Tragically, District Ignored It’s Own Five-Year Financial Plan


by Christopher Paslay

 Recently, I was perusing the Philadelphia School District’s website when I stumbled across an interesting budget document titled, “Five-Year Financial Plan: Fiscal Year 2008-2009 through Fiscal Year 2012-13.”  (Click here if you want to review the document yourself). 

Dated June 30th, 2008, the financial plan was put in place to help close the $73 million “surprise” budget deficit left by Paul Vallas, former C.E.O. of Philadelphia public schools.  The plan went on to make several ambitious promises in its executive summary:


“In future years, District finances are projected to continue steady improvement based on strong continued state funding levels, combined with tight fiscal restraint for District spending. Accordingly, the first year of this Plan is critical for establishing sustainable fiscal health.


A Gap Closing Plan is in development to achieve full and sustainable balance for the fiscal year ahead. The SRC Chair has requested that the Commonwealth of Pennsylvania Secretary of the Budget and City of Philadelphia Director of Finance work with the District to construct this approach, and the process has begun. Assuming that at least half of the initiatives in this Gap Closing Plan recur, the District is projected to produce operating surpluses in FY2010-11 and FY2011-12 and to begin to rebuild a positive Fund Balance reserve.    


Here are the yearly budget projections quoted in the Five Year Financial Plan (p. 14 of the document):


FY2008-09:  $2,280,602,991

FY2009-10:  $2,483,103,289

FY2010-11:  $2,646,495,847 

FY2011-12:  $2,806,419,243

FY2012-13:  $3,025,631,379


To the credit of the newly appointed Dr. Ackerman and the SRC, the District did manage to successfully balance the books in 2008-09.  Shortly thereafter, however, the District’s philosophy of efficient spending went out the window.  This was undoubtedly due to the fact that a gigantic pot of Federal Stimulus money landed at their doorstep.  Here are the District’s actual budgets from 2009 to 2011:


FY2008-09:  $2,794,000,000

FY2009-10:  $3,057,000,000

FY2010-11:  $3,216,000,000


The District’s spending not only went up nearly a half a billion dollars in three years ($422 million), but their 2010-11 costs were 570 million dollars over their original budget projections in their financial plan issued in June of 2008.    


The irony of the situation is two-fold.  One—the District somehow forgot to exercise “tight fiscal restraint.”  And two—there is no operating surplus for the year 2011-12.  In fact, there is a deficit of $629 million dollars, according to District projections. 


Most ironic, however, is the fact that if the SRC would have simply followed their own Five Year Financial Plan, which estimated a budget of only $2,806,419,243 for the upcoming 2011-12 school year, there would be a more manageable deficit of $111 million dollars, based on the District’s most recent budget projection for the 2011-12 school year of $2,695,000,000.   


Interestingly, as District spending went up almost a half a billion dollars in the last three years, the student population has gone down.  In 2008, there were 169,742 students enrolled in District operated schools.  In 2010, there were only 162,662 enrolled in District schools.          


The question is, where did the money go?  In the 2010-11 school year, nearly $200 million went into Dr. Ackerman’s Imagine 2014 reform plan.  According to an official District News Release dated April 21, 2010, “The proposed FY2010-11 budget provides $180 million for the implementation of Imagine 2014 Phase Two initiatives, including $119 million for the continuation of initiatives implemented last year and $61 million for new or expanding initiatives.”  (To read the whole document, click here.)


Specifically, the money was spent on things like expanding summer programs, Renaissance Schools, Newcomer Learning Academies, Reengagement Centers, Student Success Centers, Regional Talent Centers, Parent Ombudsmen and Student Advisors, expansion of the Parent University, improved counseling services, reading supports, and reduced class sizes, among other things.


Tragically, the District was investing in an ever-growing reform plan with money it didn’t have.  In the 2010-2011 school year, $116 million of the District’s budget came from Direct Federal Stimulus Funding, and $193 million came from PA-Provided Stimulus Funding ($309 million total).  It was public knowledge that both of the sources of this funding were temporary, and that they would be gone at the end of the 2010-11 school year.  


So why did the District recklessly continue to expand its programs?  The District News Release dated April 21, 2010 might give a hint at the answer: “Imagine 2014 builds on the District’s past successes in increasing student achievement and provides the District with a road map to accelerate academic progress over the next five years.”     


But exactly what were the District’s past successes?  If you turn to standardized testing data for the answer, the overall progress was slim.  From 2008 to 2010, after the District increased its budget by nearly a half a billion dollars, PSSA math scores went up a total of 7.3 percent (from 49 percent proficient and advanced in 2008 to 56.3 percent in 2010), and PSSA reading scores went up 5.2 percent (from 44.8 percent proficient and advanced in 2008 to 50 percent in 2010). 


It seems there is too little to show for the District’s overzealous spending.  When Paul Vallas left Philadelphia for New Orleans in 2007, he left in his wake tangible improvements.  He started the process of breaking large, factory model schools into smaller, more manageable ones.  He upgraded building conditions and replaced books.  He also brought Philadelphia School District sports to a new level, making city schools an official member of the PIAA and building new football and track stadiums (he called them “super-sites”) at Simon Gratz, Northeast, and Roxborough, among other schools; Vallas also partnered with Microsoft in 2006 to bring the city its first “paperless” high school—the High School of the Future—in West Philadelphia. 


Other than the expansion of charter schools (which suck money from traditional neighborhood schools), and the creation of a dozen or so special district programs and help centers, there isn’t an overwhelming amount to show for Imagine 2014, at least nothing concrete that will still be standing once the Ackerman administration moves on; to their credit, the current administration did greatly improve the District website and the use of technology, and work out a fair contract with the Philadelphia teacher’s union.     


Nevertheless, it’s still time to pay the piper.  According to the latest District projections, an unlucky number of teachers, nurses, school police, and counselors will be losing their jobs in the 2011-12 school year.  Athletics might be cut, as well as summer programs, music and art classes.  (Were opening Regional Talent Centers and Parent Universities really worth cutting sports programs and laying-off teachers, nurses, and school police?)


Of course, the new PA governor is also to blame for the shortfall.  Tom Corbett has proposed cutting $293 million in education funds for the Philadelphia School District in 2011-12.  This decline in state education funding is unprecedented in Pennsylvania history.      


Still, $293 million isn’t even half of the projected $629 million budget deficit.  Over $300 million is the fault of the District, a gap in revenue that was waiting there like a hole in the road for all to see; everyone and their mother knew the stimulus money would run out in 2011. 


So how in the world did we get into this mess?  How could the District’s financial officers be so reckless with the budget?  It seems to me that the District was its own worst enemy.    


Maybe in the future, such mistakes can be avoided.  Maybe in the future, the SRC will heed its own advice and follow the financial plans they’ve carefully laid out for themselves.       


1 thought on “Tragically, District Ignored It’s Own Five-Year Financial Plan

  1. Fantastic article. Too bad nobody in politics or the bureaucracy cares about the kids. They only care about themselves; their actions have proven this.

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