COUNCIL OF THE CITY OF PHILADELPHIA SCHOOL BUDGET HEARING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, March 10, 1998 9:50 a.m. - - - RESOLUTION NO. 980131 - Calling on the City Council's Committee of the Whole to hold hearings, conduct an investigation of Philadelphia School District's proposed 1999 budget. RESOLUTION NO 980138 - Supporting transfer of $15 million from the City' General Fund to the School District of Philadelphia. - - - PRESENT: PRESIDENT JOHN F. STREET, Chair COUNCILWOMAN ANNA C. VERNA, Vice Chair COUNCILWOMAN AUGUSTA A. CLARK COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DAVID COHEN COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILWOMAN HAPPY FERNANDEZ COUNCILWOMAN MARIAN B. TASCO COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK DICICCO COUNCILMAN RICHARD T. MARIANO COUNCILMAN W. THACHER LONGSTRETH COUNCILMAN FRANK RIZZO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 175 I N D E X Ted Kirsch, President, Phila. Federation of Teachers. . . . . . . 180 Clarence Armbrister, Managing Director, Phila. School District . . . . . . . . . . 211 Paul Hornbeck, Superintendent Phila. Public Schools. . . . . . . . . . . 258 Patricia Brennan, Parent . . . . . . . . . 354 Roxborough High School Bradley Slater, 8th Grade Student Shawmont High School . . . . . . . . . . . 358 Keith Simon, Father of Bradley Slater . . . . . . . . . 358 Jayne Davis, Parent Saul High School . . . . . . . . . . . . . 364 Joseph B. Boyle, Private Citizen . . . . . 369 Gail Tomlinson, Member, Citizens Committee on Pub. Ed. in Phil. (CCPEP) . . . . . . . 372 Pedro Perez, Executive Director Parents Union for Public Schools . . . . . 379 Saul High School Students: Dana Cirino. . . . . . . . . . . . . . . . 385 Randi Congleton. . . . . . . . . . . . . . 391 Tiana Singletary . . . . . . . . . . . . . 398 Monay Sarrington . . . . . . . . . . . . . 401 Gloria Hailey, Parent of Student from Ben Franklin High School . . . . . . . . . 409 Thomas Doyle, President Local 1201 . . . . . . . . . . . . . . . . 411 176 Index, cont'd. Denise MacIntosh, Concerned Parent of Beaver Middle School Student . . . . . . . 416 Renee Hollman, Sister of Denise MacIntosh . . . . . . . . 420 Eugene Bivins, Retired Teacher Philadelphia School System . . . . . . . . 439 Dr. Karen Bivins, Retired Principal Philadelphia School System . . . . . . . . 439 Malachi Robinson, Community Activist . . . 444 Victor Lewis, President, Roxborough High Home & School Association. . . . . . . . . 448 Citywide Improvement & Planning Agency: William Mackey, Head . . . . . . . . . . . 454 Christopher Waiters, Youth . . . . . . . . 454 Candace Nelson, Youth. . . . . . . . . . . 454 Jovonne Hill . . . . . . . . . . . . . . . 468 Michael Garrett, Youth . . . . . . . . . . 470 Philadelphia Student Union: Jean Friedman-Rudovsky . . . . . . . . . . 475 Sarah Shapiro. . . . . . . . . . . . . . . 475 Sean Cook. . . . . . . . . . . . . . . . . 487 Kareem Holland . . . . . . . . . . . . . . 489 Angel Sheared. . . . . . . . . . . . . . . 492 Jermaine Dobine. . . . . . . . . . . . . . 499 Antonio Funk . . . . . . . . . . . . . . . 500 Vincent Thomas . . . . . . . . . . . . . . 501 Amanda Kaplan. . . . . . . . . . . . . . . 502 Octavia Harold . . . . . . . . . . . . . . 504 Djinge Lindsay . . . . . . . . . . . . . . 505 Tequan Blanche . . . . . . . . . . . . . . 507 177 P R O C E E D I N G S
Good morning, ladies and gentlemen. This is a recessed hearing of Council's Committee of the Whole. If I could have your attention. . . If I could have your attention, please, we'd like to get the hearing started. This is a recessed hearing of Council's Committee of the Whole. Today we will have a public hearing on two resolutions: Resolution No. 980131, calling on the City Council's Committee of the Whole to hold hearings and conduct an investigation in the Philadelphia School District's proposed 1999 budget and the impact of the School District's looming fiscal disaster on the City's children, residents, and businesses; And Resolution No. 980138, which is a resolution supporting the transfer of $15 million from the City' General Fund to the School District of Philadelphia to support the continued improved operations of the public school system. Yesterday, we had some very interesting and enlightening testimony from the President of 178 PUBLIC HEARING - COMMITTEE OF THE WHOLE the Board, who is here, and the Superintendent. Today we would like to continue our discussion and have testimony from the Managing Director of the School District Clare Armbrister, after which, we would like to have a full discussion of the School District's finances, particularly the proposed or the anticipated projected deficit and the impact that it will have all on services at the District. At this time, the Chair recognizes the Managing Director of the School District of Philadelphia, Clare Armbrister, for a summary of his statement. (Clarence Armbrister comes forward.)
Good morning, Council President Street, other Members of Council, and the public. I am Clarence Armbrister, Managing Director of the School District. I am a resident of Philadelphia County. Before I begin I just want to make sure that the Council has copies of my testimony. There are two pieces: one on my remarks, and the other are supplemental charts that you should have in front of you. Do you have those? If you do not. . . 179 PUBLIC HEARING - COMMITTEE OF THE WHOLE They were handed out, I believe, yesterday but we have copies available here today. Could you hand those out, Marilyn, please?
Council will stand in recess for just a minute. (Council briefly stands in recess while copies of Mr. Armbrister's testimony are distributed.) - - -
At this time, I beg the indulgence of the Superintendent and the Managing Director of the School District. Ted Kirsch, who's the Head of the Philadelphia Federation of Teachers is here. He informed us earlier that he had an obligation and was told that he would be able to testify at 10 o'clock. We, of course, had hoped to be able to have the part of the testimony that we are getting ready to have today from the School District yesterday. We delayed all of that till today. And so he's here, and if no Council Member has any members and with the indulgence of our witnesses, we would appreciate it if he would come forward and give his remarks at this time. 180 PUBLIC HEARING - COMMITTEE OF THE WHOLE (Ted Kirsch comes forward.)
Mr. Kirsch, good morning. Please identify yourself for the record and proceed with your testimony.
