COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, May 23, 2007 10:40 a.m. - - - PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DARRELL L. CLARKE COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN WILLIAM GREENLEE COUNCILMAN JACK KELLY COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN BRIAN J. O'NEILL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DANIEL SAVAGE COUNCILWOMAN MARIAN B. TASCO BILL 070015 - An ordinance amending Section 19-1301 of The Philadelphia Code, relating to real estate taxes imposed by the City... BILL 070118 - An ordinance amending Section 19-1801 of The Philadelphia Code, entitled "Authorization of Tax"... BILL 070119 - An ordinance amending Chapter 19-1800 of The Philadelphia Code, entitled "School Tax Authorization"... V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
Good morning, everyone. This is a public hearing of the Committee of the Whole, and I would ask Mr. McPherson to please read the title of Bill Nos. 070015, 070118 and 070119. MR. McPHERSON: 070015, an ordinance amending Section 19-1301 of The Philadelphia Code, relating to real estate taxes imposed by the City, and Section 19-1801 of The Philadelphia Code, relating to real estate taxes imposed by the School District of Philadelphia, by shifting an additional portion of real estate tax from the City to the School District of Philadelphia, without changing the overall combined rate of the City and School District real estate tax, all under certain terms and conditions. Bill No. 070118, an ordinance 22 amending Section 19-1801 of The Philadelphia Code, entitled "Authorization of Tax," to further authorize the Board of Education of the 3 5/23/07 - WHOLE - BILL 070015, ETC. School District of Philadelphia to impose a tax on real estate within the City of Philadelphia, all under certain terms and conditions. Bill No. 070119, an ordinance 7 amending Chapter 19-1800 of The Philadelphia Code, entitled "School Tax Authorization," by amending Section 10 19-1806, entitled "Authorization of Realty Use and Occupancy Tax," to further authorize the Board of Education of the School District of Philadelphia to impose a tax on the use or occupancy of real estate within the School District of Philadelphia.
Thank you very much. Our first witness? MR. McPHERSON: The School District of Philadelphia.
Oh, I'm sorry. The Chair recognizes Councilman Goode.
Thank you, Madam President. I wanted to make some brief remarks on Bill 070015. These remarks are consistent with remarks I made on the floor of Council on March 22nd. They are consistent because my public policy has been consistent, my politics have been consistent on this issue, and I'm consistent about putting public policy before politics. And I said these words on March 22nd. I told the story about how on September 28, 2006, Major John F. Street created the Philadelphia Education Advisory Task Force to conduct a comprehensive assessment of the City's education system. Mayor Street said then, "Children of Philadelphia is the most important and challenging responsibility. Investing in our children and improving their educational 5 5/23/07 - WHOLE - BILL 070015, ETC. " Those are the words of John Street. I attended that press conference, and as the only member of Council present at the time, I was publicly asked by the Mayor for a commitment to support more local resources for public schools. I committed then and I remain committed now. On December 11, 2006, Mayor John F. Street testified in City Council before the joint Committees on Finance and Education on resolutions dealing with School District finances, truancy and the dropout rate. Mayor Street said then, "Let me tell you something, we aren't fooling anybody up here on the finances of this City. You got people up here who know as much about this as anybody anywhere, and that's basically what I meant. There are things that we can do that will cost us money and there are 6 5/23/07 - WHOLE - BILL 070015, ETC. things that we can do that can increase our revenues. " Those are the words of John Street. Needless to say, I agreed with him then and I agree with him now. On December 30th of 2006, Mayor John F. Street delivered his New Year's radio address. Mayor Street said then, "The future belongs to the children. We will continue to invest in our children's education, safety and well-being. " Those are the words of John 7 5/23/07 - WHOLE - BILL 070015, ETC. Street. I anxiously awaited the Task Force report then. I anxiously awaited that Task Force report at the time when he made the remarks two months ago, and we're still awaiting that report now. On February 22, 2007, Mayor John F. Street delivered his fiscal year 2008 budget address to City Council. Then Mayor Street said, "Although the City's annual support for the School District has steadily increased, any decision for increased funding should wait until the Education Advisory Task Force issues its draft report," which we're still waiting on several months later. So what accounts for the Mayor's change in support for more local money? My introduction of Bill No. 21 070015 on January 23, 2007. It's quite simple. He asked for my support, not my leadership, but leadership is what I'm offering. I have the support of educational advocates today and at the 8 5/23/07 - WHOLE - BILL 070015, ETC. time that I made these remarks before, I had the support of every major democratic candidate for Mayor, and I still have the support of the democratic nominee for Mayor. The time to address this crisis is now. Every major issue in the City -- crime and violence, job creation, economic development, as well as the overall quality of life -- is intertwined with the issue of public education, the need for more local investment. The Mayor says this bill won't solve the problem. That's true. It is meant to be part of a more comprehensive effort. So to the Mayor I say this is a very serious public policy matter. It requires more than a lame-duck response. I remind the Mayor and my colleagues of the Mayor's own words last year: "Children are Philadelphia's most important and challenging responsibility. Investing in our children and improving their educational opportunities is among 9 5/23/07 - WHOLE - BILL 070015, ETC. the most important actions we can take as a city.
I guess my bottom line is that the School District very shortly is going to need more money, both from the Commonwealth of Pennsylvania and the City of Philadelphia, if we're going to do something to accelerate the kind of progress we think is necessary in our schools. The future belongs to the children. " I couldn't have said it better than he did, but for me, money talks louder than words. Thank you. )
Thank you very much, Councilman. Mr. Vallas. Mr. Nevels, would you like to join Mr. Vallas.
Good 10 5/23/07 - WHOLE - BILL 070015, ETC. morning. Welcome.
Please identify yourself for the record and proceed with your testimony.
