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October 2013 Vol. 21. No. 1 Focus on Schools in Crisis

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Questions and answers about the District’s budget gap

By by Paul Socolar on Sep 18, 2013 10:45 AM

How did the School District get into such a financial mess?

The $304 million budget gap announced last winter didn’t happen overnight. In fact, the District has faced budget crises almost annually for decades.

The fundamental issue is that Philadelphia is a vast district, responsible for nearly 200,000 public school students in District and charter schools – many of them with special needs – and the city depends on outside funds from the state to cover most of its budget. School funding in Pennsylvania is heavily reliant on local property taxes, and communities with weak tax bases struggle. Unlike every other school board in the state, the School Reform Commission lacks the authority to levy taxes itself. Other problems: a lack of predictability in the level of state funding for schools, which plummeted in 2011, and the city’s inability to collect all the taxes it is owed. 

It all adds up to a big problem raising revenue. Philadelphia’s per-pupil spending consistently lags the average in surrounding districts by $2,000-$3,000.

One trigger of the current crisis was the loss of federal stimulus funds – which for two years were used to substitute for some state aid – causing reductions not just to Philadelphia, but to other districts around the state. But in addition to the drop in basic state aid that resulted in 2011, Gov. Corbett also eliminated or cut back on other education line items vital to Philadelphia, including charter reimbursement (this cost the District more than $100 million) and accountability block grants that had started in the Rendell administration. In total that year, Philadelphia absorbed nearly 30 percent of the $1 billion in reduced funds coming from the state to districts in the commonwealth. 

Some argue that then-Superintendent Arlene Ackerman didn’t prepare adequately for this “fiscal tsunami.” Regardless, the upshot was that in 2011, the District found itself $629 million in the hole. It managed to get through the year by slashing 3,400 positions and using some one-time financial maneuvers, but still did not bring expenses into line with income in 2012, and the gap persisted in 2013. One of the challenges is that the District has faced rapidly increasing charter school costs. Another is that the District has expensive debt service, having borrowed funds to support its operations twice within a decade.

Why are things so much worse this year than last year?

The District borrowed $300 million last year to cover its operating costs, rather than implement another round of budget cuts comparable to the 2011 bloodletting. That kicked the budget gap problem into this year. And after the deep cuts of 2011, there was little left to cut this year besides classroom spending.

What has been cut?

The District laid off 3,800 staff this summer, but in August brought back about 1,600 of those. As of the start of school, the District’s staff is smaller by 3,000 than it was in June, many of those jobs lost through attrition. Overall, that’s a 15 percent reduction. 

Job losses were heavy among teachers, counselors, assistant principals, supportive services assistants, and secretaries. Only 126 counseling positions were restored by the start of school; last year the District had 362 counselors. Nearly half the schools in the city will be dependent on a team of 16 roving counselors. Schools were understaffed for much of the summer and are dealing with the loss of multiple key personnel. Class sizes are larger, and the year starts with 100 split-grade classrooms. However, most of the 1,200 noontime aides initially laid off have been rehired.

Wasn’t there a plan to avoid this crisis?

The District had hoped to close its $304 million gap and avert cuts through a combination of new revenues and labor concessions, but instead had to put in place a “doomsday budget” with more than $250 million in cuts. Superintendent William Hite had asked the state and city in March to come up with a combined $180 million in new revenues for the District. But Gov. Corbett’s June “rescue plan” contributed little new revenue for this year and put strings on a $45 million grant so it has not yet been received. At best, the District is now hoping to end up with $112 million in new revenues beyond what was in its budget on May 31. Most of that will come from city taxpayers.

Hite’s plan had also called for major concessions from District staff – $133 million in savings, which represents a 10 percent overall cut in pay and benefits. The teachers’ union is being asked to produce most of those savings but has said that its members cannot afford such deep cuts. Any savings achieved could be used to restore the cuts made this summer.

What was in Gov. Corbett’s rescue plan?

For this year, his plan included a meager $2 million increase in basic education funding and a $45 million grant that the governor says is contingent on labor concessions. The big ticket item in the plan is for future years: The state legislature gave the city permission to continue charging its residents an extra 1 percent in sales tax – a surcharge that was scheduled to expire next year. The first $120 million annually in proceeds from this surcharge can be devoted to the schools, starting in 2014. For this year, the legislation included provisions for the city to borrow $50 million against the future proceeds from the tax. Mayor Nutter wants to proceed with borrowing, but City Council opposes that, saying that the city should instead take control of and sell vacant District properties to raise $50 million. Either way, the District is now counting on the $50 million.

So what happened to the budget gap?