I'm Ted Kirsch, President of the Philadelphia Federation of Teachers. And I want to thank the Members of Council for permitting me to present my testimony. President Street, Members of Council, I've come before this body. It's almost a regular part of my routine. But education funding in Philadelphia has reached a deplorable state of affairs. With budget surpluses expected at the national and State levels, I had hoped that this year, during budget testimony, we could focus our attention on improving instruction for the District's 213,000 students. Instead, I'm here today representing 20,000 members of the Philadelphia Federation of Teachers who implore you to find a way to find a full year's instructional program next year. In an ideal world, we would be talking about ways to recruit new teachers and build more 181 PUBLIC HEARING - COMMITTEE OF THE WHOLE elementary school classrooms so that we could reduce the size of classes for kindergarten through third grades to no more than students 5 each. Philadelphia's classes remain among the 6 largest in the State, despite the research which 7 shows the significant progress that children, 8 particularly minority children, make when they 9 receive more individual instruction in smaller 10 classes. 11 And in an ideal world, the Federation 12 would be discussing how to bring exciting and 13 successful programs into the City's classrooms and 14 how to improve the skills of educators to utilize 15 innovative materials. We would be urging the City 16 and the State to adopt higher academic standards 17 and then to put them in place, with the programs necessary to help all children, especially those that are falling behind, to achieve those standards. As educators, we would rather be here advocating tougher Districtwide discipline policies and alternative placements for students who would keep teachers from teaching and students from learning. We would prefer to be working with 182 PUBLIC HEARING - COMMITTEE OF THE WHOLE you today to develop new strategies for teaching our children in the next millennium. But this is not an ideal world, and no 5 group is more aware of that fact than the 213,000 kids and the 20,000 Federation members whose schools may close next year for lack of funds. We are all uncomfortable with the prospect of closing schools when the money runs out next year. The PFT does not believe that students should be used as pawns in adult battles. However, we agree with the District that the budget crisis is real and the appropriate place to look for help in funding our schools is Harrisburg. When enrollment in City schools began increasing, the State changed its formula for funding schools. 9 percent after inflation, while enrollment has increased 9 percent. That six percent in lost State revenue would more than offset next year's projected deficit. Philadelphia schools have been 183 PUBLIC HEARING - COMMITTEE OF THE WHOLE shortchanged for six years, but when we asked Harrisburg for the 90 million we need to maintain our programs, we're treated like poor relations seeking a handout. In fact, the money that would balance the District's budget next year was taken from us, and the legislature is obligated to restore that money to the District now. And we haven't done a very good job of explaining the District's plight when some of our own State representatives stand up and ask the Governor to withhold vitally needed funding from our public schools. Fighting for 90 million for the education of poor minority kids in the face of an $800 million State surplus is unconscionable. Across the country, education is the number-one concern of parents, legislators, business leaders, and teachers. And it's about time. During a decade of belt-tightening by the District, many excellent, innovative programs fell by the wayside. Some of those programs protected children's health, others expanded their minds, and other nourished their souls.
So after years of being told by the government to do more 184 PUBLIC HEARING - COMMITTEE OF THE WHOLE with less, talk of budget surpluses came as welcome news to educators in financially starved schools. In Harrisburg, legislators are talking about educational reform too. But their idea of reform is carving Philadelphia into wasteful, 8 duplicative, and expensive districts. Legislators 9 are backing this ill-conceived plan despite 10 incontrovertible evidence that decentralization in 11 New York and Chicago resulted in chaos, 12 corruption, patronage; and despite the evidence 13 that community participation in school board 14 elections is less than five percent in New York, 15 and student test scores plummeted in both cities. 16 How could our legislators, in good 17 conscience, send Philadelphia down a road they 18 know is doomed to failure. How can they pretend 19 that they're giving Philadelphia what the other 20 500 districts in this State have -- local control 21 -- without also giving those 22 districts local 22 taxing authority. We have to give legislators some credit, however. They are talking about Statewide standards, and we're all for it. They're talking 185 PUBLIC HEARING - COMMITTEE OF THE WHOLE about alternative programs for kids having problems. The Federation supports that. And they're finally talking about reducing class size; that's great. But so far, no one at the State level is talking about where the money will come from to implement these proven educational reforms. In Philadelphia, teachers teach more children per class than the average school teacher. Philadelphia teachers earn less than their colleagues in neighboring communities and less than the State average. Philadelphia teachers have fewer resources with which to teach children who are more needy than the average student Statewide. Our per-pupil expenditure is $2,000 less than neighboring districts. And law makers may wonder why so many of our children are not doing well. It's not for the lack of hard work on the part of the members of the Federation and dedicated people throughout the District. During the past year, both the PFT and the District have put into place a number of innovative programs to help our teachers teach and our children to learn. 186 PUBLIC HEARING - COMMITTEE OF THE WHOLE In October, we jointly launched Philadelphia's first Peer Intervention Program, which gives our best and brightest teachers the opportunity to assist some colleagues who request help with teaching techniques, strategies, materials, and classroom management. A similar program in New York has a ten-year track record of improving the level of classroom instruction. We know peer intervention has the same potential here, but currently, it serves only a few of the teachers who might benefit from one-on-one mentoring. During the winter, the Federation and the School District administrators attended an American Federation of Teachers Conference on Strategies for Improving Schools. The Administration Federation Team came away with many new ideas. Last week, we brought several New York City administrators and teachers who have successfully improved their schools to speak with principals and union building reps in the District. We are visiting schools in New York to see firsthand how administrators and staff have 187 PUBLIC HEARING - COMMITTEE OF THE WHOLE worked together to raise student achievement. And we are sponsoring a half-day conference for school employees on programs that help children succeed. In April, in conjunction with the District, the Federation will begin working with two clusters to train teachers in reading recovery, a highly acclaimed early-intervention program to help youngsters read at grade level by the end of the first grade. This program diagnoses reading difficulties early and teaches students strategies for reading and comprehending written language.
These are all positive and important steps in the process of helping Philadelphia children reach their full potential. Of course, they accomplish nothing if the schools are not operating. Children can't learn and educators cannot teach if schools are closed. It would be a national disgrace for our City if children were locked out of schools while legislators demand higher achievement. It sends the wrong message to businesses that are considering either locating or expanding here. It sends the wrong message to parents, particularly 188 PUBLIC HEARING - COMMITTEE OF THE WHOLE those who believe that a free public education is the right of each child and the responsibility of the State government. And, most of all, it sends the wrong message to children about the priorities of adults who expect children to achieve at high levels, and then, year after year, underfund and undermine their efforts. Ultimately, the single most important factor in education is what transpires between teacher and child in the classroom every day. Eventually, we will have to: Acknowledge the need for additional new money to improve professional development for teachers, school staff, and administrators; Fund educationally sound programs that have been proven to help urban children succeed and provide children with modern, safe, healthy environments that encourage learning. Our children are our future. They get one shot at a free education that will shape them into productive, responsible, and prosperous contributors to our society. It is incumbent upon you, our City 189 PUBLIC HEARING - COMMITTEE OF THE WHOLE leaders, to use the influence you have in Harrisburg to reach our representatives with the urgent message that Philadelphia schools need their support. Support for high-quality, free public education should not be a partisan issue. The Federation supports the federal civil rights action filed by the City yesterday and the School District and the parents. But the children in schools today cannot wait years for 11 a lawsuit to wind its way throughout the court 12 system. 13 Thirty states have already revised 14 their funding mechanisms and allocations to level 15 the playing field for urban, suburban, and rural 16 children. It's time Pennsylvania did the same. 17 The Commonwealth must acknowledge its 18 responsibility for providing the youth of 19 Philadelphia with educational opportunities equal 20 to those offered in surrounding communities. Our future will depend largely on the success of our children. The PFT wants what parents want and children need: good schools, properly funded. Thank you. 190 PUBLIC HEARING - COMMITTEE OF THE WHOLE
Thank you very much. We certainly appreciate the kind of remarks about what is happening at the School District. And, as you know, I think we all agree that we can't improve the quality of education without the full cooperation of the PFT and the teachers and all the other staff and workers who are our partners in this process. So we thank you for coming. At this time, I see some lights on which usually evidences an interest in asking questions. The Chair recognizes Councilman DiCicco.