My name is James Nevels and I'm the Chair of the School Reform Commission. Madam Chair, it's good to see you again. It's good to be back. I would like to acknowledge two members of the School Reform Commission who have attended this morning and joined us, who have been absolute stalwarts in the support of children and what we have been doing in this city for the last five years. Commissioner Glenn, would you please stand and acknowledge yourself, and Commissioner Martin Bednarek. On behalf of children, I want to thank you for your continued support of Philadelphia's school children over 11 5/23/07 - WHOLE - BILL 070015, ETC. the past year. When we first came to City Council in 2002 -- and I'm sure that all of you remember that, what a different time it was -- we were a School District beginning an historic and unprecedented journey in educational reform. The five Commissioners on the School Reform Commission were charged with turning around a school system that no one believed in and to prove to the City, the state, our children and all of our stakeholders that our children could learn and that they would learn, and I'm pleased to report that they have learned and continue to learn. One of our first acts in conjunction with former Governor Mark Schweiker and Mayor John Street was to hire Paul Vallas in July 2002 to lead and implement district-wide academic reforms. In 2004, the SRC adopted the Declaration of Education defining target goals to be achieved by June 2008. 12 5/23/07 - WHOLE - BILL 070015, ETC. According to the Declaration of Education, the mission of the School District of Philadelphia is to provide a high-quality education which prepares, ensures and empowers all students to achieve their full intellectual and social potential in order to become life-long learners and productive members of society. The basis for all of our decisions and our actions over the past five years has never wavered. One, improve the quality of educational programs and offerings to our students and, number two, empower the heretofore powerless. Before 2002, only the wealthy could create educational choice for their children. If you were fortunate to be of certain economic means, you could send your children to private or parochial schools. Our efforts leveled the playing field. No matter what someone's station in life or economic status, all children 13 5/23/07 - WHOLE - BILL 070015, ETC. now would have options, and they are learning. Sometimes we lose sight of this because we can't measure the feeling of empowerment or success by test scores alone, nor can we know the true value of our efforts in only five years. Together with Paul Vallas, we pursued reforms in ten critical areas: governance, goal-setting, accountability, curriculum, professional development, classroom monitoring, data and assessments, and early childhood and elementary school instruction, secondary reform, and strategies for boosting the performance of the lowest performing schools and students. To quote Michael Casserly of the Council of Great City Schools during his lecture at the Philadelphia Inquirer's Great Expectation Forum on Public Education on April 5th of this year, "What sets Philadelphia apart is how many reforms are being pursued 14 5/23/07 - WHOLE - BILL 070015, ETC. simultaneously. " The reforms instituted are among the most aggressive and productive in the nation, yielding unprecedented increases in test scores and decreases in below basic scores. Thirty-two percent of Philadelphia's fifth-graders achieved proficiency on the Pennsylvania Reading test in 2006. I'll repeat. Thirty-two percent, as compared to just percent 13 in 2002. Math proficiency rose to 42 14 percent from 20 percent. At the eighth 15 grade level, there were 20 percentage 16 points up in both reading and math. 17 Today, the School District of 18 Philadelphia's system of reforms is 19 providing a national model for urban 20 districts across the country.
We are 21 improving academic achievement and financial responsibility. And let me repeat -- and I will repeat it again and again and again -- our children are learning. 15 5/23/07 - WHOLE - BILL 070015, ETC. The most unique aspects of reforms adopted by the School Reform Commission is the implementation of a diverse provider model in which day-to-day management of 45 persistently low-performing schools was turned over to for-profit, not-for-profit and university partners. The diverse provider model also supported the expansion of charter schools to provide parents with school choice and reduce bureaucratic impediments to improving school performance. These dramatic changes in governance, management and school choice made in the course of a single year reflect a reform agenda that would normally comprise a decade. We have not even begun to realize the full potential of the educational choices that we've made. Radically changing the public's view of public education is a formidable task under the best of circumstances, but slowly, we believe we are rebuilding 16 5/23/07 - WHOLE - BILL 070015, ETC. support for public education in Philadelphia, building confidence in our public school district and educating and empowering our children. Full participation by all stakeholders is the only way this model works. No one yet knows the true cost of reaching our full potential, but we all certainly know the cost if we fail. I thank our students for proving the skeptics wrong. Our children can learn. I thank parents, whose faith and confidence in the School District of Philadelphia was at an all-time low when we arrived. I thank our teachers, who have been asked to take on the difficult task of changing the way they teach in the name of improving the quality of public education. They have proven their versatility, adaptability and dedication, and we must give them the tools they need to win. For them more than anyone, failure is not an option. We know we still have a long 17 5/23/07 - WHOLE - BILL 070015, ETC. journey ahead of us. You will hear from our CEO, Paul Vallas, who is sitting with me. He has announced that he will step down as CEO at the end of the school year to become the Superintendent of the New Orleans Recovery School District. I want to thank Paul for five years of dedication to the children of Philadelphia. We have our challenges: the budget, personnel, academic programs, class size, to name a few, but we knew we would have challenges, bumps in the road on our journey. You have my guarantee that our children are our priority and schools will open on schedule in September. We will also be asking Governor Rendell, Mayor Street, the General Assembly and we are asking you, the City Council, to reaffirm your support for the School District as we move into a new year. We are committed to continuing 18 5/23/07 - WHOLE - BILL 070015, ETC. with one of the most ambitious and successful reform efforts in urban education. Children in Philadelphia, I repeat, are learning. They responded to our challenge and they deserve our support. As partners we can ensure that the reforms that have been successful continue and all of our expectations continue to rise. We take our fiduciary responsibility to the children of Philadelphia very seriously. We will continue to develop and implement policies that improve our fiscal and organizational oversight of the District. Despite a budgetary setback, you will hear from Paul and our CFO. We will act responsibly and deliberately so we do not undermine the successes that we have achieved to date and the reform efforts planned over the next several years. Many partnerships formed over the last five years have been at the heart of the reform process, and it is 19 5/23/07 - WHOLE - BILL 070015, ETC. crucial to continue community involvement in our schools if we want to succeed.
Most important are our partnerships with the City of Philadelphia, the Commonwealth of Pennsylvania, the business and faith communities, our friends in the non-profit and civic organizations, but most of all, parents and students themselves. We cannot reach our goals without everyone's confidence, support and continued investment in our educational reforms and our children. " Our goal is noble. Failure is absolutely unacceptable. The experiment is about our future. I am honored to be part of this journey with you and our attempts together to reach our goals. Our children are succeeding, and we'll forge ahead, I hope with your 20 5/23/07 - WHOLE - BILL 070015, ETC. support and partnership. I hope as we collectively discuss ways to make Philadelphia great, we do so with the realization that we will only achieve greatness if our children are equipped to succeed. Thank you very much. )
Thank you. Are there any questions of Mr. Nevels? The Chair recognizes Councilman Goode.
Thank you, Madam President. Good morning, Mr. Nevels, and thank you for your testimony.
As we move into the future -- and this is very much about the future -- we salute the work of Paul Vallas, but we are glad that you will still be in place to offer your 21 5/23/07 - WHOLE - BILL 070015, ETC. leadership. One of the things regarding my bill that many people are concerned about, that I'm concerned about as well, is that we not hand the School District a blank check. I've had a brief conversation with you about what we might do to alleviate those concerns. One thing I've suggested that's been suggested to me is that we look at formulating a Memorandum of Understanding that tells us exactly what we're going to get for the additional revenue that we might provide and particularly in the areas of early childhood education, class size, after-school programs, dropout prevention and safety. Would the School District, particularly the School Reform Commission, be willing to execute such a Memorandum of Understanding with the City?
