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Knudsen: 'A unique moment'

By thenotebook on May 1, 2012 10:08 PM

Following is the text of Chief Recovery Officer Thomas Knudsen's statement to the School Reform Commission on Tuesday night.

Mr. Chairman, Commissioners, as you know, I sit before you at a unique moment for the Philadelphia public school system. Years of slow economic growth have cut our resources significantly, even as our expenses have continued to rise. We are, quite simply, in a financial crisis. We face a financial shortfall of $218 million in Fiscal Year 2013 – an amount that exceeds even the $186 million I presented to you several weeks ago in the Lump Sum Budget due to an adverse ruling by the State Tax Equalization Board that will cost the District more than $30 million.

These figures, moreover, assume that we will receive $94 million in revenue captured through the Actual Value Initiative proposed by the Mayor and currently under consideration in City Council. Without these revenues, our school budgets would see enormous cuts, leaving unclear what would be left in our schools if we were able to open them. Matters are that dire.

This crisis did not develop overnight, and it will not – cannot – be solved quickly or simply. For this reason, the District has undertaken its first five-year financial plan in many years, and proposed a dramatic reorganization, focused on service for schools and quality for children. We are looking at our revenues and expenses over the long term, so that we can plan carefully and set our ship on a more stable course.

What this plan tells us is that if we do not act now, our problems in the coming year will only deepen. By Fiscal Year 2017, we will be facing a cumulative deficit of over $1.1 billion – much more if AVI does not pass. But I can tell you we will never reach that point, because our credit will not support that much debt. Quite simply, if we do not take dramatic steps now to right ourselves, we will not be able to operate.

Our challenge, however, is more significant than even this enormous financial burden. Too many of our schools are persistently unsafe, and too few of our students are receiving the high quality education they deserve. Our scores on state tests have improved over the last several years, and there are many who deserve credit for fine work to that end, but we are not improving nearly fast enough for our students to compete regionally or nationally, much less globally. We still lag state, national, and urban averages by significant margins. If our children are to be able to graduate truly ready for college or career success, and ultimately ready to enter a competitive and fast-changing world where they will lead productive lives, we must ensure a system of public education that is sustainable and unrelenting about quality.

So, as you have articulated them, our goals are two-fold: First, provide safe, high quality schools for current and future students; and second, bring our finances into long-term balance and to financial sustainability.

I am here tonight to report on the draft Fiscal Year 2013 budget, and how it advances those objectives. But more than that, I am here to offer some context as to how the FY ’13 budget is part of a larger, more profound transformation effort that will span several years.

FY ’13 Budget

Fiscal Year 2013 should be viewed as a transitional year – a time when we will be laying the groundwork for fundamental change in both the academic and operational elements of our system.

With this in mind, a large part of our efforts in the FY’13 budget were intended to maintain as much stability at the classroom level as possible. Our schools have already suffered enormous cuts – more than $300 million in direct and operating support cuts last year alone – and, after careful analysis, we concluded that we simply could not cut more from the current structure without sacrificing the fundamental things that make public education meaningful: some limited music, art, and sports, alongside core educational programming and services for students with special needs. So service levels in these areas stay flat in the FY ’13 budget.

We are keeping staffing levels constant for special education teachers and coordinators, bi-lingual counseling assistants, school police, and other key staff.

I am proud to note that even as we struggle to sustain the system, however, we are finding creative ways to further our ultimate goal of offering safe, high performing options to all our students. By approaching the matching process more creatively this year, our Chief Academic Officer, Penny Nixon, was able to open over 2,000 seats in some of our highest performing schools without changing our overall school budget picture. That is the kind of thoughtful, careful management that marks the best of what we do.

The main decreases you see in staffing and resources this year over last year are either student-enrollment-driven, as with classroom teachers, or driven by fluctuations in our grants budget.

The most significant of these is the federal Title I grant budget, which funds some of our most crucial programs. Our Title I allocation is declining, as are surpluses left over from the federal Stimulus, so we are forced to make difficult decisions.

This year, we chose to maintain support for early-childhood programs, because we know early childhood education has a significant impact on the educational success of children later in life. That choice, however, meant that we had to cut summer school programs except for those who need to attend summer school to graduate [or are in particular programs funded by other grants], as well as nearly 100 supplementary counselor positions.

