Nutter unlikely to seek a cash increase for schools

The Philadelphia School District borrowed $300 million just to pay bills through June. School officials are demanding up to $180 million annually in givebacks from teachers and other staff. And they just voted to close 23 schools.

But as Mayor Nutter prepares his budget address for City Council on Thursday, it seems unlikely that he will ask for another big-check, tax-hiking infusion of cash to help keep the School District afloat, like the ones approved by Nutter and Council the last two years.

That's because Council already faces strong headwinds from Philadelphia's proposed new property-tax assessment system, which is expected to lower many residents' tax bills but raise them by more than $400 for about a quarter of homeowners.

The district has not said how much it will request from the city.

"We're in internal discussions on that right now," said Matthew Stanski, the district's chief financial officer. The 2013-14 School District budget is expected this month.

To help pay for schools, Council passed a 3.85 percent increase in 2011 and a 3.6 percent increase in 2012.

Despite those decisions, Council has hardly given the district and Nutter a blank check.

Nutter had hoped to get Council to pass his new property-tax assessment system, the Actual Value Initiative, last year, while raising an additional $94 million for city schools.

But Council, saying it needed more time to assess the impact of AVI, delayed its passage by a year, and the district instead got $40 million. In 2011, Council granted the district $53 million in new funding, just over half of the amount then-Superintendent Arlene C. Ackerman had requested.

About 40 percent of the district's $2.3 billion revenue comes from the city. City revenue, including proceeds from the Parking Authority and property and liquor-by-the drink taxes, contributed $838 million to the district's budget this year.

Council President Darrell L. Clarke said he recognized that current school funding is deeply inadequate.

The district's budget, he said, is "a challenge. We have a situation looming where they could literally run out of money. I don't think people understand the severity of that."

All the same, Clarke said, he does not expect a request for more property tax funding from the district to be met with "any favorable response" in Council.

"I think it's going to be very difficult for people to raise taxes again, even to help meet the School District's needs, which are very significant," Clarke said.

Clarke did say he would be open to raising the liquor-by-the-drink tax.

"I have in the past talked about an additional 5 percent on the drink tax. If people could get consensus on that, I'd be prepared to go aggressively after that," Clarke said. "When we first did that, people said the sky would fall and everybody would go into New Jersey to get a drink, and that didn't happen. You've got to go aggressively after different sources of revenue."

Nutter's spokesman, Mark McDonald, said the mayor would be willing to discuss that option, too.

"He believes that increasing that tax is something we should seriously consider, and he notes that it's been a good source of funding for the School District," McDonald said. The liquor-by-the-drink tax raised $25 million for the district in 2000, an amount that rose to $49 million in fiscal 2012.

McDonald added, however, that raising that tax likely would require approval from the legislature.

In a speech last month to the Greater Philadelphia Chamber of Commerce, Nutter said he believed that under the leadership of Superintendent William R. Hite Jr., the district was managing its finances more wisely. That, Nutter said, would lead him to lobby Harrisburg to invest in the district.

"We need a substantial increase in the Basic Education subsidy for all schools in Pennsylvania," Nutter said in the speech. "We need state funding formulas, which will benefit both our district-managed and charter public schools. We need formulas that are based on the number of students served and the varying needs of those students. And we need to fix the charter school funding formula, and its impact on the most charter-friendly school district in the state - Philadelphia."

Brett Schaeffer, communications director for the Education Law Center, agreed that instituting a funding formula at the state level is crucial to helping many school districts, not just Philadelphia's.

"We need to know, as taxpayers . . . how this money is calculated and gets distributed to the schools," he said. Pennsylvania is one of only three states without an education funding formula, he added.

During Corbett's term, the district has lost hundreds of millions in state assistance.

Sen. Vincent Hughes (D., Phila.), minority chair of the Appropriations Committee, has been vocal in his assertions that the district and the School Reform Commission are not asking for enough money from Harrisburg.

The SRC has asked for an additional $15 million in funding from the governor - exactly what the Republican has proposed, not a penny more.

"Harrisburg has walked away," Hughes said. "This governor has walked away from low-income kids in Philadelphia and across the state."

By comparison, the mayor and Council have chipped in, he said.

"They've stepped up in the context of the governor walking away," Hughes said.

The Corbett administration did not respond to a request for comment.

Clarke said "there should be a very aggressive push" by the district and the SRC to get more money out of Harrisburg. "I wouldn't even call it additional revenue," Clarke said. "How about replacing the revenue that you took away?"

School officials are adamant - they won't bank on a dime more than promised, the practice that got the district into its current financial hot water.

Inquirer staff writer Troy Graham contributed to this article.