Council members wonder: With schools deficit further away, why should we pay?
City Council members grilled Superintendent William Hite and other School District officials Wednesday, using many different ways to ask the same questions: How do we know whether you are spending money wisely? And why do you need a tax increase now if you don’t expect to run a deficit for another two years?
“If we have two more years of not going negative, why are we dealing with this now?” asked Councilman Allan Domb, reflecting the tone of the District’s annual budget hearing.
In more than four hours of back-and-forth, Council members touched on myriad topics, from the conditions of school facilities, to language translation services, to the recruitment of black male teachers, to efforts to combat truancy. First on the list for Council President Darrell Clarke was an energy- and money-saving initiative in several of the District’s buildings, which he would like to see scaled up.
But most of the questions circled back to this: If I am going to risk voting in favor of raising property taxes –Mayor Kenney is asking for a 4.1 percent increase to send more money to the schools – tell me where the money will be going.
“If there’s one part of your portfolio where you think there’s still efficiencies,” Councilwoman Maria Quinones-Sanchez asked District Chief Financial Officer Uri Monson, what would he identify them to be?
Monson replied that the District wants to incorporate more principles of “zero-based” budgeting and get away from a mentality where “it’s in the budget, so you just keep doing it.”
Councilwoman Cindy Bass wondered whether she could tell her constituents that after the tax hike, the District would be “competitive” with places like Lower Merion and Cheltenham. If she could give such assurances, her voters would be “all in” on the increase, she said.
“Not yet, but it’s a step,” replied Hite.
Monson pointed out that Lower Merion spends more than twice as much per student as Philadelphia, and the increase in city spending being proposed would not get the city’s per-pupil expenditure anywhere near Lower Merion’s.
Bass said that voters in her district, which covers parts of North and Northwest Philadelphia, are struggling to stay afloat financially and won’t be thrilled about plugging a budget deficit that has not yet materialized.
“We want our schools to be good and to be strong, but at the same time, the deficit is a minute away and folks are paying bills to keep their households going right now,” Bass said.
Replying to those inquiries, Monson returned to the same theme: Even though the District has managed to eke out small budget surpluses for several years, its financial posture remains precarious because it has a “structural deficit.” That means that its expenditures continue to outpace its recurring revenues.
Councilwoman Helen Gym also sought to focus on the bigger picture, citing calculations that she said determined that Philadelphia was due at least $1 billion more annually to assure that all its children, most of whom live in poverty and many of whom speak other languages, receive a high-quality education. Pennsylvania has one of the widest spending gaps between wealthy and poor districts in the country, according to some researchers.
“This is a massive civil rights violation,” she said, adding that although Council should push that issue whenever possible, it should also “do what we can” to help the schools.
When Kenney spearheaded an effort to reassert local control over the city’s public schools after nearly two decades under a state-controlled board, he promised that the move would come with new city money. Kenney has repeatedly argued that the city must steer the destiny of its own school system and not wait on more money from Harrisburg, where the legislature is controlled by spending-shy and Philadelphia-averse Republicans.
Kenney first proposed a property tax hike in March, when the District’s financial situation was considerably shakier. Starting in fiscal year 2019, Monson projected, the District would run a deficit that would balloon to nearly a billion dollars by fiscal year 2023.
The math later changed when the city revealed its latest round of property reassessments, which will provide hundreds of millions more dollars for local schools. Projections released in late March indicate that the District won’t sink into the red until fiscal year 2020 and that the five-year deficit, without any new city investment, would reach $660 million.
In light of the new numbers, Kenney revised his request, lowering the property tax bump to 4.1 percent from 4.6 percent. He also called for an increase in the homestead exemption, which allows homeowners to lower their property tax assessments.
Clearly, though, some council members see the revised calculus as cause for restraint, especially because the tax rate increase on top of the reassessments is a double-whammy for many homeowners.
Council President Clarke, for instance, started the hearing by asking about the percentage of revenue provided to the District by the state and the percentage provided by the city, implying that the state should carry a larger load. The current District budget calls for the state to provide about $1.62 billion and the city to provide about $1.56 billion.
District officials implied that they were agnostic about where the money comes from, so long as they can ensure long-term stability.
“What we’re trying to focus on is the revenue we need to provide children with an adequate education,” said Hite.
He later added, “What we’re asking for now is to maintain the stability that we fought so hard to get to.”
Before this stability, the District lurched from fiscal crisis to fiscal crisis, firing thousands of staff members and closing two dozen schools along the way. The worst period started in 2011 when Gov. Tom Corbett severely reduced state and federal aid to Philadelphia and other school districts. Among other draconian moves, the District laid off all its counselors and nurses.
Even now, falling enrollment has left many School District buildings half-empty.
Allan Domb wanted to know about utilization of school buildings, asking at one point, “What is the perfect-size high school?”
His question yielded some interesting information: District Facilities Manager Danielle Floyd said that 31 District schools are operating at less than 50 percent capacity.
But closing schools is a touchy and complicated matter, because they serve as anchors in many city neighborhoods, and in some cases, the last vestige of institutional stability.
Hite and Floyd said that the District does ongoing evaluations of building utilization as well as prioritizing maintenance. It has $5 billion in unmet facilities needs, recently dramatized in a series of Inquirer stories on environmental dangers in school buildings and covered during the past year in the Notebook.
The School Reform Commission, which yields control of the School District to a new nine-member Board of Education on July 1, must adopt a budget for next year by the end of this month.