We are faced with these difficult choices because there is little flexibility in our revenue. State revenues, the largest share of our budget, have stayed flat with the exception of an increased reimbursement for pension payments that will only partially cover our increased costs. Our available federal funds are declining and our local revenues hinge, as I have noted, on the passage of AVI.

At the same time, our costs are rising.

Part of this is driven by increased public school student enrollment. Overall enrollment in public schools is increasing by nearly 4,000 students this year, mainly in Charter Schools. As a result our increase in charter school costs is going up by approximately $44 million. Conversely, our main sources of revenue do not automatically increase as student enrollment increases.

Under the guidance you issued over recent weeks, we are working collaboratively with our Charter partners to find ways to reduce the financial impact of Charter operations by finding Charters willing to agree mutually to more predictable enrollments, accept geographic catchment areas for enrollment, and plan for the use of former District buildings. These changes, however, will take time to work through and implement, so they will not produce significant relief for the FY ’13 budget period.

Wages and benefits are major drivers of our increased costs. Due to legal and contractual mandates, our wage, benefit, and pension costs are set to increase over $130 million in the coming year.

These two trends, flat or decreasing revenues and increasing expenditures, are self-evidently unsustainable. In the past, we have been able to implement one-time measures to bridge the gap, but there are no more easy solutions available to us. There is no scenario under which we can continue operating under our current model while delivering a safe, quality education to all our students. The system needs fundamental change.

Five Year Transformation Plan

That is why, this year, we have presented the FY ’13 budget in conjunction with a draft blueprint for the essential changes we believe we need to make over the long term, academically and operationally, if we are to achieve our goals.

The details of the draft blueprint have been made public in a number of places, so I will not go into them here. Rather, what I want to stress is the interconnected nature of the elements at work. For too long, we have separated academic and financial concerns. Students are and must be our first concern, but we ultimately do them a disservice if we allow academic and financial planning to be done in silos, or as a product of mere short-term thinking and planning. That kind of thinking is what led us to the cliff on which we now stand so precariously.

This is not a small or simple task. This kind of integrated planning demands that we have a more candid, robust and informed discussion with all our stakeholders about where our public school system is headed and why.

With your help, we have already conducted a number of discussions with stakeholders since we put the blueprint out last week, and have heard from literally hundreds of Philadelphians.

Many have been supportive. They are excited about the focus on schools as the units of change, and that teachers and principals will have more freedom to customize the school experience to fit their students needs, that we are committed to doing something about persistently failing schools, and that we are insisting on a firm financial foundation for ensuring the long-term sustainability of school improvement.

But we have also heard very thoughtful, very legitimate concern over elements of our proposal.

We are hearing a concern that, in seeking to create opportunities for innovation and creativity, we be careful not to also create opportunities for inequities, exploitative profit-making, or inappropriate political manipulation.

We are hearing a concern that we must do more to make sure that parents, students, and community members have ongoing opportunities to help shape this transformation as it evolves.

We are hearing a concern over what the closure of 40 or more schools will mean to communities and neighborhoods in terms of both access to education and potential for blight.

These have crystallized as central issues in just the first few days since we released the draft blueprint. Over the course of the coming month, I know there will be many opportunities to gain more insight into how we adjust this plan to address these and other concerns.

This SRC has set a new standard for public engagement. I want to take this opportunity to express my personal commitment – a commitment that I know the entire staff of the District echoes – to open and transparent public processes for the critical decisions that lay ahead.

Public schools are just that, public, and true transformation can only occur if we are able to arrive at a framework that incorporates the best thinking from every corner.

Our time is short. School must open in the fall and many of the changes we need to make if we are to remain solvent and sustainable must begin implementation soon. However, I believe that if all the stakeholders in our public education system come together earnestly and in good faith, we can set a framework for transformation that will serve as a steady guide for years to come.

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Comments (24)

Submitted by Phantom Poster (not verified) on May 2, 2012 12:55 am

Let me see if I have this right - the state created the SRC a decade ago to restore fiscal sanity to the school district. It failed miserably, so of course, the solution is to punish the victim.