Well, at the very outset, Councilman, I want to let you know how deeply appreciative the School 22 5/23/07 - WHOLE - BILL 070015, ETC. Reform Commission and children in Philadelphia are of your efforts on behalf of children. As to a Memorandum of Understanding, I obviously would have to consult with my colleagues on the School Reform Commission to get a sense of whether that would be acceptable. We can't deliberate right now because that's not appropriate, but we certainly -- I certainly would be absolutely willing to take that to the Commission for its full consideration and hopefully for implementation.
And that is something that as Chair of the Commission you would be in favor of personally?
Thank you. It is also part of an amendment I will be offering today, and, in fact, I find it necessary probably to make this bill 25 contingent upon such a Memorandum of 23 5/23/07 - WHOLE - BILL 070015, ETC. Understanding.
I'm very respectful of that and certainly will take that to the Commissioners as well.
You're welcome. The Chair recognizes Councilman Clarke.
Mr. Nevels, again, I want to concur with Councilman Goode that it's good that you're going to still be around to bring us through all of this. And, Mr. Vallas, good luck in your new endeavors. It's been a pleasure 24 5/23/07 - WHOLE - BILL 070015, ETC. working with you. I'm going to cut right to the chase on one of the primary issues with respect to one of the concerns that I've had. Here in the City of Philadelphia years ago we had some fiscal difficulties and a program was put in place to ensure, in the spirit of cooperation, that we had some oversight over our fiscal policies. It was called PICA. And it's not clear to me, although the SRC had members of both city appointees and state appointees to it, if it's supposed to play that role from a fiscal standpoint as it relates to the School District's finances. If in fact it was, where was the breakdown in terms of not getting a sense of the looming deficit and subsequent ballooning deficit as it relates to the School District funds? And if in fact that is not the case where they did or will play such a detailed role in the fiscal oversight of the School District's budget, do you recommend a change in 25 5/23/07 - WHOLE - BILL 070015, ETC. strategy as it relates to that, something similar to a PICA like oversight committee?
Thank you, Councilman. Again, thank you for your support and thank you for the question. One of the things -- and I'm going to defer to Paul and our CFO in terms of answering that question, but I want to say to you that when we were here in 2002, early 2002, one of the linchpin approvals -- Council President will remember this as well -- that we were very concerned about getting funds immediately through a deficit reduction bond, and we did that and we did that collaboratively with the state and with the Council as well. Those funds were what provided us a fundamental basis to pay outstanding obligations and go forward. What happened was, we had a situation where literally those funds were to be totally expended, as I recall, 5/23/07 - WHOLE - BILL 070015, ETC. Paul, in about two years, and through some very, very creative management, those funds were extended. We are now at the point where the funds are gone and we now need funds on an ongoing basis. So we had at that time funds that were supplementing what we were getting. So we have had, in fact, a decrease in revenues but revenues that were borrowed as well.
Certainly we anticipated that, but during the course of what we were doing, the funds ran out and in the process we were engaged in very sweeping reforms. So to the extent that we could recognize that, we did and we have.
That's not -- and I don't want to be combative with you, but that's not consistent with the testimony.
When I go through 27 5/23/07 - WHOLE - BILL 070015, ETC. my testimony, I'll go through that point by point if I could -- I could answer it now or do it as a part of my testimony. And believe me, as the President has pointed out, she's got me on a timer here, so I'll definitely try to get to those points in the most expeditious way. But I'll talk about the deficit financing bond or the myth of the deficit financing bond and I'll talk about the really '06 budget crisis, which is what we're suffering from here in '07. It's the '06 bills carrying over into '07. And then I'll obviously talk about the challenges that we face in this budget, '08 and beyond. And I've laid it out in presentation form in that order. So if you can just -- if you can give me about 10 or 15 minutes to get to that point of business, I think I'll be able to answer your questions in detail.
We'll probably be here for quite some time. 28 5/23/07 - WHOLE - BILL 070015, ETC.
Madam President, it's up to you if you want to have Mr. Vallas respond during his testimony. I'm fine with whatever way you choose.
Councilman Clarke, do you have any other questions?
Thank you. I'd just like to know, recently the SRC appointed the leadership for the School District. Did you all ever give any consideration to the diversity of the 29 5/23/07 - WHOLE - BILL 070015, ETC. leadership?
Absolutely, and I can tell you that the School Reform Commission has certainly during its tenure been absolutely emphatic about diversity, about MBE/WBE participation, and one of the things that in terms of this interim team, there will be minorities in chief of staff positions and otherwise.
What about the interim and also the top three leadership positions?
What we did was, we initially contemplated working with an individual, the current CIO, and had conversations with him about his interest in being the interim. Unfortunately, he was unable to take on that role, and then, frankly, we went and looked within the organization to provide continuity during an interim period of time and moved down that list.
Is the 30 5/23/07 - WHOLE - BILL 070015, ETC. search process in place? Have you hired a search firm to look for a CEO?
Let's talk about that for a moment. What has happened is, we are going to engage in a national search. There has been prepared an RFP soliciting proposals from specific search firms, and we are now in that phase. One of the very important responsibilities of the search firm will be to develop a process for public input. And we are also in conversations with some of the individuals that worked with the Philadelphia Inquirer that did their community forums to get input. But, yes, we have a process in place. We'll be moving to select a qualified search firm or firms and move forward as quickly but as deliberatively as we can to find a successor to our leader.
So as you move through that process and you engage the search firm, will there be a 31 5/23/07 - WHOLE - BILL 070015, ETC. selection committee, and what will that selection committee look like? I assume that the forums will be for the community to have input into what you might be looking for, but who will comprise the selection committee to make the final determination? Will there be broader participation than just the SRC Board?
We certainly -- the primary responsibility of the SRC will be to act to select a leader, but obviously to the extent that there are inputs to the SRC and we're respectful of inputs, opinions and advice, we're going to be open to that. I have not had a substantial conversation with members of the SRC. We have one more individual who is about to come on and fill a seat. But we're going to talk about that and come to some determination as to how we move about selection, but the primary responsibility will fall on the SRC.
What is 32 5/23/07 - WHOLE - BILL 070015, ETC. your timeline?
As quickly as we possibly can, but we want to take as much time as we need. So I would say to you that it would be wonderful if we could have a new leader by the opening of school. I'm not sure that that's possible, but we will get a better sense of that from the Commission sitting down with the firm or firms that are selected, and we'll certainly report back to you in that regard.
Now, what role will this interim team play in terms of decisions relative to -- will they be sort of like the gatekeepers to maintain what you have in place or will they have the ability or responsibility to move forward on making any new changes or anything like that in the District?
When you have a $2.1 billion operation, you have to have leadership in order to make sure that things run, that they operate. We have a 33 5/23/07 - WHOLE - BILL 070015, ETC. great concern obviously with opening the schools on time and going on with the operation of the organization. Those individuals will be charged with that. They will be responsible for that, and that's certainly no different than the current situation under current management.
