COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE SELECT COMMITTEE ON FISCAL STABILITY AND INTERGOVERNMENTAL COOPERATION - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, June 7, 2000 2:15 p.m. - - - (Hearing continued from Monday, 6/5/00.) RESOLUTION 000232 - Authorizing the Committee on Fiscal Stability and Intergovernmental Cooperation to hold hearings in order to fully examine and analyze the current and future financial conditions of the Philadelphia and to receive testimony from Mayor John F. Street and the Board of Education on proposed plans to stabilize the funding base of the School District to prevent fiscal insolvency, avoid a possible State takeover, and ensure a quality education for Philadelphia's public school children. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILMAN MICHAEL A. NUTTER, Vice Chair COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN DONNA REED MILLER COUNCILMAN ANGEL L. ORTIZ COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 6/7/00 - FISCAL STABILITY - RES. 000232 I N D E X Michael Masch, Chair, Finance Committee. . . . 3 Board of Education, City of Philadelphia Rhonda Chatzkel, CFO, School District. . . . . 43 Louis Volpe, Subsidies Technical Assistant . . 57 Mark DiDonato, Private Citizen . . . . . . . . 86 (* - Also provided attached written material.) 3 6/7/00 - FISCAL STABILITY - RES. 000232 P R O C E E D I N G S
Good afternoon. This is the continued public hearing of the Select Committee on Fiscal Stability and Intergovernmental Cooperation. I believe we continued this hearing so that we could hear from Mr. Masch. (Witnesses come forward.)
Could you explain to the committee what the $30 million in cuts are that the Board has made to the District's budget.
And let us know if these reductions in non-in instructional areas, are they in the District's budget, and will anyone be laid off as a result of these cuts?
Let me just -- I'll itemize the areas in which we've targeted reductions, but let me say a couple of things. 4 6/7/00 - FISCAL STABILITY - RES. 000232
You're going to have to identify yourself for the record, please.
Right. My name is Michael Masch. I am the Chair of the Finance Committee of the Board of Education for the City of Philadelphia. Let me just say a few things in introduction about where we are in the process. As you know, the Board was appointed in early March. Under the Home Rule Charter, we were required to adopt a lump-sum budget, which is basically a budget outline, at the end of March, and then to adopt a budget finally by the end of May. The Board, therefore, had a very limited amount of time to get up to speed this year. And I think we would all agree that if we were trying to set forth a rational desirable calender in terms of how deliberation and consultation ought to proceed, no one would have picked this calendar. I wouldn't, the President of the Board wouldn't have, the Mayor would not have and, I suspect, those of you on Council as well. 5 6/7/00 - FISCAL STABILITY - RES. 000232 And I want to say that my understanding is that while I serve at the pleasure of the Mayor, at his pleasure, this board expects to be in office for the course of the Mayor's term. So I hope to be involved in this process next year. And I will commit to you now that, you know, we will do it differently, and we will make the kinds of changes that we made in the City budget planning process. We will introduce a budget earlier, we will have more deliberation on it, and we will make decisions much earlier as well. That said, I --
Let me go back to at least one of the statements that you made about the timetable and the calendar. Could you repeat what you said about if we all could have done things differently, you would have done them differently, and just tell me exactly what you would have done differently.
Well, one thing I would have done differently is not adopt a budget 6 6/7/00 - FISCAL STABILITY - RES. 000232 finally with basically 30 days between the adoption of the budget and the beginning of the fiscal year in which the budget has to be implemented. I don't think that that's enough time to work between decision-making and implementation.
I'm sorry. Let me go back. The Board is required by the City Charter to adopt a budget, I believe, 30 days before the end of the fiscal year; is that correct?
No later than. Okay, and so tell me again what the problem is.
So I think it would be desirable if we could adopt a budget with more than 30 days of time to take the budget decisions and work on implementation, which is what we're doing on the City side now, where Council adopts a budget now in March, and there's basically a quarter of the fiscal year between the decision-making and the implementation, which gives the administration of the city much more time to figure out how they're going to actually 7 6/7/00 - FISCAL STABILITY - RES. 000232 do the implementation.
Okay. So you're saying that you would propose for next year that the budget process on the Board side start earlier or --
I think it would be desirable to start earlier and to have at least the same amount of time, or maybe more, you know, for deliberation in the middle, between the beginning and the ending period. It certainly would be desirable, if we're going to consider reductions from the Superintendent and the staff- proposed budget, to air in public the kinds of reductions that we're considering much earlier and give this Council and the public generally an opportunity to understand those reductions, the thinking behind them, for the Board to understand what the possible implications in terms of service delivery and impact on the community would be.
Right. Well, I think I understand what you're saying. But, again, let me just mention for the record, I believe this Council was ready to have, if you want to call it "a budget hearing process," I 8 6/7/00 - FISCAL STABILITY - RES. 000232 don't necessarily call it that at this stage of the game, but, I mean, I believe that the School District was scheduled sometime in early March to go over your budget. Now, it is my recollection that the District was not ready and did not have any budget books for us. Is that your knowledge or your recollection of it back at that time?
It is certainly true that at the time that -- and I guess it was about two weeks after we were appointed. We were here in this chamber, and at that time, we did not have the budget document completed. And, Councilman, yes, I am owning for us as a board and for the staff the responsibility to move up the timetable. It's clearly our responsibility, and it's only within our power to do that, and I certainly --
Do you think it would be good if the Board sent its budget over or the documents maybe round and about the same time that the same material came in from the City?
I'm not sure, and only in this sense, and I think we should all talk about 9 6/7/00 - FISCAL STABILITY - RES. 000232 this together, because there are decisions that need to get made. One thing that we need to think about is the fact that the percentage of the School District's operating budget that comes from the Commonwealth of Pennsylvania is a much larger percentage, as you know, than State and federal funding is of the City operation budget. That being the case, I'm not sure whether it's a good idea to introduce -- to actually formally introduce and look at a proposed School District operating budget before the Governor, you know, has made his proposal for the Commonwealth budget for the coming year. But one could make arguments to the contrary too. I --
When does the Commonwealth budget come in? Does it seem to come in sometime in the winter also?
So not quite as early as the Mayor has been bringing the budget to 10 6/7/00 - FISCAL STABILITY - RES. 000232 Council, but certainly, you know, earlier than we've been doing it.
So, you know, I am certainly not meaning to suggest that this body was not prepared to review the budget. What I'm saying is, for a host of reasons, and I think one was the desire on the part of the Superintendent and the staff to wait until a board was appointed; and another being the fact that we had vacancies in terms of, you know, having permanently filled some key financial administrative positions in the District, the preparation of the budget, and its presentation to first the Board and also to Council was delayed.
And that was unfortunate. Particularly this year, given how severe the financial problems were, if you were going to pick a year in which you'd prefer to have more time to work over things, this clearly would have been the 11 6/7/00 - FISCAL STABILITY - RES. 000232 year.
Okay. Well, lastly, on that point, let me just mention, though, that notwithstanding when the Board was appointed, and we were pleased to have a new board, there was no requirement that the Board be appointed in March. It was a decision that the Mayor made.
Right. And he could have done it slightly earlier; he had some more time under the Charter change.
All right. And then the board that was in place, or anyone that was appointed at that time, would have been in place, and you could have continued on with that particular crew of people. So, I mean, again, decisions were made for whatever reason they were made, and we awaited the results of those decisions, but there was no 25 requirement to appoint the board in March. 12 6/7/00 - FISCAL STABILITY - RES. 000232
Okay. Again, I wanted to talk a little bit about where we are in the process. The Board and the Finance Committee of the Board found itself with a budget target, and I can speak -- I believe that President Ramos spoke to some of the reasons why we had this target, and I regret not having been here for the hearing on Monday, and I received a partial briefing on it, so to the extent that I'm going to cover things and they're redundant, let me know, and I apologize for that in advance. The requirement that we were looking at was a prospective $30 million in expenditure reductions, not touching any parts of the budget that were proposed to be spending on education for children in the schools. So first we cordoned off that part of the budget, and then of what was remaining, we looked at whether there were areas within -- and basically that's about a billion dollars of the $1.6 billion in proposed expenditures. 13 6/7/00 - FISCAL STABILITY - RES. 000232 So then we were down to $600 million dollars, which is the area in which we could look at possible reductions. Then we have to analyze those areas where there were State or federal mandates that would preclude our being able to reduce expenditures. Then we also have to look at whether there were requirements of collective bargaining agreements that would limit our flexibility in terms of making reductions to expenditures. We then analyzed the remaining areas of the budget where we did have some discretion and attempted to come up with a plan to make $30 million in expenditure reductions, reducing service and having adverse impacts on service delivery that were the lowest that we could possibly identify, recognizing that it was not likely that we were going to be able to impose $30 million worth the expenditure reductions and have no impact whatsoever on service delivery. We try to understand the budgets well enough to conclude that we could impose a reduction of a certain magnitude without having an unacceptable impact on service delivery, and we 14 6/7/00 - FISCAL STABILITY - RES. 000232 had some notion of, you know, how that could be done, but the Superintendent and the Chief of Staff and the senior management of the District asked us for the opportunity, once we imposed the expenditure reductions, to work on a detailed implementation plan for each of these reductions, and they are doing that now. They began working once we made the decisions, which was last Wednesday night. We are scheduled to meet shortly for a first review of those implementation plans. That was going to happen this afternoon; we've rescheduled that because of this hearing. Now we're trying to reschedule that; we want to do that as quickly as possible. So I can identify for you the areas in which we have made reductions to the budget. What we are waiting on, and what we will be happy to brief you on in greater detail as we develop is the more detailed implementation plan for each of the expenditure reductions. So with that as the introduction, let me identify the areas in which we've made the reductions, and I don't have these in any 15 6/7/00 - FISCAL STABILITY - RES. 000232 particular order, so I'm not necessarily doing them in order of importance. I'll try to focus on the larger adjustments first.
