Budget cuts, restructuring plan stir up outcry

Officials say the recession, drops in state and federal funding, and mismanagement have created a crisis.

by Dale Mezzacappa

Photo: Harvey Finkle

SRC Chair Pedro Ramos (left) is seeking support from City Council, and its president, Darrell Clarke, for a property tax plan that would give the District $94 million. Without it, the budget gap would be more than $300 million.

With a projected shortfall for 2012-13 of at least $200 million even after the deep cuts this year, District leaders are proposing a major restructuring that would further downsize the central office, close 64 schools, and break up those remaining into "achievement networks."

Balancing expenses with revenues won't happen until 2013-14, said Chief Recovery Officer Thomas Knudsen. It will require significant short-term borrowing, deep union concessions by 2013, and the swift passage of a tax reassessment plan by City Council that would net the District $94 million annually.

Without the $94 million, the projected deficit will balloon to $312 million in 2012-13, and some schools may not open in September, Knudsen told the School Reform Commission.

He also presented a five-year fiscal plan that anticipates very little growth in state aid and projects a $1.1 billion cumulative shortfall by 2017 unless the SRC takes action. The commission must adopt a budget by May 31.

Blaming severe downturns in state and federal revenue, the recession, and "poor fiscal policy" in the past, Knudsen said, "We are, quite simply, in a financial crisis."

Next year's spending plan is intended to spare individual schools from further cuts but maintain what Knudsen conceded were "bare bones" budgets.

"We have wrung the towel … dry … in terms of academic programs," he said.

However, anticipating employee concessions, some school closings, and more students in charters, spending on instruction in District schools is slated to drop by 11 percent, or $121 million, in 2012-13, and by 2.5 percent more the following year.

And there is still a $20 million shortfall in this year's budget, which Knudsen hopes to close through collecting delinquent city property taxes.

"It is the District's duty to figure out how to do the best we can with the resources we have," SRC Chair Pedro Ramos told Council.

But many advocates and some City Council members have called instead for demanding more state aid from Harrisburg.

The restructuring blueprint has also caused an outcry that the SRC is using the budget crisis to promote an agenda of privatization, union-busting, and charter growth. Union leaders and others compared it to the "failed experiment" after the 2001 state takeover that turned over management of low-performing schools to outside operators.

Knudsen and Ramos dispute this. Both have said that "fundamental change" is necessary because the current system "isn't working" to give students a quality education in a safe environment.

The Philadelphia Federation of Teachers has started informational picketing at schools on Fridays and formed The Philadelphia Coalition of Advocates for Public Schools with other unions, parent and advocacy groups to fight the proposal.

"In the name of fiscal responsibility, this plan will cannibalize the School District," PFT president Jerry Jordan told Council. "The plan assumes that by closing schools, expanding charter schools and cyber charters and turning over management to outsiders that educational outcomes will improve. There isn't a shred of research or evidence to support this assumption."

Under the restructuring, Knudsen said, a skeletal central office would retain "non-core mission" functions like payroll, finance, technology, and communications. Other services like maintenance, transportation, and academic supports would be driven into the field, with schools free to purchase services from other sources. Under a new system of "achievement networks," outside organizations would supervise and manage groups of 20 to 30 schools.

Knudsen said he did not necessarily want to outsource transportation, maintenance and custodial services to private companies. But plans now call for laying off by next year all 2,700 of those workers, who belong to SEIU Local 32BJ, unless costs are reduced by $50 million.

Union president George Ricchezza said that most of his workers are female and make less than $28,000 a year.