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Mayor proposes $153 million in new funds, less than Hite’s request

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

Philadelphia’s Mayor Nutter, in his annual budget proposal, addressed the dire needs of a School District that again faces an enormous budget deficit by proposing $153 million in additional funding for next year. That amount, if realized, still falls short of the District’s request.

The District is turning to the state and city for a combined $440 million. It is counting on $120 million of that to replace funds that were promised and raised last year but were not recurring. And to cover rising costs while taking some steps toward his aspirational vision for the District, Hite has asked for a great deal more. The price tag attached to the first year of Action Plan 2.0, as it’s called, is $320 million. A quarter of that amount will be used just to cover unavoidable annual increases in expenses.

Hite has said he wants the city to dig deeper by providing the $120 million promised to the District last year in the form of an extension of a sales tax surcharge and an additional $75 million to help fund his Action Plan.

The mayor said that his proposed budget would include the city’s extra 1 percent sales tax, but that would be split evenly between the School District and the city’s underfunded pension liabilities. The schools’ share will be $70 million. The rest of the $153 million would come from the approval of a cigarette tax, which would generate $83 million the first year and a smaller but recurring amount the following years. However, those dollars are contingent on the state legislature’s approval of the new tax, which legislators have declined to do since it was passed by City Council last spring.

The mayor wrapped up his comments on education by renewing his call for a predictable and sustainable funding formula for Pennsylvania.

Below is the text from the mayor’s prepared remarks on education.

Let me take a few moments to discuss the paramount issue that I know every member of Council is concerned about – public education for our kids.

Our children deserve a high-quality education. Period. But, prolonged fiscal challenges at the School District have truly impeded our ability to provide a rich learning experience for our young people. Our Administration and City Council have time and time again shown leadership, increasing annual, recurring education funding by $155 million over the last three years.

Despite increased funding from the City and making tough decisions to reduce costs and implement savings, the School District is operating under a significantly constrained budget because it did not receive the full funding it needed for its current budget.

Recently, the District requested an additional $320 million in recurring funding – that number is in addition to the $120 million that would be generated by the extension of the 1% Sales Tax currently a topic of discussion in City Council.

Because we’re required to budget revenues consistent with existing law for measures that have already been enacted, our budget assumes that the District will receive that $120 million. But, let me be clear, and I have been consistent on this issue, we are in agreement that a 50/50 split of the 1% Sales Tax extension, coupled with the implementation of the cigarette tax, is vitally important for the financial stability of the School District and the fiscal health of our City pension fund. And, I will continue to advocate for a change in the Sales Tax extension legislation in Harrisburg.

Two weeks ago, when Dr. Hite announced that the District would need an additional $320 million for Action Plan 2.0, I said that I support his broad request for additional funds and that I would do whatever I could within our budget constraints to ensure the District had the additional funding they needed from us.

Specifically, the District has now made a request for $75 million in recurring annual funding from the City to support District-managed and charter schools. To meet the funding request, I am again calling on the General Assembly to authorize the $2 per-pack cigarette tax, as already approved by this City Council.

In its first year, the cigarette tax would generate $83 million in education funding assuming a July 1, 2014 start date, and even in the out years of the tax, when smoking rates more than likely will decrease, which is a very good thing for the health and wellness of our citizens, it will still provide more than $70 million of dependable, annual education funding. All it requires is the General Assembly simply to pass authorizing legislation, which I will continue to push for in Harrisburg.

Once again, I want to thank the members of City Council for passing the cigarette tax 16-0. But there is still more work for us to do to support high-quality education and the children of this City. The School District of Philadelphia has a structural funding deficit that is caused by a consistent underfunding problem, it’s not getting the funds it needs or deserves.

Most importantly, we need substantial and sustainable long-term funding. The School District of Philadelphia has a structural funding deficit that is caused by consistent under funding problem – it’s not getting the funding it needs or deserves. We need a state-wide, student-weighted funding formula, a formula that takes into account the number of students in a District and the needs of those students. Pennsylvania is one of only three states in the United States of America that does not utilize a student-weighted formula.

We must stand together and urge the Commonwealth to step up, create a new funding formula and support Philadelphia students and children all across the state.

Last month, I asked members of the Greater Philadelphia Chamber of Commerce to partner with all of us in the fight for the future of our city: the fight for education funding. It is my sincere hope that all Philadelphians will join in that fight for fair and full education funding as well.

I want to recognize Dr. William Hite and his team at the School District – he is doing an incredible job under tremendously difficult circumstances and has my complete support, including his efforts to gain sensible work rule changes that support positive outcomes for our kids in new teacher and principal contracts.

I know Dr. Hite, the School Reform Commission and every Councilmember shares my belief that our children should be our first priority. Investing in their education is our investment in Philadelphia’s future.

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