Philadelphia schools face additional $39 million budget shortage

The players are different, but the problems are the same.

Despite shedding thousands of employees and making significant classroom cuts in recent months, the Philadelphia School District - which had earlier announced a $629 million budget gap - must make an additional $39 million in reductions.

Officials propose further slashing individual schools' budgets by $10 million total, cutting professional development, English-language learner instruction, psychologists, instrumental music, athletics, educational technology, and bilingual counseling assistants. Together, those measures would save about $17 million.

And even if acting Superintendent Leroy Nunery II and the School Reform Commission sign off on those cuts, the district still has to find $22 million more.

Chief financial officer Michael Masch delivered the bad news to the new-look SRC at its meeting Wednesday. "These are very serious numbers, and very difficult choices," Masch said.

Without further concessions from district unions, Masch said, "the only place we still have the discretionary ability to cut is in instructional programs."

More layoffs seem likely, though contracts and laws limit what the district can trim this far into the school year. Classroom teachers cannot be cut, but alternative education programs, counselors, nurses, psychologists, and librarians could be vulnerable.

The district's central office, which accounts for about 3 percent of the total $2.8 billion budget, has already taken a 50 percent cut, Masch said, and cannot be slashed any further.

"These are difficult times, and, unfortunately, they're not ending soon," interim SRC Chairman Wendell Pritchett said.

Nunery and Pritchett have asked for impact reports on the $17 million in reductions on the table. Pritchett has also asked for proposals in the next few weeks on where the additional $22 million in cuts could come from.

Masch told the SRC the news was not all bad - the district closed the books for the school year that ended in June with a $18.2 million surplus.

But to do so, it shifted a state grant received for fiscal 2012 into the 2011 budget - a permitted use, but one that created a matching hole in the 2012 budget - and spent $25.2 million of its cash reserves.

The cash reserve now has just $10 million in the food-service budget.

Asked whether he was worried leaving so little in reserve, Nunery responded: "Obviously, yes. It's a concern."

Much has changed since Masch last updated the SRC on its financial situation in August. The district will get $8 million less than planned in city tax revenue. It will get $10 million less in savings from "efficiency measures" and $5 million less than it planned from selling vacant buildings.

Asked by Commissioner Joseph Dworetzky why the district banked on getting higher prices for its buildings, Masch said not all the appraisals were in hand when the initial estimates were made.

Also, "we did anticipate, in all candor, that we would be looking at at least a slightly improving economy," Masch said.

And though it is saving $44 million because of concessions from the Philadelphia Federation of Teachers and the district's principals' union, that's $31 million less than the district was banking on.

Masch repeated his statement that the district's fiscal bind was not the result of poor planning.

"We did see it coming," he said. "We did plan for it."

A sour economy means less revenue, and "the level of cuts we received in our funding are unprecedented," Masch said.

Officials said they were eager for a working group of private-sector executives to start examining district practices. That group is just now forming, though, and any saving it helps the district realize won't be felt until the 2012-13 fiscal year.

Dworetzky said the district must be more careful in approving contracts. He said he would be "inclined to vote against" contracts or extensions that were not competitively bid. "We just have to really press the district staff to wring every dollar they can out of our contracting," he said. "It shouldn't be standard course to simply exercise an option on a contract."

He then voted no on a $100,000 contract extension for a firm providing climate support at Fels High. With just three members on the SRC, the resolution failed to pass without Dworetzky's support.

More than 100 members of 32BJ, the union representing bus drivers, cleaners, building engineers, and mechanics, sat through the marathon meeting at district headquarters on North Broad Street.

About 1,300 of that union's members have been issued layoff notices that would take effect next year. The union rejected about $16 million in concessions that their leaders had tentatively agreed to.

Ernie Bennett, a licensed building engineer, said he feared for the district if the layoffs were made.

"It scares me to think about what would happen to the safety of our students," Bennett told the commission. "If this is a new SRC, let's start a new dialogue for all the employees of the School District of Philadelphia."

Union chief George Ricchezza said his members rejected the deal in part because at the time of the vote, former Superintendent Arlene C. Ackerman had just been paid $905,000 to leave the district.

Ricchezza said his members "don't deserve to pay the price for your mistakes."

Nunery indicated that he had reached out to Ricchezza but had not heard back. He urged Ricchezza to come back to the table.

"Head-count reduction is not the ideal, but I also take seriously what folks are saying about the quality of service inside buildings, how hard people are working," Nunery said.

The meeting was the first for commissioner Lorene Cary, appointed by Mayor Nutter this month. "I'm going to read, learn, listen, and jump in," said Cary, a novelist.

Gov. Corbett has nominated Feather Houstoun and Pedro Ramos to the SRC, but they still await confirmation by the Senate. If confirmed, Ramos will become chairman.

The SRC will have much on its plate. In addition to the ongoing fiscal challenges, officials said at next Wednesday's meeting they would announce recommendations for school closings and consolidations.