I was educated in the School District of Philadelphia. I taught and ran a couple of schools, and worked with so many who gave everything to the children of this city. No one asked me about this plan.

Forgive my skepticism - the scenario is just too contrived - and it started with the loss of institutional memory that accompanied the sale of a piece of the city's history,the school district headquarters at 21st & the Parkway.

Charters are driven by self-interest, and will never assume the civic responsibility of educating the poorest or most disadvantaged that true public schools accept. Sounds like the plan is quid pro quo, but expanded - you take this sum of money and we'll leave you alone.

Since every charter is its own school district, where will they send their difficult students if there aren't any traditional schools left? What about the social fabric of the city - so many of us still associate with our high schools - West, Germantown, Overbrook, Southern, Frankford - somehow I don't think multiple districts will improve the city's social network better - only the press will improve.

All of the good news in the district has been lost in the babble created by a succession of ego-driven messianic 'leaders' who have led us right over a cliff.

Submitted by Anonymous (not verified) on May 2, 2012 7:48 am

This guy is a farce, a paid drone. Ignore his lies and stand and fight. If anything, use his jibberish bullshit as a motivation to stand and fight. He's annoying beyond belief.

Submitted by eileen difranco (not verified) on May 2, 2012 8:31 pm

Knudsen, who is making over a hundred thousand dollars in six months brought in a group from Boston, paid for by the Wm Penn Foundation, who likes the thought of privatizing public schools, said he can't open the public schools in Sept without union give-backs. So, if the charter schools budget comes out of the public school budget, how can the charter schools open? How will farming out kids to charter schools work? Are the charters school teachers and administrators going to take a hit? Or is it just us, the red-lined public schools who have already given back nurses, librarians, music and art teachers in order to remain open? And then Tom has the gall to say that he's not privatizing public schools? Come on, Tom. We're all smarter than that. You could have asked us what works for free. We'd have been happy to sit down with you and the motley crew, one of whom no longer lives in PHiladelphia.Is the Wm Penn Foundation paying for Joe Dworetsky to fly in from California every month? If so, the money could be better spent, like on school police officers. Some of us know what success looks like and it looks like good leadership, not tinkering around the edges and throwing hail mary passes. You're looking for union give-backs when it was the SRC, the state and the city who failed miserably? Who hired Ackerman, a woman who failed superintendency in two other citites? Who let her spend the summer school money last year, knowing what was going to happen? Who engaged in risky credit default swap loans? Tom, you're selling the children of Philadelphia into second class citizenship.Another bad move for an SRC who never really knew how to do much of anything.

Submitted by Ben (not verified) on May 2, 2012 8:26 pm

You're preaching to the choir, I get it, I get it !! The question is what are OUR next steps?? Where's Jordan?? Ackerman did what she was told to do. Corbett is following the same script. The SRC is doing the same. WE need to stand and fight, no more talking and listening to nonsense. WE did nothing wrong nor did our children. The inner cities are green lighted for carpetbaggers to take our kids' money so they're doing it with the approval of Corbett, of course, but also Nutter and the SRC. It won't stop if WE continue to sit on our hands or try to see the "good" in these evil folks. Gee, I wonder why it's our inner city kids who are being targeted and not their suburban peers????

Submitted by EILEEN DIFRANCO (not verified) on May 3, 2012 8:02 am

The heck with Jordan! Let's look to ourselves. Why aren't all the people who are reading this showing up at the weekly Occupy 440 demonstrations? We've been getting lots of publicity and more and more people are getting involved. We need thousands of people to march up Broad st. and tell the SRC and the mayor that selling off our children to the highest bidder and paying the charter schools executives nice, comfy salaries is not acceptable! Tell your friends what is happening. I heard yesterday that crossing guards are manning libraries and principals are scanning kids into schools. Who is allowing this to happen? Doesn't it make you mad? Who is holding the SRC and the mayor accountable for the terrible mistakes they made and are continuing to make?

