The past two weeks have been a roller coaster for the Chester-Upland School District outside of Philadelphia.
Today, a district official announced that debt relief from the state would give some temporary relief on a payroll crunch. A Delaware County judge ruled that the state has to ramp up its contribution.
“It just doesn’t work,” said Delaware County Court of Common Pleas judge Chad Kenney on the current system of funding schools primarily through local property tax dollars. “It’s broken for Chester-Upland.”
Judge Kenney has presided over years of hearings on Chester-Upland schools, which the state declared financially distressed over 25 years ago.
Charter schools now enroll about half of the district’s 7,200 students. Tuition payments to the charter schools by local districts are mandated by state law, and the state-appointed receiver Francis Barnes as well as Governor Tom Wolf have argued that those payments are based on a flawed formula, diverting too many resources to the charter schools.
Two weeks ago, Judge Kenney rejected a financial recovery plan proposed by Barnes, that would have reduced payments to charter schools for special education students from $40,000 a student to $16,000.
Last week, Chester-Upland officials shared with staff that thanks to depleted coffers and no money flowing from the state (due to the ongoing budget standoff in Harrisburg), they didn’t have the resources to make payroll. The staff decided to work anyway and schools opened their doors on September 2.
Today, district officials said the state had made some of Chester-Upland’s debt services payments for August and September, totaling $5,731,000. That freed the district to pay its staff this week.
As for the next pay period, “we intend to” pay again, said Barnes.
Still, that intervention will not prevent the district from bottoming out again – either sooner or later.
Last week, Judge Kenney asked the district to share what it would need to operate with a balanced budget for the 2015-2016 school year, as well as a timeline for a new financial recovery plan. Today lawyers for the district, state and local charter schools appeared before the judge to go over those numbers.
In addition to $112 million in local, state and federal dollars already budgeted in Governor Tom Wolf’s funding proposal, lawyers for the district said they would need an addition $51 million in state aid to break even.
With just the regular state budget dollars, district business administration officer Karen Howell-DeShullo testified in Judge Kenney’s court the district would run out of money in April.
“Is it the same scenario we’re facing this year?” asked Kenney. “It’s similar but not as bad,” said Howell-DeShullo, if the district can restructure its charter school payments.
Kenney said the reliance on yearly “infusions” of cash – above and beyond funds budgeted through the Basic Education Funding and Special Education Funding line items in the state budget – are “misleading.” They give the impression that the district is mismanaged, he said, as opposed to underfunded.
“Does the Commonwealth understand that a property tax-based formula doesn’t work for Chester-Upland?” Kenney asked attorneys representing the Pennsylvania Department of Education.
James Flandreau, counsel for PDE, said restructuring and eliminating the district’s debts this year would put it back on good footing to break the cycle of bankruptcy. State Representative Thaddeus Kirkland introduced a bill on September 4 to divert $25 million in state dollars to Chester-Upland and eliminate the $20.6 million in old debt “anchoring’ the district in the red.
That bill has been referred to the House Education Committee.
Kenney ruled that the state needs to pay another $3.5 million to Chester-Upland to cover the costs of teacher salaries through the end of September. That will still leave another $8 million in bills to outside vendors for the month of September unpaid.
The state is expected to put forth another financial recovery plan as early as the end of next week.