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District finally reveals size of budget gap

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

[Updated, 10:10 pm] Superintendent Arlene Ackerman today acknowledged the size of the District’s budget gap for next year to be "$400 to $500 million or more" – an amount that likely represents about 15 percent of total District spending.

And officials describe their challenge as three-pronged:

The grim news was announced at a 4:30 p.m. press conference where Superintendent Ackerman, Deputy Superintendent Leroy Nunery, and Chief Financial Officer Michael Masch made brief presentations and fielded questions. The District until this event had declined to publicly put a number on the size of its budget gap.

The District’s response to its financial woes was described as a process involving three phases, starting with immediate spending reductions and furlough days for top staff. Much deeper cuts in "phase two" for next school year, when the District faces a loss of federal stimulus funds, would include the following, according to Nunery:

  • more furlough days,
  • potential layoffs of one-fourth of all central office staff,
  • cuts in school budgets, and
  • increases in class size.

If caps on charter enrollment are lifted or a voucher bill is passed by the state legislature, Nunery acknowledged that the District will be forced to move into a "phase three" that "will disrupt our core programs and initiatives."

How that kind of disruption will be avoided in phase two is unclear. The scale of the budget gap dwarfs previous shortfalls confronted by the District over the past decade.

While the officials all emphasized the need to find savings in the central office, Masch noted that the entire budget for the 1,000-person central office amounts to only $92 million. The District could slash its central office spending by half and still capture only one-tenth of the necessary savings.

"What will be our first priority is the welfare of our students," Ackerman said.

In response to a question, Ackerman admitted the likelihood of some teacher layoffs if the gap ends up greater than $400 million. "Getting to $400 million is very tough," she acknowledged.

The District did not provide the media with any lists of cuts or other documents.

But one of the more specific cost-saving measures announced, effective immediately, is that Ackerman, her executive team, and any nonunion staff in central office making more than $100,000 per year will be expected to take unpaid furlough days between now and June 2012.

"Yesterday I announced to the SRC that as an example, I will start by taking 10 furlough days," Ackerman stated. The ten unpaid days, which a District spokesperson said would be spread over the next 16 months, would be equivalent to a pay reduction of just under 3 percent for the superintendent, or about $10,000 (on an annual basis).

The executive team will get eight-day furloughs, and the other high-paid staff will have six unpaid days. The total savings from the furloughs is half a million dollars, according to the spokesperson, Elizabeth Childs.

The District’s worst nightmare is that its impending deficit could go higher. The state could decide cut its contribution to the basic education subsidy, pass a voucher bill, or lift caps on charter enrollment. Masch noted that each 100 students who move into charters cost the District roughly $1 million and it is difficult for the District to reduce school budgets to compensate for slight drops in enrollment that are spread spread over more than 260 schools.

District officials briefed City Council members on the budget this afternoon. The Inquirer reported on those discussions today and cited a District source who put the budget gap for next year at $490 million.