Tag Archives: School Budget Crisis

Will Pensions Sink the Philadelphia School District?

by Christopher Paslay

Retirement costs in Philadelphia will increase fivefold in the next seven years, growing from $73 million in 2011 to $349 million by 2020. 

There’s a hole in the bucket, dear Liza, dear Liza,


There’s a hole in the bucket, dear Liza, 


There’s a hole.

These lyrics, from a traditional children’s folk song that I first heard as a child on Sesame Street, played through my head this week as I thought about the crisis facing the Philadelphia School District.

We have a hole.  A giant hole.  Not just in terms of cash, but also in terms of resources, staff, and services.  Earlier this year, the District laid-off nearly 3,800 workers.  As reported by the Notebook in June:

The 3,783 figure includes 676 teachers, 307 secretaries, 283 counselors, 127 assistant principals, 1,202 noontime aides, and 769 supportive services assistants, in addition to smaller numbers of workers in other categories. . . . The School Reform Commission adopted a “doomsday” budget . . . that provides a principal and a core group of classroom teachers for each school and nothing else. It has already said it will lay off all counselors, librarians, art and music teachers, secretaries, and support personnel, including noontime aides, in the schools.

Although about a third of the staff was rehired at the end of August, the fact that the District could do so little with so much money is concerning.

Consider these facts: The Philadelphia School District’s budget for the 2008-09 school year was approximately $2.7 billion.  The current budget for the 2013-14 school year is approximately $2.7 billion, although the district may still fall short $100 million plus, depending on the outcome of the negotiations between the School Reform Commission and the Philadelphia Federation of Teachers.

The question here is how was the District able to run at full strength with $2.7 billion just four short years ago, and be in such dire straights now?

The answer may very well rest with retirement costs, which continue to go up at an alarming rate.  According to the Pennsylvania Independent:

Payments to retired teachers and public employees are a growing threat to government budgets everywhere, and it is no different in Philadelphia. A new report from the Thomas Fordham Institute, a conservative education nonprofit, estimates the district’s total retirement costs will balloon from $73 million in 2011 to $349 million by 2020.

On a per-pupil basis, that works out to $900 per pupil in the district for 2011, growing to $2,300 per pupil by 2020.

Robert Costrell, a professor of economics at the University of Arkansas and an author of the report, says that trend is unsustainable.

“We’ve only just begun to see how bad it is going to be,” Costrell said Thursday.

The report examines the pension costs of the Philadelphia School District. Costrell said the financial mess unfolding in Pennsylvania’s largest city is on par with what has been seen recently in Detroit and Chicago. . . .

Because pension costs for public school employees are split between the local and state level in Pennsylvania, the situation in Philadelphia is partially a symptom of the $30 billion unfunded liability in the state’s Public School Employees Retirement System, or PSERS.

Because of that split, the state now picks up about $450 of that $900-per-pupil price tag, but as the costs rise, it will hurt both the district’s and the state’s bottom line.

And when the district spends about $15,000 per pupil — but will soon have to spend $2,000 per pupil on payments to retired district workers — that means fewer dollars are available to cover the actual costs of education.

Lawmakers in Harrisburg must solve the crisis because the state runs the pension system. Little progress has been made toward that goal.

Changes to the pension system approved in 2010 affected only future hires, which does little to affect the pension obligations in the short-term, the report notes.

Since most of the cost growth in the next decade is due to deferred payments of benefits owed to current workers or those who are already retired, changing benefit structure for new employees has little effect, Costrell said.

This news is indeed troubling.  As education advocates continue to fight for more funding for city schools—at both the state and local levels—the looming crisis involving pension funding hangs above it all.  State funds allocated by Gov. Corbett already make-up 50 percent of the Philadelphia School District’s budget—about $1.3 billion annually—and as pension obligations increase, this may very well cut into money earmarked for education.

Something has got to give, and sacrifices will need to be made.  Educators undoubtedly want the best for their students.  At the same time, after contributing 7.5  – 10.3 percent of every check to PSERS (Public School Employees Retirement System), they don’t want to see their pension funds go up in smoke.

Which leads to the following question: Will pension reform take place before the District goes bust?

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Philly Schools Brought Financial Crisis on Themselves

by Christopher Paslay

State auditors have been warning the Philadelphia School District of accounting problems for decades. 

There was a very interesting and informative article published in today’s Inquirer by Eric Boehm of the Pennsylvania Independent:

State auditors warned of financial accountability problems at the Philadelphia School District in periodic audits since at least 1987, foreshadowing some of the issues that underpin the crisis in the district as it opens its doors to students Monday.

The district is running a $300 million deficit this year and was only able to ensure it would open its doors on time thanks to an emergency loan secured by the city of Philadelphia in August. The district is receiving more than $1.3 billion in state and federal aid this year.

But the district has had problems tracking students, accounting for state dollars and keeping accurate finances for much of the past two decades, according to audits conducted by the state auditor general’s office. The auditor general is required to audit all 500 school districts in Pennsylvania at least once every four years.

“The district was unable to provide us with the documentation necessary to verify that it correctly reported its membership and attendance data to the Department of Education,” wrote auditors in the most recent review of the Philadelphia School District, which took place in 2011. “A district’s failure to accurately maintain and report this data calls into question the legitimacy and appropriateness of the bulk of its state taxpayer funding.”

The auditors said they reported similar problems in each of the five previous audits of the Philadelphia School District. It was impossible to determine if the district received appropriate state subsidies for more than decade, they wrote. “These findings are particularly disturbing because in those ten years the district has received approximately $9.1 billion of state of state dollars,” they wrote.

Interestingly, these facts have been ignored by most of the Philadelphia education establishment.  Advocates continue to rally for more money from the state, but this only addresses the short-term symptoms and not the long-term problem.

Boehm’s article continues:

Repeated phone calls and emails to the school district and the state-run School Reform Commission, which was created to address some of the problems in the district, went unreturned over the past week.

But in 2011, in an official response to the state audit, district officials wrote that the district would pursue steps to address the problems identified in the report.

The district said it had new procedures in place to better track student attendance and state spending, beginning in the 2010-11 school year. Officials also tried to downplay the effect of student enrollment on state subsidies, claiming the inaccurate counts affected only 3 percent of state spending in the district.

In a second response, the auditors expressed skepticism that the district would get its fiscal house in order.

“It is imperative for us to emphasize that we have been citing the district since 1987 for inaccurate collection and reporting of child accounting data,” the auditors wrote. “The commonwealth’s taxpayers deserve to know that every dollar is accurately accounted for, and, to that end, no error rate is acceptable.”

Federal auditors encountered some of the same problems.

In 2010, the U.S. Department of Education’s Inspector General recommended that the Philadelphia School District be labeled a “high risk grantee” after a federal audit found the district did not maintain documentation for training and professional development expenditures.

State auditors said that finding highlighted the “pervasiveness of the district’s recordkeeping issues.”

