Phila. SD deficit has grown to as much as $282m

Philadelphia School District officials gave an update Friday morning on the state of their finances, and it was more bad news.

Initially projected at $218 million, the deficit is now anywhere between $255 and $282 million.

City Council's decision to give the distict $54 million less than the $94 million it asked for is part of the reason for the new number.  But there are other factors - $9 million more from city tax collections and a net $8 million change in state funds.  And the district is also bracing for a revenue loss of up to $27 million by virtue of tax appeal losses.

Officials say they want to make up the money by collecting delinquent taxes, and say they are taking steps with the city to make that happen.  Should that effort not yield enough new money, though, they say they will have to consider things like non-school cuts, reductions to salary and benefits (both unionized and non-unionized employees) and finally, school cuts - the last resort, they said.

The district was already planning on deficit financing its projected $218 million gap.  School Reform Commissioner Feather Houstoun said that while the district has the authority to finance up to $300 million, it would not be wise to do so.

"If you use borrowing for this, it’s just another one-time revenue that you have to fill next year." Houstoun said. "The more we can limit the size of the deficit this year and the use of deficit financing for that, the better the sitation will be going forward into next year."

Chief Recovery Officer Thomas Knudsen said the shifting financial picture complicated the negotiations with 32BJ Local 1201, the blue-collar union representing bus aides, cleaners, mechanics and others.  Hundreds of its members have received layoff notices that would take effect July 15 if no action is taken; the entire workforce would be laid off by the end of the year with no intervention.

Knudsen said no decisions had been made yet on whether the layoffs will take effect.  Union officials have said they put millions in concessions on the table to save jobs but have not heard back from the district.

"Right now, we're still talking to the unions," Knudsen said.