From the archives: Budget crisis ‘more stark than ever’

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

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The Notebook was launched in 1994 as a newspaper committed to ensuring quality and equity in Philadelphia public schools. We celebrated the 20th anniversary of the first publication this spring. We are featuring an article from our archives each week, shedding light on both the dramatic changes that have taken place in public education and the persistent issues facing Philadelphia’s school system.

This piece is from the Spring 2001 print edition:

by Paul Socolar

Confronting a fiscal crisis of monster proportions, the School District enters the spring in search of some major new revenue from all levels of government and facing a growing likelihood of new budget cuts.

To balance next year’s budget, which includes virtually no money for new programs, the District would have to cut a staggering 12 percent of its total spending.

"Although there are things we can do more efficiently and effectively, I must caution that we cannot cut our way out of this problem," said Philip Goldsmith, the interim Chief Executive Officer of the School District.

In their March 6 budget presentation to Philadelphia City Council, District officials said they were currently projecting a budget with an operating deficit of $191 million for next school year. Coupled with an estimated carryover $44 million deficit at the end of this year in June, the total estimated shortfall of $235 million is, in Goldsmith’s words, "more pronounced and stark than ever."

A "financial update" developed by the District paints a clear picture of a district that has been getting insufficient help from both state and city in covering its growing costs. The revenues of the District, adjusted for inflation, have grown less than 1 percent a year since 1995. When enrollment growth is factored in, the School District’s real annual revenue per student has actually declined.

Starting in 1993, the state capped its aid formula, and Philadelphia’s growth in enrollment brought no new state revenue. Over a five-year period from 1993 to 1998, the total increase in state aid per student that Philadelphia received from Harrisburg was just over 12 percent, whereas most other urban districts in Pennsylvania received state revenue boosts of 20-40 percent in the same period.

Driving up the District budget in recent years have been several growing costs: a rapid increase in the number of ESOL bilingual students, the introduction of universal full-day kindergarten, new special education costs, an expansion of the school police force, and the establishment of charter schools.

School District preliminary budget projections show expenses increasing next year by $150 million (almost 10 percent), with most of the increase due to costs of the teachers’ contract, non-union personnel expenses, increased charter school costs, and a new school for disruptive students. Officials say they have run out of "one-time fixes" to help balance the budget.

”Without a long-term solution involving the city, the state, and the District, we will be unable to provide the type of education the school children of the Commonwealth’s largest city need, deserve, and require," Goldsmith said.

Deborah Kahn, Secretary of Education, added that the District and City will do everything possible on their own to reduce the deficit.

"Our actions will include a combination of organizational changes, spending cutbacks, targeted use of federal and other grant funds, generation of local non-tax revenues, coordination and/or consolidation of functions between the City and the District, and a willingness to act and think ‘outside of the box,’" said Kahn.

Discussions about changing the system of school funding continue at the state level, but with little evidence that any major initiative will emerge this spring. While teachers and others around the state are rallying in Harrisburg to demand more funding, the talk from city and School District officials is about "sitting down with our partners in state government."

In Philadelphia, speculation has been rampant about a possible reorganization or elimination of the District’s 22 cluster offices, established in 1995 to replace the old system of six regional offices. Goldsmith said that he and Chief Academic Officer Deidre Farmbry are evaluating the organizational structure.

”The focus has to be on the classroom and how we support that," Goldsmith said. "The point is not the number [of offices), but how do we put people in the classrooms where they are desperately needed."

The savings resulting from eliminating the clusters would amount to only a tiny fraction of the deficit. There are about 200 cluster-based staff. Counting central offices, current District figures show a total of 1,515 "non-school based" or administrative staff. Goldsmith pointed out that even if every one of the administrative staff in the District could be eliminated, the District would still face a $100 million deficit.

The CEO added that he is not interested in ”turning the District topsy-turvy." Goldsmith has said that as an interim leader of the School District, he does not want to undertake a major restructuring. A search is on for a permanent chief executive officer, with the goal of filling the post by September 2001.

District officials note that the budget crisis reflects fundamental problems in the pattern of state funding for schools and not a growth of the bureaucracy. They say the figure of 1,515 non-school based staff represents a 7.8 percent decrease since 1995.

The budget crisis leaves the School District’s new Educational Empowerment Plan in limbo. Elements of the plan included reduced class size in grades K-3, expanded summer school, and activating the "school support process" at schools where test scores are lagging. To implement the new elements of the plan for the coming year would cost $75 million, but so far the District has only its $17 million Educational Empowerment grant to pay for these programs.