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When it opened in 1974, William Penn High represented the state of the art. Now district officials say it's not worth saving. Built for over 2,500 students, William Penn now enrolls just 600, and officials say it needs over thirty million dollars worth of renovations. They want to close the school permanently. A neighborhood coalition led by State Representative Curtis Thomas has vowed to stop them.

Thomas: You know that William Penn might be the only high school with a green roof. it might be the only high school in the city with a TV and media room. It has a fitness center, it has an Olympic-sized swimming pool.

Thomas plans to introduce legislation that would prohibit districts from closing schools without a plan for the empty buildings, and district officials say right now, they have no such plan for the William Penn.

Pennsylvania education officials say Agora founder June Brown misused millions of taxpayer dollars. They say Brown packed the online school's board with friends and relatives, who then gave a three million dollar contract to Brown's own management company. State officials say that's a violation of the online school's charter. Michael Race is a spokesman for the department of education.

Race: We've asked that their board of trustees be replaced with trustees approved by the department of education, and who have no personal or family relatinships with June Brown.

Race says the school must also cancel its contracts with Brown's company. If the school doesn't comply, state officials will move to revoke its charter. Attorneys for Agora deny any wrongdoing, saying the state has known about the contracts since 2006. They're still not sure how they'll respond to the state's demands. Their deadline is Monday.

In an email sent Monday , Ackerman told all 10,000 Philadelphia public school teachers to  ignore any pressure they may feel to promote failing students to the next grade. The letter comes on the heels of reports that administrators at South Philadelphia High were pushing teachers to hand out so-called "social promotions."

Sheila Simmons of Public Citizens for Children and Youth says it's unusual for a superintendent to even acknowledge the problem's existence.

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Simmons: It's not anything unfamiliar to large city school systems, Philadelphia or large school districts in general. We know that it has existed, prior to this administration, prior to the administration before that.

Simmons says the use of social promotions usually indicates that schools don't have the resources they need to fully engage failing students. She hopes the superintendent's push to increase the number of school counselors will help.

Among the Philadelphia school district's 24,000 employees are eighty who work for the Bureau of Revision of Taxes, or BRT. Recent news reports documented deep-rooted political corruption at the BRT, and Mayor Nutter is convening a task force to explore major reforms. The district's new budget allows it to shift its eighty BRT employees to the city payroll. District finance chief Michael Masch says the School Reform Commission wants to help clear up the status of BRT employees.

Masch: Right now, some are on the city payroll, some are on the school district payroll. the chairman has suggested there ought to be one payroll, it should be the city payroll, and if the school district is going to support the board of revision of taxes, it would help financially by transferring money over.

Masch says putting all the BRT employees under the same administrative roof will help simplify the task of reforming the agency.

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Lennis Torres has two daughters in Philadelphia public schools. Last week she visited the Stetson Middle School in North Philadelphia to find out what the district plans to do with 3.2 billion dollars.

Torres: I know my kids are smart. And I know they do good. But something's always something stopping them from wanting to go to school. And I always try to look into what it is. Is it the school is boring? What's going on, you know what I'm saying?

Torres was one of just a handful of people who came to hear an overview of next year's proposed budget. She sat patiently through a Powerpoint presentation showing how most District dollars go to fixed costs like salaries and maintenance. But she nodded in approval when operations chief Tomas Hanna promised improvements.

Hanna: Right now in schools you have one counselor for a thousand kids, or you have one counselor for 700 kids. what you will see at Stetson next year, going from one counselor to three. You can clap now! We think that's important …

Hanna went on to describe plans for smaller classes, new libraries, and increased funding for everything from athletics to special education. But Torres and the other parents also heard that all of these plans depend on Harrisburg. Ellen Steiker is a finance official with the district.

Steiker: The problem is, as you've probably been reading, the state budget is in considerable deficit. So it's a difficult sell to be selling an increase for education above what's absolutely bare bones.

Steiker said Governor Rendell's budget would boost the state's basic education subsidy by almost six percent, matching last year's statewide increase of about five percent. Rendell's plan would also allow Philadelphia to use federal stimulus dollars to fund most of its new initiatives. In recent years the governor has consistently pushed for education spending increases of all kinds. Some Republican legislators think its time to slow that trend.

Steiker: Many of us are very very concerned that we're going to take one-time money and plug it into recurring expenses.

Tommy Tomlinson is a Republican senator from Bucks County. He voted yes on a GOP version of the state budget that would halt most of Rendell's proposed increases. That would reduce, Philadelphia's funding by about 300 million, and cut an estimated 54 million from suburban districts. In a speech on the senate floor, Tomlinson said school district's shouldn't be encouraged to use federal stimulus dollars to launch programs that would eventually become state expenses.

Tomlinson: We cannot take federal stimulus that we know is going to disappear and expect us then in two to three years to be able to sustain that level of funding. It's just not going to work.

Republicans say their main concern is a state deficit that's now approaching three billion dollars. But they also say they're ready to negotiate over education spending.

At Stetson Middle School, District finance official Ellen Steiker said stimulus funds are meant to help states boost spending, not cut it back.

Steiker: We're supposing that the governor and the state legislature will support what the Obama administration has proposed, in terms of how stimulus funds will be used. And that they'll be used to avoid having to cut back on plans that have been made by states and localities to improve their schools.