But the district has continued to get more state funding, even while the financial situation at the district has spiraled downward in recent years.

The accountability problems at the school district were compounded by the state’s decision to cut education funding in the 2009-10 and 2010-11 state budgets, using federal stimulus funds to fill the gap. When the stimulus dollars expired in 2011, the state did not increasing funding to make up the difference.

In trying to deal with the funding mess, the school district laid off about 3,800 employees during the summer and closed 24 school buildings at the recommendation of the School Reform Commission, which cited the district’s declining student enrollment for the decision.

“By not taking action now, we would continue the deterioration of our public schools to the point where they become obsolete to the children that we have sworn to serve,” said Pedro Ramos, chairman of the School Reform Commission, in statement at the time.

Enrollment in the district totals about 190,000 this year, but overall enrollment is down 11 percent since 2008 and 29 percent since 2001.

This year, Philadelphia is slated to receive nearly $984 million in basic education subsidies.

That’s a significant increase in only the past few years. As recently as the 2008-09 budget year, the district received $932 million.

The district is counting on the $50 million loan from the city and another $45 million grant from the state to allow it to continue operating through the end of the year.

But the $50 million loan is tied up in a political struggle between the mayor and the city council, while the $45 million state grant also is on hold for now.

Negotiations, meanwhile, continue between the district and its main teachers union, the Philadelphia Federation of Teachers. State officials have said they will not provide additional financial assistance to the school district unless the teachers’ union agrees to about $133 million in concessions.

But things will only get worse, according to two reports that eye the future of the district.

A district report from August 2012 projects a cumulative deficit of $1.1 billion through 2017, and a study of the district’s pension obligations indicates the total cost of retiree payments will climb from $73 million this year to $349 million by 2020.

Tragically, these financial issues go well beyond something as simple as a “fair funding formula.”

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Are Philly Schools Headed the Way of Detroit?

detroit

by Christopher Paslay

It’s going to take more than a “fair state-funding formula” to save Philly schools.  

Tonight at 6:00 pm at the Licacouras Center, the Philadelphia Federation of Teachers will learn important updates on the current contract negotiations with the Philadelphia School District and decide what steps to take next.  PFT President Jerry Jordan has already proposed having teachers pay more for their health benefits, in addition to taking a pay freeze for one year.  The School District, however, wants more.  The School Reform Commission is asking for teachers to take pay cuts up to 13% percent for five years, among other things.

The Obama administration provided $45 million in debt forgiveness to Pennsylvania, and both sides are counting on Governor Corbett, who is holding the money hostage as a way to get the PFT to agree to pay cuts, to eventually release the cash to the School District.

The PFT may agree to pay cuts, or they may not.  Corbett may give the $45 million to Philly schools, or he may not.  In the long run, none of this will keep the Philadelphia School District from collapsing under it’s own weight; tragically, it appears that the PSD is heading the way of Detroit.

Pulitzer Prize winning Washington Post columnist Charles Krauthammer writes:

If there’s an iron rule in economics, it is Stein’s Law (named after Herb, former chairman of the Council of Economic Advisers): “If something cannot go on forever, it will stop.”

Detroit, for example, no longer can go on borrowing, spending, raising taxes and dangerously cutting such essential services as street lighting and police protection. So it stops. It goes bust.

Cause of death?  Corruption, both legal and illegal, plus a classic case of reactionary liberalism in which the governing Democrats — there’s been no Republican mayor in half a century — simply refused to adapt to the straitened economic circumstances that followed the post-World War II auto boom.

Corruption of the criminal sort was legendary. The former mayor currently serving time engaged in a breathtaking range of fraud, extortion and racketeering. And he didn’t act alone. The legal corruption was the cozy symbiosis of Democratic politicians and powerful unions, especially the public-sector unions that gave money to elect the politicians who negotiated their contracts — with wildly unsustainable health and pension benefits.

When our great industrial competitors were digging out from the rubble of World War II, Detroit’s automakers ruled the world. Their imagined sense of inherent superiority bred complacency. Management grew increasingly bureaucratic and inflexible. Unions felt entitled to the extraordinary wages, benefits and work rules they’d bargained for in the fat years. In time, they all found themselves being overtaken by more efficient, more adaptable, more hungry foreign producers.

The market ultimately forced the car companies into reform, restructuring, the occasional bankruptcy and eventual recovery. The city of Detroit, however, lacking market constraints, just kept overspending — $100 million annually since 2008. The city now has about $19 billion in obligations it has no chance of meeting. So much city revenue had to be diverted to creditors and pensioners there was practically nothing left to run the city. Forty percent of the streetlights don’t work, two-thirds of the parks are closed and emergency police response time averages nearly an hour — if it ever comes at all.

Sound familiar?  Here are some similarities between The Philadelphia School District and Detroit:

Corruption

Philadelphia has been governed by Democrats for half a century—there hasn’t been a Republican mayor in over 60 years.  Corruption of the criminal sort has also been legendary.  In 2007 Vince Fumo, a Democrat who represented a South Philadelphia district in the Pennsylvania Senate from 1978 to 2008, was the subject of a Federal grand jury that named Fumo in a 137 count indictment, including the misuse of $1 million of state funds and $1 million from his charity for personal and campaign use; he was found guilty in 2009 of all 137 counts (ironically, Fumo just got out last month and is now living in a West Philly halfway house).

This is a common theme in Philadelphia.  According to NBC 10:

You don’t have to look far to find other Philadelphia politicians who went to prison on corruption charges and came back for a second act.

In fact, there’s a whole vocabulary about it among city pols. They’ll say somebody “had a problem” and went away. Many of the city’s 69 Democratic ward leaders used to call the federal pen at Allenwood “the 70th Ward” – kind of the way celebrities talk about rehab. It could happen to anybody.

The late state Sen. Henry “Buddy” Cianfrani came back after his prison term and worked as a political consultant and powerbroker for many years. Former City Councilman Jimmy Tayoun, always the entrepreneur, started a political newspaper, the Philadelphia Public Record, which is still going and is read by city and state pols everywhere.

Former U.S. Rep. Michael “Ozzie” Myers, who went down in the Abscam scandal, is still influential in South Philly, where his brother Matthew is a ward leader.

As for current fraud, waste, and abuse: From 2008 to 2011, the Ackerman administration spent nearly $10 billion, with little to show for it other than a detailed audit of the PSD’s financial practices by the IRS (and this doesn’t include the usual antics from the usual suspects, such as Chaka Fattah jr., etc.).

Pensions

Although Philadelphia schoolteachers are not paid nearly as well as their suburban counterparts (we face harsher working conditions, have less resources, and spend thousands of dollars of our own money), funding teacher pensions has become a legitimate concern.  Unfortunately, the baby-boomers who were once contributing to the system are now taking from it, and this has called into question the sustainability of the entire system, prompting many of my generation to ask the question: will our pensions be around in 20 years when we retire?

