Monday, September 1, 2014
Inquirer Daily News

The weightiest SRC meeting anyone can remember

It's D-day for nine city schools that face closing.

The weightiest SRC meeting anyone can remember

UPDATE, 6:35 p.m.

Sheppard and Stanton Elementaries will stay open!

Saying it could not in good conscience shut down good schools, the SRC has voted to take off the table the closures of these two schools.  They will vote later on closures of seven other schools.

More to come.

UPDATE, 6 p.m.

Beyond the $26 million it must cut by June, the Philadelphia School District faces a $186 million shortfall for the 2012-13 budget year, and officials plan to plug it, in part, with more aggressive tax collections.

Presenting a preliminary $2.5 billion spending plan at Thursday night's marathon School Reform Commission meeting, officials said schools should see no further cuts to their budgets, and that they did not plan to lay off teachers.

Chief Recovery Officer Thomas Knudsen also said he did not expect the SRC would have to resort to the nuclear option - using its state-given powers to impose terms on its five labor unions - to close the remainder of the 2012 gap.

But, Knudsen said, for fiscal 2013, "there clearly has to be a discussion with labor" about ways to cut costs. He said "conversations" with the district's largest union, the Philadelphia Federation of Teachers, had already begun.

The 2013 budget has revenues of $2.358 billion but expenditures of $2.547 billion. But it's only a first draft, and will debated and likely adjusted before final approval, which must happen by May 31.

The district is coming off a brutal year where officials had to slash spending by more than $600 million, with some cuts made mid-year and $26 million still left to cut. SRC Chairman Pedro Ramos told City Council this week that "bad fiscal policy" - not just a decrease in state and federal funds, as officials had maintained for months - was to blame for the district's fiscal woes.

But Knudsen and Feather Houstoun, chair of the SRC's finance committee, said at a news briefing that this was a new era for the district, which will no longer spend money it does not have and will be more open about its budgeting practices.

So how does the district balance the budget, as required by law? Some savings will be realized by restructuring the district's operations. The Boston Consulting Group, brought in to help overhaul the district, has made some preliminary recommendations, which Knudsen and Houstoun declined to divulage.

Houstoun said that once the reorganization is launched, the district can expect a savings of about $90 million annually, but that amount will not be fully realized in 2013.

But going after tax delinquents should help the district close the $185 million 2013 gap, Houstoun said.

"We would like to accelerate the level of tax collections," Knudsen said. "We would like to engage with the revenue department and finance in grabbing some of those dollars more quickly. We are in discussions with them right now to do that."

It's too early to say just how much the district might see from more aggressive tax collection, but "even a fairly small yield would be significant for the school district," Houstoun said.

Philadelphia has an abysmal tax collection record, with roughly 19 percent of all parcels behind on taxes. In 2011, delinquents owed the city and district $472 million.

Still, other administrations have vowed to go after property taxes - why does district leadership now believe it can make good on a promise that has eluded others?

"Tom Knudsen and I have collected taxes and receivables in the past," Houstoun said, a nod to her background as New Jersey's state treasurer and Knudsen's as the architect of a turnaround at the Philadelphia Gas Works, where under his watch collections improved from 86.5 percent in 2003 to almost 97 percent in 2006.

One area not likely to yield any more savings is school budgets.

Schools are cut to the bone now, Houstoun said. The SRC would love to provide them with "an enriched program," restoring some of the cuts that have been made over the past painful year, but that seems unlikely. Still, she said, for next year, schools will not have to "operate in a fiscal fire drill."

School cuts are "absolutely the last place we'll go; it wouldn't even show up on a list at this point," Houstoun said. "This is all about providing as much certainty and stability in the schools as we can. We want to not have people think about budget all the time - that's really destructive of the classroom climate."

No teacher layoffs are planned, either, Knudsen said.

The proposed budget includes about $274 million in new expenditures, including $42 million in new salary costs, $72 million in new benefit costs, and $110 million in additional debt service costs.

Also planned is $20 million more for "managing the portfolio," officials said, a nod to the district's new characterization of its organization as not just a school system but a system of different types of schools, including district and charter.

Knudsen would not be more specific as to what the $20 million would pay for, but it seems likely to include set-asides for expansions of some existing charters and for district schools to be turned over to charters.

Even with what officials described as a more solid plan in place, they acknowledged that question marks still loom.

"Things could break the wrong way, and we could have a much bigger problem," Houstoun said.

State lawmakers must still adopt a budget, and the outcome could be even less favorable than the governor's proposal.

"They could authorize a large voucher program," Houstoun said. "They could authorize any number of things that might end up being funded out of the basic ed budget."

Also still up in the air is how the district will balance its 2012 budget. Knudsen said he hoped to close the remaining $26 million gap without further concessions from the unions or imposing terms.

"I'm trying to avoid that," Knudsen said. "I'm working around that."

But, he warned, if other gap-closing measures aren't found, "I may go back to the unions" to close the 2012 gap as well, he said.

 


 

UPDATE, 5:45 p.m.

Beyond the $26 million it must cut by June, the Philadelphia School District faces a $186 million shortfall for the 2012-13 budget year, and officials plan to plug it, in part, with more aggressive tax collections.

Presenting a preliminary $2.5 billion spending plan at Thursday night's marathon School Reform Commission meeting, officials said schools should see no further cuts to their budgets, and that they did not plan to lay off teachers.

Chief Recovery Officer Thomas Knudsen also said he did not expect the SRC would have to resort to the nuclear option - using its state-given powers to impose terms on its five labor unions - to close the remainder of the 2012 gap.