Thank you, Mr. President. Good morning, Mr. Kirsch. I just have one question. On of your testimony, you indicate that --
I think he wants to know what's the county of your residence. (Laughter.)
I was going to let him off the look on that one, but we'll get to that. The Philadelphia teachers earn less 191 PUBLIC HEARING - COMMITTEE OF THE WHOLE than their colleagues in neighboring communities and less than the State average. Could you give me some numbers so I can compare that.
I believe the average Philadelphia teacher is at about $42,000. And if we go into suburban areas, there are highs in the 80's. I mean, it's not even talking --
So then someone who teaches in Philadelphia makes half of what a suburban county teacher would make?
That really makes me wonder why people who live in the 'burbs would come the Philadelphia to teach and not live here. 192 PUBLIC HEARING - COMMITTEE OF THE WHOLE
Well, under our residency requirements since -- if you go back to 1984, it is a requirement that Philadelphia teachers do live in the City. And I would add that is, to some degree, hurting some of our recruiting efforts in some of the areas in which we are short.
Thank you. I have no further questions, Mr. President.
And, as the Council President had indicated earlier, I am a lifelong resident of Philadelphia. And I am a proud product of the Philadelphia public school system.
Thank you very much. The Chair recognizes Councilwoman Fernandez.
Thank you, Mr. President. Good morning, Mr. Kirsch.
I'm glad you're here. And, again, I thought your testimony was right on, certainly dealing with the wide 193 PUBLIC HEARING - COMMITTEE OF THE WHOLE range of issues, many of which we discussed yesterday. But one thing I wanted to know if you would comment on. Knowing you've been so long, for so many years, involved with the School District, and lived through the years when there was the annual spring budget cuts, which now, these last two years, we've decided that strategy is not good for our children, not good for the School District and are taking this alternative strategy. Would you just comment for the record on what you experienced with the strategy of essentially the annual spring cuts and what its effect was on children and teachers in the schools.
Well, there are several comments I'd like to make in response to your question. To begin with, the process of budget- cutting in the schools has taken place over a period of years. And each year, there would be cuts and cuts and cuts, programs would begin to be eliminated. 194 PUBLIC HEARING - COMMITTEE OF THE WHOLE And I agree with the School District's strategy, as well as the City, in that we are at a point where there's nothing left to cut. You cannot go back to the schools and say, Okay, well, we're short of money, cut some more. We're at a level where there's nothing to cut from the schools. The problems and the chaos that that process effected would be in the early spring. Budgets would be presented to the schools far less than they were operating, and they had to go through a very excruciating process. You know, what do we cut? And it's not just programs; you're talking about people, you're talking about teachers, you're talking about youngsters. And it would have a very negative effect. It would impact on the school system because, based on the early spring numbers, transfers would take place, so personnel would be moved, forced out of buildings. Relationships that have developed over the years between parents and teachers would be broken because teachers would involuntarily be forced out of those 195 PUBLIC HEARING - COMMITTEE OF THE WHOLE schools. When the budget cuts were made and September would come around, so many of these people have been moved and shuffled that schools would not be prepared to open on time, programs would not be in place so that students would have the full instruction. We, in previous years were, characterized by a number of disruptions in September, October. And, in many cases, it would not be until November that schools would be stabilized, that we could go forward with what should have happened from the first day of school. So the cuts that took place during the early spring in the previous years had a very disruptive influence in the actual operation of the schools.
As you were talking, I was thinking of this City, the City side of the budget during the eighties and early nineties, with the series of budget cuts and such budget uncertainty until, finally, people said, Hey, enough is enough, we have to deal with the structural debt problem in the City. 196 PUBLIC HEARING - COMMITTEE OF THE WHOLE And I was just thinking now, from the administration's side, for Council to basically have a budget agreed upon by March, it doesn't have to start to be implemented by July has really stability in terms of delivery of City services. So I look forward to the day when the structural debt and underfunding of the School District will have been accomplished so there could be some of that predictability and not this jarring sense of uncertainty that's loomed over the School District, I would say, from my experience, for all too many years. Thank you, Mr. President.
Thank you very much. The Chair recognizes Councilman Ortiz.
Good morning. I think that the point that you made is that those cuts that have been done over the years have led to a situation in which we really don't have arts and music programs because what you have is a teacher that goes once a week to a school or two days a week to a school and then rotates to another school. Is that the reality we have in many of 197 PUBLIC HEARING - COMMITTEE OF THE WHOLE our arts programs and so on?
Well, it exists in a number of schools where a full-time service has been cut back. And it's not just art and music and physical education and sciences. We have a similar problem with health services, with the cutback in nurses, so that we do not have nursing services full-time.
I'd like to hear your opinion about some of the issues of governance that have been proposed in terms of Harrisburg and what the viewpoint of the teachers union is along those lines. There have been some proposals that want to remove the Board of Ed. and place everything under the Mayor's Office and for the Mayor to appoint and so on. And I'd like to hear your opinion about that.