I guess my question is, will they put forth any -- when the new administration or new Superintendent arrives, he has his ideas or her ideas about what the School District should look like and they want to put forth these ideas. Will this interim team make any of the changes that have been put forth by the current Superintendent and the SRC or will they sort of maintain and operate and run the school in the status quo or will they have the ability to make drastic changes?
They will report, as does current management, to the School 34 5/23/07 - WHOLE - BILL 070015, ETC. Reform Commission, and the five Commissioners will make a determination as to what is being done and whether it should be done, just as is the case now. Now, the other thing to keep in mind, please, Councilwoman, is that we have a plan, and that plan for educating children comes from the Declaration of Education. The Declaration is our guiding principle, our guiding star, and we intend, I believe, the Commission, to adhere to that and continue moving toward the achievement of those goals, and those individuals as part of the interim team will be charged with staying that course.
I guess one question I want to ask but it will probably go back to Mr. Vallas relative to the budget deficit. The question I want to ask is, what did you know and when did you know it, Mr. Nevels, in terms of the financial situation?
In terms of the financial situation, we have monthly 35 5/23/07 - WHOLE - BILL 070015, ETC. meetings, and I can't recollect exactly when it was. I would have to go back and look at notes as of that time, but certainly there was good information flow from the CEO to me personally and to the Commission about the status of the deficit.
Well, if the deficit focuses in on year 2006, were there any red flags for you? I mean, because the School District came to us last year and said you had a balanced budget, and then in the interim, you had found out you had a deficit. I'll wait until you talk, but I want to ask Mr. Nevels, at what point did you know when you were here in '06 that there might be a deficit relative to that budget in April of 2007?
We knew that we were running out of the deficit reduction financing proceeds. We knew that.
So you knew that when you came to present the 36 5/23/07 - WHOLE - BILL 070015, ETC. budget to the Council that right at that point you had a balanced budget?
But in the back of your mind, did you know that at some point in time that you would have a deficit, meaning that you would end up with this deficit?
Since I provided the testimony at the City Council meeting, when we presented the budget this past year, we presented what we felt was a structurally balanced budget. And let me point out that if we run a deficit of $23, $24 million this year, then technically we will have had a structurally balanced budget. Our problem was, we didn't close our books and we don't close our books until September and October, and at the time, we felt that we were going to run a deficit for the previous year that would be covered by our reserves, by our fund balance. 37 5/23/07 - WHOLE - BILL 070015, ETC. The deficit, when we closed our books, for reasons that I'll articulate again in my testimony, ended up being not million but ended up being $73 million 6 due to a combination of some reasons. 7 One reason was our salvage was much lower 8 than anticipated. We thought we would 9 have our average salvage 24 million. 10 That's historical. We salvaged six 11 million. 12 Term pay. As you know, the No 13 Child Left Behind mandate that employees 14 be highly qualified was enforced. There 15 was a dislocation of about 750 employees 16 who worked for us that our term pay was 17 50 percent higher than it's been in the 18 past. Term pay is retirement, sick time, 19 et cetera, et cetera. Some people call 20 it severance, but there was a 50 percent 21 increase. We are surprised at that. 22 We also did not receipt -- we conducted a number of property sales that were consummated but suddenly got held up in the courts. Incidentally, that have 38 5/23/07 - WHOLE - BILL 070015, ETC. yet to be consummated. So those three things alone added something like $30, $35 million to our deficit. So instead of closing the books with a $22 million deficit that could be covered by our fund balance, we ended up having a $73 million deficit that could not be covered by our fund balance. Do you see what I mean? And, again, I think the City closed its books in October. It discovered that their surplus was $50 million higher than they had projected and a hundred million dollars higher than the original surplus that was submitted when the budget was presented. Now, I'm not suggesting that people knew about that. That was good. You erred on the sides of being too conservative on your estimates. But the bottom line is, the books get closed in September and October, and that's when the true numbers come in. So instead of having a deficit 39 5/23/07 - WHOLE - BILL 070015, ETC. for '06 that was manageable and that could be funded by the remaining reserve funds that we had in our fund balance, the deficit was a heck of a lot higher and we could not cover that deficit. So as a result, those expenses rolled over into the '06-'07 budget, and that comprises the bulk of the deficit that we have now. We project that by the end of this year -- we're still hoping that we'll finish the year with about a -- between a $35 and $40 million deficit. There are some suggestions that it could be three or four million dollars higher. On the other hand, we're hoping that term pay and salvage will return to historical averages. If they do, then it could actually be in the 20's. But I'm not in any way going to try to speculate or to guess, because we won't know until September what those numbers are either. So that is the crux of the problem. In a nutshell, we pushed the 40 5/23/07 - WHOLE - BILL 070015, ETC. envelope. We tried to do too much. And we tried to attrit out teachers at a slower rate than we could have given the fact that we've lost a large part of our population to charter schools, I might add. Because the enrollment of the School District is stabilizing and, of course, the School Reform Commission creates charters. We're carrying almost the entire cost of our capital program, unlike other districts nationally, through our operating budget, through our operating budget. Camden gets 80 percent of their school construction from the state.
So there's a lot of things that -- we're trying to do a lot with the limited funds that we have. Also, there's this myth that the deficit financing bond, my God, all this money we could spend, I mean, the deficit financing bond netted the District $317 million. The first act of the School Reform Commission, prior to my arrival, 41 5/23/07 - WHOLE - BILL 070015, ETC. once the deficit financing bond was enacted, was to use something like $115 million of that proceeds just to pay out old bills that they had inherited from the previous administration. In addition, the debt service on the deficit financing bond is $24 million a year. So the net proceeds I've had to work with through the deficit financing bond has been less than a hundred million dollars. So much for the myth of the deficit financing bond. My point here -- and that's why they call it deficit financing bond, so you could draw down on that bond to cover your deficit so that we could -- because we weren't going to tell the City Council, We got to use this deficit financing bond to keep our budget structurally balanced, while we postpone curriculum instructional reforms, postpone early childhood reforms, postpone high school reforms, postpone school construction. We pushed the 42 5/23/07 - WHOLE - BILL 070015, ETC. envelope, and we came up short. We came up short, like most school districts are across the nation. But unfortunately, unlike most school districts and unlike every school district outside Philadelphia, we can't raise our own taxes. We are dependent on the state for our money. We are dependent on the City for our money. So I'll take full responsibility for spending more resources than I had, but I'll also share some of the responsibility with the School Reform Commission for having some of the biggest increases in test scores in the country, for offering more school choice than any other school district could even hope to imagine, to have introduced probably the best managed instructional program in the country, to have constructed a school construction program that is historic in size, yet only addresses one-third of our needs. So we pushed the envelope and we are now 43 5/23/07 - WHOLE - BILL 070015, ETC. at the crossroads. Now, the budget that we face for '07 and '08, it is a budget deficit challenge that we had expected, because we figured by this time, the deficit financing bond proceeds would have been exhausted, and all of our collective bargaining agreements or, for that matter, our capital programs back load the cost. So we can do reforms and then -- and so that we're not financially constricting us up front, because as Councilman Goode has said over and over again, we have a crisis in our district and we've got to provide our kids with the supports that they need now. But what's complicated this budget that we're currently wrestling with is the fact that we're going into this budget with a carry-over deficit from the previous year, which we had hoped that we wouldn't have. I mean, if we didn't have $35, $40, $45 million in carry-over deficit that really emanates 44 5/23/07 - WHOLE - BILL 070015, ETC. from '06 and if we weren't -- and we carried it over into '70 and now we're going to have to in turn carry the deficit over into '08, this budget would have been a little more manageable, because every year we face about $100 million in cost drivers, but what's complicating the budget this year is the fact that we don't have a reserve fund. We don't have deficit financing bond proceeds. We don't have any more creative financing ideas to get refunds on some of our debt restructuring and things like that. We're kind of -- we're in a bind. We don't have a cushion that we've had in the past, and that's why we've gone to the state and that's why we've come to the City Council for some additional help. So, again, we close the books in September and October.
