Philadelphia schools under closer scrutiny

The fallout continues from the Philadelphia School District's surprise $73 million deficit that surfaced last fall.

Turns out the nearly $77 million in new money the Philadelphia School District is set to receive from the state for the 2007-08 academic year comes with a few new strings attached.

For the first time, the state education funding bill signed into law this week requires the district to submit reports to the state's education secretary detailing cuts it is making to balance its $2.18 billion budget - or risk losing state aid that totals approximately $1.3 billion.

"We all supported that," State Rep. Dwight Evans (D., Phila.) said yesterday. "It all gets down to accountability."

Evans, chairman of the House Appropriations Committee, said he inserted the reporting requirement at the request of Gov. Rendell's office. He said there was broad, bipartisan support for the measure in the aftermath of the district's unexpected deficit and last month's report by state Budget Secretary Michael Masch that said the district had failed to use financial-management controls that could have provided an early warning of the district's worsening finances.

The provision requires the district to submit two "budget-stabilization plan progress reports" to the secretary of education and to the state budget secretary showing whether the district made scheduled cuts it had promised when its budget was adopted May 31; to outline any alternative cuts that were made; and to detail the projected savings.

The initial report covering the period through Sept. 30 is due Oct. 15. The deadline for the quarter ending Dec. 31 is Jan. 15.

"It is a way to match the state's investment with a process that makes sure that the district is on track for financial stability," Ian Rosenblum, a senior policy manager in the governor's policy office, said yesterday.

Evans said legislators blamed both the district's former chief executive, Paul Vallas, and the Philadelphia School Reform Commission for the fiscal problems.

"No one was paying attention," Evans said. "We cannot have these deficits. These people have to manage this money."

James E. Nevels, chairman of the School Reform Commission, said the five-member panel would comply with the state law. "We welcome the reporting requirement," Nevels said. "After all, this is the commonwealth's district and the city's school district as well. To that extent, I think it is absolutely appropriate that we have a responsibility to generate the reports."

Thomas Brady, the district's interim chief executive, could not be reached for comment. "The district is reviewing the new reporting requirements, and we are unable to comment any further," said Fernando Gallard, a district spokesman.

Leah Harris, a spokeswoman for the state Department of Education, said Secretary Gerald L. Zahorchak strongly supported the measure.

If Zahorchak finds the reports unsatisfactory, he can disapprove them and make recommendations to the district, the budget provision says.

He also has the power to withhold any state money that is due the district until the budget-stabilization plan has been approved.

Copies of the reports will be sent to the chairs and minority chairs of the Appropriations and Education Committees in both the House and the Senate.

The school district's $77 million appropriation from Harrisburg is $5 million more than it got last year, but fell about $20 million short of what the district had been counting on to help close its deficit.

The state appropriation for city schools includes a $30 million increase in basic education funding; an additional $4 million for special education; an increase of $17.5 million in reimbursement for charter-school costs; almost $9 million for full-day kindergarten; and $16.3 million for prekindergarten programs.

"By working closely with the General Assembly, we were able to reach a final budget that goes a long way to meeting Philadelphia's needs," Rendell said in a statement yesterday.

The state took over the Philadelphia School District in December 2001 to improve its financial stability and boost student achievement. As part of the agreement, the state agreed to provide the district with more money.