Well, I think there are basically two conflicting proposals. One, as you just alluded to, is the fact that the Mayor should have the responsibility of the school system of immediately appointing the school board and hiring 198 PUBLIC HEARING - COMMITTEE OF THE WHOLE of the superintendent. And I would say for the record that I'm in favor of that proposal. I think all too often what's happening, we think of the Board of Education, and people say, Well, the Board's responsible, when the political reality is that the Mayor does have is a great deal more of responsibility in the process than people are aware of. So there's nothing wrong in putting it right up front. The Mayor appoints the board, the Mayor appoints the superintendent. If things are going well, the Mayor will get credit; and if things are not going well, we know we have to go talk to the Mayor. And I would, therefore, favor that concept, and I believe that the Committee of Seventy is a strong advocate of that proposal. However, there is another proposal emanating out of Harrisburg, which I think would be a disaster, and that would be to break up the School District of Philadelphia into 22 separate school districts. And I think it would be a disaster 199 PUBLIC HEARING - COMMITTEE OF THE WHOLE because the implication, if you go beyond what the proponents say about the local, you know, control of education, that's not what it's about. That's about resegregating the City's school system, and I think that we cannot duck that responsibility. That says that the opportunity in the public schools of having fine magnet schools and students being given opportunities, students and parents being given opportunity of public school choice. Because we do have a number of outstanding schools. But that proposal would end it. That proposal would say to youngsters, Go back to your neighborhood school. And we're not going to give you any more funding, we're not going to give you any more supports. And so, through court decisions and agreements over the years, through creating of outstanding programs, that school systems would 21 end many opportunities for school students and, I 22 believe, would resegregate this city worse than it exists in some cases now.
And we'd just end up creating 22 more bureaucracies. 200 PUBLIC HEARING - COMMITTEE OF THE WHOLE
Well, it's the added cost, that there's another question. I mean, I could talk for an extended period of time on the disadvantages. And the most important thing, it's been tried in other places and failed. Why would we want to replicate something that is a proven failure.
The first part in terms of the governance issue, I don't believe, and perhaps our Legal Department can give us some guidance on this that perhaps we could achieve that locally by just changing charter, the educational supplement of the charter to make the change that you're talking about and not allow Harrisburg to dictate what the terms of governance of the City Board of Education should be. I would like to find that. And, Mr. President, if we could maybe research that from our Legal Department, okay?
Okay, thank you, Mr. President. 201 PUBLIC HEARING - COMMITTEE OF THE WHOLE
Thank you very much. The Chair recognizes Councilwoman Miller.
I just need clarity. On of your testimony, you said that in New York and Chicago, the student test scores fell. But then, on , you said you're going to visit New York schools. So can you give me like the time span or something.
Yes. And thank you for the question, it's a very good question. New York State recognized -- New York City recognized that the process that people are proposing failed. So they changed the system --
-- from the time that it failed. Under the present situation, they have the mayor and the superintendent and the union all working closely together to make changes to go forward. Research shows that there are a number 202 PUBLIC HEARING - COMMITTEE OF THE WHOLE of programs that, if you fund them properly, can make a difference. And that's what they have committed to doing. And I think here in Philadelphia, the School District and the PFT has that same commitment. We have been, and that's why I pointed out in the past year some of the programs that we have been working together on because we have a single goal, and we're trying to move forward. But we need the funds in order to accomplish that goal. And it can be -- and our point in showing that in other places it's happened is not to just say, Give us more money, and the cynical people in Harrisburg are saying, What difference does it make if we give you more money; you don't know what to do with it. We do know what to do with the money. And we know that if you put it in the schools and in the classrooms, our students are going to do better. And that's the key structure. It's not just more money. It's more money for proven programs. And studies, research shows that we do know what to do with it if we can 203 PUBLIC HEARING - COMMITTEE OF THE WHOLE get it.
Councilman, can I ask you to make sure you're using microphone.
I forgot about that. (Councilman Longstreth dons his microphone.)
Can you hear me all right? I listened to a gentleman who was the former superintendent of the schools in, I think, Milwaukee. And he was speaking, essentially, on the subject of alternative education. And he went into some detail of the present system, which he says has failed and, 204 PUBLIC HEARING - COMMITTEE OF THE WHOLE therefore, we have to turn the other ways of education that have either not have been used or not been used in some places or not sufficiently tested, or what have you. I mean, that was his thing, obviously, and he was pushing very hard for it. I'm interested in what your reaction is of one of the great school systems of this country with a strong union, etc. would be since he mentioned those specifically as one of the big problems that we face in making changes, which, he claims, are absolutely essential. He claims more money won't do it, but what we have to depend on is getting more money but getting it for a system that has been changed somewhat or a great deal in keeping with the needs of school children in urban areas.
Well, I would first say that I would like to provide to the Members of Council -- I will have them brought over to your offices -- the research from Milwaukee. Because I think the true measure of whether schools are successful are the test scores. And, although, in Milwaukee, they 205 PUBLIC HEARING - COMMITTEE OF THE WHOLE experimented with some alternative programs, the bottom line is, the test scores didn't improve. And that's the key measure. And this is documented research, and I'd be glad to send it over. The comment that he, you know, made, as you say, not having more money, it's not just more money. We're not just saying give us a blank check. What we're saying is that we know if we get that money how to spend it and what kind of programs can be used. If a youngster is having difficulty in reading in the first grade, that's the time to get support. Let's not wait until that student goes through the system and becomes a problem and we have difficulty later on. We know that it's in preschool programs, we know that it's in those first three grades that all of the resources and the time has to be put in so that we're not going to have problems, so that we're not going to be worrying about alternative programs and trying to send disruptive students away. The key is doing it early. Early 206 PUBLIC HEARING - COMMITTEE OF THE WHOLE intervention. Alternative education and there are some programs that have been successful. But we're talking about a city of hundreds of thousands of youngsters. We can't be just concentrating on a handful. We have an obligation -- we're a public system. We have an obligation to deal with all of our students not because some parents are politically sophisticated, and maybe there's a charter school or some program that they know how to work to get their child into that program. We've got to deal with all of our children. And that's the key -- not experimenting with some programs; some of which may work, some which may not. And I will, Mr. Longstreth, send you a copy of the research because Milwaukee is part of it.
You know, I'm always fascinated by the people who challenge the very roots of the system that we use to provide public education. And they're always pointing to private 207 PUBLIC HEARING - COMMITTEE OF THE WHOLE systems and saying, Look how well these systems are doing. And you do hear people making fairly convincing arguments on their face that, Well, we need to interject competition in the system, we need to provide other alternative forms of providing education because what it does is, it will highlight the possibilities of success, and it really shows you how the big, you know, public kind of public school system has failed and is doomed to continued failure. And I always raise the question as how much of the democracy that we impose on the public school system are we going to impose on these other alternative systems? (Applause.)
For example, you don't have -- I mean, the teachers in the public school system have to educate the children that come into those classes. They have absolutely no 22 right to pick and choose. They cannot pick and choose. They can't pick and choose the students; they, therefore, cannot pick and choose 208 PUBLIC HEARING - COMMITTEE OF THE WHOLE the parents of the students. They can't pick and choose the neighborhoods that the children come from. They don't have any control of any of those circumstances. And I want to ask the question -- and this charter school experiment, I think the results are going to be interesting, although I don't think that we're going to have them in the time that we might like to have them. I think it's going to be interesting. Because if you ask any of the private schools how well they think they would be doing if they didn't have the choice that they have in selecting the students and if they didn't have the one thing that the public schools don't have, and that is the right to say, We don't have to educate you. We don't have to have you here. (Applause.)
