Sunday, September 14, 2014
Inquirer Daily News

The financial crisis in our schools is an epic political fail

DISAGREEMENT or disinterest among the elected officials who represent Philadelphia is once again putting the city's public-education system at risk. While some in the political establishment want to believe that the district's solvency problem is the district's fault, the real culprit here is the failure of political leaders to line up behind a certain and sustainable revenue plan to support the schools.

Last year, Gov. Corbett persuaded the Legislature to give Philadelphia the power to turn over $120 million in local sales-tax revenue to the school district. High-profile Philadelphians rallied behind the governor's plan and urged local elected leaders to take the deal. But to date there's been no real action to make these revenues available for the district, while the school district inches closer to the brink of collapse.

It's hard to find a public-school system in the country in worse financial shape than Philadelphia's. It is even harder to find a more paralyzed body politic that is immobilized as children are going to schools without nurses, librarians, guidance counselors or adequate supplies. At least 80 percent of the schools have no librarian, let alone a library. Although slightly more than 200 counselors and 300 art or music teachers may sound ample, their numbers are a drop in the bucket for a school system with more than 10,000 students in each grade. As for adequate supplies, we go cup in hand asking people to contribute so that kids can have paper and pens. Next thing you know, we will be asking for money from UNICEF. And teachers and principals, the very people we rely on to deliver educational services, are being asked to take drastic pay cuts.

Philadelphia City Council's approval of $96 million in recurring revenues for the district over the last few years has demonstrated that it has the guts to do what it takes to help the city's children. Despite Council putting real funds for the district on the table, the state has failed to ante up. The hundreds of millions in state cuts to the district in 2011 and the meager restorations since then haven't gone over well with Council or most Philadelphians.

Nevertheless, real facts, not hard feelings, should drive Council's actions going forward. Philadelphia's unfunded pension obligation is close to $5 billion. The current plan to use 50 percent of the sales-tax funds intended for the schools amounts to only $70 million. The city's actuaries project that by 2020, these funds will decrease the share of the pension debt by only 2 percent.

Yes, public-pension obligations must be kept. Council deserves credit for looking for ways to pay the pension bills. But there should be a balanced approach so that we can keep our past obligations with our workers while also investing in the future for our schoolchildren.

In part, Council has not acted on the sales-tax shift to the schools because some in Philadelphia's power elite had counted on those funds to help pay off the city's gaping pension-fund debt. For city officials to expect Harrisburg to change last year's legislation to appease Philadelphia belies recent experience. Not only are the chances of success remote, it runs the risk of Philadelphia ending up with less funding from the state than it received last year.

In good faith, the school district put its budget together for next year assuming that the full $120 million from the sales-tax transfer would be available. The superintendent also released a reasonable action plan that builds a solid academic and fiscal foundation for the district. The plan lays out what is necessary, not what we would want for our own children or grandchildren. To meet the fundamental obligations of this plan, an additional $75 million in local funding is required.

There are many practical ways for Council to meet this request. It could make a combination of revenue decisions that rely on:

*  Tapping some of to the city's nearly $50 million fund balance.

*  Restoring all or some of the share of local property-tax revenues available to the district.

*  Shielding the district from revenue losses due to the city property-tax abatements.

*  Strenuously encourage major nonprofit institutions to pay payments in lieu of taxes that equal the amount of money the school district would receive if they paid city real-estate taxes.

Or, political leaders can forge an agreement with the governor to pass a cigarette-tax increase and work with him to ensure the passage of such a measure.

There are options when it comes to revenues. But there is no mistaking the fact that there are no options left when it comes to the schools.

If the city - the mayor and Council - and Harrisburg do not work together this year to support a long-term fiscal strategy for the district, the aspirations for Philadelphia and Pennsylvania to play a leading role in America's future will perish, and so, too, will the dreams of our children.


Phil Goldsmith is the former chief executive officer of the Philadelphia School District. Donna Cooper is the former director of Public Citizens for Children and Youth.
PHIL GOLDSMITH & DONNA COOPER
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