This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.
by Benjamin Herold
for the Notebook and WHYY/NewsWorks
[Updated 10:30 pm] There was more bleak budget news at Philadelphia’s School Reform Commission (SRC) meeting Wednesday.
Presenting a first-quarter financial report, District Chief Financial Officer Michael Masch announced almost $17 million in possible new cuts, then said there’s still another $22 million left to go. In this latest round, school budgets could be chopped by another one percent – or an average of about $40,000 per school.
“This is a very, very difficult choice,” said Masch.
Since announcing its plan last summer to close a massive budget shortfall, the District has already made cuts and other adjustments to save a half billion dollars. The reductions, precipitated by sharp drops in state and federal aid, have already come with substantial pain, including significant cuts to instructional programs and an overall workforce reduction of over 3,800 people, roughly 1,300 of whom were laid off.
“The $590 million in budget adjustments already made are pretty extraordinary,” said Masch.
Despite reductions in everything from special education to early childhood, Masch maintained that the District is still “operating an educational program with integrity.”
That could get more difficult to do in the coming months, however. Among the cuts proposed on Wednesday are a total of $2.6 million less for things like ELL instruction ($1.3 million), school psychologists ($600,000), instrumental music ($300,000), athletics ($100,000), educational technology ($100,000), and bilingual counseling assistants ($100,000).
On the bright side, the District was able to save almost $75 million through a combination of refinancing some of its bond payments and taking advantage of low interest rates.
But even after the newly proposed cuts take effect, $22 million in savings will still need to be found. A full list of options is expected to be delivered to the SRC within the next two weeks.
Masch said that with so many cuts already made and many of the District’s operational costs mandated by either law or collective bargaining agreements, school budgets may well be targeted again, and the cuts will likely result in more layoffs of teachers and other personnel. Regular classroom teachers are protected from layoffs at this point in the school year.
“I say with the most deep reluctance that the only place we still have the discretion to cut is in the instructional programs,” said Masch.
He said the District has already reduced its central office workforce by 397 positions and many offices were already “straining” to deliver basic services.
One reason for the lingering budget hole is lower than expected revenue for this fiscal year, including sluggish property tax collections at the city.
But some of the District’s more optimistic projections during earlier versions of the “gap-closing plan” have also proven unrealistic.
Masch said the District’s earlier expectation that it could realize $20 million in “efficiencies” had to be scaled back to $10 million. A projection that sales of surplus property could generate $10 million had to be cut in half. And the District thought it could save $8 million this year from early retirements and resignations, but higher than expected “personnel separation costs” – like paying out sick time and retirement benefits to departed workers – meant that rather than realizing savings, the District is taking an unexpected, one-time $31 million hit instead.
District officials had also hoped to get $75 million in savings from reopening contracts with its five labor unions. But so far, it has fallen $31 million short of that target.
The Philadelphia Federation of Teachers (PFT) recently agreed to extend its contract by a year and allow the District to skip some payments to its health and welfare fund. All told, the agreement created $58 million in savings for the District, but only $42 million of that goes to the operating budget. Concessions from the principals’ union netted the District $2 million.
But the District’s largest blue-collar union, District 1201 of SEIU Local 32BJ, turned down a proposed contract with $16 million in concessions, leaving a large chunk of the budget hole unplugged and prompting the District to send out layoff notices to as many as 1,300 school bus drivers, mechanics, custodians, and other blue-collar workers.
Over a hundred SEIU 32BJ members turned out Wednesday to protest the pink slips.
Karl Johnson, a building engineer at High School of the Future in West Philadelphia, said his department had already been “cut to the bone” and argued that the layoffs would threaten student safety.
“Sometimes people don’t understand when they look at the custodial staff, building engineering staff, and the maintenance staff how important we are because most of our job is above the ceiling, behind the walls, and under the floor,” said Johnson.
SEIU 32BJ President George Ricchezza exhorted the SRC to reconsider and said he was willing to come back to the table.
“We have reached out, and we are willing to discuss,” Ricchezza told District Acting Superintendent Leroy Nunery.
“It’s a new day and we’ll look forward to having a conversation,” Nunery responded.
Wednesday was Cary’s first meeting, but she remained largely quiet throughout the three-plus hour session.
“I think I ought to read, listen, and learn,” Cary said during brief opening remarks.
There were signs that the new-look commission, which has been vocal in touting a new commitment to transparency and public accountability, is serious about changing the way it does business.
Per state law and standard practice, District counsel Michael Davis announced as the session opened that the commissioners had met in executive session prior to the meeting.
But Davis expanded significantly on what for years has been a pro forma statement, revealing that the commissioners had met with City Solicitor Shelley Smith as well as the city’s chief integrity officer, Joan Markman, "so all members could discuss issues related to SRC operations and how meetings will go forward.”
Part of the discussion, said Davis, revolved around recommendations arising out of the so-called “Markman Report,” which detailed former Chairman Robert Archie’s involvement in backroom dealing on a potentially lucrative charter deal last spring.
Archie and two other former commissioners resigned in the past two months.
The new-look SRC will have its hands full in the coming weeks.
In addition to considering further budget cuts for this year, the commission will soon be gearing up for next year’s budget. But because new sources of federal and state aid appear unlikely and many of the steps taken this year represent one-time savings, there could be another big hole in 2012-13.
The District also announced that it will unveil next Wednesday its recommendations for what could be dozens of school closings and consolidations as part of its facilities master plan.
“These are very difficult times, and unfortunately, they are not ending soon,” said Pritchett, the commission’s interim chair.
Listen to Benjamin Herold’s report for WHYY.