And it changes the whole dynamic, it changes the whole dynamic. I would like for somebody to comment, either Mr. Kirsch or the superintendent if he can, tell us some information about how the privatized schools are working. 209 PUBLIC HEARING - COMMITTEE OF THE WHOLE I mean, there are some schools right here in the state of Pennsylvania who have chosen to privatize their schools. And I understand that some of those efforts have been met with very, very serious mixed results. And this might be an appropriate time to put that on the record if anybody has that information.
Perhaps the School District has more information regarding success or lack thereof of some of the private schools. But since a budget, and I don't know if the point has been made that with the State -- we're talking about Harrisburg, where Harrisburg created the concept of charter schools. The point is that for every charter school that is created here in the City, the School District is penalized even more. We lose money. So on one hand, we're saying, We don't have enough. And through this wonderful -- I'm being sarcastic of Harrisburg -- they're penalizing us even more. It's not even a level playing field. And that is another issue that, I 210 PUBLIC HEARING - COMMITTEE OF THE WHOLE think, Harrisburg has to deal with. They're hurting us again.
Any other questions? (No further questions at this time.)
Thank you to President Street and the Members of Council for the courtesy that you've extended to allow me to testify out of turn. Thank you.
Could we have the Superintendent, the Managing Director, and other school personnel that they may need to assist them. (Members of the Philadelphia School District panel come forward.)
Good morning. Please identify yourself for the record again, and proceed with a summary of your statement.
Good morning. I'm Clarence Armbrister, the Managing Director of the 211 PUBLIC HEARING - COMMITTEE OF THE WHOLE School District. I'm a resident of Philadelphia County, and I have three children in the public school system. I'm here today to present testimony in support of the School District's proposed operating budget for Fiscal Year '98-'99. The operating budget proposed by the Superintendent, unlike last year's proposal, is not a zero-growth budget in the typical sense. 5 billion, or $93 million more than our current estimate for the current year's expenditures. I will highlight the reasons for these changes later in my presentation. However, it should be emphasized that this budget proposal does not fund the creation of new programs, but merely continues funding for programs to which the School District has made commitments. In that sense, it is a zero-growth budget, with respect to new programs. As you know, the School District's operating budget routinely consists of three separate fund entities: the General Fund, the Intermediate Unit, and the Debt Service Fund. 212 PUBLIC HEARING - COMMITTEE OF THE WHOLE A Grants Revenue Fund is sometimes included in the budget in order to make appropriation authorization available in the event revenues are forthcoming after the budget's adopted. No provision is made at this time for the inclusion of a Grants Revenue fund in the proposed budget. A preliminary comparative statement of operating budget revenues, obligations, and changes in fund balances is presented on pages 12 and 21 of the budget detail document provided to 13 each of you previously. There is also an updated 14 version on pages and of the supplemental 15 charts, the significance of which will become 16 evident shortly. 17 Going from left to right, the first 18 column presents the current year budget, as 19 adopted on May 31, 1997. " 21 The third column labeled "Estimated 22 '97-'98" presents our current estimate of results 23 for the current fiscal year. 24 The "Adjustments" column in between 25 shows increases and decreases in revenues, 213 PUBLIC HEARING - COMMITTEE OF THE WHOLE obligations, and other financing sources and uses that have been identified since the May 30th adoption of the budget. The last column presents the proposed budget for the next fiscal year. " The "Increase-Decrease," or fourth column, shows the changes in revenues, obligations, and other financing sources and uses from this fiscal year to next fiscal year. As the data indicates, the School District's official estimate at the time the lump-sum budget was presented to the board was that it would end the current 1997-'98 fiscal year with a small fund balance of just under $1 million. million. million. 4 million in additional funds expected from the Commonwealth. As you know and as the Superintendent alluded to in his remarks, the City, on behalf of the School District was able to successfully settle use and occupancy tax litigation with several banks which had refused to pay the tax over the last several years. The revenues from this settlement had not been included in the School District's official estimates. 5 million, beginning in the current fiscal year. Therefore, the School District is likely to finish this year with a slight surplus of over $5 million, which is down from $33 million surplus from last year. It now estimates that the two-year effect of this settlement will result in the projected deficit for the school year 1998-'99 215 PUBLIC HEARING - COMMITTEE OF THE WHOLE falling to about $85 million. These results are reflected in the supplemental charts on pages 1 and 2. As many of you know, the School District estimated as recently as October 1997 that its projected deficit for Fiscal Year '98-'99 could be as high as $146 million. In order to address the inevitable question of what happened, I would like to call your attention to the graph in the supplemental materials on .
This graph highlights the significant factors which have resulted in the projected deficit for Fiscal Year 1999 being reduced from $146 million in October to our present estimate of $85 million. So, as you can see from the graph, the October projection was $146 million. Since that time, there have been five significant events that have occurred which have resulted in the deficit declining to $85 million. We were fortunate to receive or have the Mayor include in his proposed budget an additional $15 million grant from the City. We were pleasantly surprised by the $18 million more 216 PUBLIC HEARING - COMMITTEE OF THE WHOLE than we had anticipated in the Governor's proposed budget. We were also the beneficiaries of the stock market of last year in that the Retirement Fund contribution by the School District to the State retirement system will decrease as a result of that by $11 million on a net basis. And our enrollment, which has been projected to increase by as many as 3,000 students, we have determined, has been leveling off. So those four factors reduced the deficit, as you can see, from $146 million to the $94 million we had anticipated when we presented the lump-sum budget. 5 million in use and occupancy tax settlement which further reduces the proposed deficit to $85 million. So there are the major changes that have affected the reduction of the deficit. Of course, there are a number of -- several dozen other things that have happened, but those are the major things that reduced the deficit to $85 million. 217 PUBLIC HEARING - COMMITTEE OF THE WHOLE Returning our attention to the detail book previously provided to you, the Sources of Funds Pie Chart, shown on and also included in the supplemental charts on , indicates how the budget revenue will be derived. It should be noted that this chart presentation does not include the additional $85 million of revenue anticipated to be received from the Commonwealth. 5 percent from local non-tax sources, and that's primarily the City's extension of it's one-time $15 million grant for the third year and just about a quarter of one percent from other sources. 2 percent for student support services, which includes things like counselors, librarians, bus drivers, and attendants; A little over percent for basic 6 building services, which includes maintenance, the 7 custodial staff, and security; 8 And slightly under 1 percent for 9 cluster support services. 10 There is about three quarters of a 11 percent for professional development and under 12 five and a half for administrative support. 3 percent for financing, things like debt service insurance and other costs. The revenue projections for '98-'99 are based on revenues from the Commonwealth and amounts contained in Governor Ridge's budget, as presented to the General Assembly, except, of course, the $85 million we anticipate receiving from the Commonwealth to extinguish the deficit and from local taxes at current rates. The cost projections for '98-'99 are based on the assumptions that the School District will not shrink away from its commitments and will 219 PUBLIC HEARING - COMMITTEE OF THE WHOLE continue to provide in next fiscal year essentially all of the educational programs provided. Many of the programs, similar to those described in detail to you yesterday, like early literacy, the implementation of meaningful graduation and promotion standards, and the School-to-Career Program, require allocations of the School District's current scarce resources. However, the cost of students achievement in not making these investments today will be exponentially greater in the future. One of the most useful ways to track the operating budget cost is to review Schedule D, the reconciliation found on page B-2 in your supplementary materials, and also on of the supplemental chart provided to you today. Item numbers or, as I will refer to them, "line items" are reflected on the left side of the page.