But, Knudsen said, for fiscal 2013, "there clearly has to be a discussion with labor" about ways to cut costs. He said "conversations" with the district's largest union, the Philadelphia Federation of Teachers, had already begun.

The 2013 budget has revenues of $2.358 billion but expenditures of $2.547 billion. But it's only a first draft, and will debated and likely adjusted before final approval, which must happen by May 31.

The district is coming off a brutal year where officials had to slash spending by more than $600 million, with some cuts made mid-year and $26 million still left to cut. SRC Chairman Pedro Ramos told City Council this week that "bad fiscal policy" - not just a decrease in state and federal funds, as officials had maintained for months - was to blame for the district's fiscal woes.

But Knudsen and Feather Houstoun, chair of the SRC's finance committee, said at a news briefing that this was a new era for the district, which will no longer spend money it does not have and will be more open about its budgeting practices.

So how does the district balance the budget, as required by law? Some savings will be realized by restructuring the district's operations. The Boston Consulting Group, brought in to help overhaul the district, has made some preliminary recommendations, which Knudsen and Houstoun declined to divulage.

Houstoun said that once the reorganization is launched, the district can expect a savings of about $90 million annually, but that amount will not be fully realized in 2013.

But going after tax delinquents should help the district close the $185 million 2013 gap, Houstoun said.

"We would like to accelerate the level of tax collections," Knudsen said. "We would like to engage with the revenue department and finance in grabbing some of those dollars more quickly. We are in discussions with them right now to do that."

It's too early to say just how much the district might see from more aggressive tax collection, but "even a fairly small yield would be significant for the school district," Houstoun said.

Philadelphia has an abysmal tax collection record, with roughly 19 percent of all parcels behind on taxes. In 2011, delinquents owed the city and district $472 million.

Still, other administrations have vowed to go after property taxes - why does district leadership now believe it can make good on a promise that has eluded others?

"Tom Knudsen and I have collected taxes and receivables in the past," Houstoun said, a nod to her background as New Jersey's state treasurer and Knudsen's as the architect of a turnaround at the Philadelphia Gas Works, where under his watch collections improved from 86.5 percent in 2003 to almost 97 percent in 2006.

One area not likely to yield any more savings is school budgets.

Schools are cut to the bone now, Houstoun said. The SRC would love to provide them with "an enriched program," restoring some of the cuts that have been made over the past painful year, but that seems unlikely. Still, she said, for next year, schools will not have to "operate in a fiscal fire drill."

School cuts are "absolutely the last place we'll go; it wouldn't even show up on a list at this point," Houstoun said. "This is all about providing as much certainty and stability in the schools as we can. We want to not have people think about budget all the time - that's really destructive of the classroom climate."

No teacher layoffs are planned, either, Knudsen said.

The proposed budget includes about $274 million in new expenditures, including $42 million in new salary costs, $72 million in new benefit costs, and $110 million in additional debt service costs.

Also planned is $20 million more for "managing the portfolio," officials said, a nod to the district's new characterization of its organization as not just a school system but a system of different types of schools, including district and charter.

Knudsen would not be more specific as to what the $20 million would pay for, but it seems likely to include set-asides for expansions of some existing charters and for district schools to be turned over to charters.

Even with what officials described as a more solid plan in place, they acknowledged that question marks still loom.

"Things could break the wrong way, and we could have a much bigger problem," Houstoun said.

State lawmakers must still adopt a budget, and the outcome could be even less favorable than the governor's proposal.

"They could authorize a large voucher program," Houstoun said. "They could authorize any number of things that might end up being funded out of the basic ed budget."

Also still up in the air is how the district will balance its 2012 budget. Knudsen said he hoped to close the remaining $26 million gap without further concessions from the unions or imposing terms.

"I'm trying to avoid that," Knudsen said. "I'm working around that."

But, he warned, if other gap-closing measures aren't found, "I may go back to the unions" to close the 2012 gap as well, he said.

UPDATE, 5:30 p.m.

Before the SRC meeting, more than 200 people gathered to protest the planned turning over of four city schools - Creighton, Cleveland, H.R. Edmunds and Jones - to charters.  Supporters of the Creighton School brought the largest contingent.  "Creighton forever, charter never," they shouted. 

Rev. Harriet Waddy-King, a teacher at Cleveland Elementary, said the community would not let the school be taken over.

"It's not broke - we don't need fixing," Waddy-King said.

The schools have underperformed for years, district officials said, and drastic action must be taken.  Decisions on the conversions are expected next month.

EARLIER

It's D-day for nine city schools that face closing.  After months of warnings, we'll finally hear what the 2012-13 budget gap is.  The Philadelphia Federation of Teachers and supporters of four district schools scheduled to be given to charters in September are planning a protest outside of district headquarters. 

For those that follow the Philadelphia School District, it's a big day. (Story outlining all of this here.)

The protest is scheduled for 4:30, the meeting starts at 5:30.  There are 84 speakers scheduled to testify.  (That is not a typo!) Should be a marathon day, and with that volume of speakers, it will almost certainly be after 10 p.m. before we have a verdict on school closings.

I'll be live tweeting and blogging, so check back here, or follow me on Twitter. Meeting agenda here and resolutions here.

About this blog

Inquirer reporter Kristen Graham writes the Philly School Files blog, where she covers education in Philadelphia, both in and out of the classroom.

During the school year, you’ll frequently find her hosting live chats about the district on Philly.com.

Please do pass along the scoop about what’s going on at your Philadelphia public school; Kristen welcomes tips, story ideas and witty banter.


Kristen Graham Inquirer Staff Writer
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