Excuse me, Mr. Masch. With the list that you're giving us today, is that part of the materials that we received last Thursday?
The -- it's -- well, I think that you'll find it in two places. First of all, there is a summary, and that's summary I'm prepared to give you now, which is in Mr. Ramos's testimony, on Pages 6, 7, 8, -- 6, 7 and 8 his testimony. And then I believe you have been provided with a copy of the budget resolution that was adopted by the Board; that's Resolution F-1. And in F-1, there is a -- first of all, there's a Schedule Exhibit E, which is the -- all of the spending detail, and it shows you where the adjustments are, and then there's a summary of all of the expenditure adjustments, which is Exhibit G.
Madam Chair? 16 6/7/00 - FISCAL STABILITY - RES. 000232
Before we go into detail, I would like to know on what basis was it decided by the Board that there had to be reductions?
The decision was in two parts. The -- as I mentioned, the Board was required to adopt a lump-sum budget at the end of March, which it did adopt on March 31st. And in that budget, we were looking at --
Well, I'm not asking that. I'd just like to -- without going into all of the details, I would like to know on what basis the Board decided that it had to make cuts?
And that's what I'm trying to explain. I'm going to try to do it as quickly as I can. And if I'm not succinct, I'll make it more succinct. The decision was in two parts. The first part was that the Superintendent presented to us a budget proposal in two parts at the end of March. First, a projection of what expenditure level would be required to simply continue operating the School District and all of its 17 6/7/00 - FISCAL STABILITY - RES. 000232 programs and activities, in conformance with all mandates and collective bargaining agreements. That is what we were calling, you know, the base budget or the carry-forward budget. And then the Superintendent proposed to us what was basically the next installment of the educational reforms that are in the 12-year Children Achieving Program, what the Superintendent refers to as the "Fair Opportunities to Learn Programs." And there was a package of $45 million of additional expenditures identified -- the major areas being programs for lower class size, summer school, and remedial programs for students who failed to meet the higher promotion and graduation standards that the District is beginning to implement the next phase of those higher standards, which will be implemented for the coming school year. Since the budget that was proposed was significantly in deficit, even with any expenditures for educational reform, the Board didn't see how it could propose additional expenditures without accepting a commitment to 18 6/7/00 - FISCAL STABILITY - RES. 000232 reduce the basic expenditure level to help pay for those programs. And so we committed at the end of March to a reduction of $15 million from the carry-forward budget in order to fund educational reform. And, in fact, that's what we did at the end of March; we reduced the base budget and --
Was the Board given any suggestions by anybody to do that, or was this a decision made solely by the nine members of the Board?
By the Board, solely on the recommendation of the Superintendent?
Well, the Superintendent's preference was that we do $45 million of educational reform and not cut anything.
Because when we looked at the size of the operating deficit, it did not seem to us that there was any way that we could really contemplate a larger deficit than the one that we were looking at, and we set a goal trying to keep 19 6/7/00 - FISCAL STABILITY - RES. 000232 around a deficit of $200 million; in fact, we came out at $204.6 million as the deficit. And that was a judgment as to what was reasonable and prudent and practical, given where we were at the end of March, that the Governor's budget proposal was already out, the City budget was basically done at that point. And, really, you know, we felt, even at the $200 million deficit level that we were talking about a gap between revenues that we could then project and a proposed expenditure level where it was difficult to see how we were going to, you know, move from there to the end of May and solve that budget problem with increased revenues.
Well, did the Superintendent say to you, to the Board, for example, that I want these $45 million in educational reforms, do what you have to do to fit them into the budget?
I would say that he did not. I would say that -- remember, you know, our relationship, although obviously some of us, as Board members, knew the Superintendent before we were Board members, but I know for myself and for 20 6/7/00 - FISCAL STABILITY - RES. 000232 several of the others, we have not looked at the School District budget at the level of detail we are now looking at it, and we were getting to know one another. I would say that the Superintendent represented to us that he did not believe that the carry-forward budget, that the base budget was an extravagant budget.
Right. I think he believed that it would be preferable not to make any expenditure reductions whatsoever.
And then -- so who made the decision to go ahead with the cuts? I'm having great difficulty in understanding how a board appointed for the purpose of moving forward with reforms could have possibly started to cut into basic educational needs, thereby moving the Board backward on education. And, therefore, I'm trying to figure out what caused this board, which I assume took office with the hope of expanding educational 21 6/7/00 - FISCAL STABILITY - RES. 000232 reform, what got this board to decide to move backwards in that direction and to institute cuts, which testimony from the Board chairman and the Board president, was hurt education?
Well, I would say, Councilman, that we are trying to walk a very difficult line here. To move education --
No, I understand that, but I'm trying to find out what caused the Board to reach certain decisions? Was it instruction from someone, was it the Board's own thinking? I'm baffled and I'm just trying to get to the bottom of it, because when we know the reason for the cuts, then we're able to begin dealing with them. I find, for example, utterly incomprehensible, under any circumstance, that the small program for adult education, for example, has been cut by 80 percent. I just think it's a totally irrational decision made under any circumstance, and had I been a Board member faced with that, I would have said, "I would prefer to resign rather than reach a decision to have to make that kind of a cut." 22 6/7/00 - FISCAL STABILITY - RES. 000232 And I'd talk about certain other factors like the reduction in day care, at a time when everybody knows that day care needs to be broadly expanded. Instead, your board is deciding to make cuts. I don't see that as a forward- looking approach by a board. And I can't understand it so I have to assume that somebody compelled this board to do that or had excellent powers of persuasion, and I'm trying to find out what it was.
First of all, I want to reiterate what I believe President Ramos testified to on Monday. The budget that we are proposing will permit a higher level of enrollment in day care programs than we currently have in the School District, so it is not a cut in enrollment. It is a cut in unreimbursed expenditures, which will reduce the deficit.
Well, you know, many of us have great difficulty understanding why the enrollment figures that are represented by the Board, why they were that low, and we have concluded it because there was no -- insufficient outreach, that steps were not taken by the 23 6/7/00 - FISCAL STABILITY - RES. 000232 previous board or by the previous administrators to expand the program, because we know more than 3,000 slots were needed, and 3,000 was what you had budgeted for, and you only came up with 2300. And we don't think that was because of a lack of children that needed day care. We think it was a lack on the part of School Board to reach out to the people, and we hope that this new board would successfully do that, would begin the reach-out program that the former board had not achieved.
I want to repeat what Secretary Kahn and President Ramos, I believe, testified to on Monday: if we find that, in fact, there is a higher level of enrollment, for which we can ensure reimbursements so that it will not increase the deficit of the School District, then we will raise the level of enrollment, and we will increase the size of the program. But what we do not recommend is staffing at a level for which there is not enrollment and incurring a deficit for the School District. We do believe that that is unwise. If you will, Madam Chair, I'd like to - 24 6/7/00 - FISCAL STABILITY - RES. 000232 give me guidance. I can finish the question about why 30 million, or I can go back to summarizing the expenditure reductions or I can do something else. So tell me which one you want me to do.
Temporarily. I have great troubles with a board coming in for the purpose of promoting advancement and the education of our children, coming up and accepting and putting forth a budget which offers some gains and helps and hurts in other areas. I can't understand it, and I'm trying to figure out what prompted the Board so that we can evaluate it.
Well, Councilman, I think you know the choice that was in front of us was to adopt a budget that wasn't balanced or --
Well, you did that, you adopted a budget that was not balanced --
-- at such an order of magnitude, in terms of the size of deficit, that the insolvency of the School District at the beginning of the summer would be a certainty, and the likelihood of a Commonwealth takeover the 25 6/7/00 - FISCAL STABILITY - RES. 000232 School District would likewise be a certainty. We felt, having just, you know, come into these positions, that we wanted the opportunity to try to develop, along with the Mayor, a different relationship between the City and the School District and the Governor and the State legislature in terms of how we work on public education issues. And we did no believe that that would be possible if we adopted a budget with a deficit so large that we would not be able to secure short-term funding, and we would be virtually certain to trigger a State takeover under the State legislation that permits it.
And you think a difference between a $80 million deficit and, at most, a $95 million deficit was that significant?
Well, that was not the difference. The difference was the difference between a $204.6 million deficit and the $80 million deficit we adopted and --
Right, but those cuts and that -- 6/7/00 - FISCAL STABILITY - RES. 000232
In your cuts, the most, and I think you would feel that that wasn't true, you feel that some of the additional million in cuts were wise decisions made based 6 upon information that did not hurt the educational 7 process. But in the day care reductions, in the 8 adult education reductions, there were only a few 9 million dollars' difference between the 10 $80 million deficit and the deficit that would 11 have remained if you had not reduced those 12 programs. 13
Well, as you know, 14 Councilman Cohen, the problem with negotiating a 15 complex financial package is that when you have to get to certain numbers in the aggregate, you basically build up from zero million by million by million, and it's possible in each case to say, Well, you know, this is only a $500,000 or a $200,000 or $1 million adjustment, but if you don't do the aggregate of all of those adjustments, you don't meet the target.
Well, how did you decide what numbers you had to get to?