We ended up having a much higher deficit than anticipated, and, unfortunately, we weren't able to make the cuts in the 45 5/23/07 - WHOLE - BILL 070015, ETC. middle of the year. After numerous public hearings -- and the Mayor participated in hours of the public 5 testimony, because we were reluctant to 6 go in and cut things that would have an 7 adverse impact on our reforms. So we 8 continue to carry that deficit, and 9 that's the deficit that we're wrestling 10 with today. 11 Now, when I make my 12 presentation, I'll articulate the budget 13 challenges facing us this year, if I ever 14 get to it, and talk to some of the recommendations. I'm sorry for the long answer to the short question. Oh, I made my presentation. Okay. But I do have an outline that I do want to run by you, and if you can just indulge me, just if you can give me about 15 or 20 minutes to give you the highlights, I think the document is more than self-explanatory. So if you can just do that, I'd appreciate that. 46 5/23/07 - WHOLE - BILL 070015, ETC.
Thank you. Councilman Clarke, is your question of Mr. Nevels?
I don't know if you're in the presentation phase. You made one statement during the course of your response, and I commend you for taking responsibility for spending more money than you had, and that kind of brought me to the crux of my earlier question of Mr. Nevels. What mechanisms are going to be in place to make sure in the future that we don't spend more money than we have? And if in fact you have to spend more money than you have, we in Council will have a sense of that early on so we can hopefully respond in a way that's meaningful and productive. So that's kind of what I'm trying to get a sense of, the fiscal oversight, to make sure 47 5/23/07 - WHOLE - BILL 070015, ETC. that we don't find ourselves in that process again. And I guess I'm asking Mr. Vallas that question at this point.
We are certainly -- we have certainly been chastened by what has happened and we have put into place some mechanisms to do that, and the question going forward is making sure that we have sufficient and adequate financial information systems in place so that we can avoid this sort of situation. Now, one of the things that Paul just mentioned -- and I think it's important to mention -- is that there is -- this is a dynamic process. We are putting together -- we put together budgets based on certain assumptions as to revenue, and then we receive the revenue, which may meet the assumptions or may not meet the assumptions. So we are engaged in a process very unlike in business where you know what you have coming in. And so what 48 5/23/07 - WHOLE - BILL 070015, ETC. we're going to do is be very, very studious about making sure that we have in place on an ongoing basis financial information systems that will allow us to determine where we are, but also remember that this is a sort of thing where you have swings of 25, 30 million bucks in a budget of $2.1 billion. So we have those in place and we're going to continue to monitor that.
Can you be more specific in terms of the types of systems? I mean, is it more employees? Have you changed the MOIS systems? I mean, what exactly --
Did Councilman Clarke address that question to Mr. Vallas?
If he did address that question to Mr. Vallas, it's sort of a curious question. I don't believe Mr. Vallas is able to spend one dime after the beginning of the next fiscal year. So there's not a question of whether Mr. Vallas is going to spend more than he has in the next fiscal year, because he's not going to spend any of it.
Madam Chair, if I may, one of the things I just received from the CFO is a list of control environment enhancements, and I would 50 5/23/07 - WHOLE - BILL 070015, ETC. certainly like to submit this to the record in response to the Councilman's question. I mean, they include encumbrance controls, expense budget overrides and so on, which I can certainly review them with you here, but I think that it might be, in the interest of time, time better spent by putting it into the record, if that's okay.
Yeah. It's this document that has -- that outlines systems controls and then managerial controls, and there are four items under the system controls and another five or six items under the managerial controls, but I think that this would address the question directly.
Do 51 5/23/07 - WHOLE - BILL 070015, ETC. you want a copy?
Mr. Vallas, do you mind if we have copies made and distributed, please.
I also wanted to make -- and it's from a historical perspective. I realize that I won't be a part of this process much longer, but we, for the better part of the last six months, have been collaborating, working very closely with the state, particularly Michael Masch in the Budget Office. Now, we have periodically briefed the state Budget Director and the Governor's representatives on the status of our budget. When we had the mid year deficit, we went in, we met with them, we discussed it with them. We have periodically done that, as we have with legislative committees and as we have with Council staff from time to time, as 52 5/23/07 - WHOLE - BILL 070015, ETC. you well know. But that process has really become formalized. And in the presentation of this budget, we've been meeting not only weekly, but our staffs have been doing work during the week collectively to come up with a document that is really a consensus document, because if we're going to request more funding from the City and from the state, the state Budget Director needs to have the confidence level that what we're requesting is justified. And it's my understanding that he'll be coming out here next week to give you his assessment of the School District's finances. And so rather than to speak for him, I'll let him certainly speak for himself. But I imagine that that process or my assumption is that process is going to continue; in other words, that the interaction and exchange with the state is going to become more intensive rather than less intensive as it has been in the past. So rather than the monthly 53 5/23/07 - WHOLE - BILL 070015, ETC. briefings, this has really become a weekly exercise. So the state has really immersed itself in the examination of our finances, as they have done in a number of districts. But Michael will be before the -- I believe I was told by the Mayor's Office that he'll be here next week to, in effect, present his report and give you his assessment.