They refer to major items of change in both the budget for this year and next year. Line 1, for example, reflects by object class the current year budget as originally adopted. Line 2, identified as "Adjustments," 220 PUBLIC HEARING - COMMITTEE OF THE WHOLE shows the net decrease to this year's budget, FY'98, resulting from a variety of events and/or activities implemented subsequent to the budget adoption. 2 million, and are detailed on pages B-3 and B-4 in your supplemental book that you received previously. 1 million to pay the cost of contracted bus routes resulting from increased ridership. 5 million decrease in expenditures resulting from lower-than-projected enrollments-- that's for this year -- and over a $2 million decrease in expenditures related to the School District's temporary borrowing done earlier in the fiscal year. Line 3 represents the current year budget as we see it today, and the numbers are the 221 PUBLIC HEARING - COMMITTEE OF THE WHOLE base for comparing it to the proposed budget for '98-'99. Lines 4 through 17 reflect the categories of change between the two years. Each line item is detailed on page B-5 through B-15 of your budget documents. 5 million. These increments represent the annual wage increases employees receive for each additional year of service. 4 million for Fiscal Year 1998-99, and that's primarily attributable to a 3 percent raise effective January 15, 1998, and thus, it does not fully impact until FY '99. 2 million. 2 million resulting from savings associated with the refinancing we did earlier for the benefit of the 1997-98 fiscal year, which will not recur in 1999. And on that point, it's just to 222 PUBLIC HEARING - COMMITTEE OF THE WHOLE underscore the fact that there's about $39 million of debt service that we don't have to pay this year, that we do have to pay next year. So that represents almost half of the increase of about $93 million. Another significant change is noted in line 16, and that's basically the PSERS contribution rate change that I noted to you earlier. This change results in cost savings of $23 million. However, it should be noted that it's not reflected in Schedule D. These savings are offset by revenue losses of $12 million; therefore, you have the $11 million net benefit to the School District. 5 million to continue commitments made to programs that are critical to improving the quality of education for Philadelphia's public school students. Now, some analysts look at educational expenditures in terms of cost per pupil. The budget document, pages C-4 through C-8, includes cost-per-pupil information, which is based on certain operating expenditures; but excludes 223 PUBLIC HEARING - COMMITTEE OF THE WHOLE others, such as expenditures for debt service, adult education, early childhood education, services to non-public students, local share of categorical programs, and payment to other educational entities. The cost per student based on the operating budget numbers for '90-'91 through '98-'99 shown in common dollars on page C-8 and are reflected in my testimony. As you can see, from 1991 to 1992, the numbers have decreased when adjusted for inflation. These declines are attributable to the Commonwealth decision to the basic education subsidy formula at 1991-'92 levels while enrollment in Philadelphia began to increase significantly during that same time frame, resulting in less money being available to spend on each student. The increases in '95-'96, which are reflected in the table, were being driven primarily by the implementation of the Children Achieving Agenda. Nevertheless -- and this is a very important point -- the inflation-adjusted cost per student from the operating budget side 224 PUBLIC HEARING - COMMITTEE OF THE WHOLE for '98-'99, including the significant investments that have already been made in the Children Achieving Agenda, is still less than it was in '91-'92, $5,534 in '90-'91; and in inflation- adjusted dollars $5,244.
As noted above, enrollments were growing while revenues were static or declining. To maintain a balanced budget, as required by the City charter, it was necessary to consistently cut the budget year after year after year. Since 1989-'90, more than 2900 positions have been eliminated, over $220 million of inflation adjusted costs have been avoided. Growth in revenues from both the Commonwealth and local taxes has been less than spectacular. As you're aware, the Commonwealth's equalized subsidy for basic education -- "ESBE," as it's commonly referred to-- has been virtually frozen at'91-'92 levels. If the ESBE formula had been fully funded through the current year, the School District would have received $424 million cumulative of additional revenue. For '98-'99 alone, the underfunding amounts to $97 million. These losses of revenue 225 PUBLIC HEARING - COMMITTEE OF THE WHOLE totaling $520 million are recapped on Exhibit 1, which is of the supplemental charts provided to you. Furthermore, if the Commonwealth had increased the School District's per-pupil subsidy merely by the rate of inflation, the School District would have received an additional $72 million in the current year. And even if the School District had received only the same average rate as all the other school districts in the Commonwealth, its subsidy would have been $52 million more this year. Exhibit 2, of the supplemental materials, presents a history of revenues from the Commonwealth from '91-'92 through '97-'98. Notwithstanding the underfunding of ESBE as, noted above, the School District did receive modest increases in State revenue in every fiscal year since '91-'92. Revenue in '97-'98 is estimated to exceed '91-'92 revenue by $70 million, expressed in common terms. , those dollars that are adjusted 226 PUBLIC HEARING - COMMITTEE OF THE WHOLE for inflation -- revenue from the State in '97-'98 is $29 million less than in '91-'92. At the local level, the assessed value of taxable real estate has been essentially flat since '92. There were modest increases in originally certified assessments in '92 and '3. Assessments were virtually unchanged in '94, and declines have been experienced in '95 and '96. 2 percent lower than for '97 and actually less than for '92. A history of Philadelphia's property values is presented on Exhibit 3, or on the supplemental materials. Assessed values drive revenue from both real estate tax and business use and occupancy tax. If assessed value declines, revenues from the School District's two highest-yielding local income tax sources also decline. A history of revenues derived from each individual tax for '91-'92 through '97-'98 is presented on Exhibit 4, of the supplemental materials. 1 million as compared to 227 PUBLIC HEARING - COMMITTEE OF THE WHOLE '91-'92. 9 million, respectfully. 1 million, primarily because of the enactment of the liquor sales tax. 5 million, primarily from the sale of tax liens. 8 million more than the total local tax revenues in '91-'92. 5 million annual payments to be received from the use and occupancy tax litigation settlement. Even with the liquor tax, total local taxes in '97-'98 expressed in terms of purchasing power are $49 million less than '91-'92. If total local taxes had grown by a modest rate of only 2 percent annually, which is below the inflation rate, more than $176 million 228 PUBLIC HEARING - COMMITTEE OF THE WHOLE of additional revenue would have been generated, which is reflected in the table in my testimony on . This bleak picture of revenue, whether measured in terms of common or constant dollars, has occurred during a period of substantial growth and enrollment. Enrollment as of November 1991 was under 200,000 students, at 195,000 students. 4 percent. In an environment of static and declining revenue, coupled with increasing enrollment the result is obvious: Revenue per student and the investment in our children's future is declining, as you can see reflected on of the table.
