With the School Reform Commission poised to adopt a $2.5 billion budget Thursday, hundreds are organizing to protest what they say is a spending plan that shortchanges students.

Philadelphia School District leaders say the SRC's hands are tied, that a bad economy and poor fiscal policy by prior administrations have left the school system on the verge of financial insolvency. They say the 2012-13 budget is the best they can do for now, that it's a painful but necessary step on the way to setting things right.

Activists - unions, students, parents, and community supporters coalesced into a group that calls itself the Philly Coalition Advocating for Public Schools - don't buy it.

"We're opposed to the budget," said retired teacher Ronald Whitehorne, an organizer of P-CAPS. "We see the SRC doesn't have the power to raise money. But instead of slashing and burning, they should be talking about a plan to mobilize people to fight for adequate funding at all levels."

The budget would require the district to finance a $218 million shortfall through borrowing, and still leaves many schools without full-time nurses or police officers. Even the district's chief academic officer calls it "not the kind of budget to give kids the education they deserve."

Even so, it banks on $94 million in new city money that would come from the mayor's Actual Value Initiative tax plan, which is far from a sure thing. Should AVI fail to come through, district leaders aren't sure they could borrow enough money to keep the district afloat.

Critics, including a number of City Council members who grilled district officials at hearings this month, balk at the district's turning to the city but not the state for more funding.

If the AVI money doesn't materialize, an alternative would be to cut school budgets even further. School spending was slashed dramatically in the last year, with the district digging deep in classrooms to bridge a $700 million shortfall; many buildings lost teachers, nurses, police officers, and other support staff.

A district document analyzing the potential impact of not getting the $94 million illustrates how dire things would be. Schools are limited by law and contract to make cuts from a very limited set of line items, things like full-day kindergarten, instrumental music, books, and supplies.

Penny Nixon, the chief academic officer, has tried to create a "fire wall" around school budgets, keeping them from being cut beyond the deep reductions of this school year.

No matter what, four areas will not be cut, Nixon said - full-day kindergarten; early childhood education; reduced class sizes in many kindergarten through third grade classes; and supports for special, alternative, and vocational-education students and English-language learners.

Still, teachers are frantic, said Jerry Jordan, president of the Philadelphia Federation of Teachers.

"They know that they're being held accountable, and yet they're not being given the tools they need to do their jobs because of cuts in schools," Jordan said.

The PFT is active in P-CAPS, and Jordan planned a telephone town hall meeting with teachers Wednesday night to lay out the budget situation and invite his members to join him at the 5:30 SRC meeting and at a rally outside School District headquarters to be held before the meeting.

Helen Gym, a founder of Parents United for Public Education, said that parent groups at more than 40 district schools have already signed on to a no-confidence vote in the budget.

"This isn't just organized labor," Gym said. "The urgent need was to indicate how broad the dissatisfaction is. It's individual schools all across the city saying, 'We're just getting hammered all across this budget.' Schools feel like there's just no bottom."

Another issue expected to be raised at the SRC meeting and pre-meeting rally is the possible layoff of all 2,700 members of 32BJ, the union representing blue-collar workers including mechanics, cleaners, bus attendants and others. The district has said it wants to modernize custodial services, transportation and maintenance, and is counting on $50 million in cost savings in those areas.

Workers fear their positions will be privatized, and hundreds stand to lose their jobs on July 1, with more layoffs possible later in the year.

Talks are continuing. Leaders of 32BJ have said they have offered cost-saving options that would keep members' jobs. District representatives say they're engaged in good-faith efforts to come to an agreement.

And though district leaders have tried to separate the budget from a controversial blueprint for the total overhaul of district operation - which calls for schools to be parceled out into "achievement networks" that could be run by outside organizations - the budget and transformation appear tied up in the public perception.

"People believe they're intertwined," said Jordan. "They have a budget for next year, and there are costs associated with this new model."

The concept of achievement networks has drawn fire from the public, but so has a proposal to close 64 schools over five years and plans for a diminished population in traditional public schools and a rise in charters. District officials say the current district structure isn't working, that school closings must happen to save money, and that the charter shift reflects trend lines and parents' wishes.

The SRC will vote only on the budget on Thursday. Though initially officials indicated they would consider the two together, they now say they likely won't vote on the transformation plan until 2013 and will rely heavily on public input.

Contact staff writer Kristen Graham at 215-854-5146, kgraham@phillynews.com or on Twitter @newskag. Read her blog, "Philly School Files," at www.philly.com/schoolfiles.