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District, Council reach deal on more borrowing for schools

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City Council will apparently borrow $57 million to ease the School District's fiscal crisis -- $27 million immediately and $30 million more in the fall.

The agreement, which will help prevent up to 800 layoffs and other program cuts for next year, was secured after marathon lobbying to break the logjam between District leaders and Council President Darrell Clarke over funding for the schools.

Clarke had consistently opposed borrowing for the District, even though that was an option given to the city by state legislation last summer. He wanted the District to fill part of its shortfall for this year through proceeds from building sales. 

Council on Thursday passed the bill to borrow $27 million

Councilwoman Blondell Reynolds-Brown introduced another bill to borrow an additional $30 million. That will be voted on when Council returns in September, according to staff.

The additional borrowing will go toward raising $96 million that the District says it needs next year just to reach this year's insufficient level of services. It had asked Council for $75 million of that.

Despite the breakthrough on the borrowing, the District is still far from out of the woods in terms of having enough money for next year to prevent additional cuts.

"We’re thrilled. It’s always nice to get some good news for a change," said Superintendent William Hite after the vote. "This is good news, but we still have an uphill climb."

To fill the additional $40 million, Council is hoping for approval from Harrisburg of a $2-per-pack cigarette tax -- still an uncertainty. And some other money that the District is counting on, including about $39 million in additional education aid and pension relief included in Gov. Corbett's initial budget, could be in jeopardy because the state is facing its own funding shortfall.

At a packed session, the last one scheduled before Council recesses for the summer, Reynolds-Brown introduced the bill to borrow $30 million in the fall. 

She paid dutiful homage to Clarke's concern about the schools and to the continued need for the governor and legislature to provide more revenue to Philadelphia and schools across the commonwealth.

"Thank you again for your leadership. There is no question you have been a strong and steady voice for the School District of Philadelphia for it to use the tools and resources available" to raise additional funds, she said. 

Hite, who had been trying for weeks to impress upon Council and the public that schools would barely be schools without additional funds, also thanked Clarke profusely.

"I want to express my personal thanks to the Council president," he said.

For both bills, the borrowing costs will come out of future revenue from the extension of a 1 percent sales tax surcharge. The General Assembly last summer gave the City Council authority to extend the tax and use the first $120 million for the schools. To fill this year's hole, the legislature also authorized the city to borrow $50 million from the future proceeds.

Clarke balked, because he had been eyeing a sales tax extension to help the city shore up its ailing pension fund. He also didn't want to borrow from the proceeds, instead proposing that the city pay the District for its surplus properties to raise this year's $50 million.

Reynolds-Brown said that "we trust the School District will follow through with plans to sell the vacant buildings they've been authorized to sell and work with Council members who have an interest in the sale of those buildings." 

As recently as Wednesday, it looked as though the District would not get more from Council than $27 million in borrowing. Hite and SRC Chairman Bill Green had been pushing for the bill to be amended to allow for a loan of $55 million. 

But District lobbyists and sympathetic Council members -- sources cited, besides Reynolds-Brown, Curtis Jones and Maria Quinones-Sanchez -- worked hard to achieve a compromise.

"It was a long night," said one participant.

Hite said that the focus can now turn to Harrisburg to get authorization for the cigarette tax. District officials also have other ideas to raise more money for the schools, including restoration of a line item that partially reimburses school districts for their charter costs.

Hite and Green say that they need $440 million in additional revenue to restore basic services and make a start on Hite's reform plans.

 

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Dale Mezzacappa

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