Deteriorating Resources

It is true that Philadelphia public schools are looking eerily like the city of Detroit.  Instead of nonworking streetlights they are nonworking computers and heating units; instead of closed parks there are closed schools; and instead of long response times from police and fire fighters, there are long response times from counselors, school security, and nurses—because they are woefully lacking.

Tax, Borrow, Spend

Like Detroit, Philadelphia continues to borrow, spend, and raise taxes.

As reported in March of 2012 by phillymag.com:

Counting the previous increases in the parking tax, hotel tax, sales tax and property tax, Nutter is on course to raise taxes all five years he has been in office. . . . Nutter is on course for a tax-hiking legacy unmatched since Mayor Rizzo’s fiscal insanity drove the city to the brink of bankruptcy.

In a city that already had one of the highest overall tax burdens in the country, five years of additional tax hikes could take a generation to undo. The result is an even more uncompetitive city.

Last year alone, the city borrowed $300 million to run the schools, and still faces a $1.1 billion budget deficit over the next five years.

Solution?

Tragically, the Philadelphia establishment continues to turn a blind eye to this situation, and continues to blame Governor Corbett, who’s been in office less than three years, for the mess they find themselves in.  Sure, Corbett’s funding formula has put Philadelphia in a pinch financially (although he’s given Philly Schools nearly $1.3 billion in funds this year alone), but fixing this formula is only a small part of stabilizing the PSD as a whole.

What Philadelphia needs is a paradigm shift—a total change in attitude and culture.  At the core of this is the need for everyone—parents, students, teachers, administrators, etc.—to go from passengers to drivers.  We need to stop being victims and start being captains of our own ships.

How do we do this?  Stop being sheep.  Stop groupthink and continuing to vote for the status quo.  Embrace individual achievement over stagnating collectivism.  Parent your children (that means you, fathers).  Pay your property taxes.  Get involved in your children’s educations.  Hold one another accountable.  Meet deadlines.  Speak out against corruption (yes, blow the whistle and snitch!)  Show up for work, on time.  Enforce current policy—gun laws, student discipline, truancy, etc.—before enacting new, unenforceable (dog and pony show) regulations.  Give no more than a second chance to anyone.

Nothing is free.  There is no perpetual motion machine.  Debts and deficits, at the local as well as the federal level, are real and mean something.  The fantasy that there exists some unlimited amount of money out there in limbo that some rich, (perhaps racist), miserly politician or one-percenter is hoarding (and that we need to rally or march to extract) is just that—a fantasy.  As Philadelphians we need to work together and make do for ourselves.  We need to sacrifice, and make do.

A new state-funding formula is just the first step in saving city schools.  If we don’t change our culture, the Philadelphia School District will end up just like the Motor City.

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On Corbett Bashing and the Common Core

by Christopher Paslay

Common Core texts indoctrinate young children and teach them to manipulate facts for social advocacy.  Sound familiar, Philadelphia? 

Mark Twain once said, “The difference between the right word and the almost right word is the difference between lightning and a lightning bug.”

This is the philosophy I use when I teach students in my high school English classes how to write.  There is no substitute for the right word—no true synonym—and until a writer figures this out, he won’t be able to fully articulate his thoughts.  This is the case whether you are writing a narrative, informational, or persuasive essay (the Common Core’s preferred term for “persuasive” is now “argumentative”).

Good writing, especially in today’s culture of limited attention spans, is focused, clear, and accurate.  Good writers can say more in less space—and they can back their writing with examples, details, and evidence.

This philosophy has worked well with my own students at Swenson Arts and Technology High School.  On the 2012 PSSA Writing Test, 74% of my 11th graders scored proficient or advanced—a whopping 28.1% percent higher than the Philadelphia School District average, which was only 45.9%.

Unfortunately, some English Language Arts texts being promoted by the Common Core are no longer focused on teaching students succinct, accurate writing that avoids the use of flimsy persuasive techniques (such as red herrings, overgeneralizing, circular arguments, name calling, etc.), but on writing that actually encourages the use of emotionally charged propaganda for social advocacy.  In short, some ELA texts supported by the Common Core are not making young children free thinkers, but politically indoctrinating them (type the phrase “Common Core indoctrination” on YouTube and see the results).

One interesting case of indoctrinating students and promoting the use of propagandistic writing for social advocacy is the state of Utah’s first grade ELA primer Voices: Writing and Literature, recommended by, and aligned with, the Common Core.  On the surface it appears the text is about literature and writing, but a closer look reveals a major theme is social justice and social advocacy.  This, amazingly, is being introduced not to college undergraduates in Community Organizing 101, but to first graders!

One section in Voices: Writing and Literature teaches young children how to play fast and loose with facts by using emotionally charged propagandistic words to elicit emotions and bring about liberal social change.  It doesn’t teach children to use the right word, as Twain would have advocated (as well as any respectable writing teacher), but to use a word that will get folks stirred-up for social justice, whether or not that word is true, evidence-based, or accurate.

Click on the below YouTube video to see for yourself:

Because the Philadelphia School District is flat broke and has no money to invest in a new set of textbooks, such a primer may not be made available to our city’s school children.  However, the political indoctrination of School District students—and the teaching of how to play fast and loose with facts—is well underway.  Groups like Youth United for Change and the Philadelphia Student Union, who often partner with politically motivated adult organization such as the Education Law Center, are well schooled on the use of propaganda in writing.

All three of these groups frequently use “correlation to prove causation”—a logical fallacy and standard propaganda technique—to imply that Philadelphia public schoolteachers are discriminating against minority students because black students are three times as likely to be suspended or expelled as their white peers (and these groups continue to claim this despite the fact that no documented cases of racial discrimination by a Philadelphia teacher against a students exists . . . except, of course, the discrimination against Sam Pawlucy by a black geometry teacher for wearing a Romney T-shirt in class).

The newly founded “Fund Philly Schools Now” does much of the same in terms of their blatant use of propaganda.  Launched to help raise money for struggling city schools, an admirable goal, their website states:

Since Gov. Corbett took office, it has become clear that when he must make the choice between tax breaks for corporations and much-needed investments in our children, he chooses corporations and wealthy donors every time. The crisis in Philadelphia public schools has been manufactured by Gov. Corbett. He is starving the city of resources and then using teachers as scapegoats and Philadelphia families as pawns.

Propagandistic?  No question.  With Federal stimulus money gone, Governor Corbett has been forced to make due with less, and this has no doubt adversely impacted Philadelphia public schools (as well as most public schools in PA).  But the crisis in city schools was not “manufactured by Gov. Corbett.”

During the Ackerman years, from July of 2008 to July of 2011, the School District blew through nearly $10 billion, spending so reckless it prompted the IRS to open a detailed audit of their financial practices.  The rapid expansion of charter schools—nearly 100 of them in 10 years—also greatly contributed to the School District’s financial crisis.  There is also the matter of Philadelphia residents owing over $500 million in delinquent property taxes.  And the fact that the School District loses millions of dollars in unreturned textbooks and stolen computer equipment each year.  And the reality that recently retired baby-boomers are overwhelming the pension system.  And all the cronyism/nepotism over the past five years from the usual suspects . . . Ackerman, Archie, Evans, Gamble, Fattah Jr., etc.

