Blowing a huge hole in the District budget

by Paul Socolar on Sep 12 2009 Posted in Eye on the budget

Philadelphia Inquirer reporter Dan Hardy writes Saturday that with the proposed Harrisburg budget agreement, the Philadelphia school district will fall at least $144 million short in state aid this year compared to what was in the budget plan of Gov. Rendell. The governor is still threatening to veto the proposed agreement.

According to today's story, the massive $144 million gap would result from a decision to scale back the increase in the state basic education subsidy ($300 million statewide instead of $418 million) and more significantly, a redirection of federal stimulus ("fiscal stabilization") dollars that Rendell had planned to send directly to school districts. The $144 million blow to Philadelphia could grow even larger if the state cuts other funding streams such as Accountability Block Grants, HeadStart, or Pre-K Counts.

The governor is expected to fight the legislature's plans to cut funding for pre-K programs.  District Chief Business Officer Michael Masch told the Inquirer that it is too early to know the impact of the state's budget on the District.

The District budget for 2009-10 incorporated the projected revenue increases in the Rendell budget plan, which were expected to boost School District revenues by an unprecedented $307 million, or 11 percent. These anticipated funds were to be entirely devoted to a variety of new and recurring expense items in the current school year, and some have already been spent on items like summer school, class size reduction, and new counselors.

[The Notebook reported in May on how this anticipated $300 million infusion was slated to be spent. One large chunk, the $126 million in Year 1 initiatives of the Imagine 2014 strategic plan, is detailed in the District's "Budget in Brief" document.]

Privately, District officials have been discussing for weeks the possibility of a budget shortfall in the range of $150 million, according to District sources. That would be the approximate result if Republicans and the Rendell administration resolved their deadlock on education aid by meeting each other halfway. Publicly, Superintendent Ackerman has stated only that the District has been holding off on some spending until the deadlock is resolved.

By comparison, the "surprise" budget shortfall that hit the District in fall 2006 amounted to $73 million. One difference this year is that the current year's budget includes dozens of new initiatives, some of which can still be taken off the table before they are launched.

As was evidenced in 2006, the School Reform Commission and the public can insist on making these midyear budget-cutting decisions via an open public process, though the District is not required to do so.

Perhaps as a harbinger of the types of issues and battles that are to come, local advocates are reporting that the District has taken steps to cut hundreds of slots from the new alternative programs for returning dropouts that were slated to start this year. The Notebook has confirmed that some providers whose contracts were authorized by the School Reform Commission in June have been notified that the District will be reducing or eliminating their slots.

On Friday, the District did not respond to requests for comment on plans to cut alternative programs. The District would save about $1 million for every 100 slots eliminated.

Alternative education providers approved for this year include The Big Picture Company, Camelot Schools of Pennsylvania, Communities in Schools, Community Education Partners, Abraxas Education Group, International Education and Community Initiatives (IECI), Ombudsman Inc., Opportunities Industrialization Centers of America (OIC), Unique Education Experience Inc. (Delaware Valley High School), and Youth Empowerment Services (YES). Not all have experienced cuts.