More oversight for schools?

Concerned about the Philadelphia School District's financial problems, City Controller Alan Butkovitz said yesterday he would seek legislation to give his office greater authority to audit school finances.

He also plans to call for legislation that would give the Pennsylvania Intergovernmental Cooperation Authority (PICA) or some other state agency the ability to oversee district finances, approving both its annual operating budget and a five-year financial plan. The agency currently monitors city finances.

"It is inconceivable to me that the school district . . . has no real independent oversight and monitoring of their budget," Butkovitz said at a news conference yesterday. Butkovitz's comments follow the district's disclosure in October that it faced a $73 million deficit and news last week that its underlying bond rating had been lowered, indicating its deteriorating financial condition. "It's fine" if Butkovitz wants to seek PICA oversight of the district, responded Frank Siefert, the School Reform Commission chief of staff. PICA was formed in 1991 to monitor the city's finances as it neared bankruptcy.

Though he welcomed the controller's scrutiny, Siefert said, "I don't know how productive it would be as we're making up the budget to have someone else at the table."

The district already is getting financial guidance from Michael Masch, Gov. Rendell's budget secretary and a former member of the School Reform Commission. The commission also hired an internal auditor to monitor district spending.

The district's projected deficit for this year is between $30 million and $35 million, officials said last week. District officials have declined to project a deficit for 2007-08, saying it was too early in the budget process, although one board member recently said it would be as high as $140 million.

Butkovitz questioned the district's decision to spend as quickly as it did on consulting contracts, curriculum and other areas. The district, he noted, received $144.3 million in additional city funding from 2002 to 2006 and $204 million more from the state over the same period. Its budget grew from $1.47 billion in 2002 to $2.04 billion this year, a 39 percent increase, he asserted. District officials previously defended their spending decisions, including the use of $300 million the district borrowed in 2002 to improve schools.

Butkovitz said that his office had the authority to audit district budgets from previous years, but that he wanted the legislature to give him the right to look at the current budget. His office most recently audited the 2005-06 budget. Siefert noted that the audit produced no major findings. Butkovitz said he would look for legislators to sponsor the changes but acknowledged that could take a while.

The office of House Speaker Dennis O'Brien, (R., Phila.) did not return a call for comment yesterday. "I'm not sure what the additional layer of approval will add," Rendell spokeswoman Kate Philips said. "It's something to consider if there is value to it."