The 2013-14 "Doomsday Budget" of the School District of Philadelphia:
How Did It Come to This?
June 3, 2013
by Ken Derstine
(Click the blue text for links.)
On Thursday, May 30, 2013 Philadelphia School Reform Commission adopted for the Philadelphia School District what the local media has dubbed a “Doomsday budget” for the next fiscal year. The School Reform Commission is the body that has managed the School District since Pennsylvania took over the District in 2001.
Due to a $300 million “structural deficit”, the $2.39 billion budget eliminates all staffing in the schools except the principal and a minimal number of classroom teachers. If funding is not found, gone will be counselors, certified librarians, sports, secretaries, support staff, music and art.
When the School District was taken over in 2001, the Philadelphia School District had a deficit of $216.7 million dollars in a $1.7 billion budget. The takeover plan had six main parts: putting the district under the control of a School Reform Commission; hire a CEO; enable the CEO to reform the teaching staff by hiring non-certified staff, reconstitute troubled schools by reassigning or firing staff; allow the commission to hire for-profit firms to manage some schools; convert some schools to charter schools; and reallocate and redistribute school district resources. The initial plan was for Edison Schools, Inc. to take over 64 schools, but this failed within two years.
With the failure of this privatization plan, the state and city began turning over the management of some of the lowest-achieving schools to for-profit and nonprofit organizations and two local universities and providing additional resources to the private managers. Besides Edison, these included Foundations Inc., Victory Schools, Universal Companies, Temple University and the University of Pennsylvania. The systematic starving of the public schools in favor of the growing charter sector has continued for the past ten years.
The Broad Foundation had developed a relationship with Philadelphia's School Reform Commission, the body set up by the state and city officials to manage the Philadelphia School District when it was taken over by the state in 2001. The first superintendent appointed was former Chicago CEO Paul Vallas in 2002. According to Philadelphia Daily News columinst Will Bunch, in a September 13, 2013 article, Broad Street Bully?:
Paul Vallas, a former Illinois state budget director who arrived from Chicago in 2002 to take over Philadelphia's schools, was an early archetype - and he won a $4.3 million grant from the Broad Foundation three years later to train new principals in an Academy for Leadership in Philadelphia Schools. His short-term successor here - a retired Army colonel named Tom Brady - was a graduate of a Broad academy.
Dr. Arlene Ackerman followed Brady as Superintendent from 2008 - 2011.
While state funding to the district increased during the later part of the 2000’s under Governor Ed Rendell, much of this increased funding, and temporary funding from federal stimulus money, was devoted to School Superintendent Arlene Ackerman’s Imagine 2014 initiative which poured money into charters, Promise Academies, and Renaissance Schools. Ackerman, who was on the board of the Broad Foundation while she was Superintendent of Philadelphia public schools, oversaw this five-year strategic plan for the District beginning in 2008. She was forced to resign in the fall of 2011, however, by Philadelphia Mayor Michael Nutter when she came into conflict with the Mayor over which charter management company would get ownership of Martin Luther King High School. (For details about this episode see More On Broad in Philadelphia.) Her buyout was $905,000 and $86,000 of unused vacation pay. A few months after resigning she filed for unemployment that was denied. She passed away February 2, 2013 after a short bout with pancreatic cancer.
During the almost a year interim before the next Superintendent was appointed, the Imagine 2014 plan went forward. Outside corporate management companies where brought in to implement the plan by the Philadelphia School Partnership. The PSP was made up of managers from outside the District who were hired by local wealthy philanthropists such as the William Penn Foundation to draw up the strategic plan for privatization. Most prominent was the Boston Consulting Group that had experience in raiding and decimating companies in the corporate world. (For details see “Who is killing Philly schools” and "Who's Still Killing Philly Schools" by Daniel Denvir in the Philadelphia City Paper.) Under the guidance of PSP, the charter portion of the School District budget has gone from 15% in FY09 to 30% in FY14. More than $670 million of the budget goes to charter schools. Dr. Ackerman’s replacement was Dr. William Hite, a graduate of the Broad Superintendent's Academy Class of 2005, who took his position on June 29th, 2012. In the midst of the budget crisis, Mayor Nutter continues to agressively promote charter schools.