And there will be a similar role from the City's perspective in terms of weekly --
Absolutely. Because at all those meetings the City has been represented, too. The City has had its budget representative there and, of course, Jackie Barnett. The very able education czar has also participated in that process. So it's been a collective. Mr. Nevels and his representative, myself, I've been there involved in those meetings myself personally and, of course, the Mayor's Office has been 54 5/23/07 - WHOLE - BILL 070015, ETC. represented and Michael has been there himself. And if anyone knows Michael, Michael really has the -- he likes to immerse himself in the data. And I imagine that that process is going to continue as we build -- because I think a case can be made for more funding. Let me point out that what we're requesting from the state is a 5.7 percent increase in state funding, 5.7 percent. That is less than we've received last year and that is consistent with, at least over the last four or five years, with the increases. So we're not requesting 7, 8, 9, 10 percent funding. What we're requesting from the City, if you include the 9.2 million that we've requested to help us fund our after-school and summer school programs and if you pass Councilman Goode's bill, that would constitute a 5.8 percent in City funding to the District, 5.8 percent, not 10 percent, 15 percent, 20 percent. 55 5/23/07 - WHOLE - BILL 070015, ETC. So, again, if you look at historical trends -- and I'm not suggesting that that is easy to absorb in the City's five-year budget plan, because obviously the City has its own challenges, that we're not requesting something that is outrageous from a historical perspective. So I just want to point that out. And what we've been trying to do is, the Governor's people and the Mayor's people have been going through the numbers so they have a comfort level that what we're requesting can be justified and what we're requesting can, in effect, be specifically earmarked. So that money translates into restore teaching positions or that money translates into more early childhood slots or that money translates into funding for dropout prevention programs, things of this nature. Okay? But, again, the state will make its presentation early next week and I'll 56 5/23/07 - WHOLE - BILL 070015, ETC. certainly defer those further questions to them.
Okay. I'm in no way suggesting that there does not need to be more revenue generated for the School District.
I'm on record early on as saying that I'll be supportive of additional revenue. My question only relates to oversight to make sure that we don't find ourselves in a similar situation a year or two out.
Absolutely, and we're respectful of that. And, again, the materials on budgetary controls have been -- will be circulated to you and put in the record.
Thank you. Thank you, gentlemen. Thank you, Madam President.
Mr. Vallas, you keep referring to the report that we will be given next week. 57 5/23/07 - WHOLE - BILL 070015, ETC. Knowing that we were having these hearings today, why couldn't the report be submitted to us?
I know the state Budget Director has briefed both the Governor and the Mayor on his preliminary conclusions or conclusions, but I was told by the Mayor's -- by Jackie that they would be coming next week to present. And so it's their report. It's not ours. It's not our report. It's their report. It's not something that we're co-authoring.
So to the best of your knowledge, the report is completed?
Well, then I'll submit it since I haven't read it. Jackie just gave me a copy of a letter submitted by Michael to Jackie, and I'll 58 5/23/07 - WHOLE - BILL 070015, ETC. just submit it to you and we can read it at the same time. So I don't -- I'm getting a copy of it this morning. But it's my understanding that they've made a presentation to both the Governor and to the Mayor about the status of the School District's budget and obviously to make a case for additional funding. And I was told that they would be here next week to answer questions and to, in effect, respond. And when I read the letter that Jackie just handed me, I may be able to elaborate further, but that's my understanding. And I believe they've pretty much completed their work. I think they probably wanted to brief the Governor and the Mayor before putting out something publicly, but I imagine that they'll be briefing the City Council shortly.
Well, we have not been informed of that as yet and I think we do have a timetable to pass this before us, and I know that's 59 5/23/07 - WHOLE - BILL 070015, ETC. not your concern. Councilwoman Brown, did you want to be recognized?
Yes. Thank you, Madam President. Good morning, gentlemen. Let's go back to the discussion around the search process. You say that your goal for finding a new CEO is fall '07 by the time school is open?
With the exception of the community input that you're putting in place this time, how does this search process differ from the search process that gave us Mr. Vallas?
Oh, my goodness. 60 5/23/07 - WHOLE - BILL 070015, ETC. I'm hearing three to four and I'm also hearing six months.
Six months. But I believe three to four months was really what --
So it's conceivable to think if we add community input and the last process took six months, it's a strong possibility that we will not have someone in place prior to schools opening?
Last year there were a lot of questions raised around the School District's fragile, sensitive discussions with the building trades. Update us on where you are with the agreement that was put in place.
As to that agreement, I can say that it has moved very, very nicely. There will be a follow-up announcement in the next month, 61 5/23/07 - WHOLE - BILL 070015, ETC. I believe, that will show that rather than there being 500 apprenticeships that are available, we're really on a trend line that could yield 700. So rather than we're looking at in the first year 100, it will be substantially more than 100, because we are now at the one-year anniversary of that historic agreement. So there's some very good news to be shared in terms of the collaboration with the building trades and the fact that we are looking at an increased yield of young people that will be admitted to the building trades.
So then it's fair to say that you reached the benchmarks that were stipulated in the agreement?
Councilwoman Tasco gave us some discussion and questioning around the procurement activities there. What is 62 5/23/07 - WHOLE - BILL 070015, ETC. the connection between the District's vocational curriculum -- that question is better suited for Mr. Vallas. The remaining of my questions are better suited for Mr. Vallas. So I thank you for your testimony.
You're welcome. The Chair recognizes Councilwoman Blackwell.
Thank you. Good morning, Mr. Nevels, Mr. Vallas --
-- members of the SRC. I'm concerned, as always -- and I was going to wait to mention the few 63 5/23/07 - WHOLE - BILL 070015, ETC. issues, because I try not to bring my own District Council issues into a full budget discussion, but I think I'll do it anyway. I went to a meeting -- Al Bichner and others were there, and I'm grateful -- last night at West Philadelphia High School, and I left the meeting feeling that I don't know if there's a real plan to do West Philly High. I mean, at the meeting, discussions were about how Turner School would input, even though we've talked at KIPP whether that would input. As you know, we've been talking about Salzberger becoming a high school. And if you're going to do anything with West and University City, you got to have a high school feeder school. But it's as if the discussion on all of these things is just starting, not that it's been going on for years, and it's very frustrating. The students complain in the schools that in spite of the fact that 64 5/23/07 - WHOLE - BILL 070015, ETC. there are fires, that they don't empty out the school every day and they don't know what's real and what isn't, but you and I know whether it's real or imagined. If there's an alarm, you've got to empty out the school, and we have to deal with it. So there's so many of those things. But I'm looking at the budget and I'm trying to figure out where we stand. We've worked hard to have a comprehensive plan. I thought that we could make West Philly or the Third District a model for the City, but I don't feel any further along than before. I don't know if Salzberger is going to be a high school. After I left West Philly High School, I have no idea. I felt that everybody was in -- I thought that everybody was kind of in collusion to not do anything. That's how frustrating it is. We talked about boundaries. We talk about cutting the school in half. Either the Girls High or the boys part of the school open, cutting that in half and 65 5/23/07 - WHOLE - BILL 070015, ETC. lowering those numbers. But where are those kids going to go? Then they mentioned Turner School, which we were talking about for KIPP. What happens to half of those kids? What happens if Salzberger doesn't become a high? And Salzberger can't become a high school with an elementary school gym, and we've been fighting for the money. PHA was willing to do the turnkey. They still have their four million. We needed the other four million. We're talking about acquisition money that I understand the School District has for West. Penn is here. They talked about, Penn and Drexel, redoing University City and the part they would play in that. So I've got all my schools tied up, and I really try to stay on top of the issue. You know I'm a former educator. I love my schools. I love the Education Committee, but I feel no 24 further along and more frustrated than I did two years ago, because then I felt 66 5/23/07 - WHOLE - BILL 070015, ETC. hopeful. Now it's just confusion, and I don't feel we have any answers. We're supposed to know for West by June 18th. Well, that's about a week before schools end. And I'm really frustrated at people slipping me notes, call me, and the Home and School and you've got still Concordia in there. You've got the student union. You got all of these entities on a student level, as well as the adult academic teaching level. I mean -- and I'm just throwing it all out there, then you can respond and I'm done with it at this point of our hearings. But Cliff James left in March. Now we have Ozzie Wright. Ozzie Wright is already at another school. Now we've got more principals. I mean, if we weren't going to have all this stuff straight, why did we -- part of the frustration with the Home and School and the people who are there, as all of you know, is that they didn't want Cliff James to leave. Having said all of that, 67 5/23/07 - WHOLE - BILL 070015, ETC.
