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Source4Teachers is paid only for teachers it places, according to contract

The District can cancel its deal with the company to provide substitutes with just 14 days' notice.

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

Editor’s note

Critics may get small consolation from the news that Source4Teachers, the firm hired to provide the District’s substitute service, is not getting paid by the District for the teachers that it is failing to place in city classrooms.

And the District has incorporated standard language into its contract terms allowing it to terminate its agreement with Source4Teachers “for its convenience” and without penalty, simply by providing the company with 14 days’ notice.

Asked whether contract cancellation was imminent, District spokesman Fernando Gallard said, “We are keeping a close eye on the contract and are continuing to demand better performance. … We will continue to do that till our expectations are met.”

The struggling company had hoped to get paid up to $17 million a year, or as much as $1.4 million a month.

But according to the language in a $34 million, two-year contract and supporting documents, obtained by the Notebook through a Right-to-Know request, Source4Teachers can bill the District only for the employees that work each day. For teachers, that rate varies depending on the person’s qualifications.

With the company so far managing to fill only about one-fifth of daily substitute openings, it will face a comparable shortfalll in its revenue from the District.

In addition, the contract calls for penalties starting in January if the company falls below a 90 percent “fill rate” or if it gets substandard results on a “satisfaction survey” sent to principals. But those penalties are small, and they max out at less than $10,000 per month.

The contract says that the maximum penalty the firm could incur is 20 percent of revenues, but it doesn’t specify how or when a penalty as large as 20 percent could be incurred.

The School Reform Commission hired the company during the summer, hoping to improve on an average 55 to 65 percent fill rate for substitute teachers achieved by the District. Source4Teachers, one of only two contractors deemed qualified, promised a 75 percent fill rate in the beginning of the year and 90 percent by January.

The best it has been able to do so far on any given day is 28 percent, leaving schools scrambling to cover classrooms for absent teachers. The districtwide fill rate for substitutes on most days has hovered around 20 percent. Superintendent William Hite has said several times that his patience is running thin and he is taking steps to see that the company improves its performance.

The company’s inability to find enough substitutes to fill classrooms has gotten the District’s school year off to a chaotic, demoralizing start, leading advocates and others to clamor for the District to cancel the contract – and soon. That call was repeated at a City Council hearing Wednesday.

“The whole school year has been contaminated,” said Susan Gobreski, the executive director of Education Voters PA and a city school parent, in testimony to City Council. “So many problems have been caused by this. Teachers who should be able to plan and stabilize their own classrooms are instead doing coverage. Morale is low, people are frustrated, and children’s safety is being compromised.”

Gobreski said that heads need to roll.

“It is important to know what happened here,” she said. “Sometimes a decision is so badly made that somebody needs to resign or be fired for it.”

The contract language provided to the Notebook specifies that the District remained responsible for filling long-term vacancies that are “known in advance and likely to last longer than three months.” However, District spokesperson Gallard said that this provision of the contract had been revised and that Source4Teachers had been responsible for providing long-term substitutes since the start of the school year.

Earlier this week, Philadelphia Federation of Teachers president Jerry Jordan said that one of the major problems this year was caused by failures to find long-term subs for classrooms of teachers whose planned absences were known in advance, for reasons like medical or parental leaves.

The District also has had trouble this year filling permanent vacancies caused by retirements and resignations.

“These vacancies have existed since the end of the last school year, and the District simply failed to fill them,” Jordan said.

Regarding penalties, the contract does not include some harsher penalty provisions that were spelled out in the District’s original “request for proposals.”

In the RFP, the District said that the contractor they hire could be fined up to 6 percent of biweekly revenues for a fill rate below 60 percent and fined at a lower rate for failing to meet fill rates between 60 and 90 percent. Additional fines would also have been imposed for multiple penalties and for poor quality of service.

The School Reform Commission resolution adopted in June that authorized the contract said the District expected to save an estimated $10 million annually by contracting with Source4Teachers, compared with what its expenses would be to achieve a 90 percent fill rate with its previous corps of unionized substitute teachers.

Unknown now is how much the District is losing because it has to pay teachers for covering classes during their preparation periods.

The “Full Day Billing Rates” in the Source4Teachers agreement, which determine how much the District is charged, incorporate a 29 percent markup over what the company is paying the substitutes it hires, said Kendra-Lee Rosati, the District’s chief talent officer.

Some of those rates are being renegotiated with the company and will be included in an addendum to the contract, she said.

Rosati said the District does not yet have a final figure from Source4Teachers for what the invoice amount will be for September, the first month for which the company is billing the District.

The full package of contract documents obtained by the Notebook includes the agreement with Source4Teachers displayed below, job descriptions of positions to be filled by the company, the District’s request for proposals and subsequent correspondence about the bids, and the District’s standard contract language, which applies in any areas not addressed by other documents.

Editor’s note: The School District has clarified that the fill rates they have been reporting to the media are the overall fill rates for substitute positions. These reported fill rates have counted the positions filled by 24 salaried District instructional coaches who have been reassigned as substitutes. The fill rates the Notebook has cited in its coverage thus overstate the fill rate attributable to Source4Teachers by between 3 and 4 percent. District spokesperson Fernando Gallard said the District “will use the fill rate attributable to Source4Teachers when reviewing their contract.”

Paul Socolar contributed additional reporting for this article.

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