The financially beleaguered School District is on track to end this fiscal year with a shortfall of $14 million, Chief Financial Officer Matthew Stanski told the School Reform Commission Thursday night.
The news of an unbalanced budget was a grim but not unexpected greeting for new SRC chair Bill Green, who also got an earful from an unhappy capacity crowd of about 250 people. New SRC member Farah Jimenez was not present, fulfilling another commitment that predated her appointment.
Stanski formally presented to the SRC the bleak budget picture described in a financial supplement to Superintendent William Hite's Action Plan 2.0, which says that the District needs $320 million annually in additional funds starting in fiscal year 2014-15 to miniminally implement its proposals. That is on top of $120 million that the District is already counting on but that is not yet guaranteed due to squabbling between Harrisburg and City Hall over how to raise it.
The crowd made it hard to hear Stanski and also shouted down Hite's effort to recap his plan and his goals with chants like "Save our schools," and "How can we do that without any money?"
Stanski presented a financial analysis showing that this year's budget is $283 million less than fiscal 2011, even though the District and charter schools then enrolled 2,500 fewer students than they do today.
"We've had our struggles from a resource standpoint," Stanski said.
However, both he and Superintendent Hite said that the $14 million shortfall -- which has been pared down from more than $28 million at the end of December -- will either be carried over until next year or eliminated this year without making further cuts in schools.
"That's what we're working towards; schools can't afford to lose more resources, especially this time of year," Hite told reporters after the meeting.
Stanski's presentation showed that in 2011, 63 percent of operating revenues went to District-run schools and 18 percent went to charters. This year, 54 percent of revenues go to the District schools and 29 percent to charters. Administrative costs have been reduced from 4 percent to 2 percent over that same period, while the bite that debt service takes out of the budget has stayed constant at 11 percent. Four percent of expenses, then and now, goes to the costs of supporting students placed for disciplinary or other reasons in non-District operated schools that are not charters.
In addition to the loss of operating dollars, the District lost nearly $300 million in federal money during this time.
He gave an example of one unnamed District school, which in 2011 had 508 students, 41 teachers, 2 guidance counselors, 13 support positions, and almost $130,000 in money for extra programming. Today, that same school has grown substantially to 660 students but has just 36 teachers, 1 counselor, 10 support staff and $112,000 for extra programming.
"The student body has grown, but it has lost nine full-time positions," he said.
Stanski said that it is still possible that the District could get enough in new revenues to avoid making any more cuts. He said that most city property tax revenue comes in during February and March. "It could get worse, it could get better," he said. "We will continue to review ... with the mindset of holding schools harmless."
He said that the hope was to get new revenues for next year "so we can build back up investments in schools in a strategic way."
Rising charter school, special education, and transportation costs have contributed to this year's budget shortfall. However, the District has been able to reduce this year's gap by more than $14 million since the end of December through a combination of economies and a trickle of additional revenues. Stanski said that there is a hiring freeze and reductions of $3.5 million in the central office and a slight reduction in the variable interest rate paid on debt. He shifted $3.3 million in expenses from the operating budget to grant dollars and came into $2.1 million in additional Medicaid dollars that help pay for some student placements.
Potential future sources of funds to eliminate the remaining $14 million shortfall -- besides property taxes -- include Parking Authority revenue and money from the sale of vacant and unused school buildings. The District's budget already assumes that it will spend its modest reserves, which means that any carryover deficit will affect next year's budget, where the potential gap between income and expenses is much larger.