In what was either a thinly-veiled threat or a no-nonsense, frank assessment of the school district’s current financial malaise, district Chief Recovery Officer Thomas Knudsen got everyone’s attention on Tuesday when he announced that the school district will face the possibility that schoolhouse doors won’t open in September if city council doesn’t approve the controversial Asset Valuation Index (AVI) legislation, which would provide the district $94 million in funds.
Knudsen made the startling announcement during the first public hearing on the School Reform Commission’s Blueprint for Transforming Philadelphia’s Public Schools. That $94 million in additional AVI revenue has already been included in the blueprint, along with extra state revenues in fiscal years 2016 and 2017.
Given the opportunity, school district officials didn’t back away from Knudsen’s assertion — and reiterated that the district literally has nothing left to cut, and the $94 million is a must-have for the district’s survival.
“In reference to [Knudsen’s remarks], the $218 million shortfall we are projecting for the next fiscal year takes into consideration the city approving $94 million in extra revenue,” said school district spokesman Fernando Gallard. “What makes it dire is if we don’t get the $94 million, then in the fall, the budget deficit becomes $218 million plus $94 million.
“This is a conversation about reality and fact; it’s about finally stating clearly where we are financially and what our needs are,” Gallard continued. “The SRC has mandated to the district that we must be 100 percent clear and straightforward with our finances.
“The SRC has made it clear that in prior years, the district has spent more than it had, and it can no longer continue to operate this way. When Knudsen said it’s dire, we literally do not know where we will get the money to fill that hole.”
Knudsen’s remarks hinted that the district will be unable to carry a deficit of $312 into the next year, which could theoretically cause the district to basically shut down in September. Gallard refused to speculate on what public education would look like in the near-term if council doesn’t come up with the $94 million. While city council members continue to debate the merits of AVI, council president Darrell Clarke recently said he is pleased that the district is at least finally confronting its financial morass, but stressed the need for caution.
“Some aspects of it make some sense, some are of some concern, but the reality is that things have to change - and they have to change dramatically,” Clarke said. “You have to deal with teachers, and you have to deal with structure. With this new $90 million request, there is going to be something in there that reflects our viewpoint. That’s just the bottom line.”
Gallard also said there’s nothing left for the district to cut; that is it down to providing the most crucial programs, and few non-mandated services have survived the last round of cuts.
“For fiscal year 2012, we went through $700 million in cuts. We’ve had to lay off 98 nurses, school police officers, and announced were are not going to have summer school, but only credit recovery programs for seniors, so we’ve been actively cutting where we can.
“What we are saying in regard to AVI is that there is no fat left — we are down to the primary services for education.”
Veteran school nurse and vocal student services advocate Eileen Duffey has seen the hurt these measures have caused, not only on her peers that were laid off, but for the students she serves as well.
“We never said the school district was perfect. It has had funding problems going back 30 years, and now they have organized in such a way as to dismantle it,” Duffey said, who has cared for public school students for more than three decades. “We have a devastating situation on our hands, and the people who are now charged to fix it are not looking at dissecting the social situation, but looking at dollars.
“It’s heart-breaking, union-busting and undemocratic,” Duffey continued. “And everyone will pay for this travesty.”
Jerry Jordan, president of the Philadelphia Federation of Teachers, said he doubts the teacher’s union can mount a legal defense to either the reorganization plan in general, or the particular element that calls for a $159 million reduction in personnel, including a restructured benefit and wage scale. But Jordan defended the union, noting the district’s history of mismanagement, and the prior givebacks by the PFT.
“When it comes to health care costs and pensions, for ten years, the legislature allowed school districts to pay zero into funding their pensions, and then we had the financial crisis in the country, which of course affected the pension funds, too,” Jordan said. “So now, [the state] is saying to districts across the commonwealth that they have to pay more money into the pensions.
“The SRC knew that, and it’s the school district and SRC that has been managing the district, When it comes to health care costs, it’s a major issue.”