District turning to consultants for big help
By Benjamin Herold on Jan 24, 2012 02:25 PM
by Benjamin Herold
for the Notebook and WHYY/NewsWorks
As he tries to deal with the School District’s "unprecedented" budget crisis, new Chief Recovery Officer Tom Knudsen intends to rely heavily on outside consultants to help implement what could be a radical transformation of the District’s operations.
According to a Request for Qualifications issued late last week, the District is looking for providers of “managerial and financial consulting services” to help:
Close the District’s budget gap this year.
Develop a balanced budget for next year.
Assist in the completion of a five-year financial plan for the District.
Develop a plan for reorganizing the District’s “administrative, operational, and organizational structure.”
Determine options for “monetizing District assets.”
A District spokesperson was unable to provide information about how much those consulting services are expected to cost. But David Thornburgh, executive director of the University of Pennsylvania’s Fels Institute of Government, surmised that it won’t be cheap.
A similar turn to consultants in the 1990s ran into the millions, he recalled.
"We've run this play before," he said.
Government agencies frequently turn to consultants for help with big restructuring efforts, said Thornburgh.
“You’ve got a system out of kilter,”” said Thornburgh. “You’re buying expertise and talent that is used to working on very tight deadlines in a very political context. “
“It’s kind of a S.W.A.T. team.”
In order to balance the District’s budget this year, Knudsen and the School Reform Commission must find $61 million in new cuts or savings by June. At the same time, they hope to address the underlying problems that point towards a “structural gap” of at least $269 million for next year.
According to a presentation delivered by Commissioner Feather Houstoun last week, the District is hoping to find as much as $46 million of the funds needed for this year by getting more concessions from the District’s five labor unions.
Teachers’ union President Jerry Jordan expressed disbelief that the District is intending to spend significant sums on consultants while cutting school budgets to the bone and asking for more givebacks from teachers.
“Where is the money coming from?” asked Jordan. “Continuing to keep hiring outside people and giving out contracts to others to perform duties that could be done within the system by staff is not money well spent.”
In October, the Philadelphia Federation of Teachers approved a contract extension that saved the District $58 million by allowing it to delay payments into the union’s Health and Welfare Fund. At the time, District officials said they needed $75 million in concessions from labor unions to help close a $629 million gap.
Now, they want more.
“They keep changing the numbers,” said Jordan. “I don’t have any belief in any numbers they have right now.”
Responses to the District’s RFQ are due January 31.