One reason to celebrate the resolution of a labor contract – such as the one the School District of Philadelphia just settled with Philadelphia Federation of Teachers after four long years– is the stability that a settled contract brings.
Except the new teacher's contract — which grants raises to teachers and establishes new work rules that will benefit the district –could bring the opposite of stability. That's because the district doesn't have the money to cover the cost of the contract, which is projected to be $395 million over the next five years.
In fact, the district, which has enjoyed a rare, albeit brief period of financial stability, could soon be plunged back into living on the precipice. Since the district has no authority to tax or raise revenue, the state and the city will have to figure where the money comes from.
The district does not have the money needed to meet its financial obligations over the next five years. The additional $395 million owed the teachers over that period will make matters worse.
Unless something is done, the district will face deficits beginning in 2020 that will climb to over $900 million by 2022.
If that happens, we will face the same round of ruinous cuts and layoffs experienced when the district had to dig itself out of the $600 million-plus deficit that greeted William Hite when he became superintendent in 2012.
That, in turn, will destabilize Hite's efforts at improving the public schools and it is likely to convince more parents to flee to charters or suburban schools. (In fact, Tuesday, Hite announced that the contract will prevent him from hiring new teachers, as he had planned.)
Give the district credit for not hiding its difficult financial future. The earliest budget projections made this year predicted the district was headed for a "financial cliff," because its revenues were growing at half the pace of its expenses.
The cliff just got steeper with this contract.
Clearly, the district leadership – having laid its cards face up on the table – is hoping the state and the city will step up to provide extra money for the schools. We have been down this path before, with painful results. State lawmakers' hatred toward the idea of raising taxes is matched only by their disdain for fully funding public education.
Some of those lawmakers argue that the problem is not underfunding, but rather the district's inability to live within its means.
That would ring truer if there weren't big-ticket items the district has no control over – charter costs and teacher pension fund payments, to name two. Further, the state's blind appetite for charter schools continues to financially clobber districts around the state, especially Philadelphia's. The district does have control over employee contracts, though, but after four years of no agreement, it clearly felt it had to act. The district did win concessions on work rules, and for the first time, members of the PFT will contribute to their own health care, though the amount (1.5 percent of salary) is small.
From a labor/management standpoint, the new contract is a success, where each side compromised.