Submitted by Anonymous (not verified) on May 3, 2012 9:11 am

Little by little, the tide is turning and Knudsen's big mouth has helped it. The biggest issue in MANY years is in Wisconsin. If that nazi nut gets away with it, Corbett and the Fat guy from NJ will be next. These folks are NOT what America is all about or should be or better be. They come from the 1%ers who have nothing but scorn for the poor and Middle Class and by extension, the unions.

Submitted by Rich Migliore (not verified) on May 2, 2012 8:27 am

As Helen pointed out last night. In all of the "public engagement sessions" no one ever said they wanted to privatize our public schools.

I went to several of the public engagement sessions on what to look for in a new superintendent. In all of them the constant theme was that what they wanted in a superintendent is a "collaborative leader."

There is a difference between giving a people a voice and giving them a "true voice."

When you led teachers and school communities, did you lead them collaboratively giving them a true voice? Or, did you tell them the way it was going to be....

Those dedicated professionals you worked with over the years " who gave everything to the children of this city" will still be here to pick up the pieces. Good points Phantom!

Submitted by Anonymous (not verified) on May 2, 2012 4:30 pm

It's all about the money the business model can make. Yes, it is very uncomplicated but they don't care. Yes, again, the quid pro quo is in effect hiding in plain sight.

Submitted by Ms.Cheng (not verified) on May 2, 2012 7:45 am

Mr. Knudsen is being far too nice and accommodating about Title I. The amounts that individual schools have received have risen, not fallen in the past years. I will use W. Levering because that is the school that I am familiar with. For 200 students it was most recently (FY 2011/12) $120,000, at one time $100,000. Sorry but a "Instructional Reform Facilitator" once "Team Literacy Leader" (during which time the school did not make AYP, specifically for Literacy) and SSAs are not (at Levering they weren't) enrichment (as in trips to museums, theater, books, educational kits, toys) that middle class peers get. Instead they were extra babysitters and paper pushers that should've been paid for by the Operating Budget. I'm sure the "lowest" scheming nonprofit could see that in "a heartbeat".

I'm glad the professional development was looked at. It was also a way for Title I money to be diverted to the District as it paid itself from public concern for the poor kids. Tutoring for those who qualified (TANF, Free or reduced lunch) when a school did not make AYP - if "tutoring" was what our "Team Literacy Leader" did, she was pretty bad at it.

Submitted by Anonymous (not verified) on May 2, 2012 7:29 pm

You continue to spread your propaganda about that school. Almost every single post of yours -- and I said ALMOST -- over the past two years on this forum has been to target and bash the William Levering community, it's former (now deceased) principal, staff, and the Home & School. Just because YOU are saying those things (repeatedly, as in a broken record), doesn't make it the truth.

Submitted by Ms.Cheng (not verified) on May 2, 2012 7:16 pm

W. Levering is not the only school where Title I money has not been reaching the poor children. If you read my post, I say, I use this because I am familiar with the school. It only takes looking at other school's budgets to extrapolate. Do you care about the poor children or only W. Levering's reputation? I would guess the latter.

Submitted by Anonymous (not verified) on May 2, 2012 7:24 am

The SRC took over the district because we said we didn't have the money to operate. Now, the SRC is saying we don't have the money to operate.

So, the SRC did what now? How can the state take over the district and then refuse to fund it?

Revenues for the state of PA are exceeding expectations, resulting in a now-projected $400 million surplus by the end of the FY. The draconian cuts weren't and aren't necessary. But guess which cuts will probably be reversed.

Submitted by Ms.Cheng (not verified) on May 2, 2012 10:37 am

As I understand it Mayor Street dropped a discrimination lawsuit against the State in return for more funding. Mayor Nutter needs to step up and hold the State accountable for it's control of the PSD and the financial fiasco it, via the former SRC, was responsible for. Yes the State has a surplus (go figure) and stands to gain more from its Recovery Tax (sales tax on internet and Delaware purchases). Sure we can chip in more for our real estate taxes (within reason) but the State needs to fix the disaster it caused in hiring Ackerman and then letting her fiscal irresponsibility go unchecked.