The other factor in the crisis has been the ALEC inspired agenda of Pennsylvania Governor Tom Corbett. In his first year in office he cut education funding by for the state's schools by $1 billion, with the deepest cuts being made in low-income districts. Philadelphia has had to make do with $300 million less in state funding for each of the last three years. At the same time, Corbett increased the state’s prison budget by $700 million in his first year in office. His Department of Education has worked to give cyber charters and charter management companies every advantage. Over the past few months, charter companies have been in conflict with the SRC over contractual enrollment caps. They have been increasing enrollment over these caps, and then going to the state Education Department that takes the funds out of money allocated for Philadelphia public schools. Twenty-one charters want 15,000 new seats, which the District estimates would cost it about $500 million over five years.
Finally, a major part of the budget crisis is the huge financing costs of the debt accumulated over the last ten years. The district’s annual debt-service obligation is up 32% from five years ago. Half of that debt, $159.9 million, goes to interest. According to 2011 Census data, districts nationwide paid an average of $155 per non-charter pupil on debt service. Philadelphia spends $1,684 per non-charter students. Last year the District borrowed $300 million to cover the deficit that year. The interest for that loan is $22 million annually for 20 years. Before the 2008 banking crisis, the District entered into $3.5 billion in variable rate bank swaps. The School District is out $186 million because they bought variable rates, which plummeted in the 2008 banking crisis, instead of fixed rates. Debt service is 12% of the FY14 budget for the School District. The only people happy about the situation are Wall Street.
On March 7th, 2013 the School Reform Commission implemented the school closings portion of the Imagine 2014 plan. Following the timeline and methods outlined in the Broad Foundations 2009 “School Closure Guide: Closing Schools as a Means of Addressing Budgetary Challenges” they had held a series of community meetings over three months where students, parents, and teachers unanimously begged for their schools to spared. On March 7th after two more hours of these pleas, in an atmosphere that resembled a Greek tragedy – except this was real – the SRC voted to close 24 community schools.
On Friday, May 17th, over 2000 high schools students, organizing through Twitter and Facebook, walked out of class and marched on City Hall and the school District administration building to protest the schools crisis. See “Thousands of students are marching on City Hall protesting budget cuts | Philadelphia Public School Notebook”.
To reduce layoffs and cuts in resources Mayor Nutter and the District is calling for “shared sacrifice” by members of the Philadelphia Federation of Teachers of $133 million in wage and benefit concessions when the PFT contract expires on August 31st. In addition, they want to eliminate seniority, class size limits, and other concessions. School operating budgets have been reduced 25% from the already austere budgets of last year.
Before the SRC vote on the budget, hundreds of protestors gathered in front of the school administration building to protest the cuts. Philadelphia Federation of Teachers President Jerry Jordan said it would be immoral for schools to open in September with these cuts. What the PFT plans to do about this has not been disclosed. The 2001 state takeover bill makes it illegal for the PFT to strike.
The History of the State Takeover of Philadelphia Public Schools
To understand the present crisis in the School District of Philadelphia and how we got here, it is helpful to know how the state takeover of the School District came about in 2001.
In the City of Corporate Love and Beyond: The Boston Consulting Group, Gates, and the Filthy Rich
The Common Errant - May 18th, 2012,
Our School Are Not For Sale - August 10, 2013
The award winning video about the budget crisis by the Alliance for Philadelphia Public Schools and the Media Mobilizing Project.
Who is Eli Broad and why is he trying to destroy public education? - Defend Public Education, February 24, 2013
Links to articles about the Philadelphia School District budget crisis since the above article was printed:
Meeting to discuss GHS buildings future scheduled for Dec. 3, Camelot still interested
Philadelphia Newsworks - November 22, 2013
No relief in sight for District's troubled finances
Philadelphia Public School Notebook - December 2013
Community gives input on reuse of Germantown High
Philadelphia Tribune - December 11, 2013
Ethics Board responds to Parents United lobbying complaint
Parents United for Public Education - December 16, 2013
Profits Over Pupils: Philadelphia's True Priorities
From the Teacher's Desk - January 3, 2014
Stepped-up mediation in contract talks
Philadelphia Public School Notebook - January 7, 2014
School District got 20 offers on buildings listed for sale
Philadelphia Inquirer - January 8, 2013
PhillyDeals: Analyst: More Phila. school cuts would hurt bond rating
Philadelphia Inquirer - January 14, 2014
Mayor 'deeply concerned' about appointment of Green to chair SRC
Philadelphia Public School Notebook - January 17, 2014
Desperate times for schools in the City of Brotherly Love
Philadelphia Public School Notebook - March 28, 2014
SRC Won't Adopt Doomsday Budget II
Philadelphia Public School Notebook - May 29, 2014
District, Council reach deal on more borrowing for schools.