Technically it has been eliminated. By putting in place its doomsday budget and planning to spend down its modest reserves, the District balanced its budget for 2013-14. Officials now project that there will be enough money to operate through June 2014 and end the fiscal year with zero fund balance. But they would like to restore staff and programs that have been cut, and they say they cannot afford to do that now because they will not spend funds that aren’t secured yet.

What’s the District’s plan now?

The District has so far restored $83 million in cuts with funds secured since June. Now its strategy is to get deep financial concessions from the teachers’ union and three other unions and use the savings to rehire additional staff that were lost. Officials say the priority would be to restore instructional staff. Restoring the 156 counselors who were cut from the operating budget would cost $17 million. Instrumental music teachers and sports were restored for the fall; bringing them back for the whole year would cost nearly $8 million more.

Whether the District intends to impose changes to the pay scale or other contract terms on its unions if it cannot reach agreement at the bargaining table is unknown. Such a move would surely prompt a court battle.

Can’t anyone else come to the aid of the schools?

Advocacy groups and some local elected officials have been pressuring the governor to release the $45 million grant, but the Corbett administration is adamant that it wants to see a reformed teachers’ union contract first. Other than the proposal to sell District properties, there has been little movement in City Hall to identify new strategies to raise funds for schools this school year. 

At the state level, the legislature failed to vote in June on authorizing a proposed new cigarette tax approved by Philadelphia City Council. That proposal could be considered in the fall but faces opposition from anti-tax forces. In the long term, advocates hope that the state will re-establish a funding formula to aid struggling districts across the state. But that won’t happen in time for this school year.


About the Author

Contact Notebook editor Paul Socolar at

Comments (39)