Submitted by RogueTeacher (not verified) on May 2, 2012 1:28 pm

I think that is key where you mention Ackerman going unchecked. Those who let her get away with all of this should be held accountable. Aside from the obvious of fixing the mess, there ought to be a public investigation into the accounting practices of those who were in charge. There also should be a civil suit filed against each of those individuals. Why is the media ignoring this part of the equation? Unless something is done to stop the corruption, we will see more of the same situation, only in the hands of the private companies, many of which have already proven they are equally corrupt.

Submitted by Anonymous (not verified) on May 2, 2012 4:43 pm

First of all, the charters, by their genesis, are NOT interested in educating anybody who is difficult. By far, they are more corrupt not equally so. Ackerman was a disgrace, a fraud and a wart on the ass of life--we all know that--but she didn't do anything she wasn't told to do or she would have been unceremoniously ousted like yesterday's trash.

Submitted by Anonymous (not verified) on May 2, 2012 4:58 pm

WRONG-----Ackerman did exactly what she was hired to do with the approval of the state and other money people. There are no accidents. The Queen got the job, was told how to do the job and did exactly that. Finally, she was told to go and given a million to take with her.

Submitted by Anonymous (not verified) on May 2, 2012 10:03 pm

I'm not familiar with the legalities, but if Street was going to file a discrimination lawsuit against the state, can we, as members of the school community, file some sort of class action suit against the state?

Submitted by Ms.Cheng (not verified) on May 3, 2012 6:28 am

That is worth considering. Does anyone know the answer to this, or know a lawyer who could answer this?

Submitted by Anonymous (not verified) on May 3, 2012 8:21 am

Hornbeck cried racism in the late '90s and the state legislature cut money and by Dec. 2001 took over the School District of Philadelphia. While I agree the Commonwealth is constitutionally responsible to provide equitable education funding, suing the Commonwealth in the past has not helped. It probably is better to build alliances with other school districts that are underfunded - and there are plenty in Pennsylvania - to gain a cross section of support. Many rural districts have far less per pupil spending than Philadelphia and they do not have local resources in close proximity (e.g. hospitals, social services, arts, etc.) . There are school districts adjacent to Philadelphia that are also struggling (e.g. SE Delaware Co.) Nevertheless, we also have to deal with the archaic property tax structure in Philly. Some people who have paid next to nothing on very valuable properties need to pay their fair share (e.g. part of South Philly, University City, Queens Village, etc.)

Submitted by Ms.Cheng (not verified) on May 3, 2012 9:32 am

The inequities stem largely from the amount collected from real estate taxes. We can't expect the State to make up for that difference without causing resentment from other State residents. Philadelphia was receiving, prior to Gov. Corbett, a large amount of grant money. It still receives, along with other poor districts I would assume, Title I Federal money for the impoverished.

What makes no sense is how the State can shirk its responsibility which it imposed upon the District through a takeover. Whereas Hornbeck's allegations, and we'll never know if the lawsuit Mayor Street threatened also, may not have had grounds to succeed; it seems the situation is far more "clear cut" here.

The main reason given for the State takeover was to prevent another fiscal crisis. Clear and simple.

Submitted by Anonymous (not verified) on May 2, 2012 4:50 pm

Knudsen seems as if he's used to speaking to folks whom he can impress. Educated persons see through his bull crap for what it is. More and more, I'm yearning for Robert Archie to return--only kidding but this guy is very tedious at best. It's NOT WORKING, Tom !! Just shut up !!

Submitted by Arnold (not verified) on May 2, 2012 8:21 pm

I was asked to leave at the one meeting I was able to sit through. How can any of you STILL give them any credence at all?? Are you gluttons for punishment?? They're making fools of us with their jibberish bull, I agree. This Knudsen is the worst of all of them.

Submitted by Anonymous (not verified) on May 3, 2012 7:03 am

Ackerman really did her job. Her job was to demoralize the teachers, students, and parents until they didn't really want to fight. Her job was to give away all of the money we had and use the rest poorly.

Her job was to put the school district on the brink of extinction, and now all these greedy elite have to do is push it off the cliff and pick the money out of the remains.

And we are all letting it happen.

Submitted by Anonymous (not verified) on May 3, 2012 8:09 am

And now Ackerman is being paid to promote vouchers / privatization... I assume the Broad Foundation is underwriting her endeavors.

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