Philadelphia Public School Notebook - June 19, 2014
Without cigarette tax, Hite says, layoffs would begin August 15
Philadelphia Public School Notebook - July 9, 2014
First Day of School Inspires Fear, Hopes
Philadelphia Public School Notebook - September 8, 2014
SRC to sell 11 closed school buildings, netting $2 million
Philadelphia Inquirer - September 18, 2014
SRC approves Germantown High School sale to Md. developers
Philadelphia Public School Notebook - September 19, 2014
Comment: The reason given for closure of 24 schools in June, 2013 was two-fold: 1) The School District needed the money from the sale of the closed school buildings due to the deficit. 2) The schools were under enrolled and therefore too costly to maintain.
It can now be seen that the claim of money from sale of the buildings going to the deficit was bogus. The District only netted $2 million from the sale of eleven buildings. The bulk of the money went to financing the costs of repairing the long neglected buildings so they could be sold.
As to under enrollment in a school. Superintendent Ackerman's plan was very direct that the intent is to use some of the building to create more charters. (Imagine 2014. See item #36) The under enrollment is due to parents moving their children to charters. A major issue was security which has been made worse by more cuts in security personnel in the public schools. There has been a diliberate policy of starving the public scholls and fully resourcing charters to make them attractive to parents. The public schools have been on a starvation plan since the implementation of Imagine 2014.
Pending deal on former Germantown High catches neighbors off guard
Philadelphia Public School Notebook - September 19, 2014
Bill That Approved Cigarette Tax Guarantees More Charter Schools in Philadelphia
Philadelphia Magazine - September 29, 2014
SRC sells schools for pennies when the district needs millions
Solomon Jones @ Philadelphia Newsworks - September 22, 2014
Audio of the SRC Meeting Canceling the PFT contract
SoundCloud - October 6, 2014
The Imbalance of Leveling
Philadelphia Public School Notebook - October 29, 2014
At Germantown school, operating on $160
Philadelphia Inquirer - November 9, 2014
Blackstone Group's Stephen Schwarman says more money won't improve public education
International Business Times - January 23, 2015
There is nothing original about PSP Mark Gleason's positon that resources in public schools don't matter. It is the essence of corporated education reform.
Parents United prevails in getting BCG school-closings list
Philadelphia Public School Notebook - January 28, 2015
How the BCG, PSP and the Broad Foundations engineeered the closing of 24 Philadelphia schools.
Philadelphia school's latest budget forecasts $80 million deficit
Phladelphia Inquirer - February 10, 2015
Budget crisis for Philadelphia schools
Philadelphia Public School Notebook - February 10, 2015
Pa's school-spending gap widest in nation
Philadelphia Inquirer - March 13, 2015
After years of trying to starve the public schools to advance a privatization agenda, Arne Duncan and city and school officials want to seperate themselves from the catastrophe they have created.
In cash-strapped School District, a hidden treasure trove of books
Philadelphia Inquirer - March 17, 2015
SRC adopts nearly $2.9B 'lump sum' budget for 2015 - 16
Philadelphia Public School Notebook - March 26, 2015
More questons than answers on funding Philly schools
Philadelphia Inquirer - May 13, 2013
City Council to School District: Go Away Already
Philadelphia Magazine - May 31, 2015
SRC outsources substitute teaching, approves five new charters
Philadelphia Public School Notebook - June 18, 2015
SRC adopts budget, but questions remain
Philadelphia Inquirer - June 30, 2015
"It is clear that the doomsday budget is now the status quo," said Robin Roberts, a member of Parents United for Public Education."
The Siege of Philadelphia Public Schools
Defend Public Education! - August 29, 2015
Audit slams Pa. Education Dept. as inept, lumbering
Philadelphia Inquirer - October 6, 2015
Pennsylvania is failing Philly's schools – so, close the schools?
Philadelphia Newsworks - December 28, 2015
Proposed changes to Pa. law would squander higher school funding
The Notebook - January 20, 2016
Michael Churchill is an attorney at the Public Interest Law Center.
Deborah Gordon Klehr is executive director of the Education Law Center of Pennsylvania.
Susan Spicka is an advocacy coordinator for Education Voters PA.
This change to the PA School Code would single out Philadelphia for the two-tier school system proposed by SRC member Bill Green.