Well, that's what I was 27 6/7/00 - FISCAL STABILITY - RES. 000232 getting to before. Part of it was the desire to move education reform forward and fund some parts of the reform agenda, even despite the very difficult financial circumstances the District found itself in. That was part one. And part two was our need to put together a package that would forestall insolvency for the District. And for that purpose, we determined, after we had adopted a budget at a $04.6 million deficit, that we needed to get the deficit down another 115 million in order to reach a level of deficit where we would be solvent for the whole year, where we would keep the schools open for the whole year. And our priority was to keep the schools open for Philadelphia school children for the full year; that was what was motivating us in very, very difficult circumstances. In order to do that, and this part of the discussion was very much a discussion between the leadership of the Board and the Mayor, because we understood that we couldn't do that through expenditure reductions, that that would, in fact, be unacceptable, that there was a limit to how much expenditure reduction we could do, and the 28 6/7/00 - FISCAL STABILITY - RES. 000232 rest would have to come on the revenue side. And the approach that was taken was to seek a solution with the Commonwealth, where the burden of solving the problem would be divided proportionately roughly according to the proportions of financial assistance that the Commonwealth provided to the budget, about --
That's correct. The -- well, the Mayor and the Mayor's Secretary of Education and the Board President were the people who were party to these discussions, and then the Mayor was, in fact, the person who needed to approach the Governor and put this proposal forward. But the Mayor developed the budget that he put forward, in close consultation with the leadership of the Board of Education.
Madam President, I'll close this part of my questioning with merely the comment I believe the Board's judgment was flawed to the extent it approves any service which it felt was a reduction in the educational accomplishments of Philadelphia's children or 29 6/7/00 - FISCAL STABILITY - RES. 000232 adults or others that the Board was serving.
Thank you, Councilman. The Chair recognizes Councilman Kenney.
Thank you, Madam Chair. Mr. Masch, I had asked this question yesterday. You were not here, but I would like to, at risk of being redundant, ask it again.
During the course of the last number of years, we have been consistently told at our budget hearings, at our tax reauthorization hearings, that the administrative expenses of the School District were cut absolutely to the bone. In fact, that particular phrase was used: "The sound you hear is the sound of sawing of bone that has been cut so tremendously close." Can you understand our frustration when 30 6/7/00 - FISCAL STABILITY - RES. 000232 the Board comes in again -- and I recognize the drastic-ness and the need for it at this point -- and say to us, By the way, here's another $15 million in administrative cuts that we think we can make. You might have been talking about the other may have a quasi-argument that, in 8 fact, it is educationally-related and could be 9 detrimental to the students, but I'm just talking 10 about the $15 million in clearly additional 11 administrative funds. 12 When that kind of information comes to 13 us, I get increasingly more doubtful that what 14 we've been told over the years is, in fact, true. 15 While significant cuts in the administration have been made, there seems to always be more to do and more to make. And why, over the course of three or four years, have those cuts not been made -- I'm asking that rhetorically to you -- and what better situation would we be in today if, in fact, those hard decision and cuts were made three years ago?
Right. Well, Councilman, I guess I would want to start out by saying that every time you work to balance a budget, you're 31 6/7/00 - FISCAL STABILITY - RES. 000232 making judgment calls and you're making trade-offs. And in our case, this board is not saying that we found a lot of waste and we cut the waste; we are not saying that at all. We're saying that we had to make decisions and they were very painful and very difficult, and the question was, what should the priority be right now. With a new Mayor in office, a new board appointed, and our sense, and the sense on the part of Mayor and the Secretary of Education and the President of the Board, that there was some potential to create a space in time to build a different, more constructive relationship with the Commonwealth, should we risk all that, with a budget proposal that we did unilaterally risk a State takeover, risk the insolvency of the School District, risk not being able to keep the schools open for a full year, and that was the trade-off that we were looking at. And so, in that context, the Board was asked to play a part, and the part we were asked to play was to make expenditure reductions that would hurt the least and that is different from saying that they don't hurt, that is different 32 6/7/00 - FISCAL STABILITY - RES. 000232 from saying there is no adverse educational impact. And, I mean --
The $15 million in administrative cuts that are being proposed for this, the budget that you just passed, by the Board, is that going to stop the School District from operating?
It is not going to stop the School District from operating, but at the margin, is it going to reduce the effectiveness of offices that provide critical supports to the people out in the field in the School District? It is going to hurt.
I understand that argument, but if we had another $200 million to put into those services, those services would be that much more enhanced, and that would be better in the long run for kids. My point is, what is the "to the bone" if it's not yet to the bone? I mean, it's extremely frustrating to be told that this is -- we can't go any further, except another 15 million more. And if you take those cuts that can be made and still, I'm sure, from the Mayor's letter of 33 6/7/00 - FISCAL STABILITY - RES. 000232 April 10th, there's potentially a whole load more cuts that could have already been made over the course of two, three, four years, that would have put this district in a much better financial situation than it is today, and it may be in a better situation vis-a-vis our relationship with the Commonwealth. So, I mean, I'm expressing frustration to you, you are now sitting at that table, you are not responsible for this frustration. However, I want the record to be clear that even though where there have significant cuts made, when I am told there are no more cuts to be made, I would suspect there are no more cuts to be made, and then we find 15 million more and then we find 15 million more, and now we're going to fine 100 million more. I mean, what credibility -- I mean, if you think that creating this situation will better our situation in Harrisburg -- I mean, if I'm sitting in the legislature from McKean County, I'm going to say, Well, wait a minute. If you found 15 and 15 and now you're working on 100, there must be a ton of stuff over there to cut. I don't 34 6/7/00 - FISCAL STABILITY - RES. 000232 think that's the case, but how do you expect to maintain credibility when, for three, four, five years, people in this body, myself included, and people in the legislature believe they've been lied to?
Well, I can't speak to the last point. I will just say this: The staff of the School District has been very forthcoming with this board, and we have tried to be quick studies, and we've tried to be responsible, given where we find ourselves. And I have personally tried to understand what the Superintendent and his staff have done and what the history of finances have been, say, in the past half a decade, the past six years, you know, the "Hornbeck Children Achieving Era." And I don't know as much as I would like to, but I will give you at least my preliminary conclusion. My preliminary conclusion is that, faced with severe financial limitations, the Superintendent and his staff have made one difficult decision after the other to shave central administration in order to move more money 35 6/7/00 - FISCAL STABILITY - RES. 000232 into instruction. And I will tell you --
In fairness to that argument, you could move money out of central administration and simply move those people into a cluster setting and make argument that could be accepted or rejected that, in fact, those people that we are now paying large salaries to, that used to be sitting at 21st and the Parkway, are now sitting in a cluster office, they're instructional in nature, when, in fact, they're still administrative. So you just moved -- you call them a different name, you give them a different title.
Right. And I am saying that that is not what I'm finding so far. Has there been some of that? Yes. Is that the whole story? No. 19 But I want to make a second point and that is the following: I think the District has done a terrible job of explaining itself to the Board, to this Council, to the State legislature, to the Governor, to the State Department of Education. I think we can, and will and must, do a much better job of making the case for some 36 6/7/00 - FISCAL STABILITY - RES. 000232 very, very extraordinarily good things, not just educationally, but in terms of prudent administration, that the School District has done over the past half decade. I think there is a story to tell there, and I don't think that that part has been done well at all.
Well, in that vain, then let me ask you a question about in your short time there, your opinion as to the condition of the books of the School District. Do you believe that the accounting methods and reporting and other types of budgeting and other issues as it relates to the actual physical condition of the financial books of the District are in good shape, bad shape, confusing shape? How would you characterize them after looking at them?
'Cause I have heard stories that you've expressed yourself quite vociferously as being upset with the way in which these books have been maintained, or lack thereof.
Well, that answer has several parts. First of all, the District chose 37 6/7/00 - FISCAL STABILITY - RES. 000232 to implement a sweep of new Y2K-compliant financial applications. I would say they're about two-thirds of the way through that implementation, and that implementation has been difficult, and it has not been a flawless implementation, to say the least. I don't see any problems that aren't if fixable. I think that the vendor that was selected under-performed. I have to say that the vendor is known to me and is a nationally credible firm and worked with a lot of large enterprises, so I don't fault the District administration for presuming that this particular vendor could perform at the level that they were promising. It doesn't look like they did that. I would also fault administration of the School District itself. The implementation of these systems requires a very sophisticated and effective level of coordination and cooperation between the finance function, the human resources function, and the information technology function, and in two of those three areas, during the time of the implementation, key senior management left, was not replaced in a timely manner. Interim 38 6/7/00 - FISCAL STABILITY - RES. 000232 people came in and out of positions, which is not desirable during an implementation. It's very unfortunate that that happened right around January 1, 2000. So, yes, I think that there are things that need to get fixed at that level. In terms of the integrity of the financial information, I do not have any question whatsoever about the integrity of the financial information that is being disclosed by the School District. I have no reason to question it based on everything I've seen to date. I do not think that the systems serve managers as well as they need to be served in terms of providing management information, to help people to manage effectively. And, finally, I think that the School District, like the City of Philadelphia, needs to go about budgeting and financial planning in a different way, which is the thing that I tried to do when I was working for the City, and that is to link expenditure to the delivery of service -- first at the goal-setting level and then at the performance measurement level, so that it is very clear what you are expecting to receive in 39 6/7/00 - FISCAL STABILITY - RES. 000232 exchange for a certain level of expenditure, and then to see whether you are actually, in fact, achieving that level of service delivery. And I think, first of all, it's a better way to manage it, and it also helps you to tell your story a lot better. So we are going to make those kinds of changes.
Well, would you agree that in the private sector, a debacle similar to the computer system contract implementation would have resulted in firings, on a private level, private-business situation?
I mean, the cost overruns based on the amount of money that was expected to be spent, the amount of money that we're spending -- that I guess we're still spending now -- I don't know, what is the number? have we come up with a final number on the cost of the computer system that maybe still does or does or does not work?
I don't have that 40 6/7/00 - FISCAL STABILITY - RES. 000232 information here. Those are expenses being charged to the capital budget, and I have to admit, I have spent so much time in first 60 days on the operating budget, I have not yet turned attention to the capital budget.
The ledger works, the payroll system works, and it works a lot better than it did in the fall. Reporting is a problem. And, in general, when these large-scale, large-enterprise applications are implemented, reporting is often the most troubling thing. Even at Penn, even at Penn, which has a lot more resources at its disposal, you know, both at the staff level and in terms of the ability to secure consultants, it took us a good 18 to 24 months to get the reporting right after we turned on new financial applications on July 1, 1996. So that is not unexpected. The test now is how fast we will fix the remaining 41 6/7/00 - FISCAL STABILITY - RES. 000232 problems.
