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Lump sum budget counts on $440 million not yet secured; principals storm Council




The School Reform Commission voted Thursday to approve a $2.8 billion “lump sum” budget for fiscal 2015 that counts on receiving $440 million more in revenue than it currently has secured.

It did so shortly after an unprecedented scene in City Hall, when a few dozen school principals clogged the corridors to dramatize the appalling conditions in their schools and ask Council members for more funds.

And State Sen. Vincent Hughes addressed the SRC directly after holding a rally on the District’s steps in which he called for taxing Marcellus Shale extraction – Pennsylvania is the only gas-producing state in the country that doesn’t do so – to raise money for education.

District Chief Financial Officer Matthew Stanski’s presentation to the SRC said that the District needs $120 million from a 1 percent city sales tax extension plus $100 million in funds that are as yet uncommitted just to maintain current levels of “inadequate” service.

SRC Chair Bill Green said that, with so many unknowns, the District’s current financial situation remains “dire.”

"No one would submit that the status quo is sufficient for the education of children in Philadelphia,” said Superintendent William Hite.

Stanski said that $220 million above that would get the District back to providing adequate services in schools and make a start on the “transformation” and innovation agenda described in Hite’s reform agenda, called Action Plan 2.0.

The District will end this year with a $29 million deficit instead of the $14 million projected earlier, only adding to the District’s woes. That is due primarily to higher costs for utilities during the cold winter and additional special education expenditures to place more severely disabled students in private school placements, Stanski said. Also, city real estate tax revenues have dipped.

The City Council visits and Hughes’ push for a shale tax are part of the building drama in the attempt to get the people who hold the District’s purse strings -- City Council and the state legislature -- to recognize how urgent the schools’ situation is.

Principal Otis Hackney of South Philadelphia High School said he told Council members that principals are being run ragged and that students don’t have what they need.

“We just don’t have the people. I don’t know how long we can sustain this pace,” he said.

The 2015 school budgets sent to principals this week include only enough to get them to the level of services they have now. Those budgets assume that the District will get $120 million in additional sales tax revenue, plus  $100 million in new dollars.

The sales tax extension, authorized by Pennsylvania's General Assembly last year, has been stalled by City Council President Darrell Clarke's insistence on splitting the revenues "equitably" between the District and the city’s struggling pension fund. Mayor Nutter has said he agrees with Clarke that the funds should be used for both the District and pensions, which would require new legislation from the state. 

Clarke and Nutter want a new city cigarette tax to send money to schools, but that requires legislative authorization from Harrisburg as well. 

The principals asked City Council to approve Harrisburg's version of the sales tax extension pronto and met with 10 of the 16 Council members – but not Clarke, who said his schedule didn’t permit it.

“We need sustainability. We need stability,” said Hildebrand Pelzer III of Carnell Elementary School in Oxford Circle, one of the principals who met with Council members. “I need to be able to tell my teachers and my school community that we’re going to grow from where we are. Every morning my children say, ‘We’re going to become a high-performing school.’ Well, to become a high-performing school, I need those resources in place.”

Green, who left his seat on City Council to take the SRC chairmanship, made reference to an actuarial study showing that while the schools do without, diverting money from the sales tax to the pension fund won’t significantly accelerate the process of fully funding pension obligations

Instead of the city reaching its goal of having pension obligations 80 percent funded by 2028, it would reach that point by 2030 if the first $120 million raised each year in sales tax revenues goes to schools, the study found.

Plus, he said, “The city’s five-year plan has funding for the pension in it, but we don’t have enough money for our five-year plan.” 

Clarke has disputed the findings of that study, saying they are based on overly optimistic projections.

Despite Clarke's insistence on splitting sales tax revenues, Stanski said he was confident in getting the $120 million from Council, although it would be better to get it now instead of at the last minute in June as Council exhausts other options.

Officials familiar with the Harrisburg scene say that the legislature is unlikely to direct new state funds to Philadelphia if the city hasn't made use of the authorization already given for the sales tax extension.

Hughes said that his Marcellus Shale plan is not as far-fetched as it may seem politically because so many districts in the state have seen their state aid shrivel over the last several years and have been forced to raise local taxes. Gov. Corbett, who is running for reelection, has pledged not to raise taxes and has repeatedly rejected the idea of a shale tax.

“I say it with some sense of optimism,” Hughes said, citing "bipartisan" interest in his proposal.

“In conversation with colleagues, I’m not telling you everyone is rushing towards it, but a number of important people are not running away.”

Districts across the state need to band together and make their hardships known, he said.

A 5 percent extraction tax would yield about $375 million for public education statewide this year, Hughes said. Under his plan, more than $100 million of that would come to Philadelphia by reinstating a budget line item that reimburses school districts for part of the costs they incur due to charter schools.

Since 2010-11, Stanski said, charter school costs have grown from 18 percent to 29 percent of the District’s total budget, while money spent directly in District schools has shrunk from 63 percent to 54 percent. Now, nearly one in three city students who attend a publicly funded school is a charter student.

Speakers at the meeting pressed the SRC and Hite to explain why they are pursuing policies that would make life harder for teachers, such as reducing the role of seniority in teacher placement and layoffs and eliminating contract provisions that ensure the presence of counselors and librarians in schools.

“To be honest here, there is no way to right the financial ship of the District as long as it continues to bleed money and children to charter schools,” said South Philadelphia High School teacher Mark Wilkins. “You can get your pound of flesh from teachers, but it will only slow, and not stop, the bleeding.”

West Philadelphia parent Terrilyn McCormick said in testimony that even though parents have been busy raising money for everything from teachers and librarians to art supplies, “you leave us out of discussions. ... We deserve a place at the table." 

Green, who in his first few SRC meetings has been confronted with anger and frustration, tried to set a conciliatory tone.

“I hope everyone, whether you agree with the choices we make, will help us advocate at the state and city levels for resources we need,” he said.

Additional reporting by Kevin McCorry of WHYY.

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Dale Mezzacappa

Dale is a contributing editor at the Notebook. She has reported on education since 1986, most of that time with The Philadelphia Inquirer.

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