then why did we change principals and couldn't even have an interim until the end of the school year? I mean, we got a search on. We have one new principal. Ozzie Wright, everybody liked him or most people, and then he left. He's already in another school. I mean, it's just mass confusion on every level. It's very, very frustrating, because our responsibility as leaders is to lead, and I have no idea what I'm supposed to say and to whom you listen, because everybody has a different point of view, whether they're a teacher, an educator, administration, and it's just -- I feel that it's all just one big mess. And so I'm happy to listen to -- I'm not blaming anybody specifically, but collectively how can we be further behind than we were two years ago?
Was that in the form of a question? 68 5/23/07 - WHOLE - BILL 070015, ETC.
Let me respond. First of all, as you know, Salzberger, we want to convert Salzberger, but we can't convert Salzberger until the new Barry is built, because we have to house the Barry kids in Salzberger. So Salzberger has been delayed because of the need to house the Barry students. As you know, the Barry School was not safe to be occupied. And the Barry School is under construction, and once the Barry School's construction has completed its course, Salzberger can then begin its conversion to a small high school. And, as you know, we've talked to Mastery Charter about, in effect, doing the type of conversion that they've done at Thomas and that they're going to do at Pickett and that they've done at Shoemaker. And all you have to look at 69 5/23/07 - WHOLE - BILL 070015, ETC. is their middle school conversions and they did an outstanding job.
But you can't do it with an elementary -- the gym is too small.
Right, and I support the community center, but the Commission will have to deliberate on that. And I believe that the community center is in the capital plan. But we can't begin the conversion until the Barry kids are out. Secondly --
I mean, I don't know how we view -- you got replacement schools. You have reservations. How do we translate that?
Well, let me take you through it, because we've had conversations of this and I've met with all of the community groups on your 70 5/23/07 - WHOLE - BILL 070015, ETC. behalf many times with you. We've asked KIPP about Turner, but as you know, KIPP takes a year to select the principal and then a year to train the principal. That's their model. And they will only do their school their way, which is why they're successful, because they don't go in and they don't do the school until they have the right team for that school.
But now they're saying West kids may go to Turner. Turner kids used to go to Bartram.
Well, as you know -- but there is -- look, the community has never been divided on a lot of things that want to be done. Our recommendation was to convert it to a K to 8. There is still a group out there that wants to convert it to a small high school and has approached Mastery and some others about converting it to a small high school to reduce the 71 5/23/07 - WHOLE - BILL 070015, ETC. population of West Philly. But the bottom line here is, KIPP is still on board to do the school once they've selected the principal, and when we met with the community and when we met with the Seniors Council out there, that's what they wanted, they wanted a K to 8 school. They didn't want to turn Turner into a high school.
Well, how are they going to get rid -- how are you going to divide the population of West Philly in half?
Well, West Philly -- and Al Bichner is here to talk about it, and he'll be more than happy to talk about the plans for West Philly for next year, and he'll be more than happy to talk about that. In terms of the construction of a new West Philly, I can go into all sorts of reasons why the construction has been delayed, and you know as well as I have that there was a long time lack of consensus on where that 72 5/23/07 - WHOLE - BILL 070015, ETC. building should be built, and if somebody wants to blame me for indecisiveness, I mean, I'm moving on, so I'll take responsibility for everything and that will kind of clear --
I know. I know. But the bottom line here is on West Philly, there was a lack of consensus on a site. The status for West Philly is in the capital plan. It is going to be budgeted. It is budgeted in the capital plan. The RFP for design is being issued next week. The design phase will begin in July. The design phase will probably take at least six months. And as you know, I mean, we went through that long methodical -- what was the group? The year-long Concordia group. What did it take? 12 months?
But the bottom 73 5/23/07 - WHOLE - BILL 070015, ETC. line here is, the Concordia group brought all the community organizations together and they went through a year of --
I know, but what I'm saying is, the Concordia group had representation from all of the community organizations and the individual feeder schools. I'm not saying you brought them in, but what I'm saying is, there's been a long process of community involvement in the schools. And they suggested small schools. They suggested the design of the small schools. So there is a plan for West Philly. It's just going to take longer than anticipated. And it's going to be because there's been a lot of input, maybe too much input, into the whole West Philly project. And I'll be more than happy to have taken responsibility for not trying to expedite it or not trying to, in effect, muscle the project 74 5/23/07 - WHOLE - BILL 070015, ETC. through, but at the end of the day, the new West Philly will be built and we will have a new high school out there. Now, the status of Turner, Turner is still in line to be a KIPP school, and the future Superintendent or in the future the Board may change direction on that, but the bottom line here is, KIPP is gearing up. They're recruiting a principal, and they are more than willing to convert the school into a K to 8 school. And I support the addition at Salzberger. I've always supported that addition. And there's no reason why we can't go halves on creating that addition. But nothing is going to happen at Salzberger until the Barry kids are out. And so we're going to continue to have to wait until the new Barry School is built, because we have to house those kids somewhere. Now, on the bright side, Microsoft has opened and Sayre has 75 5/23/07 - WHOLE - BILL 070015, ETC. converted to a small high school, and the Sayre campus has been revamped and revitalized and are almost done with the athletic field. So some things are moving, but I'll take responsibility for the delays in the process.
I'm not asking that. I'll ask two small questions, because the President wants to move on, only two specific small ones. Number one, would you check into -- they're really complaining about that music -- they have a traditional program with students, alumni and others, a music program every year in the school and they're told they can't have that.