And how much it will cost. And there, the Board has made it very clear to the Superintendent and the staff that our highest priority is to achieve stabilization of systems, with management information available in realtime, with an in-house staff, without the benefit of consultants running the systems within the next one to two fiscal quarters. That's our goal.
Good afternoon, Mr. Masch. I'd like to ask you a few questions in the area of some of the requests for information that were made the other day. I received today a copy of a memo from Mr. Epstein to the President and all members of Council. This was in response to both some issues raised at the hearing the other day as well as some issues raised in a letter from State House Majority Leader Perzel to Board 42 6/7/00 - FISCAL STABILITY - RES. 000232 President Ramos. Do you have a copy of the memo from Mr. Epstein to the Council President? (Epstein memo attached hereto.)
I do. Ms. Chatzkel has just given it to me. I do understand that -- I can just tell you this: I understand there was a number of information requests, I think we've complied with some, and we are working on them all.
Okay. Why don't we try to walk through the memo, and if you could provide whatever detailed information that you can about some of the components. Exhibit A is listed as a list of the District's additional State funding for Fiscal Year 2001. Can you go through those items and tell us exactly what they mean and how they came to be?
Right. I'm going to turn this over to Miss Chatzkel. She'll identify herself and she'll walk you through this.
Good afternoon. I'm 43 6/7/00 - FISCAL STABILITY - RES. 000232 Rhonda Chatzkel, with the School District of Philadelphia. This sheet was prepared in response to Councilman Cohen's question. You had asked what additional funding we were receiving from the State in addition to the deferrals that were talked about by President Ramos. The basic education funding increased by $18.4 million. This was announced in the Governor's budget; as was special education funding, an increase of $5.1 million. Because of a change in the contribution rate for retirement funds, there was a net benefit to the District of $10.9 million. And then subsequent to our March 31st lump sum, over the past month, we've receive notice of the Empowerment Act being passed. An additional $16.5 million that will come to the District in our categorical budget, which you had also asked about, but which will carry operating expenses. The interest earning due to early receipt of State funding is assumed to be $10 million. There is an advance on our State subsidy of $363 million, half of which is to be 44 6/7/00 - FISCAL STABILITY - RES. 000232 received the first business day in July, half the first business day in August, and there are earnings on that over the course of the year. And the last is the Safe and Alternative Schools, which is the Commonwealth's contribution for the CEP Program in particular. That's $3.5 million. This is in addition to the deferrals and other adjustments that we talked about.
Okay. On the basic education funding formula, the $18.4 million, what percentage increase is that as compared to last year's budget?
Between Fiscal Year '99 and Fiscal Year 2000, the increase was about $15 million in the basic education piece. From Fiscal Year 00 to this year, it's $18.4 million.
Let the record reflect that Miss Chatzkel carries some form of 45 6/7/00 - FISCAL STABILITY - RES. 000232 calculator with her, or is that an HP or is it a graphic --
No, I wanted to 15 know what the additional 18 million as compared to 16 whatever the previous year's budget was. 17
That's 20 percent more of an increase than we received in the prior year.
And the under 3 percent number, how does that compare with the amount that may have been received by the other school districts across the Commonwealth? 46 6/7/00 - FISCAL STABILITY - RES. 000232
I'm not sure I can answer that. We can get back to you with the answer to that question. You're looking for an average there?
Yes. The special education funding that was also, either by request or an initiative of the Governor or of the State legislature in an attempt to just generally increase special education funding, and we received what we received based on student population?
Okay. Could you give us a little clearer explanation on the retirement number. I think you said there was a change in formula?
A change in our contribution. The market's done very well, so the contribution that needs to be made dropped. I -- it was over 4 percent. I believe it's something like 1.94 percent now, so that's a deep savings for us.
Sure. I think we know about the Empowerment Act. 47 6/7/00 - FISCAL STABILITY - RES. 000232 When would you normally receive the first check from the State for State funding?
We receive checks at six points over the year. Actually, I have a cash flow which I can pull out, but what this basically does is, advance funds, our biggest check, which is received in June, or a significant piece of it, and March and February and December so. So it takes those later payments and pulls them forward, which is why we receive an interest benefit, interest earnings benefit, for a prolonged period of time.
Now, if you know, why are the larger checks -- is it appropriate to call it -- this funding formula is somewhat backloaded? With the larger checks toward the tail-end of the fiscal or school year?
It's not phenomenally backloaded. The net SVPs that we were projecting for June is about $145 million. That's approximately $60 million, I believe, more than 48 6/7/00 - FISCAL STABILITY - RES. 000232 other checks that we would get. So a piece of it is backloaded. It's not weighted that heavily.
Previous -- before the last agreement with the Governor was announced, there was a lot of talk about advancement of the funds and that it would be a savings to the City -- an interest savings to the City in that it wouldn't have to pay interest on money borrowed. I don't see that factor included here.
Actually, when the School District does a tran, there is a borrowing cost to the tran. And what we had calculated that you saw in the lump-sum budget that you got at the end of March was a cost of about $13.7 million. However, the School District traditionally has been able to borrow at a lower cost than it's able to invest those funds at. So during the course of a year, the interest earnings on that original tran were about $12.7 million. The net cost of doing a tran was about only a 49 6/7/00 - FISCAL STABILITY - RES. 000232 million dollars. What's happened here is that we have the benefit of funds without borrowing them at all. We will probably not need to do a tran, but the gain to us is really only $10 million.
What in the course of a year generally, say, the last fiscal year, what has been paid in interest for borrowings by the School District? Has there been any borrowings on which interest has been paid?
Sure. We do a tran every year. I can find that for you, I can find what was budgeted. For Fiscal Year 2000, for the year that we are completing, we estimate $9.7 million. And our revenue, because we do have interest earnings on a piece of that. The way a tran works, you get all of the funds in at the beginning of the year. That gives you over the course of the year a lot of positive balance that you could invest. We -- typically, because of the timing of our funds, we have a deep cash shortfall if we don't do a tran around December, January, until the local tax collection happens in February, which means that 50 6/7/00 - FISCAL STABILITY - RES. 000232 we would traditionally be cash-positive in the beginning part of the year. The tran gives us just additional monies to invest.
But the interest that we pay as a result of having to engage in a trans, I think, would be better spent on services of the School District rather than paid as interest to banks. It seems to me that the banks are a beneficiary of every school budget, that you build into your budget a figure to make sure the banks are happy, and I don't understand why you should be doing that, and cutting at the same time important programs like those that I referred to earlier.
Councilman, our problem is basically a problem that we share with the Commonwealth and with the City. The Commonwealth and the City, and most public jurisdictions, collect some major tax revenues at specified points during the fiscal year, so that revenue spikes. It doesn't come in evenly in every single month of the fiscal year. Expenditures, on the other hand, are 51 6/7/00 - FISCAL STABILITY - RES. 000232 pretty consistent during the fiscal year. And when you're spending in advance of the revenue coming in, then you have a gap and you have to fill it and you need to borrow to do that. The only way that any of our governments can solve that problem is if we do all of the tax collections at the very beginning of very fiscal year. And, as you know, there are difficulties in doing that. It's something that, you know, we considered when the City was in financial difficulty. The problem is right now, you know, one of the taxes we -- the major tax that the City and the School District collects on a once-a-year basis is the property tax, and we're already charging it in advance, at the beginning of the calendar year. If we moved it forward any more, we'd have to be prepaying the tax, people would have to pay it in the year before the year in which it was owed. As long as that's the case, we're going to have a cash shortfall, and if we have a cash shortfall, all of our public entities have to borrow to close it. And, yes, the banks are the 52 6/7/00 - FISCAL STABILITY - RES. 000232 beneficiaries of that.
Of course, the problem with the real-estate tax is that moved to a fiscal year, so that our year begins July the 1st, and the real-estate tax for the next year doesn't begin until -- it's not due until the end of February, which is the beginning of the chronologic year but already in the eighth month of our fiscal year. And I think a lot of attention ought to be done to that. I kind of have the feeling that these arrangements were made with the thought of the banks in the mind, to make sure that they were satisfied with the City's arrangements. And I think we ought to take steps to make sure that we avoid those kind of expenditures. I don't think when you have a tight budget that you can afford to pay interest on loans. You ought to try to find a way to operate on a cash basis.
Well, we would be very happy to do that, and I suspect the Finance Director of the City would be more than happy to do that as well. And the difficulty is getting the 53 6/7/00 - FISCAL STABILITY - RES. 000232 people whose money is being remitted to us to give it to us sooner. It's either that or delay the expenditures. Those are the choices.
Mr. Masch, let's go to Attachment B in the memo, which is a -- what appears to be a very detailed, possibly slightly complicated analysis of the funding formula. Could you walk us through this, explain any of the -- what appear to be some terms of art and other needed-to-be-defined terms, and tell us what happened in 1992, and walk us through FY 01.
Councilman, I'm positively delighted to turn this one over to the Chief Financial Officer.
Councilman Nutter, I think this is in response to a question that you asked specifically.
I wanted to understand in a succinct way and I know that we've used acronyms instead of language but tried to make it succinct what happened to the old formula, because what we talked about was that the change to a different formula disadvantaged us in terms of the 54 6/7/00 - FISCAL STABILITY - RES. 000232 level of funding. In Fiscal Year '92, which we're calling "the old formula," and we do have a chart in here shows what we would still be getting if the old formula were used.
Miss Chatzkel, hold on for a second. Ladies and gentlemen, it is a little difficult to hear in the room, and Miss Chatzkel is trying to give an explanation of the State's education funding formula. If we could have a little less noise, it would be helpful for everyone. Thank you. Please proceed.
