The promise of a $50 million bailout from the city has allowed district officials in Philadelphia to begin preparing for an event they had warned would not come on time: the opening of school.
The district is rehiring hall aides, assistant principals, and guidance counselors for many—but not all—of Philadelphia’s public schools. The district laid off some 4,000 employees this year, and it plans to hire back some 1,600 of those now that a deal has been cut for the city to provide the emergency aid.
But Superintendent William R. Hite Jr. also says that while the money will permit the district to open doors safely, it’s still not enough to fully staff and support the schools in the long term.
After a week of tense negotiations by city officials, Philadelphia Mayor Michael Nutter, a Democrat, announced Aug. 15 that the city would provide the $50 million Mr. Hite said was necessary to open schools on time.
Philadelphia officials disagree about where those funds are coming from. Mr. Nutter supports a plan proposed by Pennsylvania Gov. Tom Corbett, a Republican, that involves using anticipated revenues from the extension of a 1 percent increase to a citywide sales tax, while Philadelphia City Council President Darrell L. Clarke is hoping to use funds from the sale of school buildings.
A firm plan is to be set out this fall, but both the mayor and the council president say the district can count on the money.
Also on Aug. 15, the School Reform Commission, the school system’s state- and mayorally-appointed governing body,
voted to suspend portions of the state’s school code in order to let the district rehire staff members without considering seniority and exert more control over charter schools.
Though the immediate crisis has been averted and schools are on track to open Sept. 9, as planned, Mr. Hite said the district needed longer-term solutions. The superintendent was optimistic about the potential of a permanent extension of the $120 million sales tax, for instance, or about more money from collection of delinquent real estate taxes.
“That gives us different levels of capacity going forward,” he said in an interview. “The challenge is getting from here to there so we have some predictability about what revenue we have.”
Budget Hole
The district announced a $304 million budget gap out of a $2.7 billion budget this past spring.
In response, the state has approved an extension of a 1 percent increase to the citywide sales tax that would bring in $120 million a year, beginning July 1, 2014, and committed $2 million in basic education subsidy and $45 million in one-time aid. So far, only that $2 million is in the district’s coffers.
The city has pledged $15 million in delinquent real-estate-tax collection in addition to the $50 million.
The district identified $16 million in additional savings, which means it has made up $83 million of the initial $304 million gap.
The district is asking for $133 million in concessions from its three unions, whose contracts expire at the end of this month. The outcome of those negotiations will also determine whether the district receives the state’s pledged $45 million in one-time funds, which is contingent on unspecified changes to the teachers’ contract.
District spokesman Fernando Gallard said the city and the district would continue to search for additional funding sources to make up the remainder of the budget gap.
Weighing the Deal
Moody’s Investors Service, a global credit-ratings agency, released a statement last week saying that the city’s plan to borrow $50 million to support the schools would bolster the beleaguered district’s credit.
Moody’s said the funds, ideally, would help stem a further decline in the district’s enrollment. More than 60,000 students in the district will attend charter schools this fall, leaving some 136,000 students in the regular public schools.
“If we continue to lose students at the pace we’re losing them now, we will turn into a district that is not able to fiscally do anything but reimburse charters, pay debt service, and manage every other student who has either been refused, sent back, or is not interested in attending a charter school,” Mr. Hite said.
Among other state-level cuts, Pennsylvania eliminated reimbursement to districts for expenses associated with charter schools starting in 2011. The suspension of the school code allows the district to limit charter schools’ enrollment and close low-performing charter schools.
Contract negotiations continue, though the changes in the school code have exacerbated an already-antagonistic dynamic between district and union leaders.
“Somewhere along the line, we have to reconstruct trust [between employees and the district], because none exists,” said Robert McGrogan, the president of the principals’ union in the district.
Staff Writer Benjamin Herold contributed to this story.
Vol. 33, Issue 2
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