Submitted by Anonymous (not verified) on September 13, 2013 10:44 am
So basically the Republican governor (the lowest polling Guv) is holding money back that he *has* in order to get concessions from teachers who can't afford to give them. This is not about money it's about weakening the unions who for the most part back and fund Democratic candidates. Voter ID will not be required in 2014, so the idea is to weaken the unions and their membership at the expense. of our schools. Corbett has said that if he is known for ONE thing it'll be breaking the teacher's union. So YES someone can come to the aid of the schools, the governor who is not in compliance with the state constitution.
Submitted by Joe K. (not verified) on September 18, 2013 12:12 pm
YES, it is so obvious that everybody can see the agenda so why are The PFT and overall, the Philly Folks, allowing ourselves to be screwed over, bullied and over time, become extinct ?? Google the word, "Coward" and all of our faces should come up. Tell me where I'm wrong !!
Submitted by anonymous (not verified) on September 18, 2013 2:28 pm
You aren't wrong Joe K. Unrelenting serious pressure must be placed on all those responsible- but you've been saying that all along.
Submitted by Anonymous (not verified) on September 18, 2013 4:33 pm
What about Laid Off APs? Will they be called back?
Submitted by Anonymous (not verified) on September 19, 2013 11:14 pm
After three tax increases to fund schools, even the city machine seems to be fed up with the more money so the pft can maintain its status quo.
Submitted by Anonymous (not verified) on September 18, 2013 12:22 pm
Someone forgot to mention that the SRC gave out charter school seats to charter schools who were not in line to get them. They are only to get more seats when they come up for renewal. The money they need from the PFT will be used to fund the charter schools. So why are the teachers so reluctant to take pay cuts? IT'S FOR THE KIDS!
Submitted by Anonymous (not verified) on September 18, 2013 5:52 pm
Correction: at renewal or in the third year of their charter (per SRC policy), but you are right that the SRC has given seats to low-performing charters who were not eligible (e.g., KIPP in 2012).
Submitted by Annonym (not verified) on September 18, 2013 8:03 pm
And World Communications Charter - low test scores and nepotism / "financial irregularities." But, Khin said "renew, renew, renew!" Meanwhile, public schools are closed...
Submitted by Anonymous (not verified) on September 19, 2013 9:53 pm
What is your stick in the butt about World Communications. There are charters who are doing much worse than they are. Nepotism is and has been a way of life in Philadelphia. It goes on in every phase of government - why should education be any different? and on the flip side, if my "husband, wife, son, daughter, sister, brother, niece, nephew or cousin is qualified for the job, as long as it is disclosed, why shouldn't I be able to give it to them?
Submitted by Annonym (not verified) on September 19, 2013 10:03 pm
While public schools with much better records and no shenanigans are closed, charters like World Communications are allowed to stay open. Read on -
Submitted by Anonymous (not verified) on September 19, 2013 10:15 pm
All is am saying is it is ineffective to point fingers - World communication is indicative of the problem of charters in general - there are fundamental flaws in Pa's charter law - it was disigned to benefit the few and the polically connected - it was not meant to be what it has become. Look at the laws of states where their charters are monitored, controlled and flourishing on the small scale that there were meant to function on. I just don't like the repeated finger pointing at World - it appears that there is a personal vendetta rather than a focus on policies and functionality of charters in general.
Submitted by Annonym (not verified) on September 20, 2013 4:55 am
Delaware Valley Charter also appears to thrive on nepotism - two of the CEO's sons work for the school. That said, World Communications is an example of a school that should NOT have been renewed based on its academic and financial record. Instead, Khin defended it while he led the parade to close public schools. I have no personal or professional connection with the school. It is an example of blatant hypocrisy by the 440 administration / Phila. School "Partnership" in determining "good" / "bad" schools and sealing their fates.
Submitted by Anonymous (not verified) on September 18, 2013 12:37 pm
Did you read the Pew report? Parents want more charters.
Submitted by Headstart teacher (not verified) on September 18, 2013 1:30 pm
Only because their neighborhood schools are so awful. Fund and improve the neighborhood, unionized schools and parents will come back on board.
Submitted by anonymous (not verified) on September 18, 2013 2:43 pm
Neighborhood schools get MORE per student than charters do... it's not the amount of money, it's how it's spent. Everyone wants to talk about privatization when the biggest privateers in all this are the bosses over at the PFT
Submitted by Education Grad ... on September 18, 2013 9:21 pm
anonymous, A major reason why neighborhood schools receive more per student than do charters is because the neighborhood schools have more special ed students. EGS
Submitted by PFTeacher (not verified) on September 18, 2013 6:41 pm
In the same report, Corbett and Nutter were blamed for this mess - not teachers.
Submitted by Terrilyn McCormick (not verified) on September 18, 2013 1:46 pm
Can you add as a follow up question to this story - what is next year's deficit expected to be? My understanding is there is a lag in payments for charter schools. For example, we're paying this year for enrollment numbers from 2 years ago. Given rise in charter school enrollments (that have probably further risen given this year's crisis) what does the district expect next years deficit to be.
Submitted by Anonymous (not verified) on September 18, 2013 1:26 pm
Then let it go to a court battle!!!! I'm sick of it already!!! Let them impose whatever they want so we can then win in court. Why sit at the bargaining table when no one else is giving? It's a waste of time. Lockout, file for unemployment, and wait and see..........
Submitted by Anonymous (not verified) on September 18, 2013 3:02 pm
No sanctions can be imposed as long as you're "bargaining in good faith," so perhaps the strategy is to hang tight and see what mnoney is forthcoming. IOW this cannot last for much longer. (that's just a guess IDK).
Submitted by Anonymous (not verified) on September 18, 2013 3:22 pm
. Everyone wants to talk about privatization when the biggest privateers in all this are the bosses over at the PFT >> LOL there are two separate words: privatizers and profiteers, let's not make it sound like "musketeers." One of the chief reasons these folks want unions gone is because of the influence they have on elections. I suppose it's okay to have superpacs but not union support? OMG those "terrible unions," how dare they have a preference. Fight for your union even if it means short term pain.
Submitted by Joe K. (not verified) on September 18, 2013 3:46 pm
It's shocking how little you seem to understand about the danger of removing worker rights in a democracy. Superpacs !!!!!!!!!!! Are you serious or just playing with us??
Submitted by Anonymous (not verified) on September 19, 2013 10:31 am