Thank you. The old formula, about 58 percent of the total funding that we received was derived by, number one, where it says "fee," multiplying $2,550 times what we call "the weighted average daily membership." That's fairly synonymous with enrollment. The term "weighted" comes in because for secondary students, grades 7 through 12, a multiple of 1.36 was used. For half-day kindergarten students, a multiple of 0.5 was 55 6/7/00 - FISCAL STABILITY - RES. 000232 used. So we're weighted to reflect the different costs of educating kids at different points in their career times our aid ratio, which was our market value income aid ratio, which, at that point, was 0.5685 percent.
The aid ratio is a measurement of local wealth compared to the rest of the State. There are two components to it, which we can discuss here or we can discuss later. And as I understand it, at least currently, and I think this was the case back in 1992, 60 percent of the weighting had to do with market value, and that's the market value of our real estate divided by that weighted average daily membership relative to the rest of the State. If you come out 0.5, it means that we're level with the rest of the State. Obviously, we have, you know, a different weighting overall. The personal income is the other component of this. That is a 40 percent component, and that is personal income divided by 56 6/7/00 - FISCAL STABILITY - RES. 000232 weighted average daily membership. Each of those formulas is given a weighting, and when you put them together, at least for that year, it was 0.5685, which means that we have a higher level of poverty, I'm told, than the norm within the State.
0.5 would be the norm. The low income was $689 times the AFDC population -- that was Aid to Families with Dependent Children. At that point, it was just under 79,000. And then tax effort actually benefitted two cities in the Commonwealth: Pittsburgh and Philadelphia. There were, I think, only 4 percentages you can get for tax effort: percent, percent, percent, and percent. We were a beneficiary of 19 percent, and that contributed 32 percent. That formula in 1992 --
And the tax effort -- what is the meaning of the $927 million figure? What does that represent?
I think that's the total 57 6/7/00 - FISCAL STABILITY - RES. 000232 State pool. I'd like to check with our revenue specialist. (Ms. Chatzkel consults off-mike with colleague.)
It's the average instructional expense for the prior year just for Philadelphia, just for the School District.
The average instructional -- are you talking about the salaries?
Actual instructional expense. Is that the salaries and benefits of the entire teaching population? Or where does that figure come from? (Witness comes forward.)
Louis Volpe, Subsidies 58 6/7/00 - FISCAL STABILITY - RES. 000232 Technical Assistant.
Basically, this comes off the annual financial report that we submit to the Commonwealth. What it is, it's selected expenditures less selected revenues. It's like a three-page calculation that they take off of our hundred-page annual financial report. It's a State formula that they would take from the annual financial report that we submit to the Commonwealth in the prior year. And in the following year, they just would take that and multiply it by 19 percent. I mean -- okay, let me try and go -- it's total expenditures. They would take -- I'll try and hit the main areas that they would knock out. They would knock out Transportation, they would knock out Health, they would knock out 59 6/7/00 - FISCAL STABILITY - RES. 000232 selected State revenues like Voc. Ed., they would knock out federal revenues. And you would come down to this net of actual that they define as actual instructional expense.
Taking out certain categories that may not have anything to do with teaching a child. So Transportation --
I guess you have to get there, but it has nothing to do with what you learn.
Okay, all right. And do each of these three lines then -- I mean, I assume they create a number, and if you add the total of the three line, that's what get you $548,563,501?
Okay. And then you're saying that that figure was frozen for FY 60 6/7/00 - FISCAL STABILITY - RES. 000232 '93.
The following year, what they said was, You get same amount of money you've gotten in the prior year, plus these additional supplements to that. And one supplement was a poverty supplement, which was $100 times your AFDC, which is Aid to Families with Dependent Children, and that was 92,414. And a gross supplement, which compared the growth in your average daily membership from '01 -- from fiscal '91 to Fiscal '93. And you multiply that by your aid ratio, and that's how you came up with the second supplement. 61 6/7/00 - FISCAL STABILITY - RES. 000232 Those three items together produced a $560 million entitlement we had in '94.
What would have been the increase that year if the formula had not changed?
Exhibit C. We've done for you an analysis of what the subsidy would be.
Well, before you do that, do you have any historical information as to what brought about the change in the formula?
I believe -- it's just my own personal opinion -- that it just was a money crunch at the State, because I remember when this 62 6/7/00 - FISCAL STABILITY - RES. 000232 happened. Originally what happened in '92-3, they kept intact -- the Governor's proposal was to keep intact the ESBY (ph.) formula and then let everybody -- instead of receiving 100 percent of it, only receive. I believe, it was 96 or 95 percent of it. But then it finally was passed by the legislature, they came to the other process of just freezing it at exactly the same amount as the prior year. Because the total appropriation didn't really change much from one year to the next, in those two years.
Statewide appropriation. The total appropriation statewide did not grow much.
Okay, all right. Take us now from FY '94, at $560 million to FY '95.
Okay. That basically -- they went through a similar process as they did in the prior year. They said you get the $560 million that you received in prior year plus 63 6/7/00 - FISCAL STABILITY - RES. 000232 poverty supplement and a gross supplement, which, that was also equal to about 12, $13 million.
And it appeared that the growth supplement went down by 175?
But then they didn't multiply it by the aid ratio. It's just the way they passed the legislation. I don't know the logic behind it or. . .
So if they had multiplied it by the aid ratio, it would have been more.
Probably. But they decreased the rate but they used no aid ratio, so. . .
So your poverty number grew by about $2.3 million, but your growth figure went down by about 1.3.
Okay, all right. And so then there have just been a series of -- well, it looks like something -- 64 6/7/00 - FISCAL STABILITY - RES. 000232
Yes. That was the only year where something different happened. In '96, I believe, that was the present Governor's first budget, and his assumption was that you would take the prior year's basic ed. subsidy, divide it by your average daily membership of the prior year. You would come up with a number of 2728 and increase that by 3 percent, and it would produce a number of 2810, and you would multiply that by your prior year's average daily membership, and that produced an additional $21 million.
Right, I understand -- I see that. Now, is this the first time that the formula seems to go in the direction of a direct per-pupil figure?
Or direct per-pupil 65 6/7/00 - FISCAL STABILITY - RES. 000232 expenditure?
Again, just for historical purposes, do you have any idea where these formulas come from and how they are derived and what they are based on and what their relationship or relevance is to what's going on in a particular school district?
No. This came about -- I know this was the Governor's proposal, this was not the legislature after the Governor came out with his proposal. This was when his proposal came out when he introduced his budget. So it was done in the Governor's chambers, I guess, they decided.
There is actually a presentation that was made to the Commonwealth that speaks to the long history of funding. It goes back to the 1900s, it's not that long. We're 66 6/7/00 - FISCAL STABILITY - RES. 000232 trying to get it and we'll forward a copy. It goes to some of the thinking behind the original formula.
In '97, the same thing happened (Unintelligible, parties talking over each other.)
Yes. The same thing happened as what happened in '93. There was no 13 increase at all to any school district.
Correct. Except for this new supplement called "the base supplement." 67 6/7/00 - FISCAL STABILITY - RES. 000232
Which -- that's how they generating the monies out to the School District now in the past-- I guess it's -- it would be four years now.
And the base supplement seems to taken the place of the previous poverty supplement.
What they basically do is they say, you qualify for this base supplement if you have an aid ratio over 0.4.
An aid ratio -- what Miss Chatzkel described before, the market value personal income aid ratio.
And Philadelphia's -- our average daily membership was 214,000 times an aid ratio of 6548. And then that would go into the pool of all school districts that qualify, so that, therefore, I believe -- I don't have it 68 6/7/00 - FISCAL STABILITY - RES. 000232 right here in front of me -- that roughly we got our proportion of that $16 million, which I believe probably was around percent. Okay? 5
-- that's divided up among 17 all of the qualifying school districts, of which we are one.
It's similar to that. 69 6/7/00 - FISCAL STABILITY - RES. 000232
But that pot changes every year from -- you saw in that year, it was 66; the following year is 85; the following year, it's 70.5; and next year, it's 76. The total pot that's to be distributed for this base supplement.
Right, right, right. And then on Exhibit C, you've gone back and taken the original formula from '91-'92.
And what did you use? Did you maintain all of the figures that still existed?
No, I increased it for -- well, the only figure that I kept consistent was the factor for educational expense. In '91-2, the fee or factor for our instructional expense was $2,550. It was in the law that in the following year, in '92-3, that fee was supposed to go to 2655, I believe. So that's the number I used. It's the fee, and I've never increased that fee. And then 70 6/7/00 - FISCAL STABILITY - RES. 000232 I used the average daily membership, as we had, and our aid ratios and all the other --
Our aid ratio for every year. We get the aid ratio from the Commonwealth, every year our what ratio is.
All right. And so when you go to Exhibit C, your calculation is that in '91-'92, we were getting approximately $548 million, and based on that formula of 10 years ago, we would now receive $733 million.
Which is $73 million more than what we receive under the current formula.
And then you've done it cumulative over that 10-year period of time, and -- I mean, you're basically saying that we are short from the Commonwealth $656 million? 71 6/7/00 - FISCAL STABILITY - RES. 000232
Yes. All school districts, not just Philadelphia. It's all school districts.
I mean, this 656 is just Philadelphia, but it affected all school districts.
And would every school district have a shortage, based on the formulas? Did some school districts get increases rather than decreases.
Are you able to calculate -- not that you necessarily would want to, but is everyone subject to the same formulas?
Okay. Would you be able to calculate what the total cumulative effect 72 6/7/00 - FISCAL STABILITY - RES. 000232 of the funding formula changes over that 10-year-or-so period of time would have been for the Commonwealth? In other words --
I -- I -- I really couldn't do that without having every district's statistics. The Commonwealth obviously could, but I couldn't.