All Corbett?  Please.

Does the School District badly need money?  Absolutely.  Do I want to see our city’s children get the resources they need?  Most definitely.  But the theatrics and use of propaganda to get money is getting old.  People are growing tired of it.  Attacking public officials is becoming counterproductive (just ask Mayor Nutter).  Why does the rest of the state hate Philadelphia, think we are a cesspool?  Perhaps they are tired of Victimology 101.  It’s like with affirmative action: If groups in need simply took responsibility for their problems and said, I’m having some trouble keeping up, can you please lend a hand?, people would bend over backwards to help out.  But it doesn’t work like that.  Affirmative action in 21st century America goes more like this:  It’s YOUR fault I have problems, so give me what you owe me, now!

Not the best way to get the help you need, or to get at the true root of problems.

Neither is using propaganda to bring about reform (or to teach our students English Language Arts).

According to the mission statement of the Common Core:

The Common Core State Standards provide a consistent, clear understanding of what students are expected to learn, so teachers and parents know what they need to do to help them. The standards are designed to be robust and relevant to the real world, reflecting the knowledge and skills that our young people need for success in college and careers.

Dr. Carole Hornsby Haynes, a noted curriculum specialist and former public school teacher, disagrees with the Common Core’s mission statement and feels they have an ulterior agenda.  She writes in a recent article:

Common Core is not about “core knowledge” but rather is the foundation for left-wing student indoctrination to create activists for the social justice agenda. Education is being nationalized, just like our healthcare, to eliminate local control over education, imposing a one-size-fits-all, top-down curriculum that will also affect private schools and homeschoolers.

I don’t know if Dr. Hornsby Haynes is totally correct about the Common Core, but I know this: ELA teachers should teach students how to make strong, factual arguments, not how to play loose with the facts to support their own political agendas.

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Healthcare Reform Causing School Districts to Cut Jobs

Officials in school districts are voting to cut employee hours to avoid the healthcare mandate. 

Below is a must read article concerning school districts and healthcare reform by Elizabeth MacDonald:

Health reform is now causing job turmoil across the country in three key groups that the White House has depended on for support—local government, school workers and unions.

School districts in states like Pennsylvania, North Carolina, Utah, Nebraska, and Indiana are dropping to part-time status school workers such as teacher aides, administrators, secretaries, bus drivers, gym teachers, coaches and cafeteria workers. Cities or counties in states like California, Indiana, Kansas, Texas, Michigan and Iowa are dropping to part-time status government workers such as librarians, secretaries, administrators, parks and recreation officials and public works officials.

This growing trend comes as three major unions have written to Democratic Congressional leaders Nancy Pelosi and Harry Reid warning that, because health reform is helping to push the work week to below 30 hours, it will “destroy the foundation of the 40-hour work week that is the backbone of the American middle class.”

The federal law forces employers with at least 50 full-time workers to cover at least 60% of health-care costs for employees who work 30 hours or more per week. The law covers schools and state and local governments.

If they don’t offer affordable health insurance, schools and local governments could be fined $2,000 to as much as $3,000 per employee annually. The White House delayed the employer mandate for one year so employers can adjust, which the National School Boards Association (NSBA) applauded, as the mandate will hit schools hard.

Nearly three-quarters of government employers provide generous benefits to workers, funded by taxpayers, higher than any other industry, says the Kaiser Family Foundation.

But the quarter that do not are making rapid changes to the work week. To stop the wheels from coming off the school bus, school districts are doing the math, and are figuring out that cutting worker hours down to part-time status, or paying the mandate tax, or dropping part-time coverage is less expensive than offering health insurance benefits. “School districts across the U.S. are grappling to determine how they will respond to the requirement,” says National Insurance Services, a specialist in public sector employee benefits since 1969.

“Even some school districts on Long Island now contemplate putting school workers in the state health exchange to save money, while administrators and superintendents get paid huge six-figure salaries,” says a school administrator in Nassau County who asked to remain anonymous.

On top of that, cities across the nation are discovering that the extra expense from health reform will trigger layoffs and cutbacks in city services like public works, city jails, government workers in nursing homes, parks and libraries if they don’t push government workers down to part-time status. Some plan to hire even more part-time employees to make up for the lost hours, city officials have said.

A record high 28.1 million workers are now part-time, though the recession officially ended four years ago. Since the 2008-09 recession, part-time employment rose by 2.8 million (almost all of the gain was involuntary). Full-time work fell by 9.4 million from 2007 through 2010, the Census Bureau says. During that time, the ratio of part-timers rose to 20%, vs. 13% in 1968, and 17% in 1980. The economy has created just 130,000 full-time positions so far in 2013, versus 557,000 part-time jobs.

The irony is, health reform could fix the soaring pension and retiree health benefits owed by government agencies across the country, as numerous municipalities consider moving to a part-time workforce, analysis shows.

With the help of FOX analyst Mark Rigby, here’s what we found happening across the nation.

SCHOOL DISTRICTS

Schools throughout Indiana are cutting back the hours of teacher assistants, bus drivers, cafeteria workers and coaches to avoid having to offer them health insurance under the new federal employer mandate.

“We cannot go out and raise the price of our product to assist us covering this. We would have to go to the taxpayers and ask for some type of increase, and I just don’t see that happening,” said Les Huddle, superintendent of the Lafayette School Corp. This school district has cut the hours for about 600 full-time, non-certified employees in more than 150 schools to part-time status.

Indiana’s Shelbyville Central School System also is cutting back full-time hours of about 100 teacher aides, bus drivers, coaches and substitute teachers.

The Wake County Public School System in North Carolina is considering restricting its 3,300-plus substitutes to working less than 30 hours a week, effective July 1. The school district figured that, if just a third of these subs got employer health insurance, it would cost it about $5.2 million.

The Southern Lehigh School District in Pennsylvania voted to cut the hours of 51 part-time secretaries, custodians and cafeteria workers to avoid the health care mandate.

“We are always looking to meet our obligations to students, the community, taxpayers, our employees and our staff, and this vote will have a direct impact on some of our employees,” South Lehigh School Board President Jeffrey Dimmig told the Lehigh Valley Morning Call, saying he was “troubled” by having to make the move.

In Nebraska, public school districts have been contemplating cutting worker hours to avoid the extra expense of health reform. Attorney Karen Haase who represents roughly 150 school districts in the state, estimates thousands of non-teaching jobs, such as bus drivers, cafeteria cooks, teacher aides, janitors, and administrative workers, may see their hours cut, layoffs and hiring freezes.

Between 1,000 and 1,200 of teacher aides, substitute teachers, administrators, cafeteria workers, bus drivers, and security officers and other workers in the Granite School District outside Salt Lake City, Utah, will see their part-time hours reduced due to the costs of health reform.

Virginia Gov. Bob McDonnell recently said he would limit state part-time employees to a 29-hour maximum work schedule to save the state $61 million to $110 million per year. That includes schools.

Virginia’s Chesterfield County Public Schools and the Chesterfield County government have set 28 hours as the maximum work week for school and other government workers who are not full-time. A school district memo says “this legislation has the potential for serious financial implications for the school division.”

The memo is blunt on how the new law redefines work hours. “The Affordable Care Act redefines full-time employees from people working 40 hours a week to people working 30 hours a week,” it says. “Failure to comply with health-care reform requirements would result in severe penalties — potentially millions of dollars.” The memo says the move will avoid extra costs of about $14 million.

Complaints from school workers about the new law are rolling in. “This healthcare reform is going to make me pay higher preminums (sic). It will make the schools pay more & cut jobs, & programs,” said one complainant on the American Federation of Teachers’ website.

Already, colleges and universities have been cutting back hours of adjunct professors. Youngstown State University in eastern Ohio will limit the hours of non-union part-time employees like these professors to 29 hours a week or less to make sure that the university is not required to provide them with health insurance coverage under the new law.

Part-time professors at Piedmont Virginia Community College and other community colleges in the state could see their hours cut because of Virginia’s response to the new federal health reform law, officials said.

Some 200 adjunct faculty members at Community College of Allegheny County in Pennsylvania will see their hours cut so the school can avoid paying for their health insurance coverage. “While it is of course the college’s preference to provide coverage to these positions, there simply are not funds available to do so,” David Hoovler, executive assistant to the president of CCAC, has said. Another 200 additional part-time employees, such as administrators, computer, seasonal and other positions, will be limited to working 25 hours per week.

And the Haysville school district outside Wichita, Kansas, now says part-time employees who work fewer than 30 hours will no longer receive health benefits they used to get.

MUNICIPAL WORKERS

Officials in Floyd County, Ind., recently announced plans to drop the hours of part-time government workers to below 30 hours a week from 34 because of health-reform mandates.

Butler County outside Wichita, Kansas, now classifies part-time municipal workers as those who work fewer than 30 hours a week.

Long Beach, Calif., is restricting most of its 1,600 part-time employees to on average fewer than 27 hours a week. City executives warn that without the move, their budget would soar $2 million due to higher health benefit costs. The city calculated that the federal penalty for dropping coverage completely for its 4,100 full-time employees would have been about $8 million, so instead, it’s opting to cut the hours.

“I understand there are costs to healthcare reform, but it is surely not the intent of the law for employees to lose hours,” part-timer Tara Sievers, an outreach coordinator at a nature center in Long Beach, is quoted as saying.

The city of Plano, Texas, says it will cut the hours of up to 70 employees who work 30 hours, but currently don’t get health insurance. Offering coverage would have cost about $1 million.

Dearborn, Michigan, is cutting the number of hours for its part-time and seasonal employees to no more than an average of 28 hours per week. Mayor John B. O’Reilly, Jr. said the policy was drafted due to changes in the federal government’s definition of a “part-time” employee.

City officials in Cedar Falls, Iowa, also say they’re being proactive by cutting hours of part-time workers starting Dec. 1. That means 59 part-time employees who now work 32 hours a week in public works public libraries and the parks department, will be scheduled for 29 hours per week starting Dec. 1.

UNION OPPOSITION

The trend in school and government workers getting hours cut comes as the number of unions opposed to health reform grows. The list includes: The United Food and Commercial Workers International Union; International Brotherhood of Teamsters; International Brotherhood of Electrical Workers; International Union of Operating Engineers; United Union of Roofers, Waterproofers and Allied Workers; Sheet Metal Workers International Association; UNITE HERE; and Laborers International Union of North America.

Union leaders James Hoffa of the International Brotherhood of Teamsters, Joseph Hansen of The United Food and Commercial Workers International Union and D. Taylor of UNITE-HERE recently sent a letter to Reid and Pelosi warning: “The law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly,” adding, “the law as it stands will hurt millions of Americans including the members of our respective unions.”

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Dwight Evans’ Laughable Plea for School Funding

by Christopher Paslay

After dismantling public education and lining his own pockets, Dwight Evans suddenly gets a conscience.   

Dwight Evans, who represents the 203rd legislative district in Philadelphia, published a commentary in today’s Philadelphia Daily News headlined, “Deathly ill public ed needs state meds.”  My first reaction after reading it was Is Dwight Evans off his meds?

Evans’ article begins:

I’M CALLING IT the Harrisburg Syndrome: the chronic and costly practice of refusing to invest responsibly in education.

Pause the tape right there.  Since Evans is talking about the need to “invest responsibly in education,” let’s examine some of the ways Evans himself has invested in public schools.

First, there is the education legislation Dwight Evans has fought to pass—the Pennsylvania Charter School Law, which opened the floodgates for the privatization of Philadelphia’s public schools, and Acts 46 and 83, which according to the University of Pennsylvania Labor and Employment Law, “allows the Secretary of Education to declare the system in ‘distress,’ and upon making that declaration, to displace the Board of Directors of the school system and impose a five-member ‘School Reform Commission’ to take over the duties of the Board.  Additionally, the Act eliminates teachers’ right to strike, and prohibits them from negotiating a number of issues for collective bargaining purposes.”

In laymen’s terms, Evans has supported laws that have taken tens of millions of dollars away from traditional public schools and put them into privately owned charters (like Evans’ own West Oak Lane Charter); laws that enabled Harrisburg to take over the Philadelphia School District; and laws that have taken away the Philadelphia Federation of Teachers’ right to strike and to collective bargain.

Then, there are Dwight Evans’ business investments.  In 1983, Evans founded Ogontz Avenue Revitalization Corporation (OARC), which as of 2007 had an operating budget of $12 million.  According to its website, OARC takes “a holistic approach toward community revitalization, by focusing on our Five Pillars: Housing and Economic Development, Business Development, Education and Community Relations, Cleaning and Greening, and Arts and Culture.”

Within Education and Community Relations, OARC offers charter school management, with a fundamental philosophy that “Charter schools must be run as a business . . . a business that produces a product . . . that product is a highly educated student.”  OARC has also opened several charter schools of its own.  In 1998 they opened the West Oak Lane Charter School, as I mentioned above, and owns the property at 2116 E. Haines Street that houses the HOPE Charter School, the Philadelphia Center for Arts and Technology, and Ombudsman.

Since Evans founded the corporation in 1983, OARC has grown by leaps and bounds, and has made many people lots of money (including Evans himself).  Interestingly, though, OARC is technically a not-for-profit, 501 (c)(3), and enjoys tax-exempt status, which means they don’t pay federal income tax or property tax on their buildings.

Another one of Evans’ “investments” in education is his connection with Foundations, Inc., an education management organization that gets paid to both consult and run schools.  According to an article on philly.com:

State Rep. Dwight Evans and Foundations have a long history together, dating back more than 20 years.

Foundations collaborated with the lawmaker in several after-school programs in the area and helped design West Oak Lane Charter School. Between 2006 and 2008, employees from the company donated more than $25,000 to his campaigns. Among them, chief executive Rhonda Lauer donated $3,900, chief of staff Emelio Matticoli donated $3,100 and consultant Martha Young donated $5,920.

Foundations has made millions off of the Philadelphia School District.  As stated by Helen Gym on Young Philly Politics:

State Rep. Dwight Evans was a leading architect behind the state takeover of the Philadelphia Public Schools, and a company with which he has close ties, Foundations Inc., became one of the District’s first EMOs (education management organizations) as well as a major recipient of millions of dollars in school service contracts. Foundations has run Martin Luther King High School for the last eight years, taking in management fees as it ran the school. The school has not done well, to say the least, and its poor academic performance placed it on a list for “turnaround,” a national model of restructuring.

When parents of Martin Luther King’s students voted 8 – 1 to allow Mosaica Schools, Inc. to replace Foundations—Evans bragged about how he had bullied the School Reform Commission, Superintendent Ackerman, and Mosaica Schools into allowing Foundations to keep the contract to manage the school.

“I was like a bulldog on a bone,” said Evans, although Foundations was eventually forced to give up running King High School.

Amazingly, like OARC, Foundations is a not-for-profit, 501 (c)(3), and enjoys tax-exempt status.

Now, back to the ludicrous commentary Evans had in today’s Daily News.  Evans writes:

A physician would look at the condition of public education in Pennsylvania and call for broad-spectrum antibiotics in the form of money. Not just your garden-variety antibiotic, but consistent, broad-based funding – similar to what’s advancing in California – to provide for the “thorough and efficient” education system called for in our state constitution.

Broad-spectrum antibiotics in the form of money. 

I had to go back and reread that line several times to make sure it was really there.  It was.  Evans, of all people, is asking the state for more money for the Philadelphia School District.  He suggests doing so by raising—get this—income taxes:

California has ordered the antibiotic. Last November, voters approved Proposition 30, which calls for income-tax increases that will boost California’s K-12 budget by roughly $1 billion.

Evans then throws in a cherry-picked statistic about corporate net-income taxes just for good measure (and to appeal to all those class warfare lovers out there):

The Harrisburg Syndrome shows no signs of abating. The House recently signed off on cutting the corporate net-income tax to 6.99 percent from 9.99 percent. That’s right – taxpayers across the state are being hammered by local school taxes while big business gets a tax cut.

And while corporations affiliated with Dwight Evans, like OARC and Foundations, pay ZERO taxes!

Perhaps the most puzzling aspect of Evans’ commentary was that he used the state of California as an example of a public education system that works (according to Education Week, California’s K-12 schools get a “C” average and rank 31 out of 50), and that Evans refers to his new educational virus as “Harrisburg Syndrome” (it was Evans who fought to pass legislation that enabled Harrisburg to take over Philadelphia public schools to begin with).

Are Philadelphia public schools and their students in desperate need of more funding?  Absolutely.  But the School District’s budget woes are primarily a result of fraud, waste, and abuse of the Dwight Evans variety, which hardly makes the lawmaker a credible voice for calling for more school funding on the backs of the state’s hardworking taxpayers.

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District Cuts 676 Teachers, Despite 1,500 Teacher Vacancies

by Ray Guzman and Christopher Paslay

According to the Philadelphia School District’s Teacher Vacancy List, the district is seeking 1,540 teachers for the 2013-14 school year. 

The Philadelphia School District, according to its website, has 1,540 teacher vacancies for the 2013-14 school year.  Of the 376 schools that currently need teachers, 47 are high schools (485 vacancies); 6 are alternative schools (28 vacancies); 15 are middle schools (89 vacancies); and 308 are elementary schools (938 vacancies).

The revelation that the School District is seeking over 1,500 teachers for next fall is shocking but nonetheless true, at least according their website.  Benjamin Franklin High School, for example, is seeking no less than 33 teachers for next school year: 6 social studies, 4 English, 4 ESOL, 4 math, 3 biology, 2 chemistry, 2 art, 1 Spanish, 1 music, 1 learning support math, 1 bilingual math, 1 learning support English, 1 life skills support, 1 culinary arts, and 1 business information computer technology.

South Philadelphia High School needs 34 teachers.  Edison High School needs 78.  Strawberry Mansion needs 36.  Northeast and Washington high schools need 22 and 14 teachers, respectively.

And on and on it goes.

Although the School District has not released any official numbers, these vacancies are most likely the result of teachers either retiring or quitting over budget concerns and the bleak outlook for the 2013-14 school year (well done, Boston Consulting Group).  How has the School District responded to what appears to be a massive teacher shortage for the 2013-14 school year?

By laying-off 676 teachers.

It’s true.  Last week, 676 teachers received pinks slips terminating them as employees of the Philadelphia School District as of July 1st.  This means they will no longer receive health insurance and must file for unemployment.

The Philadelphia School District’s plans for the coming school year—from school closings to the recent layoffs of 3,700 staff—are fishy, to say the least.  Much of it fails to pass the smell test.  The savings achieved on the shuttering of 23 schools and the merge or relocation of five others has been hotly debated.  So has the preposterous idea that schools will be able to run without counselors, nurses, vice principals, secretaries, hall monitors, or learning support staff.

It’s become quite clear that the Philadelphia School District and School Reform Commission are posturing—playing “doomsday” games in front of city and state politicians to squeeze more money from taxpayers and most importantly, to box the Philadelphia Federation of Teachers into a corner in an attempt to get over $100 million in labor concessions from them; the School District hopes to manipulate the PFT the way they did SEIU 32BJ Local 1201.

These “doomsday” games are flat out dangerous.  Although the School District does have legitimate financial problems and money is genuinely scarce (due in large part to the fraud, waste, and abuse of the Ackerman administration), the laying off of nearly 20 percent of its staff, especially 676 teachers, may come back to bite them.

It’s apparent by the employment opportunities on their own website that come September 1st, the School District will need to fill 1,500 teacher vacancies simply to make the schools run.  And when you do the math—when you bring back the 676 teachers who were laid off and subtract them from the 1,500 plus teachers needed—this comes to a massive shortage of over 800 teachers.  This, of course, doesn’t factor in the vacancies created by teachers who quit or retire at the end of the summer.

Why did the School District cut 676 teachers to begin with?  Political posturing, as I’ve mentioned above.  The SRC wants to put the squeeze on the PFT, Mayor Nutter, and Governor Corbett.  They are also doing it to save money—two month’s worth of health insurance premiums, to be exact.

Seniority is also an issue.  Creating all these vacancies gives principals more power to hire their own staff.

