrisburg. The crowd continually interrupted the commissioners’ attempt to conduct business.
To noisy skepticism, Knudsen emphasized that adopting the 2012-13 budget did not commit the District to any long-term reorganization.
"Passing this budget is not passing the proposed five-year financial plan on which we are still taking public input," he said. "It does not in any way define the long-term future of the District's educational structure."
For most schools, the “bare-bones” budget option means no full-time nurse, fewer counselors, and unstaffed libraries. Some sports, music, art and other extra-curricular activities are also being reduced or eliminated. There is no more common planning time for teachers.
The school budgets are "not adequate for the children we serve," said Chief Academic Officer Penny Nixon. "We lack the appropriate funding to provide our students with the education they deserve."
SRC Chairman Ramos agreed that it is ugly – and will be even uglier without City Council’s action to give the District more money.
“You can look at any school’s budget and determine what’s left without the $94 million,” he said. “We’re not cutting schools further. We’ve drawn the line.”
But without making major changes, he said, the District will face a $1.1 billion cumulative deficit in five years.
Knudsen said that borrowing $218 million is possible, but more than that is doubtful.
“We have maxed out our credit card,” he said.
Already, the District spends about $261 million, more than 10 percent of the operating budget, on debt service. It is still paying off its last major borrowing for operational costs, which occurred in 2002 as part of the state takeover of the District.
Seeking more funding
In the briefing for reporters, Knudsen and Ramos reiterated that getting $94 million from City Council was crucial not only to avoiding more cuts to schools, but also to maintaining credibility with Harrisburg that the city is willing to do its share to fund education.
“It would be a catastrophic mistake politically for the School District’s prospects in Harrisburg for a long time if Council failed” to give the District more money, Ramos said.
Mayor Nutter wants to raise the money through the so-called Actual Value Initiative, which would change the way residential property is assessed by bringing tax burdens more in line with what a home is actually worth. The city’s assessment system, rarely updated, has long been out of whack.
City Council failed to pass its own budget and tax bills Thursday for next year, missing its deadline. Council was still trying to coalesce around a plan to provide the District with additional funds, which Knudsen has said is crucial to the District's ability to regain some modicum of financial stability.
Council President Darrell Clarke told the It’s Our Money blog Thursday that Council is building a consensus around giving the District more money, but hasn’t agreed yet on how to do it.
It did pass a resolution that would delay any Council action until a settlement is reached with the District's blue-collar union, District 1201 of SEIU Local 32BJ. The union is threatened with the layoffs of all its 2,700 members, starting in July. The District has said it needs to trim $50 million in costs from maintenance and transportation and has put out a request for proposals to privatize these services.
The commissioners were adamant that they were determined to present a realistic, responsible budget rather than one that relied on unrealistic revenue projections.
“We’re being asked to repeat past dysfunctional behavior, which we are not going to do,” Ramos said.
Yes or no
At the SRC meeting, Knudsen’s attempt to explain the budget was initally drowned out by shouting protesters, some of whom were demanding answers to a series of yes-or-no questions.
First, protesters noisily asked whether the SRC would ask for more money from Harrisburg.
Ramos said “yes,” but added that “the answer should also be, 'Yes, you are supporting what the mayor is proposing in local funding.'”
To a chorus of boos, Ramos said, “That explains a lot."
At the briefing, Ramos criticized "labor" for not doing its part to share in the sacrifice required to keep the District functioning.
The PFT's contract expires in August 2013, and Jordan has said that he will not reopen negotiations beforehand. The SRC must pass a 2013 budget by May, however, so must know by then if it has been able to rein in labor costs going forward.
"You can’t say it's just about kids when adults all refuse to do more or give something up," Ramos said. "We all share the circumstances in which we find ourselves. ... At some point, labor will realize that there is no silver bullet, no magic out there, and we have to work together to increase revenues over the long term."
At the end of the meeting, however, Ramos thanked people for their participation.
"I will take passion over indifference any day of the week," he said.