656 million. Let's roughly say we get percent or percent of the 13 statewide appropriation. Divided into that, I 14 guess it would be over $2 billion, correct? No? 15 We don't know. I'm just -- this is 16 just a very rough ballpark -- 17
Most people have not been carted away when they said they didn't know. But you're at least able to calculate it 73 6/7/00 - FISCAL STABILITY - RES. 000232 for us. Now, I mean, this is the next obvious question. I'm sure you're shared this with the Commonwealth, and the response has been. . . ?
I was never there for their response. I just gave my testimony, and they --
Isn't the heart of the lawsuit that was filed against the State, the lawsuit that's still alive but postponed for a year?
Councilman, the federal lawsuit goes to a discriminatory effect, so it's 74 6/7/00 - FISCAL STABILITY - RES. 000232 more focused on the racial and poverty composition of school districts and educational outcomes, and funding is the third leg of it.
But I think the -- a core portion of that lawsuit is the contention by the school districts like ours that the change in formula produced an effect that was discriminatory, and I think it's this formula, this change that we're alleged -- that that lawsuit is alleging brought about the discriminatory effect. No one's charging that there was an intention to discriminate or an intentionally racist action taken, but I think the core of the lawsuit is that that has been the impact. And that's the reason I raised the question. I think that this formula helps to fund at a much larger level non-urban areas, non-rural poverty areas. I think it's not just urban and rural 'cause rural districts in the poor areas seem to suffer as much as the urban poor areas. But we can get that. If nobody is competent or knowledgeable enough to answer that question, flatly we can get other witnesses to 75 6/7/00 - FISCAL STABILITY - RES. 000232 deal with that.
Mr. Masch or Miss Chatzkel, have you had any opportunity to look at either the funding formulas that are in place for other major cities across the country or in other states?
I have not. I know that we've talked about a long-term plan. As part of a long-term financial plan, we will look at other large urban school districts. We'll not only look at our expenses, which we will need to do, and look for efficiencies; we'll do benchmarking and expenses. But we'll also look at the revenue support that other large urban school districts do. We've just begun to do that. Hopefully, when we come back to Council next year, a lot of that work will be under our belt.
I think you might be coming back to Council before next year.
In the letter from Majority Leader Perzel to Mr. Ramos, the issue was raised, and I know, at least from reading in the press, either Governor Ridge himself or Mr. Reeves, his spokesperson, they have often raised the tax effort issue, and the tax effort issue is mentioned in this particular letter. We raised this the other day, and just for the record, at least according to Representative Perzel, the statewide average back in '96-'97 for equalized millage was 20.6. The average for the other urban districts in the 14 State, like Pittsburgh, Allentown, Harrisburg, and 15 Chester Upland, was 26.2. And Philadelphia's was 16 only 19.4. 17 Your Exhibit D, I'm assuming, is in 18 response to that particular issue. Could you walk 19 us through that and explain what that means. 20
All right. You asked us 21 to look at this issue, and what we have here is 22 equalized mills, which I believe is what that 23 letter addresses, which is the total local taxes available for the schools -- this does not include the City Grant, by definition, it does not -- 77 6/7/00 - FISCAL STABILITY - RES. 000232 divided by the market value of our real estate.
I understand it doesn't include the City Grant. Why don't you just put on the record specifically what it is. Is this the portion of the real estate property taxes?
This is all local taxes which we've received. This is the liquor-by-the- drink tax, it's all local taxes.
But specifically, I wanted to mention the piece that IT does not exclude, that we count as significant funding. We have three years here, and the reason we do is because Fiscal Year '96-'97, which is what the letter addresses, is an extraordinary year for us. We did a tax lien sale, so we took in $41 million in additional revenue, which was counted as local tax. But, again, it's an aberration. So we took you to the year before that and the year after that.
Just take us through the numbers from the top. The $529 78 6/7/00 - FISCAL STABILITY - RES. 000232 million, that represents --
Total local taxes received by the District in that year. The market value of real estate in Philadelphia, which is about three times assessed value, is determined by the State, and that was $31,417,499,500. The mills on market value then is 16.9; whereas, the State median for that year was 21. You had asked us what level of additional taxes would be needed to reach the State median, and we have that figure: 130 million.
The 16.9 percent figure, assuming I don't have the benefit of the Hewlitt Packard, is 529 million divided by the 31 billion figure, and that results in 16.9?
Okay. And so your calculation here is that the City in that year, to meet the State median, would have had to give an 79 6/7/00 - FISCAL STABILITY - RES. 000232 additional $130 million to the School District in order to meet the State median figure?
Okay. And in the '96-'97 year, which you have the asterisk and talk about the $41 million tax lien, we were at a -- what is this -- for us, what is the figure called, what's the correct name of the figure?
The equalized mill rate that year was 19.4, and the State was at 20.6, and so we would have only had an increase of $35 million.
That's correct. Although, again, we had the tax lien sale. For that year, we have information that we don't have for other years, which is why we include in it taxes needed to reach the surrounding district average.
All right. And then you come back in the following, year and it's basically back up over $100 million. How did the $41 million additional revenue on the tax lien sale have what appears to 80 6/7/00 - FISCAL STABILITY - RES. 000232 be such a dramatic difference between the '95-'96 rate and the '97-'98 rate? How could $41 million plummet that figure down to 35?
The $41 million, as a percent of all of the taxes that we received, is a very high number, relatively speaking. And that's why it skewed the results.
And just for the record, $104 million, if we went by the '97-'98 figure, is it my understanding that each 1 percent in millage represents about $10 million; is that correct?
This is not a real-estate tax. These are total taxes. So a mill of real-estate tax roughly generates around $8 million.
A mill of real-estate taxes is based on the assessed value rather than on the market value.
So what would the City -- if the City -- if we were to attempt to meet that challenge of $104 million, what would the City have to do from either a millage standpoint or I guess -- I mean, this would really get into the realm of very large grants.
It would be just over 12 mills, or close to 13 mills, or a large grant, yes.
And we would have to take that figure to somewhere into the neighborhood of 65, 66, 67?
Higher than that. I 82 6/7/00 - FISCAL STABILITY - RES. 000232 think over 80.
Yeah. Your portion would have to go between 75 and 80, and the City's would go down to 25. 8
Again, we are not 9 necessarily proposing this; you've asked for this 10 information. 11
No, I understand 13 that. The record should be clear that I asked you 14 to get us this information. You know, somebody 15 says you're at one rate and the State's at another 16 rate -- I mean, it doesn't mean anything until we 17 have some dollar signs in front of it to better 18 understand what they're talking about. And 19 sometimes once you get the answer, maybe you're 20 not interested in pursuing that particular proposal anymore. Councilman?
Well, there's nothing in that report that compares our contribution to the School District, taking into 83 6/7/00 - FISCAL STABILITY - RES. 000232 account the fact that we have certain county expenditures that other school districts don't have. Those that contribute a higher percentage of real-estate tax to the schools don't pay for police, often don't pay for fire or at a reduced level, don't pay for the court system, which -- and have a larger geographic area beyond that of the school district. For example, Pittsburgh is only a part of Allegheny County. Yet, Allegheny County -- the rest of Allegheny County outside of Pittsburgh bears a heavy burden of the cost, say, of courts, police, and so forth. Is there any way of arriving at what we could think would be a fair comparison? 'Cause this just compares the taxes that Philadelphia imposes for the schools compared to what others impose for the schools, but it doesn't take into account all of the other expenses that Philadelphia has because it's a city county rather than a city in a county.
Councilman Cohen, we would defer to our colleagues at the City here, but I believe that the Pennsylvania Economy League has completed a study, or is about to complete a 84 6/7/00 - FISCAL STABILITY - RES. 000232 study, that speaks to the overall tax burden to the City, which is also contained in your five-year plan, which addresses that issue.
And what would be the result of that, say, if such a pair comparison were made? You're indicating that there may be a basis of such a comparison in this Pennsylvania Economy League report?
That's correct. I don't have it in front of me, but it speaks to the tax burden on a family of 4, I think with median income of $25,000. And it also compares us to other cities in terms of, again, overall tax burden.
And what in general is your impression of what it shows?
It shows that the tax burden on the corporate and private citizens of Philadelphia is high.
Would you say that again? I missed that. It shows. . . ?
It shows that the tax burden on the corporate and private citizens of Philadelphia is high compared to other cities. 85 6/7/00 - FISCAL STABILITY - RES. 000232
And I think that's very important for us to be able to put through. Mr. Chairman, I'm wondering whether -- there's at least one person from the community here, where at a school, an announcement was made, I think, at the beginning of the week or last Friday, with respect to reductions, and it's the kind of reductions that I indicated I was very concerned about. And if we could interrupt and give our brains a little rest from all of the cerebral additions and just hear what's happened and see whether that is as a result of the impact of the additional cuts, 'cause I'd like the comments from the people at the Board or anybody else from the Board to explain that.
Could we just recess and they'll get a little rest as they listen instead of being directly on the spot.
Mr. Donato, yes. 86 6/7/00 - FISCAL STABILITY - RES. 000232
All right. I see his name here. Mr. Donato, why don't you come up and give us a brief explanation of either what you heard or --
He can talk about what's happened at Forest Elementary School.
My name is Mark DiDonato (ph.). I live in the Wissanoming section of the City. The reason that I was able to come down is because I have availability in my schedule. I was speaking to my --
This is my first time down here. Okay. I had spoken to my girlfriend 87 6/7/00 - FISCAL STABILITY - RES. 000232 earlier in the week. Her daughter attends Forest Elementary day care. She needs full-time care. She is a single parent, and she was told at a meeting last night that the service would be -- the full-time day care would be transferred to Lincoln High School. The after-school and before-school care would be totally eliminated. That's a concern because there are a lot of single parents who have children that go to that facility. I don't know what their status is in reference to availability at Lincoln High School and so forth, but it puts a burden on these people because, to put small children in a high school setting, it's kind of a -- you're asking for a problem there.
