This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.
The District’s transformation plan announced today includes a five-year budget plan. The District also published its annual 43-page budget-in-brief document today. Here are 10 details that stand out about this far-reaching plan to bring the budget, which now has a $218 million gap, back into balance:
- The good news: The District now projects it wil end the current year without a deficit.
- Taking on more debt: Details for balancing the coming school year’s budget are not all worked out. Chief Recovery Officer Thomas Knudsen said borrowing will be necessary to close much of the anticipated $218 million gap because most of the plan’s projected savings won’t come soon enough. And the gap will grow if the city doesn’t deliver $94 million more in tax revenue.
- The strategy: District leaders say their overall strategy is to bring expenses back into balance with revenues by 2013-14 through "substantial concessions from all stakeholders." Major areas identified for savings include wage and benefits restructuring, reduced charter expenses, school closings, and drastic cuts to facilities maintenance and transportation.
- Pay cuts: Wages and benefit savings are an immediate target, Knudsen said. His goal is to cut $156 million in personnel costs off of a $1.2 billion baseline. That would be a 13 percent reduction. Asked whether the goal is to achieve those cuts in 2012, he said, "I would like to, but we’re not going to be able to get there this year." Union contracts run until August 2013.
- Charters: The budget already reflects a 7 percent reduction in per-pupil payments to charters in the coming year. District payments to charters are determined by a state-mandated formula and based on District expenditures in the prior year. In addition, the District served notice to charters not to expect any increases in per-pupil payments in the three following years.
- More charters: The District says it’s achieving $149 million in savings by limiting the growth of charters. But at the same time, charter costs in the five-year plan grow from $603 million in 2012 to $874 million in 2016 due to a continued increase in the number of charter seats.
- The squeeze: With charter school expenses growing and the costs of the District’s debt growing as well, what’s left for District-operated schools declines steadily in the years ahead – from $1.5 billion in 2012 to $1.3 billion in 2016. This $200 million decrease means funding for District schools will be 13 percent less in 2016 than it is today.
- School closings: Part of that decrease is accounted for by closing 40 school buildings in 2013, and 6 more each year after that, at an average cost saving of $850,000. Starting in 2013, they hope the savings add up to $33 million annually.
- Blue-collar blues: The District wants to save an additional $89 million on the operational side. The biggest chunk of that is $50 million in transportation, facilities, and maintenance costs. Current spending in those areas is $224 million. Knudsen said $50 million can be saved by contracting out those services but invited the District’s blue-collar union, 32BJ SEIU, to "come back to management and tell us how you can reach that level of savings."
- Kids and classrooms: "We have wrung the towel about as dry as we can in terms of academic programs," said Knudsen, promising to spare schools from further cuts. But the numbers don’t match that promise, reflecting the personnel cuts the District is determined to make by 2013. Spending on instruction in District schools is slated to drop by 11 percent, or $121 million in 2013 and by 2.5 percent more the following year.