Philadelphia shouldn't look to the state to help close its massive school budget deficit, and there will "have to be cuts," Gov. Rendell said at a City Hall news conference last night.

Departing schools chief Paul Vallas had proposed closing the $186-million shortfall with $82.5 million in state and city funds and by cutting spending by $99 million.

But Rendell, Mayor Street and other state and city officials said there won't be a "quick fix."

Instead, Street, Rendell and School Reform Commission Chairman James Nevels pledged to begin combing the district's books, looking for ways to close the schools' deficit.

What they didn't promise is an immediate infusion of city and state money, which Vallas has said the district needs to make up its budget shortfall.

"I don't think people should look for a quick fix in the next 30 days," said Street, who said he'd like the district to create a five-year plan like the one the city uses for its budget.

"This isn't that kind of thing.

"But there is every expectation on my part, and on the governor's part and the SRC's part, that we are going to continue the reforms and make the money available to fund those reforms."

Rendell said that money is unlikely to come from the state.

"It's going to be hard to achieve in Harrisburg," Rendell said.

"This is a tougher budget year than last year. There is a feeling in Harrisburg, among legislators from other parts of the state, that they have done a considerable amount for Philadelphia - and, truth be told, they have."

Aiding in the review of the district's books will be state Budget Secretary Michael Masch and city Secretary of Education Jacqueline Barnett.

Meanwhile, Vallas - who said last week that he would resign - has agreed to stay on through the summer to ensure schools open in an orderly way come fall, the officials said.

Then the SRC, which runs the city schools, will replace Vallas with an interim CEO, a temporary caretaker who could serve until June 2008.

"What we are concerned about is that we don't have a gap in service . . . that there is no interruption whatsoever as we do the search" for a permanent CEO, said SRC chairman Nevels.

That search for a permanent CEO will be national - and will include input from of state and city officials as well as the mayoral candidates, as those candidates had requested.

Last night, officials would not handicap the odds of those who are rumored to be under consideration to replace Vallas.

They include Masch, who is also a former member of the old city school board and the school reform commission, Gregory Thornton, the district's chief academic officer, and Thomas Brady, the school district's newly hired chief operating officer.

Vallas was invited to last night's press conference but decided not to attend, his spokeswoman said.

"The meeting was to position the district to move forward. Paul's focus right now is on finalizing a balanced budget for fiscal year 2008 and finalizing a five-year financial plan for the district," said Amy Guerin, the spokeswoman.

Rendell said the $99 million in cuts Vallas had projected would certainly come to pass - even if the extra city or state funding wouldn't.

There will "have to be cuts," Rendell said.

The schools' financial problems are being driven by four areas of growth, according to a district budget document that was released to the public last week.

From this year to next year, the district said, salaries are projected to increase by 5.2 percent to $917 million.

Benefits are projected to jump 10.1 percent to $451 million; the cost of charter schools is projected to increase by 13 percent to $270 million.

And debt service is to increase 19 percent to $229 million

Vallas has proposed reducing the cost of academic reforms, including funding to private school managers by $21 million and to charter schools by $6 million.

He's also proposed reducing management and productivity initiatives by $48 million, personnel-related costs by $12.5 million and debt service by $11 million. *