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August 27, 2014, 4:50 am

Controller’s report pessimistic about school district finances

Officials try to rein in costs

 

If there’s one thing the School District of Philadelphia and the city’s controller’s office can agree on, it’s that district finances are in a state of disarray.

Where the two entities differ is on the exact state of affairs, and what the district is doing to right its fiscal ship.

City Controller Alan Butkovitz recently issued an Independent Auditor’s Report on the school district’s finances for the end of the 2011 fiscal year, which concluded on June 30, 2011. While the findings won’t exactly shock many, the blunt language used to describe the finances leave little doubt about the controller’s feelings in regard to the district’s money management and proposed austerity measures.

“The school district has experienced continued operating fund losses, is projecting significant budget shortfalls for fiscal years 2012 and 2013, and is uncertain about its ability to achieve cost savings and obtain additional funding to cover those shortfalls,” read part of the statement released by the controller’s office and meant to accompany the release of the full audit. “These conditions raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might results from the outcome of this uncertainty.”

The school district’s budget gap increased to $70.8 million from its announced deficit of $61 million due to expenses accrued through pension payments and early retirements; but a number of painful cost-cutting measures, including the furlough of 91 per diem school safety officers, slashing the number of school nurses, employee salary and benefits adjustments, and closing school buildings on weekends and cutting back weekday hours have had a positive effect on the gap.

Those measures, said school district spokesman Fernando Gallard, helped the district shrink its budget gap by almost half, to $38.8 million. The budget gap must be closed by June, which marks the end of the current fiscal year. For its part, in a response to the controller’s audit, the school district released a statement that reiterated its stance that it is doing everything possible to close the gap.

“As discussed in the audit, district management shares a number of the concerns about the future financial direction of the district. The immediate concern is the budget shortfall projected for fiscal year 2012,” read the statement in part. “Substantial progress has been made in that regard, and the remaining balance is now estimated to be $38.8 million. The district continues to meet its financial obligations including the payment of debt service and salaries, and will continue to do so in a timely manner.”

Mayor Michael Nutter, who recently reallocated funds and resources that allowed school-attached recreational centers to remain open on Saturdays and for certain weekday after-hours programming to continue in school district buildings, is cognizant of the issues facing the district, and voiced his confidence that the school district can fix its problems.

“It has been evident for some time to everyone that the school district has been experiencing financial challenges since at least last year, and through the current fiscal year and into the next. We now have a much better picture of what the district’s challenges are,” Nutter said. “The key here is that the School Reform Commission and Chief Recovery Officer Tom Knudsen are keenly focused on those financial challenges and are working with me and my administration on a daily basis to address those challenges.

“We will ensure financial stability, fiscal discipline and continued operations of the School District of Philadelphia on behalf of our children, their parents, teachers and the City of Philadelphia.”

 

Contact staff writer Damon C. Williams at (215) 893-5745 or This email address is being protected from spambots. You need JavaScript enabled to view it. .