The search for funding for Philadelphia's public schools continues, as students, parents and teachers await answers from City and State officials. While the City has announced that it secured $74 million, and yesterday, Governor Corbett announced $140 million secured on behalf of the State, the funds combined still do not meet the $304 million the District needs and many of the announced dollars are conditional. Navigating these conditions, and keeping up with union negotiations and pass-or-fail legislation can be difficult. While the School District's budget is sure to remain a topic of discussion throughout the summer, those discussions are likely to be riddled with misinformation.
TheNotebook.org investigates and reports extensively on the Philadelphia School District. We reached out to contributing editor Dale Mezzacappa, and asked her to break down the City and the State's plans and where they stand today for saving Philly's schools.
Q: To dig its way out of the so-called “Doomsday” budget scenario which includes drastic program cuts and layoffs of nearly 4,000 teachers and support staff, Philadelphia public schools need at least $304 million dollars. Several plans have been proposed both by the City and the State, the latest being Gov. Corbett's plan announced yesterday. Can you explain where each of these proposals stand today in terms of money actually secured to date?
Initially the School District asked the State for $120 million and the City for $60 million. The City, Mayor Nutter, came up with a plan in which the City would contribute as high as $95 million that would've been raised through a combination of a $2 per pack cigarette tax, a 50 percent increase in the liquor by the drink tax and more aggressive tax collection. For all of those things, it needed some kind of State approval, or at least in terms of collecting more property taxes it needed some State legislation that would allow it, for instance to put liens on properties outside of Philadelphia, would've helped them accomplish their goal of raising $28 million through more aggressive tax collection. For the other two, they needed enabling legislation to actually implement those taxes. The liquor-by-the-drink tax died early. City council didn't even approve it. But they did approve the $2 cigarette tax, which they were hoping would raise $5 million next year and then after that as much as $90 million per year. The City council approved it but the State did not. So the only thing left of the original City package is the money that can be collected through the more aggressive tax collection; property tax collection. But the bills that they're asking the State to pass that make it easier for them to do that have not been enacted yet. But they're counting on that money.
The $120 million that they asked for from the State, it gets more complicated to explain how that's gonna be fulfilled or how that money is gonna be raised. Ultimately, starting next year, it’s gonna be raised because the Governor has approved -- and I'm not sure what's happening today (the Senate approved it yesterday but the House may or may not have voted by now) -- it would allow the City to extend, past next year, a 1% increase in the sales tax. That was first enacted in 2009 for five years to get the city through the recession. That's money that the city uses now and it was going to expire next year, but the legislature included a provision that would allow the city to extend the sales tax and provide the school district with up to $120 million in revenue from that extension, from that extra percent on the sales tax. But that doesn't help this year because the city uses that money this year. They also put a provision in the law that would allow the school district to borrow $50 million this year from the expected increase in the sales tax next year. So that would provide $50 million this year.
Another chunk of money for this year would come from a one-time payment of $45 million dollars that will be raised, essentially from the federal government, in the form of a waived reimbursement of a past over-payment. So, the federal government wanted, initially, about $108 million from the State, which they said had been overpaid. And they basically said we won't ask for that money anymore, at least $45 million of it, that they could then divert to the schools. So that amounts to about $95 million in money this year through a combination of that federal money and a loan against the expected increase in the sales tax starting in 2014. So that's how they're gonna raise the money.
Q: Some people have criticized the Governor's plan. Why is that?
The people who don't think this is a good deal are upset because they think that really the state isn't contributing much of anything when you get down to it because the sales tax increase is gonna be from people who live and shop in Philly, the federal waiver is a one shot deal, its not recurring revenue, it won't continue in the future. And the recurring revenue will come through the sales tax.
But it’s important to note that the way that the mayor and city council wanted to raise its share of the money from the city, $60 million, most of that was shot down and won't happen, and that's the cigarette tax and the liquor tax increases.
Q: So City Council's big announcement of $74 million for the school District has somewhat been made null and void?
Well the $74 million that would've been raised by the increase in the liquor-by-the-drink and the cigarette tax, that's not going to happen. They're not going to increase the cigarette tax. They're not going to increase the liquor-by-the-drink tax so the only thing left is the increase tax collection; the $28 million that they were going to get in increased tax collection. And they still need some legislation from the state to help with that, to make it easier. And that legislation hasn't been voted on.
Q: Is it true that Governor Corbett's proposal will reel in more than the amount the District originally asked for?
It is incorrect. That's not really true because if you count the city and the state together, it was $180 million that they were asking for from both of them but this is only going to give them, generously $140 million from both sources. Another issue is that, debatably, the Governor's $140 million includes $15 million increase in the basic education formula. But if you look at the budget that the School District enacted, they've already counted on that money, all but $2 million of it. So it really doesn't help close that $180 million gap that they were seeking to close. So that money shouldn't be included in the $140 million.
The other thing is that the sales tax extension and the $45 million one-time payment from the federal loan forgiveness, has contingencies on them. There are strings attached to that money. The Secretary of Education would have to certify that the School District is enacting reforms in the area of operations, education and administration of finances and would essentially decide or have a lot of influence over what kind of contract that the school district negotiates with the unions, especially the teachers union.
The other big piece that the district is counting on to close the $304 million gap is $133 million savings from its labor costs. So the contingency is designed to influence that and it assumes that they're going to get those savings. But it’s not clear that they will. It sounds like the Secretary of Education won't sign off on even releasing that other money or allowing that other money, you know the sales tax extension money or giving the district that $45 million unless they save all of the $133 million that they say they’re gonna save from the union contracts.
Q: Where does this current scenario leave the teachers union both politically and financially?
It leaves them in the position of kind of having to negotiate, not just with the School District but with the State in some ways. Not literal negotiation with the State but it seems that the State is going to have a lot of influence over what the teacher's contract ultimately looks like. And that unless it includes all of the savings that the District said it could get from the teachers and from the other unions, then they won't even release the money that they've already approved.
Q: Realistically, what exactly needs to happen now for the district to avoid layoffs and cuts to programs like arts and athletics?
At this moment, it’s unclear the effect on layoffs, whether the 3800 layoff, how many of those jobs will be reinstated, how those jobs will be reinstated is unknown. The School District has said that it’s not commenting because it hasn't fully figured out yet exactly what the impact is. What needs to happen now for the district to avoid the layoffs is for all of these pieces to fall into place and it’s still unclear exactly when that's going to happen.
There's no indication yet of how the District would go about deciding what it’s going to put back and what it’s not going to put back. Sometime later this week they're likely to say something. when the dust settles. i think they want everything finalized before they say anything and give them a chance to look over the numbers and determine the impact and then they will say something. and they might not even know then what they're going to do exactly or how they're going to do it.
Q: So there's no real timeline per say for all of this to be implemented, aside from the first day of school being a general deadline goal?
Well the School District teachers' contract expires on August 31st and school starts a week after that. But practically, the School District doesn't want to call people back to work a week before school, some people are going to find other jobs, they'll have to figure out where exactly these people who are called back are going to be teaching is going to be up in the air, and a whole lot of other things that are going to have to happen. It just doesn't bode well for a smooth opening of school, at least not yet.
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