April 4 — 11:45 am, 2016

Impending deficit could cripple schools

The state charter formula is driving the District toward bankruptcy, State Sen. Vincent Hughes says.

hite harvey finkle Harvey Finkle

This article will appear in the Notebook’s forthcoming edition on high school dropouts: Dreams denied: What leads to academic success. 


Superintendent William Hite has released the District’s new five-year plan, including significant new investments in schools and an internal turnaround strategy that relies on receiving a significant infusion of state aid –- a chancy prospect given the budget gridlock in Harrisburg.

But Philadelphia needs more than an agreement between the governor and General Assembly on how to raise and distribute basic education aid. The District’s solvency also hinges on making major changes to the way funds are distributed to charters, which now educate about a third of the city’s students.

Right now, the charter funding formula – coupled with recent court decisions restricting the power of the School Reform Commission to limit charter growth – is putting Philadelphia and some other districts on the path to bankruptcy, according to one state senator.

“This whole setup is broken,” said State Sen. Vincent Hughes (D-Phila.) in a phone interview. “It is designed to fail. The charter school financing law bankrupts local school districts, and we’ve got to be frank, upfront, and honest about that.”

In March, Hite and his new chief financial officer, Uri Monson, outlined a spending plan that shows the District ending this year with a $133 million fund balance. But over five years, it calls for 2.2 percent growth in revenue and 4.5 percent growth in expenditures.

“That’s the definition of a structural deficit,” said Hite.

And they explained that the charter formula is a big factor. Because it is based on how much a district spends per pupil, any new investment in District schools results in a larger payment to charters the following year. This year, $752 million of a $2.65 billion budget goes to charters; next year that figure will grow to $875 million in a $2.8 billion budget.

Of the $123 million charter cost increase, half is due to enrollment growth and half to the higher per-pupil payment to charters resulting from new investments in District schools. Those new investments include more literacy coaches for the early grades, at least one counselor and a full-time nurse in every school, updates to instructional materials, summer enrichment activities for students, and more funds for intensive school turnarounds.

To compensate for charter growth, the District plans to close three schools a year, starting in 2017-18.

Hughes, whose legislative district includes wealthier school districts like Colonial and Upper Dublin, doesn’t think that Philadelphia or other districts should be penalized for making those investments. The law, he said, should not be set up so that every charter approval “cuts services for other students.”.

“I get to see firsthand what a 21st-century education should look like,” he said. “It’s resourced at the level that any child, no matter how they learn, there’s something available to turn on their brain. They have everything they need.”

Hite agrees that the law is “fundamentally unfair” and should be fixed. At the same time, he said, “I would never advocate for one sector over the other when that sector cannot respond to the needs of all children.” Rather than casting the battle as a fight for the preservation of the District, he sees it as “preservation of good schools.”

Hite, using Gov. Wolf’s proposed budget for next year to make funding projections, hopes that his $23 million internal turnaround plan, which now includes 16 schools, can improve some enough to slow the growth of charters.

Although the turnaround plan includes investments like an assistant principal in every school, teacher coaches, and smaller class sizes, it also relies on replacing principals and half the staff in each turnaround school, which has caused controversy. Critics say that schools need resources, not turmoil. Hite has said that the staff turnover provision has some flexibility.

School closures and staff upheavals “will not result in true, long-lasting improvements, but rather continue a destructive pattern of churn and destabilization,” said City Councilwoman Helen Gym.

But Hite said he is basing his strategy on what has worked in Memphis, Tennessee, where schools being turned around by the district are outperforming those put in a state-run turnaround network.

Hite maintains that the staff changes are needed, not to disrupt the school, but to make sure that all teachers are invested in doing things differently.

“Individuals need to be excited to work in a model that requires different things of them,” he said. “You don’t impose models on people. You get people who want to work within that model.”

n April, the SRC is scheduled to vote on turning three additional schools over to charter operators. If it approves all three, there will be 23 Renaissance charter schools. Renaissance charters cost the District less than new charters created from scratch.

Gym said that an approach that results in the siphoning-off of more funds to charters means “we will not be able to provide the majority of our neighborhood schools with transformational investments, but rather will continue to benefit some students and schools at the expense of many others.”

For several years, the SRC put a virtual moratorium on new charters, seeking to rein in costs. But the state legislature required it to reopen the charter pipeline as a condition for allowing the city to increase the cigarette tax to raise money for schools, and charters recently also won court battles over the District’s right to impose enrollment caps on individual charters.

In 2014-15, the SRC approved five new charters out of 39 applications.

 

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