I understand. If you could, I'm sorry, repeat to me the two elements that you're are told being affected. You're told it would be the after-school program?
The two components of the day-care program are the before- and after- school care program for school-aged students, and the full-time care for preschool children.
Would that be the 88 6/7/00 - FISCAL STABILITY - RES. 000232 comprehensive day care program?
Well, it's a full-time care -- a full-time day care program for children who are potty-trained, up until about kindergarten age.
I assume by the directors of the program. All I will -- because, as I said, the majority of those children are from single-parent homes. And that's a -- and most of them have no other option.
And now you mentioned one program was being transferred to Lincoln High.
The full-time -- the full-day care program is being transferred to Lincoln High School. 89 6/7/00 - FISCAL STABILITY - RES. 000232
Okay. Why don't we get the District folks back up and see if they can answer some of this. (School District witnesses return to witness table.)
Councilman, I want to repeat the statement that I had made earlier in this hearing for those may not have heard it. The process that the Superintendent and the staff have agreed to go through is that our having made cuts at a departmental level, the Superintendent and the staff will develop implementation plans, and they will review them with the leadership of the Board before those plans are implemented and before those plans are announced. And, therefore -- and I was apprised before I came in to this hearing that there was a meeting held last night and there were members of the District staff who presented program changes and announced them as if they were going to be implemented and they had been decided upon. 90 6/7/00 - FISCAL STABILITY - RES. 000232 And I want to say that is not correct. And those staff got ahead of where they should be in the process. So I want to make that clear first, that that should not have happened, and I want to apologize to the parents and the people in that community. It shouldn't have happened. We're going to take steps to correct that. That's where we need to start out.
All right. So a part of your response is that they were not authorized to say what they said.
That is correct. Now, I think that Miss Chatzkel has some information about budgeting for day care at that particular school in terms of where we are in terms of funding and issues that the school faces, and we would be happy to share that with you, but I want to start out with this, that what happened last night shouldn't have happened, and let's go on from there.
I understand and I appreciate you're putting that on the record. Mr. DiDonato, this is what I'd like to do. If you want to put any other information on 91 6/7/00 - FISCAL STABILITY - RES. 000232 the record or leave, you know, even a hanging question, which we will try to get an answer to, what I would like to do is have you do that, and then I'd like to bring the people who were at the table before back to the table.
As per the conversation last night, okay, she was told that -- I was told by my girlfriend that this event would happen about two and a half weeks from now, July 1st. And there's -- and there's two concerns. One, to put children -- like I said, to put children in a high school is ridiculous. Another thing is, July 1st is a bad time of the year. The kids are already out of school and other day cares are booked.
Also, you're talking about a lot of extra costs because the school provides the Title XX program, and you're talking an enormous amount of increase in tuition, which, believe me, I've experienced that incomes from single parents doesn't even come close from income with married parents. 92 6/7/00 - FISCAL STABILITY - RES. 000232
I understand. Thank you very much for sharing this information with us.
Sure, thank you. Mr. DiDonato, why don't I direct you to the very nice young man in the back there, Mr. Epstein. If you could touch base with him and share all the information that you have and phone numbers and all of that, he will take care of it. The Chair recognizes Councilman Kenney.
Thank you. I just have a comment based on the testimony, and this is more, I guess, hypothetical or philosophical than it is directed at this particular situation, 'cause I know that people have serious problems when it comes to child care and working and the fact that it was kind of sprung on the them at the last minute. But I think the long-term problem that this District faces, and has faced for a number of years, is that it is being asked increasingly to do things and to provide services that it never 93 6/7/00 - FISCAL STABILITY - RES. 000232 provided before because of the way society has changed over the years. And I don't want to sound like I'm a World War II veteran or anything and I'm reminiscing about the good old days. But not too long, you wouldn't think of a school providing preschool, day care, both after-school care and pre-care. I think a lot of the resources and stuff that we spend money on now are required or mandated or we decide to spend that kind of dollars and are things that really aren't necessarily school-related. It may be societal-related, it may be community-related as it relates services in the community and allowing parents who are by themselves, which there are more and more single parents than there were 10 or 15 or 20 years ago, to have a good life and to work and to raise their kids. But I think what schools are facing is that they're dealing with nutrition, they're dealing with health care, they're dealing with day care, they're dealing with adult education and adult issues. And I'm not saying that any of them are bad or any of them shouldn't be provided. But the more and more you drain the available sources 94 6/7/00 - FISCAL STABILITY - RES. 000232 resources for things that are not traditional education, the less money you have for science teachers and music teachers and arts and culture and other things that enrich and make a school district desirable. And you don't have -- I don't have an answer for this and you don't have an answer for it and the gentleman who testified so clearly doesn't have an answer for this. But the point is, I think at some point in time, we have to figure out what it is a school district is supposed to provide and then try to figure out an avenue or vehicle to provide the other social services that communities and parents need, but not through the School District. Because I think what happens is -- teachers say to me, you know, I leave the system, or I'm leaving the system because when I go in in the morning, before I start my lesson plan, I have to deal with two kids haven't eaten, I have to deal with three kids whose clothes are so filthy that we need to go to changing room to get them clean clothes to put on. And a lot of these problems are related to drugs and societal 95 6/7/00 - FISCAL STABILITY - RES. 000232 problems and other kinds of issues. But in the end, there is never going to be enough money of any municipal government or any government of any kind to provide the comprehensive social-service needs that this school district is being asked to be provided. And, I mean, that's just a comment from me. I think we ought to solve the Forest School problem, and I think we ought to, in your implementation plan, have as little hurt as possible. But at some point in time, we're going to run out of money, everybody's going to run out of money. And something's going to have to be done either in a private way, in a religious or social service way, in a nonprofit way to deal with these issues, because I don't see it ending. Frankly, what I do see is less and less of a tax base and more and more social-service needs, and less of those dollars being generated and pushed towards education.
Councilman, the only thing I'd want to add is this. I believe I'm speaking for the entire board in saying this much. Where parents and/or government entities have put 96 6/7/00 - FISCAL STABILITY - RES. 000232 together the financial resources and the volunteer efforts to put child-care programs together and they need space and the School District can provide the space, we will do so. And many of the programs that we run are of that nature, where the funding is there and the parental effort is there, and in some cases, we can provide this base. I will say that in many neighborhoods, that's getting to be an increasing problem. As enrollments go up, we get squeezed in terms of space to be able to run regular classes, and that is an issue with some of our schools, and I do want to flag that issue for you. But, I mean, you know, it is our general approach that where the funding is there, the parental interest is there, the parental involvement and contributions are there and we have the space, we will do our part to help with child care in the City.
And I'm not in any way arguing that we shouldn't undertake a approach to solve and alleviate these problems that are social in nature, but I do just want to state for the record that I think I would much rather have 97 6/7/00 - FISCAL STABILITY - RES. 000232 this money going into teaching kids a second language or a musical instrument or some advanced science program, or something of that nature than I would be providing social services could be, or perhaps could be, provided from a nonprofit religious or other type of non-school-based situation. It's just -- it's a real worry, as time goes on, of will we ever have enough money to do all of the things we're expected to do? Thanks.
Thank you, Councilman. Mr. Masch and Miss Chatzkel, I mean, you have taken us through -- and first let me say that I greatly appreciate the rapid response to the information request, the memo provided by Mr. Epstein to the Council President with regard to the requests for information that were made just on Monday. Can you give us a sense at this point of where are things going and what is the plan, not only short-term, we have a sense of what has, you know, kind of been cobbled together to get 98 6/7/00 - FISCAL STABILITY - RES. 000232 through the next year. Based on your collective, albeit short experiences, what can you tell us today in terms of the longer-term plan and prospects for stable funding and acknowledging that -- unless you disagree with this -- we have only put off a potentially disastrous situation for a year. We run the risk, naturally, of revisiting all of this conversation, not only during the course of this upcoming school year, but literally facing the same prospects, probably more, next year. What is the game plan?
Councilman Nutter, I would like to answer in my new role and also ask Mr. Masch t answer in his -- almost his new role. We talk about a long-term plan, and it's not a magic pill. A long-term plan is not the same as a balanced budget, but it's critical because it starts with an analysis of how we got to the point that we're at, and you had asked for some that background, which is summarized in what you received on Monday.
Right, right. I'm sorry to interrupt you, but one of the reasons 99 6/7/00 - FISCAL STABILITY - RES. 000232 that I asked for that is, at least for myself, it is only through some level of that understanding on the financial side and to the extent that people have any of the history of either the politics and the personalities -- I mean, some of that is good and some of it will just be interesting stories. But I think in order to kind of scrape ourselves off of pretty much the bottom, we have to know how got here, what we're potentially fighting through to get back to where we potentially once were, and why are we trying to do that in the first place. So, I mean, that's -- it is at least helpful to me how we ended up where we are today and what we plan to try to do about it going forward.
Right. And what that history shows is that while we have put off a deficit situation through a lot of extraordinary means -- through refinancing our debt or tax lien sale -- really, if you look back over the past five years, we've never had a comfortable surplus, a surplus that we didn't have to do things outside of the scope of our ordinary course of business to 100 6/7/00 - FISCAL STABILITY - RES. 000232 achieve.
And what we hope to do with the Five-Year Plan is address in part what Councilman Kenney raised. We provide a lot of services which, everybody agrees, need to be provided to kids in order to have them learn. The question is, is the most efficient, the best place to have those offered within the School District? And we need to look at other large urban school districts who have the same issues to see how they address those same needs; who in their community, whether it's the public sector, not-for-profits, or the private sector, that addresses them does. And we need to look at measures of efficiency and results for those as well. So we have to take a close look at our operations. It's not just a financial look; it's a look at how we offer everything we do. Then we need to look at funding relative to other urban school districts, both local, and taking into account our local circumstance and looking at state. And then when you ask, what do we 101 6/7/00 - FISCAL STABILITY - RES. 000232 propose to do this? -- and this is the part I particularly wanted to answer in my role, and I know that the Board is supportive of this, and in their respective roles, want to do the same. I've sensed, just in my recent time with the District, the degree of trust that needs to be increased with regard to what we're presenting. And we have to do that by communicating frequently, not just at a point in the year that we're at now, and conveying our story to you -- good, bad, or indifferent -- and by "you," I mean the public -- during the course of a year. And as do this plan, to communicate what we find, again, during the course of the year.
