Despite a painful and protracted School Reform Commission budget-cutting process last fall to resolve an unexpected deficit, the District is expecting to end the current school year in the red once again, and is facing an even bigger challenge next school year.

Through central office layoffs, reductions in contracts, and other measures, the SRC sought to balance this year’s budget and reach June 30 with zero deficit. But District officials now say they may fall short of that target by more than $30 million, even after more cuts, such as the elimination of 26 teacher coaches.

In the fiscal 2008 budget, to be finalized in May, anticipated cost increases in four “big-ticket items” – salaries, benefits, charter schools, and debt service – together total $153 million, while the District is facing “a flat budget in terms of revenue,” according to Chief Financial Officer Folasade Olanipekun-Lewis.

“In our five-year plan, next year’s budget is the toughest one to balance,” said District CEO Paul Vallas.

The District no longer has the cushion it had from 2002 to 2006. Proceeds of a $300 million deficit financing bond are now depleted. And it hasn’t resolved the structural issue blamed for the massive budget deficits in the 1990s – a system reliant on property taxes that results in large shortfalls in per-pupil funding compared to surrounding school districts.

Advocacy groups have been hammering away at that issue for over a decade. Efforts by statewide groups such as Good Schools Pennsylvania and the Education Law Center to craft a more equitable school finance system now take on renewed urgency for Philadelphia.

The District is hopeful for passage of city legislation introduced by Councilman W. Wilson Goode Jr., to shift some property tax revenues from city coffers to the schools.

District officials will have to persuade city and state government that sound financial practices have been put in place to avoid any more unexpected deficits – and do so amidst attacks on the leadership of CEO Paul Vallas from local critics such as School Reform Commissioner James Gallagher and City Controller Alan Butkovitz.

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