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Masch: ‘We do not have a budget crisis’

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

Presenting a "second quarter financial report" to the School Reform Commission on Wednesday, District Chief Financial Officer Michael Masch stuck with the District’s recent stance and declined to estimate the size of an anticipated massive budget gap facing the system next school year.

Asked in a press briefing to put a number on the gap, Masch said, "It is too early to talk about that. That’s not what we’re focused on at this point."

But Masch and Deputy Superintendent Leroy Nunery did announce immediate "spending restrictions," elements of which were outlined in an email to staff by Superintendent Arlene Ackerman.

Masch emphasized that the current year’s budget is still "balanced" – although his report showed the District still plans to spend down nearly all of the $40 million fund balance with which it entered the year on July 1.

His report also showed the District facing the loss of nearly a quarter billion dollars in non-recurring federal stimulus funds next school year. The anticipated budget shortfall for 2011-12 grows even larger once growth in expenses – negotiated pay increases, benefits and pension costs, charter school costs, and utilities – is factored in. And there are fears that Harrisburg may actually cut its share of spending on schools.

"It is true that if we don’t take corrective actions, we could have a budget gap for next year," Masch said. "But we don’t have a budget crisis…. We understand that we have to take corrective actions, and we are doing so much earlier than we normally would in order to ensure that we don’t experience a financial crisis." The District has promised to draft a budget in February this year.

Press accounts have quoted unnamed official sources saying the deficit could exceed $430 million.

Referring to the new spending restrictions, Masch said Superintendent Arlene Ackerman ordered the District to hold down spending "to the lowest level we can this year, seeking … to outperform our budget and build a buffer to meet the challenges ahead." Managers have been asked to refrain from most new spending on personnel, contracts, supplies, and equipment.

Masch noted that an SRC finance committee meets monthly "to review where we stand on both expenses and revenues." The Wednesday presentation to the SRC reflects a commitment to report quarterly to the public, Masch said.

SRC members did not question the District’s approach. Masch defended the District’s use of stimulus money as proper under federal guidelines, responding to critics who say that the District should not have spent temporary funds on recurring expenses.

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