In the audience, Lennis Torres said she's for anything that brings more counselors and teachers to her daughters' schools. She wishes they got the kind of attention she got as a Philadelphia public school student.

Torres: When I was growing up, I was involved in choir, drama, track, you name it, I was in it. And there was plenty of other things to do. You had after school programs, and you had teachers who were willing to stay after school and help you. When now, there's a lack of that.

The School Reform Commission will vote on Philadelphia's school budget at a special session on May 27th. By law, legislators in Harrisburg have until June 30th to approve a state budget.

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At the heart of this year's budget debate lie hundreds of millions in federal stimulus funds. Governor Rendell wants to use those funds to help boost Pennsylvania's overall education budget. But Republican legislators want to use stimulus dollars to replace state funds, holding the line on spending.

Lori Shorr is Philadelphia's chief education officer. She says the city will lobby hard to preserve Rendell's proposed increases.

Shorr: I think what Harrisburg needs to see is when they invest in Philly, they get returns. We see six years of increased PSSA scores, school attendance is up, the graduation rate is up, I mean, it's paying off. They've invested and it's paying off.

Shorr says the Senate proposal would cost Philadelphia schools about 300 million. That would spell the end of district plans to hire more teachers and guidance counselors next year. State legislators have until July to pass a budget.

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Arlene Ackerman says she's ready to get started. This week the new superintendent will ask the new School reform commission to approve a five year plan designed to end inequity in the Philadelphia School District.

Ackerman: Every time that I talk to some of our young people, and they understand that there are differences, that some get and some don't, some have and there are lots of have-nots, it's what makes me get up every morning.

Ackerman says this inequity takes its toll on schools in poor neighborhoods. The result is the so-called "achievement gap." Recent test scores show the district's white students improving faster than African American and Latino students. Ackerman's strategy is to redistribute resources in order to boost those struggling students.

Ackerman: We have to make sure that all students make progress, but we have to accelerate the kids in the gap. So if their counterparts make one year's progress, they have to make two years progress, or three years progress. That's the only way we'll be able to close this gap.

For weeks, Ackerman has been holding community meetings to refine and promote this plan. The final draft calls for more libraries, more guidance counselors, more qualified teachers and reduced class sizes. Ackerman also wants to close as many as ten poorly-performing schools by next year. What the final draft does not spell is what happens when, or at what cost. Last week Commissioner Heidi Ramirez asked for a budget. Ackerman asked her to wait.

Ramirez: I had understood that we would have some kind of a budget briefing on the costs for the plan before voting on that, so we'll get that detail when we vote next week?

Ackerman: Right.

Ackerman later said her plan would cost about $60 million a year. She also said the SRC won't have to approve a final budget until later this spring. But the uncertainties still worry some advocates. Helen Gym is with Parents United for Public Education.

Gym: The problem is that when you apply the budget and the priorities to the plan, they don't match up. You have a plan that on the face of it looks like it would cost hundreds of millions if not billions of dollars.

Gym likes much of what she sees in the plan. Her concern is that the revamped SRC hasn't had time to probe it for weaknesses. Two of the commission's five members, including the chairman, sat at their first meeting last week. A third new member has yet to be confirmed by state legislators. Gym was troubled by the fact that only one commissioner asked detailed questions about Ackerman's final draft.

Gym: when you have SRC commissioners who don't ask questions, or are deferring to the CEO generally on major questions and concerns that could potentially be a dangerous place for the school district.

Gym hopes the SRC will delay its vote. But others say it's time to move forward. Carol Fixman runs the Philadelphia Education Fund. She hopes the SRC approves the plan. But she says that's just the beginning of the new commission's duties.

Fixman: It would've been nice if they had been in office a bit earlier, and they had had the time to be the SRC that had the time and the staff to research it. But it didn't work that way. So, they'll vote on it, and they'll implement it.

Fixman says the SRC will have plenty of chances to shape both the plan and its budget in the months and years to come. But no matter what its successes or failures, Fixman says it will be easy for the public to know who's ultimately responsible. All five SRC members have been appointed by either Governor Ed Rendell, or Mayor Michael Nutter.

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Ackerman's strategic plan promises more books, more libraries, more counselors, and clear performance targets for every school. But when commissioners asked for details of her strategy to improve the quality of the district's teachers, Ackerman said that part of the plan depends on her ongoing contract negotiations with the Philadelphia teachers' union.

Ackerman: Right now we can't transfer teachers from one school to another. We can't transfer them from one grade to another. so to say, it's the district's responsibility to improve teacher quality, I think that is unfair to those of us who are working hard, and in negotiations to try to make that happen.

Ackerman wants to create a system of merit pay for successful instructors. Union officials have voiced some support for that plan, but they also say they're not ready to abandon the seniority system. The teachers contract expires this summer.

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Lower Merion school officials say they're just trying to get an equal number of students in both their high schools. They say that's why they're requiring students from a minority neighborhood to ride the bus to a new school when they could walk to their old school. A group of African American parents say racism underlies that decision. James Herbert represents the families.

Herbert: "You don't take a vibrant minority neighborhood, which is really the only significant minority neighborhood on the entire main line, and draw a line down the middle of it, and tell the kids, you can't choose to go to your neighborhood school."

Herbert says the families just want the freedom to choose between the two schools. Lower Merion officials say they'll cooperate with the federal investigation. But they say they've done nothing wrong, and that they'll stick to their plan.

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