The revenue per student in '91-'92 -- again, these are based on operating dollars -- is about 5350. And in 1998-'99, it's only gone up by $17. When adjusted for inflation, obviously, the numbers are much worse. Inflation-adjusted dollars in '91-'92, the number is 5,350. And in 1998-'99, it drops to $4,559. The decline in inflation-adjusted 229 PUBLIC HEARING - COMMITTEE OF THE WHOLE revenue per student is undeniable. And this is graphically depicted on of the supplemental materials provided to you. The proposed lump-sum budget for Fiscal Year 1998-'99 includes $94 million in anticipated revenue to be provided by the Commonwealth, which was not included in the Governor's proposed budget. As we now know, our current estimate is that the School District will need an additional $85 million. In order to ensure the receipt of adequate, stable, and recurring revenues, the School Board took the bold step of filing suit in Commonwealth Court against the Commonwealth on February 24, 1997; and yesterday filed a civil rights action against the Commonwealth in federal court. The uncertainty surrounding the outcomes of the aforementioned litigation forces us to consider what might be the future of the School District if the School District were: one, either forced to cut programs to ensure a balanced budget; or, two, committed to maintain the current level of expenditures without additional 230 PUBLIC HEARING - COMMITTEE OF THE WHOLE significant revenues from the Commonwealth. Furthermore, of the budget document gives a preview of what the School District's financial future will be if additional revenue is not secured prior to the end of next fiscal year and a projected deficit of 85 to $90 million was to actually materialize. 1 million for the fiscal year beginning July 1, 1999. This cumulative deficit would be in excess of 14 percent of the proposed budget for Fiscal Year 15 1999-2000. This clearly would be an untenable 16 situation. 17 In the absence of significant revenues from the Commonwealth in order to adopt a balanced budget for Fiscal Year 1998-'99, the School District would be forced to make draconian cuts in its most basic programs. These cuts would decimate the system. Exhibit 5, in your supplemental materials, includes a list of programs which undoubtedly would have to be cut. The cuts, if 231 PUBLIC HEARING - COMMITTEE OF THE WHOLE implemented, would result in the total elimination of kindergarten and the elimination of Museum Education, Itinerant Instrumental Music Teachers, the Latin Program, Parent Co-op Nurseries, Professional Development for Teachers, the Desegregation Program, all secondary-school Athletic and Non-Athletic extracurricular programs. The subsidy enjoyed by public and non-public students who purchase SEPTA tokens would be reduced to a minimal ten cents. Transportation eligibility would have to be curtailed, as would many Early-Childhood Programs. All cluster offices would be eliminated, including innovative support services instituted in the last several years. These cuts would dramatically reduce the school nurse staffing levels. The aggregate amount of savings resulting from the implementation of these cuts would result in fiscal balance, but would leave the Philadelphia School System educationally bankrupt. 232 PUBLIC HEARING - COMMITTEE OF THE WHOLE That concludes my formal testimony. I'll be happy to answer any questions.
I thank you very much. As most of you know the, new Police Commissioner is now being -- is about to be sworn in in Room 200 of City Hall. I have had requests from three Council Members who wish to attend that ceremony. And unless Members object, what I would like to do is take a 30-minute recess so that those people who would like to attend that ceremony will be free to do so, and then we can come right back and get into the questions. Is there anyone that has any objection to taking a 30-minute recess for that purpose? Thank you very much. The Committee will stand in recess for 30 minutes. (Committee stands in recess.) (Committee reconvenes at 12:40 p.m.) - - -
This is a recessed hearing of the Council Committee of the Whole. We would respectfully ask all Council Members to come 233 PUBLIC HEARING - COMMITTEE OF THE WHOLE to the chambers. We would like to continue with hearings. To all Council Members, we would appreciate it very much if you would come to the chambers. . . We would appreciate it if all Council Members would come to the chambers. We're going to wait just a minute or two to give you an opportunity to come to the chambers. We would appreciate it if all Council Members would come to the chambers. . . We would appreciate it if all Council Members would come to the chambers. . . We'd appreciate it if all Council Members would come to the chambers. (Council Members file in to City Council chambers.)
Thank you, Mr. President. Dr. Hornbeck and Mr. Armbrister, I have a number of questions, but I'd like to break them out into fiscal questions. And then in what will 234 PUBLIC HEARING - COMMITTEE OF THE WHOLE probably be in a round later on, I have some programmatic questions. But first, let me try to understand in Mr. Armbrister's testimony on , at the top, which is a carry-over from , you say that it should be noted that this chart presentation does not include the additional $94.4 million of anticipated revenue to be received from the Commonwealth. And then in the middle of the page, you talk about Governor Ridge's budget as presented to the General Assembly, parentheses, except for the additional $85 million we anticipate receiving from the Commonwealth to extinguish the projected deficit. At least for that page, could you clear up any discrepancy between these numbers, or explain what the difference is between two or three paragraphs.
Sure, I'd be happy to. I apologize for the confusion. I think in my stated testimony, I think, in the top line, I mentioned it was actually $85 million. The $94.4 million reference 235 PUBLIC HEARING - COMMITTEE OF THE WHOLE was to the budget book document that you have, The budget book document that was presented to you earlier, the big thick one. The numbers in there were done prior to --
That is correct. And the page reference on will reflect that we need $95 million from the Commonwealth. In my testimony, I indicated that we now know that number to be 85. And in the supplemental charts that were provided to you today, that same comparative statement that's on of the book is replicated with the number going down to 85 million as a consequence of the UNO taxes.
All right. Well, that leads me to, I guess, what are the two main questions in the fiscal area. And you allude to it on of your testimony and you allude to other issues later on in your testimony. But if you could, I guess, a little more slowly and without so many references either to the big white book, other materials, something that maybe you haven't given us or something that 236 PUBLIC HEARING - COMMITTEE OF THE WHOLE may be on another desk maybe somewhere else. I seem to remember six to eight months ago that the School District was talking about a deficit upwards of $150 million. And it has gradually and properly, at least, been moving in a downward direction. But we seem, as the days go by, to almost literally get a different number week by week and month by month, which then, I'm sure you can appreciate, becomes a little difficult to explain either to constituents or even to those who may be, for whatever bizarre reason, opposed to supporting the School District because it seems like we can't keep track of our numbers. Can you take us through where it was, how it got to be where it is today, where you think it may be going as the one question. And then I want to come back and talk about what some of these various ideas are for how we make up the gap, including what, again, some believe to be the direction of, Well, we can just cut it away. And you've alluded to that in your testimony as well.