Well, I certainly agree with everything that Miss Chatzkel said. I feel that the Board needs to come before both City Council and the State legislature, our two funders, with a much better explanation than has been presented to date as to what we spend and why we spend it and how we should -- how we can know whether we are efficient and the degree to which we are efficient and the degree to which we have to become more so to meet an acceptable standard 102 6/7/00 - FISCAL STABILITY - RES. 000232 of efficiency. But I think underlining all of that, or maybe proceeding it, we have to come to agreement, all of us, as to what the components of a successful educational program are for Philadelphia's children. In my short time in this role, in my longer time as a citizen and as a resident of this city and this state, I have been convinced -- and everything I've learned in the past 60 days only serves to reinforce that -- that the knowledge is there in terms of how to improve the educational performance of our children, but I don't think everybody's convinced of that, and it's clear that it's not self-evident. So we need to start with what's the program that works, all right? Are smaller class sizes important? Are tougher standards important? Is teacher training important? And in all of those areas, what kind and how much should it cost if done efficiently. And then build from there. And that is the part that I think we as a board have to take particular responsibility for, and then dialogue with those of you who are the 103 6/7/00 - FISCAL STABILITY - RES. 000232 funders at the City and State level, and clearly, you're going to need to dialogue with one another. And, you know, if we don't do that very, very effectively and very well and very intensively in the next six to eight months, then there won't have been much point to forestalling a crisis, which, I absolutely agree with you, is what the current agreement between the City, the State, and the School District does. It bides us some time. And if we don't use that time wisely and effectively, then that will be a tremendous tragedy.
Mr. Masch and Miss Chatzkel, thank you very much for laying it out. I think both of you -- and, Mike, naturally, we've known you longer and in a couple of different capacities. I think, hopefully, it continues to remain evident to the School District that there is tremendous concern, heartfelt concern, personal concern, political concern, if you will, for the School District from the elected officials here. I will not speak for any of my colleagues, but I think generally people care about public 104 6/7/00 - FISCAL STABILITY - RES. 000232 education, they want the School District to be successful, no one wants it to shut down, go out of business, be taken over or anything else. And regardless of the day-to-day differences of opinions about what goes on at one of the 259 buildings or what happens over at 21st and the Parkway, there is, I believe, a tremendous wealth of support for the District. That does not mean, naturally, that we won't ask the questions that need to be asked, that we won't ask tough questions, and we won't ask what happens with the money that goes over there; and if you need more, what is it for and why? And as we also grapple with making sure that we're being fiscally responsible in asking the same questions within the government, that if we were going to send money over, where do we get it from? And that's a process that we go through. The timing on all of this -- there's probably no good time to go through one of these kind of situations, but I think, as we have demonstrated in the past, we have the capacity to get through it, and I'm certainly going to do all 105 6/7/00 - FISCAL STABILITY - RES. 000232 that I can to continue to support the District, but we will ask, as you know, the tough questions that need to be asked.
Councilman, that is your right and your responsibility and your obligation, and it our obligation to give you full and clear and timely answers, and that's our commitment to you.
With respect to the recent exchange between you, Mr. Masch, and Councilman Nutter, I think that's very good, but I wanted to add a -- few put a few marbles in the ring. I think the District, over time, has been known to the people of Philadelphia as a kind of cold institution represented by this monstrous building at 21st Street. It has not been known as a sensitive organization, but just the opposite. And I would hope that as the -- and while I thought many things that Superintendent Hornbeck did were fine and were going in the right direction, he did not seem to ever appreciate the 106 6/7/00 - FISCAL STABILITY - RES. 000232 role of warmth and sensitivity. And I think it reflected itself in the feeling in some places that the School District was not really interested in the people. And so when you're talking about the Board's functions, I would like you to -- all of you to be aware of all of that, and I hope that you will move in the direction of showing sensitivity in things. A child may be hurt at school, the parent doesn't get told for hours, or if parent does get told, it's by a police officer who may have been called in instead of the school officials showing interest and going out of their way to communication with the child's parents. There were innumerable instances that occurred all the time like that, and I hope you move in that direction. Then you've got to realize there are a lot of questions about the Board as a result of the change in the composition of the Board. With no Board member being guaranteed more than 10 days' security of a position, there is a lot of question out in the community: Is this board a board that really has any power, or is it just a 107 6/7/00 - FISCAL STABILITY - RES. 000232 group puppets, you know, there to do the Mayor's bidding at all times? What authority does the Board really have? All sorts of questions like that that will have to be answered in the course of the life of this board. Then there's question of funding. Councilman Nutter referred to our obligation. Well, it happens that with respect to School Board money, City Council does not have any authorization over the budget and its huge sums of money if in fact only the Mayor is the principal player for him to have control over that money without the check and balance system that exists in the rest of the City departments. And I think it was for that reason that there was a question and an exchange that came up involving -- involving that initiative yesterday as to Council's responsibility. We're being asked, say, with respect to this 20 million to add $20 million to a pot of money over which we have no legal authority to question in the same extent we question and can act on other City appropriations. So these are all difficult things that 108 6/7/00 - FISCAL STABILITY - RES. 000232 have to be factored in. And, again, I think the public is going to be watching carefully. You know what happens as that scenario plays out. So I wanted to put on the table all of the concerns. Councilmembers, you know, are a diverse body, and we will have different interests in different directions, but we'll generally be able to come together, as Mr. Masch knows from before, in a consensus of opinion finally, and what that consensus will be, I think will, in large part, dependent on the response of the Board. Mr. DiDonato, did you want to say anything further?
Would you come up. Why don't you two stay where you are. (Witness comes forward.)
You've met, Mr. DiDonato, with the representative of the Board? You have to identify yourself again for the record.
My name is Mark 109 6/7/00 - FISCAL STABILITY - RES. 000232 DiDonato, and I live in the Wissanoming section of the City, and I've come down on behalf of the Forest School day care program. Okay, I just want to say in closing that I listened to Councilman Kenney's remarks. Myself, as a single parent, we don't want a handout, we just want a helping hand. Nobody created our situation. Okay, we're not saying we're not blaming for anybody for the situation that we're in. We took the responsibility of taking care of our children, somebody had to do it, okay, while the other party bugged out. If the day care program is run through the school system, we would like to be a part of it. If they don't want it, let somebody else take care of it, all right? I'm a product of the school system myself, but this is a whole different situation. It's a different social time, where there's no commitment. And for Councilman Kenney to say that is way out of line.
Well, I don't think Councilman Kenney meant to disparage or indicate any unfavorable attitude to the program. What he 110 6/7/00 - FISCAL STABILITY - RES. 000232 was suggesting was that there ought to be a funding arrangement.
I understand that, but I sort of took it as, you know, we're looking for somebody to babysit our kids and we want to be a burden on the School District. No, we don't. We just want, you know, we're not sitting home collecting a welfare check, okay? Pretty soon, we're not going to be able to do it anyway. I work full-time. The people that I've been involved with, they work full-time. Some of them go from one to four children -- widows, divorced parents. I've been there and I'm proud to say that -- I can tell you, I've had custody of my son for 12 years, okay? And I'm the one that came down to court every other month for two years. And, believe me, when it was time to apply for that Title XX day care so I could work, I was more proud to go out to work as opposed to just sitting home collecting a welfare check, looking at son. And my son looks up to me, and there's other children who look up to their parents 'cause they get up in the morning, they 111 6/7/00 - FISCAL STABILITY - RES. 000232 drop 'em off and they go to work.
All right, we thank you very much for coming down today to let us know about the situation. And Mr. Masch, I think, explained very well the interest of the school.
And I thank you for this time. Also, there will be a demonstration tonight of those day care parents at Frankford and Cottman Avenue at 6 to let people know that there's no reason to close the day care center. People need it.
Thank you, thank you. Mr. Masch and Miss Chatzkel, I think we've come to the end of the road for today. And so -- because I don't know what the intent of the chair of the committee is, I'm going to recess the hearing until the call of the Chair. And -- well, let me withdraw that for a minute and let me recess t to tomorrow morning, at 9 o'clock, at which time the President will make an announcement as to whether the hearings will be recessed to a specific date or whether they will 112 6/7/00 - FISCAL STABILITY - RES. 000232 be adjourned or just recessed indefinitely to the call of the Chair. So today's hearing is recessed till tomorrow morning, at o'clock. 6
Very good, and we will be 7 happy to be back in the future. We expect to be 8 back here. As I said, Councilman, we understand 9 that it's your responsibility and your obligation to demand accountability of us as one of the key funders, and we would expect nothing less. And we expect that you will expect high standards for us in terms of what we do. And you know that the Board is a very diverse group, but I think the thing that unites us all, which we have in common with you and the other Councilmembers is our concern for the school children of Philadelphia and our desire to see them grow up healthy and self-sufficient, in a city that we all care for.
All right. That's a good closing statement for today. So this hearing stands in recess until 9 o'clock a.m. tomorrow. I will just state that I don't think it will be necessary for anybody from 113 6/7/00 - FISCAL STABILITY - RES. 000232 the School District to be here. If there's any change, if the President does want to continue these hearings, I'm sure she'll be in touch with you later this afternoon. Thank you. (Adjourned at 3:20 p.m.) - - - 114 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, June 7 2000, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON FISCAL STABILITY RESOLUTION NO. 000232 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter