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Mayor plans to proceed with borrowing $50M for schools, restoring 1,000 positions

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

Huge thanks to @MayorNutter for providing assurance of $50 million in order to begin the process of returning critical staff. — Dr. William Hite (@SDPHite) August 15, 2013

Mayor Nutter announced Thursday morning that he is taking "executive action" to borrow $50 million for the schools in time for their opening on Sept. 9. The funds will allow the District to restore about 1,000 of the 3,800 positions that were cut this summer due to the city’s budget crisis. The mayor has issued a letter to Superintendent William Hite assuring him that the city will deliver those funds.

City Council, still not on the same page with the mayor about how to raise the funds for the School District, has separately provided its own assurance that the District will get $50 million.

Hite, who last week said that the $50 million was “necessary but not sufficient” to ensure the opening of schools, said in a statement Thursday that the money committed by Nutter "will enable us to provide many crucial school functions and restore critical staff positions, including assistant principals, counselors and hallway, recess and lunch monitors. This money will also help us to avoid combining grades in single classrooms, offer extracurricular activities at all schools, and ensure adequate maintenance and custodial services."

City Council President Darrell Clarke, however, says the mayor does not have the authority to borrow these funds.

The City of Philadelphia cannot borrow $$$ without approval of #PhillyCouncil. — Darrell Clarke (@Darrell_Clarke) August 15, 2013

That doesn’t appear to be an obstacle to the go-ahead the mayor gave the District. Asked whether Hite should still presume that the District will get the $50 million Hite had asked for, Clarke said "Correct."

#PhillyCouncil gave #phillyeducation assurance of $50M to open schools earlier this week. — Darrell Clarke (@Darrell_Clarke) August 15, 2013

Here are the mayor’s prepared remarks:

A week ago, Superintendent William Hite said Philadelphia public schools could not safely open on Sept. 9 without a firm commitment of $50 million so that he can hire back about 1,000 School District employees between now and then. Today, as Mayor of this great City, I’m here to say I WILL NOT RISK A CATASTROPHE. We WILL avoid this disaster. I am committing to our students, parents and citizens today that schools are going to open on time and safely on Sept. 9th. Children are going to continue their education. I am not going to let this crisis ruin the start of what is certainly a promising school year, and it’s clear to me that a majority of Council members, even with different ideas now being discussed, want the same one thing – that schools open on time AND safely. Therefore, I am taking executive action today on behalf on our City to end this current crisis and uncertainty. There are a number of ways to try to accomplish this goal – a borrowing, a grant, a loan or even the purchase of school buildings or school tax liens – each has its own requirements, complications and challenges. I’ve evaluated all of the options and their respective impacts on the City’s finances. As a result of these evaluations, I am today now directing the City Finance Director, the City Treasurer and the Budget Director to begin immediately to take all necessary steps to conduct a City borrowing of $50 million on behalf of the School District. I believe this mechanism is the best way to immediately get these needed dollars to the School District with virtually no financial impact on our City. If Council approves a sales tax bill consistent with what’s been approved in Harrisburg, or any other legislation, it will give the City access to $15 million a year to repay the borrowing. If Council fails to act, either the costs of the borrowing will be borne by our City’s General Fund and unfortunately it causes significant deficits for the City, or even worse, deprive our schoolchildren of a sustainable funding source because of a dispute over how best to solve our City pension problems. Our school children did not create the City pension problem nor are they responsible for the School District’s funding problems. They should not suffer as we try to resolve it. They should not be pawns in a political chess match of leverage and strategy. The State legislation, while not perfect, does provide $400 million to our Pension Plan over the next 10 years, while also providing $600 million in education funding over the course of the next 5 years. These are significant new funds for education AND pensions. Second, today, I will have this letter hand delivered to Dr. Hite, informing him of the City’s commitment and asking him to immediately begin the process of hiring back the thousand or so school district employees whose return will ensure that schools open on time and safely. Third, today, we will also hand deliver to City Council and the Chief Clerk proposed legislation to implement the sales tax extension consistent with what was done in Harrisburg. This legislation will also include language that if the General Assembly changes the distribution of sales tax revenue to an equal split between the School District and the city pension fund, then that too would be authorized by Council with passage of that particular piece of legislation. And I agree that the sales tax should be split between the City and School District IF, if the cigarette tax is passed in Harrisburg. The bottom line is that we need to take action now and make commitments now in order to avoid chaos. I will continue to work with Council President Clarke and members of City Council to take the necessary steps to support our School District in the short term while we all work with our State Legislators and our Governor on a long-term, stable and recurring financial plan for funding the education of our young people. And so, I’m also calling upon all elected officials, school advocates, the business community, our religious communities, our parents and anyone concerned about the City’s future and its economic well-being to work together with cities and towns all across the Commonwealth on developing a new education funding formula that takes into account the student population and their needs and challenges. Pennsylvania needs to join the other 47 states that use such student-based formulas to fund education. Let this effort be the cause that unites us all across the Commonwealth. I believe this cause is a significant part of what quality education is all about. And if we’re successful, it’s this kind of long-lasting work of which we can all be proud. But let me be clear at this moment, my message today is focused on tomorrow’s deadline and on Sept. 9th. We are taking these actions because Philadelphia children and their parents and their hopes for a brighter future are not going to be shattered by indecision, fear or doubt. As Mayor, it’s my duty to keep Philadelphia on track and moving forward and that’s what I’m doing today. On Monday morning, Sept. 9, I expect that we’ll all be ringing school bells at schools all across the City with Philadelphia school children, their teachers, administrators and other staff. We’re going to kick off a great year of enrichment and discovery on that day. To the parents of Philadelphia school children, I have heard you clearly and I understand your concerns, and that’s why I’m taking this action today on behalf of our children. Young minds are preparing for greatness in our grand and beloved City. We must meet our challenges head-on, that is our path forward. I anticipate that day, and with today’s commitment we’ll have the necessary funding and staff – safe and ready to go on Sept. 9th. Thank you.