This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.
Updated | 7:50 p.m.
Tonight Superintendent William Hite presented two five-year financial plans to the School Reform Commission.
One is called "Inadequate Status Quo" and reflects the "grim reality" of current conditions in schools.
The other, called "Transformation," asks for enough resources to "provide all … students with the kind of educational opportunities that will enable them to fulfill their promise."
Both plans require more money — $30 million to maintain what exists now, and 10 times as much — $309 million — to give students what District leaders think they need next year.
In a presentation to the SRC, Chief Financial Officer Matthew Stanski asked the commissioners to approve the first plan, keeping with its policy of not spending more money than is available.
"The plan you are voting on is the financially responsible plan," he said, although, he added, "it is wholly inadequate." It was approved unanimously.
Under that plan, spending between now and 2019 will increase by $282 million, or 2.6 percent, despite annual "labor savings" on the order of $50 million per year. Compensation levels would be flat throughout the five-year plan.
The cautiously projected revenue growth under this plan would be only $115 million, Stanski said, leaving a budget gap that if unchecked will grow to more than $150 million by 2019.
The $30 million gap for next year assumes the District wins its court battle with the Philadelphia Federation of Teaches over its cancellation of the contract and unilateral reduction of health benefits. The $309 million in requested new revenue would be on top of $200 million in labor savings over the five-year period.
By fiscal 2019, the more optimistic "transformation" plan says, the District will need almost a billion new dollars annually — $934 million — "in order to realize a system of great schools for Philadelphia students."
Just to maintain the grim status quo, it will need to find new revenues totaling $374 million cumulatively between fiscal 2016 and fiscal 2019.
The document has been posted on the District’s website.
It says that the District will end this year with a balanced budget, but that expenses are consistently outpacing revenues. The District’s budget imbalance persists even with new revenues from sales and cigarette taxes and efficiency moves since the last five-year plan that included the closing of 24 schools, the elimination of 5,000 positions, and deep reductions in central administrative costs.
The nearly $1 billion figure on top of the current $2.6 billion to provide all students with is not out of line with what was estimated by a "costing out study" done by the legislature in 2007. That study found that for Philadelphia to provide all students with a "thorough and efficient" education called for in the state constitution, it would need to spend about $1 billion more a year.
Stanski painted a bleak picture of the District’s financial future, with more than half of funds committed to mandated costs including pensions, charter school reimbursement, and debt service. That percentage is only going to go up, he said, and will be 60 percent by fiscal 2016, he said.
At the same time, revenues are only expected to grow by 1.1 percent, if nothing changes from current circumstances.
The District is asking the state to contribute two-thirds of the requested funds for next year, or $206 million, and the city one-third, or just under $103 million. "It is important to invest in education," Stanski said. "It reflects what we truly value."
It is also seeking an overhaul in the pension system, major changes in how charters are paid for, and a new state education funding formula — all politically fraught issues.
Pension costs are soaring; in 2011, the District paid just under 6 percent of salary into pensions, by 2019, it will be 30 percent, said Stanski. While the state reimburses the District for about two-thirds of that, its costs in reimbursing all school districts is eating up money that could be put into the basic education funding formula, he said. The state itself is facing a $2 billion deficit, which will make finding more money for schools more difficult.
Stanski said that the state retirement system is funded at about 56 percent of total liabilities; the vast increases for districts are part of an effort to bring that percentage up to 80-90 percent.
Commissioners didn’t seem happy about their options, but asked what an infusion of money under the "transformation" plan would be paid for. Sylvia Simms asked specifically what would be done for low-performing schools.
Hite said that, among other things, it would be used for teacher and principal professional development, to provide both more high-level courses and more "credit recovery" for students who have fallen off track to graduation, and for repairs and maintenance of schools to reduce "asthma triggers" that cause many students to be absent. In addition, he wants more counselors, music, art, technology, and sports.
Stanski said that in a high school with 7,000 students, the budget under the transformation plan would increase from $5.6 million to $7 million, money that the school community can determine how to use. "Decisionmaking will be driven at the school level, with accountability tied to those decisions."