Okay. COUCILWOMAN BLACKWELL: And number two, is our supersite still on?
Yeah. I mean, the supersite is part of the budget, is part 76 5/23/07 - WHOLE - BILL 070015, ETC. of the school budget. And, as you know, we've been talking about the 4601 Market Street site as the site for the supersite.
And they were talking about Lee Cultural Center, too.
Believe me, I haven't -- that's not mine. I'm not -- the Cultural Center is not on my radar screen.
Councilwoman Brown, do you have a question of Mr. Nevels?
I do. I want to seize the moment. Tell us the process you went through for identification and recruitment of the current CEO.
Please 77 5/23/07 - WHOLE - BILL 070015, ETC. tell us the process you went through with the identification and recruitment of the interim CEO.
What we did was, we looked at the -- we started initially with internal candidates. We started with the current CAO. The SRC had deliberation about that, talked to him about his interest. He had other opportunities and other opportunities to look at and pursue. We then determined that it would be important to remain in-house internally during this process and then moved to the COO, Tom Brady, who has a wealth of experience at larger school districts, Fairfax County and other experience that we felt commended him to be the interim. That was the process that we used.
And subsequent steps regarding uniformly making aware all SRC members of the decision was what?
How did you go about informing all of the SRC Commissioners of the decision?
There was a process, and during the process, the four SRC members were asked to submit names. This was something that transpired over a five- to six-week period. And during that time, individuals were allowed to come up with names, come up with suggestions, and they did, and then we sifted through those. It is important to note that this was not an intemperate act, that it was in fact a deliberative act that proceeded over a five-week period.
So then what are the lessons learned, given the press reports that not all SRC members were uniformly aware of the decision?
No. What are the lessons learned where, according 79 5/23/07 - WHOLE - BILL 070015, ETC. to press reports, which are contrary to what you've just shared with us, not all SRC Commissioners were informed simultaneously? What are the lessons learned?
I think that the lessons learned are that, number one, what we will do in the future is, we will engage in the fullest measure all SRC members, along with funders and others that are involved, and would continue to do so. I will note to you that there were ongoing conversations about this process with funders as well. What we will do is, we will be certainly more transparent about that in the future and more public about it.
And when you say "more transparent," that means what?
What that means is, it will be a far more open process in public deliberation in much the same way 80 5/23/07 - WHOLE - BILL 070015, ETC. that we will try as we look to finding a new leader, community input, look to have also a search firm that will design that process and reach out into the community in that respect. In the case of an interim, it is my personal opinion that a broad, far-ranging public engagement in that is not appropriate.
Thank you for your testimony. Thank you, Madam President.
Thank you so much, Mr. Nevels. Mr. Vallas, if you don't mind -- 81 5/23/07 - WHOLE - BILL 070015, ETC.
No. 5 Please don't, because we do have a witness that has a very, very important commitment and has asked if he could testify.
I would like to call to the witness stand Michael Nutter, who will present his testimony, and Mr. Vallas will be next. Good morning. Again, congratulations and welcome.
I'm sorry. Councilman Clarke, did you want to be recognized?
Madam President, do we get to ask questions of 82 5/23/07 - WHOLE - BILL 070015, ETC. this witness?
You've been looking forward to that one. Absolutely. Thank you very much, Madam President. My name is Michael Nutter, N-U-T-T-E-R. I appreciate this opportunity to give some very brief remarks, which will be unusually characteristic, which all the members I'm sure by now will appreciate after 15 years of long speeches and testimony. I'll be very brief today. Madam President, Councilwoman Blackwell, Chair of the Education Committee, and all Councilmembers, as well as Chairman Nevels, SRC Members Dungee Glenn and Bednarek and CEO Vallas, I appreciate this opportunity to give brief remarks with regard to Bill No. 25 070015, which is sponsored by Councilman 83 5/23/07 - WHOLE - BILL 070015, ETC. Goode, with regard to proposed additional financial resources for the School District to be transferred from the City of Philadelphia. First, Madam President and Madam Chair, I am in complete support of Bill 070015. I wanted to lend my voice to finding additional support for the School District of Philadelphia and the City's ongoing commitment to providing educational opportunity for our young people. And while some may say that the District's financial circumstances far outweigh this amount of money presently, I think it is critically important that this City Council and this City Administration continue to demonstrate financial commitment and support to the School District, but, more importantly, that we send the right message to our partners in Harrisburg, the Governor and the General Assembly, as they go through their budget process that for whatever we can afford presently -- and I believe 84 5/23/07 - WHOLE - BILL 070015, ETC. that we can afford this particular transfer -- that for whatever we can afford, we should put on the table as a sign of good faith but also ask our General Assembly to more than match this funding for the schools, one, because it's the right thing to do; second, because the Commonwealth of Pennsylvania has a constitutional responsibility to provide fair and efficient education for all children in Pennsylvania, and certainly we are advocates for children here in Philadelphia. And so I would hope that these dollars would help to leverage by multiples the funding that should come from Harrisburg, not only to solve the present financial circumstance but to also right the ship financially for the School District of Philadelphia so that we do not have annual budget crises. Madam President, I'd like to conclude with I believe it's important in the course of a campaign that if we say 85 5/23/07 - WHOLE - BILL 070015, ETC. that we support certain things or propose certain things, that we in fact, through our actions, as they say, put our money where our mouths are. During the course of the campaign, I commented about this issue and supported it strongly, and as a part of the education plan that I laid out for the School District and the City, I had proposed the following: That as Mayor, I will work with City Council to pass legislation that will increase the allocation of the property tax revenues going to schools. As a member of City Council, I supported then Mayor Rendell's request for an additional tax on drinks, which provided the additional funding for the School District. As Mayor, I will work with Council to provide additional funding for the School District by changing the allocation of local property taxes that go to schools from 58 percent to 60 percent. This would shift approximately 86 5/23/07 - WHOLE - BILL 070015, ETC. $18 million per year to schools. These new educational resources will be evidence of the City's increasing financial commitment to the educational success of its children, and this commitment should be matched by a new state commitment and private sector and foundation funding of at least the same amount. As a result, this $18 million commitment by the City will leverage additional funding from new sources for education. That was the proposal then.
That was the commitment I made then, and that's the commitment that I want to make today as, for the moment, a private citizen and the democratic nominee for Mayor in the City. I would hope that this Council, through its wisdom, would support this particular measure completely through the legislative process to make sure that this bill becomes law, and I want to commend Councilman Goode for putting this 87 5/23/07 - WHOLE - BILL 070015, ETC. legislation forward. I know there are a number of members who are supportive. I wanted to lend my voice to this effort, and I thank you very much. )
Thank you. Thank you very much. We appreciate your taking the time to come in to testify. I know that no one has any questions.