A closer look at the teacher vacancy list reveals something else: the School District is full of bologna when it claims it will end all of its art and music programs.  If they were truly cutting all art and music (and not just putting on a grand show for all the city and state to see), why in the world would there exist vacancies on the School District website calling for various art and music teachers?

Currently, there are 78 music teacher positions, and over 100 art-related positions, posted on the website.

Come September, after the Philadelphia School District is done trying to consume itself to save a little money, and after they have finished successfully tap-dancing for tens of millions of dollars in cash from city and state legislators (and, surprise, surprise, find extra money in their coffers), much of its programs will be restored; the School District can only violate state laws for so long.

The kicker, of course, will be finding a way to deal with the massive teacher shortage they have created.

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Taxing Nonprofits Could Help Save Philly Schools

by Christopher Paslay

Philadelphia’s multi-billion dollar nonprofit sector must start paying its fair share. 

According to the Philadelphia Foundation’s Nonprofit Study 2010, there are over 3,500 nonprofits in Philadelphia.  In 2007 alone, they made more than $25 billion in revenue, which was 7.7 percent more than they made in 2000.  These nonprofits—which provide services that focus on the arts, the environment, animal rights, education, health, civil rights, housing, food, recreation, and the like—had nearly $47 billion in total assets in 2007.

Interestingly, these nonprofits pay no real estate tax, despite billions of dollars in assets.  For example, the Kimmel Center as of 2010 had $16,449,000 in liquid assets (cash, grants, contributions, etc.) and 267,645,000 in total assets (endowment funds, land, building and equipment, etc.), yet are exempt from paying $5 million in annual property taxes.

According to a 2007 article in the New York Times:

The Chronicle of Philanthropy surveyed 23 cities to try to determine which nonprofits that seek public support — excluding foundations, government and religious groups — receive property-tax exemptions. Such exemptions accounted for more than $1.5 billion a year, with more than half that amount forgiven in New York City and Boston. . . . In terms of value, the biggest exemptions after New York and Boston were in Los Angeles, Washington, Houston and Philadelphia. . . .

The Chronicle’s survey highlighted several well-known properties beyond hospitals that receive big property-tax breaks. These include the Getty Museum in Los Angeles, exempted from $18.4 million in property tax; the Chrysler Building in New York, owned by the Cooper Union for the Advancement of Science and Art college, an exemption worth $17.5 million; and in Philadelphia, the Kimmel Center for the Performing Arts, exempted from $5 million in annual property tax.

The Philadelphia School District is facing a $300 million budget deficit next school year.  District officials are asking everyone to make sacrifices to help close this hole, and have demanded that the Philadelphia Federation of Teachers make tens of millions of dollars in concessions via wage cuts.  Officials are also asking for an additional $120 million from the state, and $60 million from the city, some of which may come from new property taxes.

Mayor Nutter’s new real estate tax assessment—AVI (Actual Value Initiative)—has ruffled the feathers of some City Council members, however.  According to a February 28th article in the Philadelphia City Paper:

This morning, City Councilwoman Maria Quninones-Sanchez quietly and without speechifying, offered what may be a solution to one of the central problems created by the Actual Value Initiative, the city’s property-tax reform effort. The problem: An estimated $200 million of the tax burden is being shifted from large commercial properties to residential ones, while small businesses are also in many cases expecting to see their taxes skyrocket. Sanchez’s solution: Put some of that burden back onto the large commercial properties by way of the Use & Occupancy (U&O) tax, which is applied to commercial tenants, and let the city keep some of that money to use for tax relief for the rest of us.

What’s curious is that Sanchez didn’t mention the problem with Philadelphia’s 3,500 nonprofits—the fact that they bring in $25 billion in annual revenue and have nearly $47 billion in assets—but pay zilch in property tax, money that could help bail out Philadelphia’s struggling public schools.  Why should our city’s students go without counselors, nurses, sports, art, and music while mega nonprofits like the Kimmel Center are sitting on a quarter of a billion dollars in total assets and get a $5 million break in annual property taxes?

Fight for Philly, “a grassroots coalition of residents, community groups, neighborhood associations, faith organizations and labor groups,” feels mega nonprofits like the Kimmel Center should start pitching in and shouldering some of the load.  Earlier this month, they delivered tax petitions to City Council and Mayor Nutter asking for better school funding, demanding that “mega non-profits pay taxes on their profitable commercial property and contribute fair ‘good neighbor’ payments for city services from which they benefit.”

I agree with Fight for Philly—City nonprofits should no longer sit back and get a free ride.  City Councilwoman Maria Quninones-Sanchez’s new tax reform bill should also include Philadelphia’s 3,500 not-for-profits, which earn $25 billion in annual revenue.  Even a small real estate tax on these organizations could generate millions of badly needed dollars for Philadelphia’s struggling public schools.

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A Look at the Philadelphia School District’s Top Earners

by Christopher Paslay

The Philadelphia School District’s top 655 earners (less than one-third of 1 percent of employees) make a combined $88 million in annual salaries.    

According to a Phillymag.com article by Larry Mendte published last June, there were 655 individuals working for the Philadelphia School District in 2011-12 making over $100,000.  Surprisingly, there were 98 teachers on the list.  Principals, who on average make $106,046, flooded the list and accounted for five of the District’s top 10 earners.

Not included on the list are this year’s newly minted one percenters, such as Superintendent Dr. William Hite ($300,000 annual salary), Deputy Superintendent Paul Kihn ($210,000 salary), and newly appointed Chief of Family and Community Engagement Evelyn Sample-Oates ($129,162 salary); Chief Recovery Officer Thomas Knudsen who was receiving $25,000 a month in 2012 (for a grand total of nearly $300,000), did make the list although is not listed in the top 25 below because he’d only racked-up a nifty $122,988.48 when Mendte published the article last June. 

When totaling up all the 655 salaries over $100,000, it comes to $88 million.  This means one-third of 1 percent of the workers (the School District has 20,309 employees) gobble-up over 10 percent of the money (the District’s 2013 adopted operating budget allocates $879 million for salaries and wages).

