Governor Tom Corbett is authorizing a $265 million advance to the Philadelphia school district.
This is an early disbursement of money that the district was already scheduled to receive, and thus does not erase the district’s $81 million budget gap.
Corbett, speaking at a press conference Wednesday at his southeastern regional office on South Broad Street, said his goal is to prevent further school layoffs and ensure that city schools open on time on Sept. 8.
“Financially this action will assist the district with their cash-flow needs in the short term,” Corbett said. “[It will] reduce the amount that the district will have to borrow, and as a result save the district $4-to-$5 million in borrowing costs.”
The district says it asked for this advance in June, and has already included any borrowing related savings in its budget. (Most school districts routinely do short-term borrowing early in a school year to cover costs until tax revenues begin trickling in.)
At the presser, Corbett was flanked by Superintendent William Hite, School Reform Commissioners Farah Jimenez and Feather Houstoun, as well as Rep. Bill Adolph, R-Delaware County, who has been a major champion of the Philadelphia cigarette tax which Mayor Nutter and other local school advocates have touted as a source of new cash.
Hite thanked the governor for “providing some certainty,” but said the advance was “just another piece of information that we will use in our consideration for an announcement about schools leading up to the 15th of August.”
Hite says that if the school district’s $81 million deficit hasn’t been significantly closed by that date, he would choose between two bad options: Either layoff an additional 1,300 staffers, making some class sizes balloon to 41 students per teacher, or save money by truncating the school year.
Since the $265 million advance does nothing to close the district’s gap, Hite said he still couldn’t guarantee that schools would open as scheduled on Sept. 8.
“What we will say is what we’ve been saying all along. There are things that we are considering, and things that we continue to consider,” said Hite. “It’s really important for us to make sure that we weigh everything.”
Closing the district’s $81 million gap would only deliver schools the same amount of resources as last year.
“And no one will submit that that was sufficient or adequate,” said Hite.
The school district has been counting on Harrisburg approval of a Philadelphia $2-per pack cigarette tax. City Council unanimously passed the measure in spring of 2013. It picked up momentum in Harrisburg this summer, but disagreements over ancillary measures tucked into an omnibus bill that includes the tax have stalled its passage.
If passed, based on city projections, the cigarette tax should generate $83 million in a first full year of collections.
When Republican leaders in the state House of Representatives declined this week to return from recess to debate the cigarette tax on Aug. 4, as previously scheduled, they promoted the idea that the governor could ensure schools opening on time by advancing money.
Legislative leaders say the district should count on the cigarette tax passing this fall and maintain they see no urgency to pass the tax this summer.
But Hite has stressed that the district will not count on funding that’s not guaranteed.
At the press conference, Corbett called on the legislature to return to Harrisburg before school starts, but did not call for a special session on a specific date.
“If other issues added to the bill are complicating that chance of passage,” Corbett said, “put the other issues aside.”
At a seperate hearing hosted by a caucus of Philadelphia state senators at City Hall, Mayor Michael Nutter was exasperated at Harrisburg’s inaction.
“It is insane that we are having to have this conversation at this moment….” said Nutter. “It’s a local government issue. It’s a local tax issue. On this one, we have not asked the Commonwealth of Pennsylvania for one dime. Yet, here we are a year later in the vortex of legislative and political hell going back and forth over whether or not the citizens here should be able to fund their own schools with their own tax dollars.”
Following Corbett’s press conference, a coalition of city education advocates demanded action beyond the advance.
Rhonda Brownstein, executive director of the Education Law Center, said it’s critical for the district to receive “an assurance, in writing,” from lawmakers that they will approve the bill.
“The School District of Philadelphia, and the thousands of families and children in the city, need to know as soon as possible if their schools will open on time,” she said.
A salvo at the union
Corbett also offered this advice for guaranteeing swift passage of the cigarette tax.
“Several of the legislators have asked why they should support a bill that assists the Philadelphia School District only,” he said. “Part of the solution in securing their support … is for the union leadership of the Philadelphia Federation of Teachers to be as committed to the students of Philadelphia as they are to their own interests.”
Corbett then listed a number of actions taken by the state – including directing a one-time $45 million influx to the district last year – and the city, before saying that “the PFT remains the one entity not at the table.”
The district has been seeking $103 million in concessions from the teacher’s union, in addition to work-rule changes. The PFT contract expired at the end of August 2013.
Corbett complained that the PFT is “one of only two teacher unions in the entire state that pays nothing to health care in this day and age. When I hear the people say, ‘We need more money.’ We need more agreement. We need more cooperation to address not only the revenue, but the cost drivers.”
A small fraction of PFT members do contribute towards health care premiums.
In addition to health-care concessions, the district has been asking teachers to take salary cuts of 5 to 13 percent.
In a telephone interview, union president Jerry Jordan said his members have “already gone above and beyond” by agreeing to forestall pay raises and paying for classroom supplies out of pocket.
“The members of the PFT are not the funders of the district,” said Jordan. “The state has a constitutional responsibility to provide funding for the school district of Philadelphia.”
Last August, Jordan said the union would agree to a contract that included health-care concessions (of an amount he still won’t disclose publicly), but the district did not accept the offer.
‘It’s not an easy thing’
Assuming the legislature passes the cigarette tax, Corbett has instructed the Department of Revenue to expedite its collection processes.
Corbett also said the state has certified Philadelphia’s 1-percent sales tax extension.
The governor also used the press conference to reiterate a point on which he’s been touring the state: state employee pension reform.
Corbett says this issue has specifically affected the district’s bottom line. Over the past 10 years, he says the district’s pension costs have risen by $66 million dollars.
If enacted tomorrow, Corbett’s preferred pension plan, sponsored by Rep. Mike Tobash, R-Berks, would not save the school district money in the immediate future.
Corbett also stressed that the state already sends the Philadelphia school district $1.33 billion through the basic education subsidy.
Asked if thought that, even with cigarette tax proceeds, Philadelphia schools would have adequate resources, Corbett said:
“When you’re looking at what’s adequate, you also have to look at what your costs are.”
Corbett also lamented special education costs.
“Special education was created 30, 40 years ago by the federal government, kinda mandated down on everybody and we were told that we would be funded forever at 48 to 49 percent,” Corbett said. After conferring with Hite, the governor said the district receives 17 percent of needed special ed funds from the feds.
“They didn’t keep their promise,” said Corbett. “The federal money was there and then it was taken away, but the school district and the state have to pick that up.”
In all, Corbett refused to say that the district’s resource levels were inadequate.
He closed the press conference by referencing the difficulty of getting the legislature to reach agreement.
“You have to keep in mind at the same time: There’s legislators from all different kinds of districts that are saying, ‘What’s fair for my district? What’s adequate for my district?’ So you have to kind of reach that consensus,” said Corbett. “It’s not an easy thing to do.”