Philadelphia schools again on precipice

Philadelphia Superintendent William R. Hite's stunning announcement that schools will not open on time unless the district is assured of $50 million from the city, raised alarms this week.

But it was not the first time school operations had been threatened.

In 1998, then-Superintendent David Hornbeck warned that the district might have to close schools early the following year unless the state sent more money to the cash-strapped system.

The schools never closed. But Hornbeck's threat so enraged Harrisburg lawmakers that they passed legislation that led to a state takeover of the district in late 2001.

Despite a dozen years of state control, with three gubernatorial appointments on the five-member School Reform Commission, Philadelphia schools are on the precipice again: The deficit still stands at more than $270 million in a $2.39 billion budget. Nearly 4,000 employees have been laid off.

And Hite said Thursday that it would be irresponsible to open schools as planned Sept. 9 without counselors, noontime aides, assistant principals, and other support staff.

"This funding problem is real," he said. "We have a responsibility to students and families. . . and we will not put them at risk, even if it means the first day of school may not be until after Sept. 9."

But longtime educational observers and activists say the school system is facing much different circumstances now than 15 years ago. Privatization of education has taken hold, and the district's coffers are being drained by expenses outside its control.

"This is much deeper and much more threatening," said Shelly D. Yanoff, who retired in January after directing Public Citizens for Children and Youth for 26 years.

"The context is very different," said Donna Cooper, Yanoff's successor.

During the Hornbeck era, the district's expenses were rising while state aid was flat, recalled Cooper, who held top policy and planning positions when Ed Rendell was mayor and governor.

This time around, she said, Philadelphia's schools face steeply rising costs while state aid is down. She said Pennsylvania's funding formula for public education has been "shredded" since Gov. Corbett took office in 2011.

City Finance Director Rob Dubow said last week that the district saw a decrease of $145 million in state funds between July 1, 2010, and last month while city aid increased by $155 million in that period.

Cooper noted that the district also is being forced to pay for steeply rising expenses that are mandated by the state and federal governments, including charter schools, contributions to the state teachers' pension system, and special-education services.

The city has nearly 90 charter schools, and state law says districts cannot limit their enrollment unless the charter agrees. Philadelphia will spend $674.8 million on payments to charter schools plus $33.3 million to transport their 55,000- plus students this fiscal year.

As recently as 2010-11, the district received $100 million from the state to reimburse charter costs, but that program ended.

To meet federal requirements, the district's budget includes $230.5 million to provide services to students who require special education, including growing numbers of children identified with autism.

In addition, the state has increased the percentages that school districts must contribute toward the teachers' pension costs. Philadelphia's contributions to the state system will increase from $101 million to $116 million this fiscal year.

The district also lost $134 million from federal grants that expired this year.

Hite said in an interview Wednesday that proposed changes to the teachers' pension system could ultimately provide savings. And he said the district was pushing for a fair and equitable funding formula to distribute state aid for schools.

Hite said the district needs assurances from the city by Aug. 16 that it will provide $50 million or the district will delay the opening of schools, open only a few of them, or operate them on half-day schedules.

To address the district's deficit of what was then $304 million, Mayor Nutter and others had backed a state plan that called for the city to borrow $50 million against future collections of the city's extra 1 percent sales tax, which was set to expire next June, and turn the money over to the schools.

Hite's announcement revealed a rift between Nutter and City Council President Darrell L. Clarke over the distribution of the sales-tax funds called for in the state legislation that permitted the 1 percent extension.

After meeting with Clarke and some state legislators Friday, Nutter said he was more optimistic that the dispute could be resolved.

But Hite still has not received assurances of the $50 million he needs to open schools.

"We talk about the $50 million as being necessary - not sufficient, but necessary - in order to open schools," he said.

And although the district sold $300 million in bonds last September to cover a $200 million deficit for the fiscal year that just ended, Hite said the district cannot borrow its way out of the current fiscal crisis.

"We're trying to clear debt," he said.

The district's past borrowing practices have left the district with a large annual debt payments.

"Remember what I said the deficit was? The hole in that budget is $304 million." Hite said. "The annual debt service is $280 million. It almost makes up the hole in the budget."