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District grappling with a $14 million shortfall this year, says CFO Stanski

By Dale Mezzacappa on Feb 21, 2014 01:01 AM

The financially beleaguered School District is on track to end this fiscal year with a shortfall of $14 million, Chief Financial Officer Matthew Stanski told the School Reform Commission Thursday night. 

The news of an unbalanced budget was a grim but not unexpected greeting for new SRC chair Bill Green, who also got an earful from an unhappy capacity crowd of about 250 people. New SRC member Farah Jimenez was not present, fulfilling another commitment that predated her appointment.

Stanski formally presented to the SRC the bleak budget picture described in a financial supplement to Superintendent William Hite's Action Plan 2.0, which says that the District needs $320 million annually in additional funds starting in fiscal year 2014-15 to miniminally implement its proposals. That is on top of $120 million that the District is already counting on but that is not yet guaranteed due to squabbling between Harrisburg and City Hall over how to raise it. 

The crowd made it hard to hear Stanski and also shouted down Hite's effort to recap his plan and his goals with chants like "Save our schools," and "How can we do that without any money?" 

Stanski presented a financial analysis showing that this year's budget is $283 million less than fiscal 2011, even though the District and charter schools then enrolled 2,500 fewer students than they do today.

"We've had our struggles from a resource standpoint," Stanski said.

However, both he and Superintendent Hite said that the $14 million shortfall -- which has been pared down from more than $28 million at the end of December -- will either be carried over until next year or eliminated this year without making further cuts in schools.

"That's what we're working towards; schools can't afford to lose more resources, especially this time of year," Hite told reporters after the meeting.

Stanski's presentation showed that in 2011, 63 percent of operating revenues went to District-run schools and 18 percent went to charters. This year, 54 percent of revenues go to the District schools and 29 percent to charters. Administrative costs have been reduced from 4 percent to 2 percent over that same period, while the bite that debt service takes out of the budget has stayed constant at 11 percent. Four percent of expenses, then and now, goes to the costs of supporting students placed for disciplinary or other reasons in non-District operated schools that are not charters. 

In addition to the loss of operating dollars, the District lost nearly $300 million in federal money during this time.

He gave an example of one unnamed District school, which in 2011 had 508 students, 41 teachers, 2 guidance counselors, 13 support positions, and almost $130,000 in money for extra programming. Today, that same school has grown substantially to 660 students but has just 36 teachers, 1 counselor, 10 support staff and $112,000 for extra programming.

"The student body has grown, but it has lost nine full-time positions," he said.

Stanski said that it is still possible that the District could get enough in new revenues to avoid making any more cuts. He said that most city property tax revenue comes in during February and March. "It could get worse, it could get better," he said. "We will continue to review ... with the mindset of holding schools harmless."

He said that the hope was to get new revenues for next year "so we can build back up investments in schools in a strategic way."

Rising charter school, special education, and transportation costs have contributed to this year's budget shortfall. However, the District has been able to reduce this year's gap by more than $14 million since the end of December through a combination of economies and a trickle of additional revenues. Stanski said that there is a hiring freeze and reductions of $3.5 million in the central office and a slight reduction in the variable interest rate paid on debt. He shifted $3.3 million in expenses from the operating budget to grant dollars and came into $2.1 million in additional Medicaid dollars that help pay for some student placements.  

Potential future sources of funds to eliminate the remaining $14 million shortfall -- besides property taxes -- include Parking Authority revenue and money from the sale of vacant and unused school buildings. The District's budget already assumes that it will spend its modest reserves, which means that any carryover deficit will affect next year's budget, where the potential gap between income and expenses is much larger.

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Comments (8)

Submitted by inthetrenches (not verified) on February 21, 2014 4:20 am
Meanwhile, charters are expanding. The existence of two, inequitable Districts - one charter and one public - funded by a dwindling source of revenue is not sustainable. The Hite/Green/Gleason/Nutter solution is to take it out of the measly pay of teachers. Green's interview on Radio Times indicated - Philly teachers start at salaries similar to the suburbs. Then, there is a steep decline. So, go the 'burbs. Philly will be full of drive by teachers. That is not good enough for my children. Attending run down public schools is not good enough for my children while charters like MAST, Esperanza, Franklintowne, etc. select their students and bask in new facilities. Shame!
Submitted by LS Teach (not verified) on February 21, 2014 5:25 am
"Rising special education costs"? I bet those costs are being paid out in the form of comp ed and attorney fees because of the lack of teachers in the SDP. I find it amusing that 3 years ago SELs were full time, full release positions and the SDP paid out over 9 million in comp ed. Now, SELs have full caseloads - so I wonder how much is being out into comp ed.
Submitted by Education Grad ... on February 21, 2014 10:02 pm
LS Teach, As a fellow Special Education Teacher, I completely understand your points. Being an SEL is in so many ways a thankless job: legal cases, TSS services, compliance, paperwork, compliance, paperwork. In some schools, which have a low number of students with IEPs, an SEL might be able to handle the job with a reduced caseload. In schools with the self-contained classrooms--Autistic Support, Life Skills Support, Multiple Disabilities Support, and Emotional Support--there are additional issues that make the SEL's job more difficult. In larger schools, my understanding is that the SELs are typically released from teaching. However, there are some smaller schools which have large numbers of students with IEPs and based on the numbers of students with IEPs, the SELs should be released...but are not. The duties of SEL often end up superseding teaching and students on the SEL's caseload end up losing instruction. Another issue is that with the cuts to the central office, there are fewer people in the Office of Specialized Services to provide support for and oversight of special education services in the District.
Submitted by Morrie Peters (not verified) on February 21, 2014 8:42 am
One Billion dollars a year is the true cost of Charters.
Submitted by Anonymous (not verified) on February 22, 2014 10:58 am
District data shows that between 33.5% and 34% of all district students are in charters. District data also shows that 29% of the budget goes to charters. The math is simple, we educate 34% for 29% of the budget. Where to do you get your data?
Submitted by Terrilyn McCormick (not verified) on February 21, 2014 9:36 am
Stansky also reported that next year's deficit to maintain the abysmal status quo of this year is at $80 million.
Submitted by Anonymous (not verified) on February 21, 2014 12:04 pm
SDP won't ever admit even if there is a surplus. They like the drama and will do anything to get teachers, staff salaries as low as they can go. It's all a manufactured crisis and will be until we get leaders that really care about educators and students. The people in place do not care, they are self -serving and only care about the wealthy and crooked politicians.
Submitted by Anonymous (not verified) on February 21, 2014 3:41 pm
What happened to the $130 Million shortfall for this year after the additional money from the city and state? Are they factoring in concessions from the PFT for next year?

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