Here were the top 25 earners working for the School District in 2011-12 according to the article by Mendte:

  1. Arlene Ackerman, Superintendent of Schools: $804,668.67
  2. Leroy Nunery, Special Advisor: $206,283.52
  3. Michael Davis, General Counsel: $171,247.48
  4. Penny Nixon, Chief Academic Officer: $170,096.13
  5. Michael Masch, Special Advisor: $168,840.82
  6. Debora Borges, Principal Empowerment School: $157,102.79
  7. Renee B. Musgrove, Principal Empowerment School: $151,776.93
  8. Donald j Anticoli, Principal Renaissance School: $151,161.70
  9. Edward Penn, Principal Renaissance School: $150,531.86
  10. Ethelyn Payne Young, Principal Renaissance School: $150,319.66
  11. John W. Frangipani, Principal Empowerment School: $149,645.96
  12. Otis Hackney, Principal Renaissance School: $149,147.04
  13. Charles Staniskis, Principal Empowerment Schools: $147,765.82
  14. Thomas Koger, Principal Non High Needs School: $147,687.99
  15. Mary Dean, Principal Renaissance School: $147,529.67
  16. Michelle Byruch, Principal Non-High Needs: $147,049.39
  17. Christophe Johnson, Principal Renaissance School: $146,809.37
  18. Amish Shah, Teacher: $145,743.55
  19. Woolworth Davis, Principal Renaissance School: $145,652.42
  20. Karen Kolsky, Assistant Superintendent: $145,423.45
  21. Lissa S. Johnson, Assistant Superintendent: $145,423.45
  22. Benjamin Wright, Assistant Superintendent: $145,333.45
  23. Francisco D. Duran, Assistant Superintendent: $145,333.45
  24. Linda Cliatt Wayman, Assistant Superintendent: $145,333.45
  25. Emmanuel Caulk, Assistant Superintendent: $145,333.45

On the opposite end of the spectrum are the 2,700 workers represented by SEIU 32BJ Local 1201, who provide cleaning, maintenance, and transportation services to the School District.  Nearly all of these workers make less than $40,000 annually—some as little as $25,000 a year.  The School District recently shook-down these hardworking blue-collar folks for an estimated $100 million in labor concessions over the next four years.

According to the new contract between the Philadelphia School District and SEIU 32BJ, which extends to August 31st, 2016, SEIU 32BJ members will contribute between $5 and $45 (depending on salary) to the School District each week, and agree to forgo planned wage increases in the future and freeze wages for the life of the contract.

This, of course, didn’t stop the School District from recently giving 25 non-union workers $311,351 in increases, which average $12,454 per year.  31-year old Christina Ward was given a 17 percent raise and promoted to Deputy Chief Financial Officer, and will earn $138,420 a year. Joseph D’Alessandro, now the Chief of Grants Development and Compliance, was given an $18,000 raise (16 percent) and currently makes $130,270.  And newly appointed Chief of Family and Community Engagement Evelyn Sample-Oates, who earns $129,162, was given a whopping 49 percent salary increase.

How will the School District cover the pay raises?  No one knows.  Not even the $100 million in labor concession squeezed from the District’s janitors and bus drivers will cover the tab.  According to projections in Dr. William Hite’s Action Plan v1.0, “The District has recurring expenses that exceed its revenues by over $250 million per year, amounting to a $1.35 billion dollar deficit over the next five years.”

And I thought only big corporations and greedy Republicans maintained wage gaps and pimped the working class.

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To Mayor Nutter: Close Delinquent Properties, Not Schools

by Christopher Paslay

Instead of cutting badly needed school personnel and resources, Mayor Nutter should crack down on the city’s deadbeats who owe $472 million in delinquent property taxes. 

Despite laying-off teachers, nurses, school police officers and teacher aids, freezing salaries, cutting athletics, and shutting down after-school activities, the Philadelphia School District continues to struggle financially. 

Thomas Knudsen, the School District’s Chief Recovery Officer (who makes $25,000 a month), recently announced that the District faces a $218 million deficit for the 2012-13 school year, and that if Mayor Nutter’s new property-tax proposal does not pass City Council, the District may not open in the fall.

“It is not clear that we could, in fact, open schools this fall,” Knudsen said.

Nutter’s new property tax proposal, nicknamed “Actual Value Initiative,” would serve to reassess properties across Philadelphia and adjust taxes to an “actual” or current rate.  In theory, this is supposed to bring in an additional $94 million to the School District. 

But Nutter’s property tax reassessment plan is only a drop in the bucket, and continues to put the burden on hard working middle class citizens.  His plan does little to go after deadbeats who refuse to pay their fair share of property taxes, and does not adequately address the problem of vacant buildings. 

In August of last year, the Philadelphia Inquirer did a series on Philadelphia’s delinquent-property-tax collection system titled, “The Delinquency Crisis.”  In a report headlined “Taxes wither on the vine,” the Inquirer wrote:

Philadelphia runs the least-effective delinquent-property-tax collection system of the nation’s biggest cities, a system that has created a “culture of nonpayment” and cost the city and cash-strapped School District $472 million in unpaid real estate taxes, penalties, and interest.

It is a delinquency epidemic that reaches from Chestnut Hill to Point Breeze, infecting every neighborhood. In all, there are nearly 111,000 delinquent properties, or about 19 percent of all parcels in Philadelphia, according to an Inquirer and PlanPhilly.com analysis of city data.

The past-due properties include such pricey parcels as the proposed Foxwoods casino site, an Old City art gallery, a South Philadelphia hotel, and choice real estate a block off Rittenhouse Square.

But it is in low-income neighborhoods where the delinquency crisis has peaked and where the city’s response has been the least effective. . . .

According to the Inquirer report, Philadelphia has more tax deadbeats per property than any other big city in the country.  Here are some facts highlighted in the report

  • The delinquent tax problem has grown under the Nutter administration.  In May 2009, there were just over 100,000 tax-delinquent properties in Philadelphia. On April 30, 2011, the count had risen to nearly 111,000.
  • Tens of thousands of parcels are never subjected to any enforcement action beyond sternly worded letters from the city Revenue Department.
  • The city’s typical tax delinquent is 6.5 years behind and owes $4,249 in taxes, penalties, and interest.
  • 26,000 properties are at least a decade behind, and the owners of nearly 8,500 properties haven’t paid a dime for 20 years or more.
  • According to city records, the largest delinquent, owing $6.1 million in principal, penalties, and interest on five unpaid years including 2011, is Roman Philadelphia Property L.L.C. at 1499 S. Columbus Blvd., site of the potential Foxwoods casino.
  • Cumulatively, the city’s delinquent properties are 720,000 years behind in taxes.

Of the delinquent properties, Frank S. Alexander, a law professor at Emory University and a leading national authority on improving property-tax collection systems, told the Inquirer:  “That’s an astronomical level of delinquency. It is phenomenally high.  Those numbers tell you there is a very high rate of nonenforcement. It means that the city has made a decision not to go after these properties.”

Mayor Nutter may not be going after these tax deadbeats, but he is going after schools.  Nutter and Knudsen have targeted teachers, nurses, custodians, school police officers, noontime aids, cafeteria staff, athletic coaches, after-school activity sponsors, art programs, music programs, and unions, among others, in an effort to balance the School District’s budget, all of which will have a negative impact on learning. 

Not surprisingly, Nutter and Knudsen are now implementing scare tactics—à la Arleen Ackerman and the Great Full-Day Kindergarten Crisis—suggesting that schools may not be able to open in the fall.  Not unless, ahem, the School District’s five unions cough-up $156 million in givebacks, and Philadelphia’s hard working citizens (who actually pay their taxes) submit to another property tax increase.

It’s time for Mayor Nutter to get his priorities straight and make an honest effort to recover the $472 million owed to the city.  He must take the high road and finally confront the city’s tax cheats instead of balancing the School District budget on the backs of hard working citizens and their children.

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