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Mayor calls Council action on school funding 'unfortunate,' would support more

By Dale Mezzacappa on Jun 12, 2014 04:26 PM

School District officials are still hopeful that City Council will borrow more money on their behalf than was approved by a Council committee on Wednesday, and they have Mayor Nutter on their side. 

But these debates are still mainly about how to close a lingering gap in this year's budget, not the larger revenue shortfall the District is facing in the new fiscal year that is less than three weeks away.

In an interview with radio reporters, according to his spokesman Mark McDonald, Nutter called Council's decision to support a $27 million loan instead of the $55 million that District leaders requested "an unfortunate turn of events."

Nutter said, according to McDonald, that "we need to do everything we can to get all the resources we can to the District. The need is clear."

McDonald said that there was time for an amended bill to be introduced next Thursday and for a final vote to be taken June 26.

On Wednesday, District officials pleaded with Council to approve $55 million in borrowing against future revenue from a 1 percent extension of the sales tax, a move that was authorized by the state legislature to raise money for the schools this year. McDonald said that supporting a loan this size "basically holds the city's general fund harmless."

Council, however, approved just a $27 million loan because it wants the District to use money from sales of school properties to fill part of its budget hole this year. The difference in the carrying costs for a $27 million loan and a $55 million loan would be modest.

Last year, the General Assembly authorized City Council to extend the 1 percent sales tax and use up to $120 million for the schools, an idea that did not sit well with Council President Darrell Clarke, who was eyeing that money for the city's ailing pension fund. Nor did he like the idea of borrowing against future years of that revenue stream. The legislature said that the city could set aside $15 million a year for four years of the future sales tax revenue as debt service -- which officials said could actually support more than $50 million in immediate revenue for the schools. 

When Superintendent William Hite said last August that he may not be able to open schools without a guarantee of the $50 million, both Nutter and Clarke sent him a letter providing a means to obtain it.

Nutter promised the money through the borrowing -- but said that if Council didn't approve that, money would come out of the city's general fund, a solution he didn't like.

Clarke offered to give the District $50 million in return for title to its surplus properties, with the city keeping the first $50 million in sales proceeds. But the District did not go along with that.

What Council passed on Wednesday was a loan for $27 million and the assumption that the District would get $34 million before the end of the month from property sales, chiefly the University City High complex and William Penn High School. That adds up to $61 million instead of $50 million because the District had already budgeted $11 million in revenue from the sale of surplus property.

Clarke spokesperson Jane Roh issued a statement saying that "the District could have had the $50 million up front" by leaving the city on the hook for unsold properties, but declined the offer.

But District spokeman Fernando Gallard reiterated that the District's position is that it needs both the loan money authorized by the state and the full amount from selling its vacant properties. Otherwise, he said, the District may be forced to make further layoffs and program cuts.

What Council approved, Gallard said, was "whatever you cannot get from the sale of property, they said we will cover the rest. We are saying that's not enough." 

Gallard said that officials were working hard to get Council to amend the bill to increase the loan amount and were asking for public support. A Council member could have tried to amend it as it was formally introduced Thursday, but no one offered any amendment.

"What we need for our students and for our schools is access to the full loan and the money from selling the properties," said Gallard. "We are in a position where we don't know if we are going to have functioning schools next year."

For next year, the District says that it needs $216 million in additional funds -- the $120 million plus $96 more -- just to reach this year's depleted service levels in schools.

City Council wants to raise money for the District through a $2-a-pack cigarette tax. Harrisburg has so far declined to authorize that tax. And in her testimony to Council's Finance Committee on Wednesday, School Reform Commission chief of staff Sophie Bryan told Council that even if the cigarette tax were approved, next year it would not provide the full $80 million that is expected, but only about half that amount. She argued that was another reason to provide the District with a larger loan.

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Comments (9)

Submitted by S.G (not verified) on June 12, 2014 10:39 pm
Let us not forget: the Mayor did not put a DIME for education in his budget. The Cigarette tax is no more his money than it is Council's or the General Assembly's. If it passes everyone will claim it was their rescue package and we can debate that later. Council must do more, and immediately, but Nutter has been unaccountable to schools. He is hardly the cheerleader. This reporting paints Nutter as an advocate: that he is not.
Submitted by inthetrenches (not verified) on June 13, 2014 4:31 am
Thank you for this reminder about Nutter's lack of support. Remember his comment about schools - he is part of the Phila. School Dictatorship cheerleaders of privatization. Nutter doesn't care "what kind of school"...
Submitted by Taxpayer (not verified) on June 12, 2014 11:31 pm
No more borrowing. You can't borrow long term to pay for current operating expenses. That would only hurt the SDP down the road. It's time for some belt tightening.
Submitted by Anonymous (not verified) on June 13, 2014 9:16 am
blah,blah , the new boss ,same as the old boss.........
Submitted by Anonymous (not verified) on June 13, 2014 9:15 am
Just keep on saying, "It's all for the children".
Submitted by Anne Gemmell (not verified) on June 13, 2014 9:42 am
Could we please start asking Nutter & McDonald real questions. Their quote is a farce. Nutter did nothing in his budget proposal to get more money to schools. It's tragic stagecraft. I would like an update on revenue collections. Who is responsible for ensuring all taxes owed to Philadelphia are paid to Philadelphia? The Mayor. All property taxes are paid? All liquor by the drink taxes are paid? The Mayor. Who refuses to add a few percentage points more from property taxes to go permanently to schools? The Mayor. Who has most of the power in our city government? The Mayor. Borrowing is not a solution. It's a giveaway to Wharton banker buddies.
Submitted by Headstart Teacher (not verified) on June 13, 2014 11:44 am
Once the "good" properties are sold, what do we sell next?????
Submitted by Poogie (not verified) on June 13, 2014 5:46 pm
The only way to get money for the Philadelphia City Council is to be a relative or crony.
Submitted by Anonymous (not verified) on June 17, 2014 1:45 pm
Borrowing won't solve the issues but it will help.

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