This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.
You may have been expecting grim news, but this is how Superintendent Ackerman summarized Wednesday’s briefing on the District’s revised 2009-10 budget of $3.084 billion, now $100 million smaller than it was back in May:
“It’s not a reduction in the services or programs that we’ve been able to provide to the schools. It’s not the same level of increase that we had anticipated. But having an 11 percent increase still means good things can happen for children.”
In the revised, leaner budget presented to the School Reform Commission by Chief Business Officer Mike Masch, total budgeted spending for the year is actually up 11.8 percent compared to last year. His gap-closing plan still leaves money to pay for the class size reduction, new counselors, and more.
If the District hadn’t had to pare back the budget adopted in May due to disappointing state appropriations, Masch says the spending increase would have been an astronomical 16.6 percent. Despite these recent cuts, the increase in District spending this year will represent more than $300 million.
Where is all this extra money coming from? Didn’t the District get creamed in the state budget?
The whole story didn’t get explained yesterday. The receipt of $227 million in federal stimulus money deservedly got most of the credit for the District’s ability to boost its spending so dramatically. Masch also noted that ending last fiscal year with a $28 million surplus in the operating budget was a helpful factor.
However, after perusing the budget documents, I see two other numbers that should have been highlighted in explaining how the District can proceed with such a large spending increase despite weak state and local support.
First, it appears that the District actually took in a whopping $90 million more than it spent last year, when you combine both the categorical (grants) and operating funds. Total revenue was $2.848 million, but the District came in way under budget on the expense side, spending only $2.758 million. Thus there are carryover funds in areas like Title I and Title IIA that were available to support new spending. It would be good to hear more details on this $90 million figure and the unspent categorical dollars.
[UPDATE: The District promised us more information today on this and objected to any implication in this post that there was a $90 million surplus in 2008-09 – more below].
Second, related to its various surpluses, the District has decided to go ahead and spend $57 million more in 2009-10 than it is receiving in revenue (spending is pegged at $3.084 billion as against $3.027 billion in projected revenue).
There’s nothing inherently wrong about spending down a surplus. But it certainly merits a little discussion, especially about future years. If our expenses are recurring, how are we going to deal with them next year when the surplus is gone?
There will be more opportunity to discuss these questions at SRC meetings on December 9 and 16, and before the revised budget comes up for adoption at a special meeting at 10 a.m. on December 18.
One hopes there will be a few more questions. At today’s hearing, there was only one official question, from Commissioner Johnny Irizarry, and a few more from the only public speaker on the budget, Helen Gym.
(UPDATE #2: District Chief Business Officer Masch said that the budget documents presented yesterday were in error.
In an email, Masch wrote: "As the Budget in Brief indicates, the SDP ended FY2008-09 with a $28.1 million surplus in its operating funds, and that is the only surplus the District has. Grant funds by definition can never have a surplus or deficit. Grant funds are only spent if available. If no grant revenue is available, spending against the grant is not permitted.
"Your misconception is understandable, given that the schedules we published yesterday, which appear to suggest that the District had a substantial level of unspent grant funds coming out of FY2008-09. The School District was in error. We inserted an incorrect revenue schedule in the Budget in Brief. The confusion results from the fact that at any given time the School District is managing grants from single sources from multiple years. As a result, there are various “revenue schedules” for grants. We inserted the wrong one in the Budget in Brief. We are issuing a corrected version of the Budget in Brief in which the correct schedule will be presented.")