Joe you misunderstood (and there is no us, I'm a regular poster). Along with the functions that unions serve for their members comes our political clout that the TPTB want gone. IOW they can form super pacs but unions are not allowed to be a poltical force? Therfore downsizing is just fine with them, it serves many purposes.
Submitted by Joe K. (not verified) on September 19, 2013 7:42 pm
I apologize profusely and even profuselyer. SO SORRY !!
Submitted by Anonymous (not verified) on September 19, 2013 8:45 pm
It's cool, people get confused by my writing sometimes. It was just to say that the implications are not confined to education, they reach farther than that when it comes to unions.( But you know that already.)
Submitted by Joe K. (not verified) on September 19, 2013 8:26 pm
You are so right. Their agenda is beyond obvious and VERY dangerous. Only the boob patrol would think it appropriate to destroy worker rights.
Submitted by Anonymous (not verified) on September 19, 2013 11:42 pm
Joe, the boob control is very savvy, we just need to fight at every level..Nutter is really starting to get embarrassed & Corbett is getting a LOT of scrutiny.
Submitted by Joe K. (not verified) on September 19, 2013 11:47 pm
Nutter is more scared than embarrassed because he is ALWAYS concerned about HIS future, first, last and only. Corbett is a cold blooded, Tea Party Tool who is sickened by inner city people, including the children.
Submitted by Anonymous (not verified) on September 20, 2013 9:29 am
I stand corrected about Nutter, you're right. Even worse than him is Rahm Emanuel who should be run out of town. DFERS is what they're called (Democrats for educational reform).
Submitted by Anonymous (not verified) on September 18, 2013 8:29 pm
Maybe Hite and all of his friends, that he hired at six figure salaries, should take pay cuts, since the Philly School District is bankrupted. Some of Hite's cronies were even hired this summer after almost 4000 teachers/counselors/secretaries had been been laid off, and Hite was saying he had no money to open schools. WELL, if you have no money to open school, why in the name of God, are you hiring 5 more of your friends this past August at six figure salaries??? Why is this information not in the news? If I was a public school parent, I would be outraged by this information!!
Submitted by Education Grad ... on September 18, 2013 9:35 pm
I'm wondering what's happening to Discovery Charter School and the agreement on which DCS and the District were working. DCS is using its new building. KIPP's DuBois Academy moved into Discovery's old building. In order for DCS to occupy the new building, the District needed to allow DCS to expand in order to cover the cost of bonds for the new building. How many new students is the District allowing DCS to enroll? How much is this costing the District. All the while, across the street from Discovery's new building, Joseph Leidy ES sits vacant. And Leidy had 3 Life Skills Support classes, but DCS doesn't have Life Skills Support classes for children with Intellectual Disability. Those classes are now at McMichael. EGS
Submitted by Annonym (not verified) on September 19, 2013 4:55 am
The concentration of students with special needs is happening all over the District. Charters will not take them. Magnets won't take them. This violates "free and accessible" education legislation. So, Hite/Khin, what are you going to do about it?
Submitted by Anonymous (not verified) on September 18, 2013 11:27 pm
Three words as to the ruination of the SDP, Hornbeck, Vallas, and Ackerman coupled with an incompetent school board and SRC's that were in charge under each carpetbagger administration. All three refused to run a balanced budget, and the boards went along with the frivolous spendings expecting the state would bail them out. Now the SDP is truly broke, property taxes need to be raised, old taxes collected, and the PFT unfortunately has to help bail out the mess. Finally a school board needs to be elected by the people, with the capability to raise taxes if needed, and get away from the corruption of city hall. If you don't like your board member vote them out like they do in the other 499 school districts. Whatever the state does for the SDP they should also do for the other school districts that are in far worse financial shape then Philly.
Submitted by Anonymous (not verified) on September 19, 2013 10:08 am
So the schools are struggling against enormous odds and the state has new rating systems for schools? HELLO!
Submitted by Anonymous (not verified) on September 20, 2013 9:25 am
I agree with the person who said the charter law is flawed, but I still think the concept of the pubic paying for private type schools is dead wrong. If you want to know where their unmitigated chutzpah comes from it comes from the fact that tthey know the public pays their way. I read the Notebook regularly and note that on the side of my screen there are nothing but ads from charter schools. WHY am I paying for these institutions? If we can't answer that we are doomed to be mired in this mess.
Submitted by Anonymous (not verified) on September 30, 2013 4:09 pm
How would parents respond to an ad for MLK or Southern? You advertise things that people want. Mr. Socolar never blamed charters. Only the PFT and their shill, Commissioner Dworetzky have advanced that theory.
Submitted by Annonymous (not verified) on September 30, 2013 7:07 pm
There are unique programs at most high schools - including neighborhood high schools - that schools would like to publicize. There is no money for public schools to advertise - only for charters.
Submitted by Anonymous (not verified) on January 29, 2015 1:45 am

According to this article on

No-frills spending plan adopted for Phila. schools

The biggest cost increases in the five-year plan are charter and pension expenditures. Next year alone, the district expects it will have to spend $32 million more in pension costs and $42 million in charter costs.

Why would it cost more for charter schools? The school district budgets to spend a certain amount of money per school age child in the district. Charter schools only get a certain amount of money per child enrolled in their school, which is less then what is spent per child in a regular district school. They (charters) do not get money for things such as maintenance. The charter school is on their own for things such as that. If a student decides to go to a charter school then the money allocated for their education is given to the charter school and not the district school. The only thing I can think of is the district wants to double dip for students who choose to go to a charter school. If that is the case it is wrong. The way I see it, the same amount of money should be spent per child regardless of their choose of school (district or charter). therefore it should cost the same amount of money and not be an additional cost to the district. If the district was doing a good job educating our children then parents would not feel the need to send their children to charter schools except in rare instantances such as a maritime school for a child who wants a career living on boats out on the seas.

Submitted by Anonymous (not verified) on February 4, 2015 3:24 pm

Why don't all workers in the state of Pennsylvania donate .1% of their salary to education. That would bring in $252 million. That is a quarter of the states funding for public schools.

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