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Budget banks on $180M in new aid, 10% pay cuts

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

Updated | 10:15 p.m.

The struggling Philadelphia School District, hoping to close a $242 million budget shortfall for next school year, plans to slash labor costs by 10 percent more and hope for a huge influx of cash from the state and city.

The School Reform Commission voted Thursday evening to approve this so-called "lump-sum budget," which totals $2.66 billion. The 2013-14 school year will be the third in a row in which the District, staggered by sharp reductions in state and federal aid as well as poor financial planning, has had to make deep and painful cuts to balance its books.

In a press briefing Thursday afternoon, Superintendent William Hite told reporters the District would ask for $120 million from Harrisburg and $60 million from City Hall, part of a painful effort to fix the District’s "structural deficit" without again resorting to borrowing money to pay its bills.

"I’m agnostic on the ‘how’" legislators come up with the new revenue, Hite said. "We’ll take anything."

A presentation to the SRC provided details on the District’s predicament, including how state aid to the District took a $201 million hit two years ago from which it has not recovered.

Absent new financial commitments from the state and city, the District would expect only a 2 percent increase in revenues next year. The lump sum budget instead projects revenue will go up by a hefty 10 percent.

The $133 million in hoped-for savings from personnel costs are to be achieved by concessions from workers, not further reductions in force.

Those savings would require an average giveback of 10 percent in salary from all employees, as well as a 10 percent contribution toward benefits costs, officials said. For employees like the District’s blue-collar union workers, who have already accepted cuts in compensation, the District’s demand for concessions would be reduced accordingly.

Officials hope to save millions more by reducing contracts with outside vendors, streamlining the District’s transportation system, cutting 8 percent more out of the District’s central administrative budget, and being more energy efficient.

"We are seeking multiple ways to address the challenges that we face," Hite said. "We’re trying not to impact schools any more than they’ve been impacted already."

But while the District isn’t planning on further cutting schools’ already decimated operating budgets except where enrollments declined, the loss of millions of dollars in federal grant money this year — due to sequestration, the expiration of stimulus funds, the expiration of grants from the U.S. Department of Labor and the U.S. Department of Education, and cuts in Title 1 funding, among others — will mean more direct hits on the city’s classrooms.

All told, Hite said, that could mean $134 million less next year for "highly impacted groups of students," including those who have special needs, those who speak English as a second language, and those who are eligible for free lunch.

Some Philadelphia elected officials responded quickly to the request for additional revenues.

From Mayor Nutter: "We will very seriously consider this new SRC request for more funds for public education in Philadelphia in the context of the overall city budget and tax rate. I want to be very clear that through a dire economic recession, we have supported our children’s education with increased funding for three years in a row, and I will continue to do all I can at both the city and state levels to improve the educational opportunities of all our children.”

State Sen. Vincent Hughes, who recently criticized District officials for not demanding more state dollars, offered praise: “The SRC needs to strongly reinforce arguments made by lawmakers from Philadelphia that the Corbett administration has short-changed the city in school funding. I am pleased the SRC is now engaged and that they are pursuing new dollars to offset local costs."

Details of the District’s budget must be finalized by May 31, pending the resolution of state and city budgets.

Additional reporting by Paul Socolar

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