This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.
With a projected shortfall for 2012-13 of at least $200 million even after the deep cuts this year, District leaders are proposing a major restructuring that would further downsize the central office, close 64 schools, and break up those remaining into "achievement networks."
Balancing expenses with revenues won’t happen until 2013-14, said Chief Recovery Officer Thomas Knudsen. It will require significant short-term borrowing, deep union concessions by 2013, and the swift passage of a tax reassessment plan by City Council that would net the District $94 million annually.
Without the $94 million, the projected deficit will balloon to $312 million in 2012-13, and some schools may not open in September, Knudsen told the School Reform Commission.
He also presented a five-year fiscal plan that anticipates very little growth in state aid and projects a $1.1 billion cumulative shortfall by 2017 unless the SRC takes action. The commission must adopt a budget by May 31.
Blaming severe downturns in state and federal revenue, the recession, and "poor fiscal policy" in the past, Knudsen said, "We are, quite simply, in a financial crisis."
Next year’s spending plan is intended to spare individual schools from further cuts but maintain what Knudsen conceded were "bare bones" budgets.
"We have wrung the towel … dry … in terms of academic programs," he said.
However, anticipating employee concessions, some school closings, and more students in charters, spending on instruction in District schools is slated to drop by 11 percent, or $121 million, in 2012-13, and by 2.5 percent more the following year.
And there is still a $20 million shortfall in this year’s budget, which Knudsen hopes to close through collecting delinquent city property taxes.
"It is the District’s duty to figure out how to do the best we can with the resources we have," SRC Chair Pedro Ramos told Council.
But many advocates and some City Council members have called instead for demanding more state aid from Harrisburg.
The restructuring blueprint has also caused an outcry that the SRC is using the budget crisis to promote an agenda of privatization, union-busting, and charter growth. Union leaders and others compared it to the "failed experiment" after the 2001 state takeover that turned over management of low-performing schools to outside operators.
Knudsen and Ramos dispute this. Both have said that "fundamental change" is necessary because the current system "isn’t working" to give students a quality education in a safe environment.
The Philadelphia Federation of Teachers has started informational picketing at schools on Fridays and formed The Philadelphia Coalition of Advocates for Public Schools with other unions, parent and advocacy groups to fight the proposal.
"In the name of fiscal responsibility, this plan will cannibalize the School District," PFT president Jerry Jordan told Council. "The plan assumes that by closing schools, expanding charter schools and cyber charters and turning over management to outsiders that educational outcomes will improve. There isn’t a shred of research or evidence to support this assumption."
Under the restructuring, Knudsen said, a skeletal central office would retain "non-core mission" functions like payroll, finance, technology, and communications. Other services like maintenance, transportation, and academic supports would be driven into the field, with schools free to purchase services from other sources. Under a new system of "achievement networks," outside organizations would supervise and manage groups of 20 to 30 schools.
Knudsen said he did not necessarily want to outsource transportation, maintenance and custodial services to private companies. But plans now call for laying off by next year all 2,700 of those workers, who belong to SEIU Local 32BJ, unless costs are reduced by $50 million.
Union president George Ricchezza said that most of his workers are female and make less than $28,000 a year.
"The negative impacts of these cuts don’t stop at the schools," he told Council. "Our communities can’t afford to lose these jobs," which, he said, have provided thousands of city residents with affordable health care and "middle-class lives."
Officials said that while the school closings, wage and benefit concessions, and "modernizing" transportation and facilities services would save money, the reorganization of schools into networks was "revenue-neutral."
The five-year spending plan and reorganization blueprint, compiled largely by the Boston Consulting Group, would also reassure lenders that are being counted on to finance the budget gap until 2013, when union contracts are up for negotiation, Knudsen said.
Ramos told City Council that the vision is a "performance-based service model that is accountable to not just the superintendent, but to the schools it is supposed to serve." He stressed that the plan is not final and community feedback will be considered.
But many advocates said they should have been consulted before now.
Parents are concerned about "the health, safety and education of their children," Home and School Council president Dolores Solomon told Council. "This plan does not address any of these concerns. … It’s a business plan."
She said that layoffs of school police, non-teaching assistants, and nurses compromise student health and safety, while cuts in art, music, and athletics deprive students of enrichment.
"These repeated ‘experiments’ on our children have not worked in the past and will not work now," she said.
Others urged Council to provide more funds but reject the reorganization.
"Please find funding to stabilize the District financially and for classrooms and instruction, but please say no to this plan," said parent Rebecca Poyourow.
The plan expects charter school enrollment to grow from 25 to 40 percent by 2017. But because the state mandates that charter per-pupil reimbursements be based on districts’ prior year spending, charter schools will suffer cuts next school year.
David Hardy, CEO of Boys’ Latin Charter School, told Council that some charters may see declines of as much as 17 percent of their budgets this year. Hardy said the cuts are unfair.
"The District budget woes may also impact our ability to expand our successful program," Hardy said. "If their budget cuts give them a head cold, it gives us pneumonia."