This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.
City Council advanced several tax-hike bills Wednesday that are projected to raise an additional $70 million for schools. But officials from the financially struggling School District say that they can only count on $45 million of that money right now.
The difference: $25 million of the proposed increase has been parked in the Council’s own budget, pending more answers from the District on plans to privatize substitute teachers and possibly nurses, moves that Council opposes.
Council President Darrell Clarke, meanwhile, is touting Council’s actions as providing an increase of "up to $100 million" to the District for fiscal 2016, close to the amount that Superintendent William Hite and the School Reform Commission has asked for in its perennial quest to make ends meet. Clarke arrives at that figure by adding on $30 million in revenue that he says the city can collect from tax-lien sales on delinquent commercial properties.
But District officials have doubts about those funds also, saying they can’t be sure how the lien sale will affect the $63 million they have already budgeted from collection of unpaid taxes.
"I’m pleased and want to acknowledge Council’s work to do all they could do to get us revenue, I’m very appreciative of that," Hite said. "But as it stands, we made a request for $103 million, and at the moment have received $45 million. It does leave us with questions of where the other money will come from, if there will be conditions, and what those conditions will be."
Hite said he was "perplexed" about Council’s withholding of the $25 million. "We first heard of that strategy today when everyone else heard it," he said. Council members did express displeasure about outsourcing at its hearing on the District budget last month.
Hite said another unanswered question "is whether the $30 million [from tax-lien sales] decreases what’s in the budget already for delinquent taxes, or amounts to an additional $30 million. That’s still another question left unanswered at the moment."
Clarke and Council have continually sparred with the District, which has no taxing power of its own, over its yearly requests for additional funds. Still, Council has increased its contribution to District coffers by $325 million over the last four years while state funding has dropped by nearly $150 million.
"No one in this body wants to raise taxes on hard-working Philadelphians and seniors, especially when this crisis was created by state funding cuts and poor financial decisions by previous School District leaders," said Clarke in a statement after the Council’s actions.
Hite and the SRC are seeking an additional $103 million from the city and $200 million from the state. The District needs $85 million just to close a budget gap to maintain current services next year; Hite wants to use the additional funds beyond that amount to restore personnel and programs to decimated schools.
Mayor Nutter sought a 9.34 percent increase in the property tax to raise the city’s full share, but Council was icy on that proposal from the start. And Clarke also made it clear that Council was on board with helping to close the District’s deficit, but not necessarily to implement Hite’s reforms, at one point calling it a "Cadillac version" of education.
Clarke has also been continually critical of the state. Gov. Wolf’s budget would give the District an additional $159 million, but it is facing tough resistance in the legislature. And Clarke complained at the Council hearing that this wasn’t the full amount the District has asked for, either.
The measures passed by Council committees on Wednesday include a 4.5 percent increase in the property tax for the schools, which raises $25 million; $10 million from increasing the Use & Occupancy tax on business; and $10 million in a grant raised through increasing the tax on private parking fees.
The measures would also increase the property tax for the city by 4.5 percent to raise $25 million more. That is the money being kept in city coffers for now.
Clarke’s spokesperson Jane Roh said later in an email that Council is opposed to District plans to privatize substitutes and possibly school nurses, but wouldn’t specify that those conditions will be attached to release of the money.
Jerry Jordan, president of the Philadelphia Federation of Teachers, Council candidate Helen Gym, Ron Whitehorne of Philadelphia Coalition Advocating for Public Schools (PCAPS), and others held a press conference Wednesday morning to protest outsourcing of school employees.
"Council has questions about the effort to privatize personnel and is still awaiting answers," Roh wrote. "Council hopes to continue the conversation about the District’s apparent attempt to lay off staff and privatize part of its workforce."
She said the $30 million from the tax liens "should be considered a separate and distinct revenue source," pointing out that the city has $500 million in uncollected taxes. But she didn’t speak to the issue of whether Council is promising the funds from delinquent taxes that would cut into the funds the District has already budgeted.
Council is scheduled to have a final hearing and vote on Thursday, June 18, on the bills moved today. After that, it plans to recess until September. Under the city charter, the city must pass a budget by the end of June.
The School Reform Commission is also scheduled to meet June 18, when it will consider a contract to hire a firm to provide the District with substitute teachers. It has also put out a request for proposals to explore options for health services in schools beyond school nurses.
If the District doesn’t know by the end of June whether it has enough money in hand to close the $85 million budget gap, it may have to start a new round of layoffs.
"Right now, if in fact we’re in planning mode, we can only plan to spend $45 million. That’s what we know we have," Hite said. "We can’t have a plan to spend additional revenue when those revenues are not for the School District but in Council’s budget.
"I’ve been very clear what it takes to educate children in the city and what it takes in terms of resources. Council’s actions raise $45 million for us; the rest remains to be seen."