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Countdown, Day 34: Tapping the surplus would cause problems, city officials say

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

City Finance Director Rob Dubow, Budget Director Rebecca Rhynhart, and Chief Education Officer Lori Shorr briefed the press yesterday on school funding. They said that they see extending the city’s 1 percent sales tax — and borrowing $50 million against it — as the only way to supply the School District with additional funds this summer. Besides that, they did not express any hope for securing more money for the District in time for the schools’ opening.

Following are excerpts from the press briefing.

On the city’s revenues being up by $200 million

Rhynhart: The majority of those revenues were already included in our budgeted projections, so it’s not as if there’s $200 million in unexpected revenue that just came in the door that is surplus. … It’s looking to be about $24 million up. This is before adjustments take place, but we usually don’t announce a number at this point because there’s accrual adjustments.

On Councilwoman Sanchez’s proposal to tap the city’s surplus

Dubow: We haven’t met with the councilwoman yet on it. … We don’t have room in our five-year plan for the $50 million, particularly if it’s caught by the "maintenance of effort" [requirements], because then it becomes something we have to do every year and that would mean it’s $250 million over our five-year plan, which would create deficits pretty much every year of the plan except 2014.

On whether there are legal ways around the "maintenance of effort" requirement

Dubow: I think the councilwoman has asked the city solicitor’s office to look at that. … Even $50 million though – [assuming revenues are up by $24 million] the low point in our plan gets under $3 million for our fund balance, which, if you look at all the risks we face, is not sustainable.

On whether the city is thinking of contributing more

Dubow: At this point, what we are thinking is we need really to do the sales tax and that will allow us to do the borrowing that gives the District $50 million.

On the $45 million state grant, contingent on certification by the state education secretary

Dubow: That’s really a governor’s office question, when they think they’ll do that certification. I think, as of now, the District is not booking that money yet.

On a long-term solution

Dubow: So the combination of that 1 percent and the additional [property tax] collections that we’re looking at – $150 million – that would actually be stable and long-term. That was not our preferred option; this is what we have now.

Shorr: The long-term fix here is a state funding formula. We’re one of only three states in the country that doesn’t have a formula that’s based on student enrollment.

The School District of Philadelphia faces an unprecedented situation – uncertainty over whether it will be in a position to open safe and functioning schools in September.

This feature, appearing each weekday, is an effort to highlight developments and motivate action as we get closer to the beginning of the school year. We encourage readers to send us information about both concerns and breakthroughs to

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