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Budget shortfall sets off scramble to avoid catastrophe

Hite, calling for shared sacrifice, wants money from teacher concessions, the city, and the state.

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

For the third consecutive year, the District is facing a massive budget shortfall, prompting a scramble to find the funds needed to save school basics like music, guidance counselors, and secretaries.

In March, Superintendent William Hite unveiled a “catastrophic” budget for 2013-14. To close a $304 million hole, said Hite, the District needs $60 million from the city, $120 million from the state, and $133 million in teacher union concessions. Otherwise, he said, city schools will open in September with a principal, teachers in classrooms at maximum capacity, and almost nothing else.

“This situation is dire, it’s real, and it’s why we’re required to ask for sacrifices from all parties,” said Hite.

The bare-bones proposal has prompted student walkouts, anguished pleas from parents, and feverish lobbying in City Hall and Harrisburg.

In early May, Mayor Nutter announced the city’s plan to come up with its share and more: a 50 percent hike to the city’s liquor-by-the-drink tax, a new $2 per pack tax on cigarettes, and improved collection of delinquent city taxes. All told, said the mayor, the measures could generate $95 million.

“Now it’s time for political leaders to step up or step aside,” said Nutter.

But enactment of this plan is not guaranteed, in part because state enabling legislation is needed to make each of the three revenue-generating measures possible.

State Republican leaders said getting these passed quickly could be difficult. They also said it’s unlikely the state will itself come up with substantial new revenue for city schools.

“The fact that you would have to add in additional funding for many other school districts, along with the fact that [Pennsylvania] is probably going to end this fiscal year more than $200 million below where Gov. Corbett expected us to be, makes it a very steep climb,” said Senate Republican spokesman Erik Arneson.

Even if the funds for Philadelphia can be found, some key state officials believe they should be contingent on an overhaul of teacher contracts.

Predictably, that stance did not sit well with Philadelphia Federation of Teachers president Jerry Jordan.

“We’re not responsible for [the financial crisis],” said Jordan. “To come and ask us now to bear the brunt of taking pay cuts in order to balance the budget, that’s just wrong.”

A doomsday scenario

The District’s budget situation can be blamed on steep drops in state and federal aid over the past two years; steadily rising fixed costs for things like pensions, debt service, and charter schools; and poor financial planning.

In 2010-11, the District’s total revenue peaked at $3.1 billion. It is down to $2.8 billion this year; no significant increase is assured for next year.

This year, the School Reform Commission borrowed $300 million just to pay the bills. With nearly 10 percent of its total spending already going to debt service, Hite described more borrowing as a “path to bankruptcy.”

But without new revenue, the only alternative is cuts.

Hite said that means 20 to 25 percent less for each school. All class sizes would go to the maximum allowed by the PFT contract. Some things required by law, like gifted programs, would be eliminated, as would assistant principals, librarians, books, extracurriculars, and even the $100 allotment teachers receive for supplies.

“The very fabric of our schools [is] being put in jeopardy,” said Chris Lehmann, principal of the Science Leadership Academy.

Among other things, said Lehmann, the cuts would mean losing one-fourth of SLA’s teachers and eliminating 11 sports teams.

On May 7, students from SLA and other schools walked out of class and headed for District headquarters to protest the proposed cuts.

Rebecca Chalil, a High School for the Creative and Performing Arts senior, said she participated because she was devastated that her school would not have enough money to stage its annual musical.

“To cut something that’s so important to us, it just makes us feel as if we’re less important,” Chalil said.

More than 2,000 students from 27 schools conducted another mass walkout on May 17.

Parents also packed SRC meetings to decry the budget proposals and question District priorities.

“It seems that when cuts are made, they are always made on the backs of our kids, but outside contracts and pet programs get a free pass,” Cook-Wissahickon Elementary parent Rebecca Poyourow of Roxborough told the commission in May.

Tax the sins

District officials say they have no choice.

In addition to school-based cuts, Hite proposed $6.6 million in further reductions to the central office, $7 million in efficiencies related to utilities and transportation, and even $1 million in net savings via the creation of the Philadelphia Virtual Academy, an online District school intended to lure students and dollars back from cyber charters.

Hite also recommended that no Philadelphia charter schools be expanded next year, despite requests from 21 charters to add a combined 15,000 seats. Such expansion would have cost the District $500 million net over five years.

“It would be irresponsible for the District to endorse charter expansion while asking principals to do the impossible with school budgets,” said Hite.

But it’s still not nearly enough.

Nutter said the city must do its part.

“Our young people will suffer under a devastating, bare-bones budget,” he said. “And we all suffer as a result: poverty, unemployment, crime, lost wages, and lack of personal opportunity.”

But Nutter’s plan to raise alcohol and cigarette taxes and improve collection of delinquent taxes is not a slam-dunk. Tobacco industry lobbyists and at least one hospitality industry group vowed to fight the measures.

An alternative tax plan from City Councilwoman Maria Quiñones-Sanchez would boost the city’s use and occupancy levy on businesses, raising $32 million, and would not require state approval.

City Council President Darrell Clarke worried that state officials might think that authorizing Philadelphia to hike its own taxes would let Harrisburg off the hook.

“There continues to be this underlying issue, the ‘gorilla in the room,’” Clarke said. “Where are the additional dollars that will come from the state?”

Who goes first?

Many state lawmakers remain skeptical of sending more money to schools, especially Philadelphia’s.

“Somehow, we’ve got to get this educational industrial complex … under control,” said Republican state Sen. Mike Folmer, chair of the Senate Education Committee.

“The question is, ‘Do we need to restore funding or do we have the guts to look at existing spending and prioritize how we’re doing that spending?’”

Folmer and other state officials acknowledged that the District has taken painful steps to close schools, extract major concessions from blue-collar workers, and slash its central office.

But still, said state Budget Director Charles Zogby, “satisfying the District’s request is going to be extremely difficult.”

Corbett’s budget proposal would send just $15 million in additional funds to Philadelphia this year.

Any new funds for Philadelphia, said Zogby, should be contingent on “achieving serious reforms” in the teachers’ contract.

In opposing the idea that teachers should take pay cuts, Jordan, of the PFT, rejected the notion of “shared sacrifice” espoused by the District. He said Philadelphia teachers already make less than their suburban counterparts, deal with some of the highest class sizes in the state, spend liberally out of pocket for their classrooms, and have already made substantial concessions.

The teachers’ contract with the District expires at the end of August.

The District must adopt its budget by May 31, but adjustments will be made after the city and state finalize their budgets at the end of June.

Holly Otterbein and Tom MacDonald of NewsWorks and Dale Mezzacappa of the Notebook contributed to this report.

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