I'd be happy to 237 PUBLIC HEARING - COMMITTEE OF THE WHOLE Councilman. But if you would permit me, I think in my supplemental materials that I proved to you, on --
-- in anticipation of this confusion and in my testimony, I referred to it. If you don't have that --
This chart was produced to address this very concern, quite frankly. And what it attempts to do is to highlight those major things that occurred between October when -- you are correct -- we did project at that time a nearly $150 million deficit, the 238 PUBLIC HEARING - COMMITTEE OF THE WHOLE number was actually 146.
And there were a number of things that happened between then and now. And the major ones are listed there. There are two that relate to revenues and two that relate to expenses to get to the 94. As you can see, subsequent to the projection made in October, the Mayor, in his proposed budget message, indicated that the School District would again be granted -- or at least in his proposal, be granted a $15 million increase from the City in the one-time grant. Again, subsequent to the 146 announcement of our proposal deficit in the Governor's budget --
The $15 million grant, if I'm looking at these boxes correctly, that would be seem to be in November 1997.
No, actually, the $15 million grant was in February of 1998, when the 239 PUBLIC HEARING - COMMITTEE OF THE WHOLE Mayor did his announced budget proposal.
The next box, which I think I can reasonably assume would be the next month --
That is something that -- the reason the dates aren't there, because many of these things happened within days of each other, and you go from October 1997 to the next point, which is February of '98, which is the 94 million. Those are not month-by-month events. The events happen whenever they happen. The Mayor did his proposed budget, I think, on February 3rd 240 PUBLIC HEARING - COMMITTEE OF THE WHOLE or --
So that's the first time, then, that we knew that the Mayor had included -- was proposing to include $15 million of additional revenue for the School District. So are we okay on that $15 million?
The $85 million deficit, is that anticipated at the end of FY '99?
Okay, fine, all right. What do you anticipate ending FY '98?
In FY '98, we are looking at approximately about a $5 million 241 PUBLIC HEARING - COMMITTEE OF THE WHOLE surplus.
Okay, all right. And so these boxes are not the month-by-month progression.
So with respect to the next major event that occurred subsequent even to the Mayor's budget proposal, we got the Governor's proposal. When we did the projection for the 146, we did include some increase in revenue, an anticipated increase in the revenue from the Commonwealth. We were pleasantly surprised that the Governor gave us more than what we anticipated, to the tune of $18 million.
More than what we had budgeted, and that's reflected in the third column there, which brings the deficit down even further. And, of course, that in February of 1998.
Just for the 242 PUBLIC HEARING - COMMITTEE OF THE WHOLE record, if you can take us through what you thought you were going to get and what it ends up being and what -- the million is the difference 5 between what and what. 6
The $18 million is the 7 difference between what the Governor proposed in 8 his budget -- 9
-- and what we had 12 anticipated was -- we anticipated about a 2 13 percent growth in the ESBE formula, if you will. 14
In addition, the legislature has been phasing out over time a supplemental appropriation that we received for special ed. over time in the tune of about $7.5 million, so we were about to lose that as well.
In the Governor's proposed budget, what he proposed was giving us 243 PUBLIC HEARING - COMMITTEE OF THE WHOLE about a percent increase in the ESBE, and also 3 indicated that he would forestall the loss of the $7.5 million. That, in combination with some other minor things, resulted in us having -- getting $18 million more.
So the is made 9 up of 7 that you were actually anticipating 10 completely losing? 11
And approximately 13 11, which, I guess, represents the difference 14 between your anticipated percent growth and the 15 Governor's 3 percent -- 16
Next, right. 244 PUBLIC HEARING - COMMITTEE OF THE WHOLE
The next one represents about $11 million net gain to the School District; i.e., this is the expenditure side we're talking about, which is PSERS. PSERS, as you know, is a retirement system in which all School District employees participate. In large part due to the success of the stock market last year, the rate of contribution by the School District to that fund has gone down. It has gone down to the tune -- to be accurate, it has gone down to the tune of about $23 million. The net of 11 results from the fact that we also lose about $12 million in revenue that we would get so that the net effect of the PSERS change in rates is $11 million, less costs.
Could you give me a little more detailed explanation on what you gain and why you're losing 12.
Well, it's because -- specifically because the State has changed the rate at which school districts have to contribute to the fund. And the way that works is that there's 245 PUBLIC HEARING - COMMITTEE OF THE WHOLE both a revenue and an expense side of that balance sheet. In terms of the expense side, it's reduced by $23 million. That's $23 million less. We also get a corresponding offset in revenue as well from PSERS to the tune of about $12 million.
Because PSERS requires -- what they do is, they give us a hundred percent. They give us half of what is required to be paid, and then we pay the other half. So we would be losing the half that they would give us.
Okay. The next box relates primarily to enrollment decreases and what we refer to as "more efficient leveling." As you recall, when the superintendent, I guess, came to Philadelphia, the leveling 246 PUBLIC HEARING - COMMITTEE OF THE WHOLE process -- i.e., the process at which -- what I refer to as "final assignments of teachers and students to classrooms" was done sometime in November. And in order to make that an earlier date -- i.e., sometime in the third week of September -- so that instruction, true instruction could begin earlier, we had to supplement the number of teachers we put out into the classrooms in order to avoid all the changes and enrollments in classes. That has now been in effect now for about three years, and we have actually gotten more efficient at being able to judge how that process works. So that's one piece of the $15 million. We have to put out fewer teachers. We have, as somebody explained it -- I think maybe the Superintendent -- we have fewer teachers, kind of like out on the bench that have to put out the. The second component of that relates to the fact that our enrollment has actually levelled off. We had been anticipating a growth even in the next year of maybe to the tune of about 3,000 247 PUBLIC HEARING - COMMITTEE OF THE WHOLE students. Our enrollment projections have indicated that that has dropped off, it flattened off. And so the combination of those two events means that we would need fewer teachers at our currents rates, and that results in about $15 million.
Well, let me stay on that point for a second. One, was last year's enrollment approximately 218,000 students?
Have I seen that number somewhere, or is that a press number, or is that a figment of --
What we did this year was, we went back and looked at our enrollment trends and, in fact, have included in the materials you have, in the kind of white papers that were sent, in that blue folder, a description of how we come to reach our enrollment figures, but -- 248 PUBLIC HEARING - COMMITTEE OF THE WHOLE
It's about -- I'll tell you in one second. It's at 213,000 students.
Okay, all right. So it's 213,000 students. And what do you anticipate it to be next year?
It's essentially flat, although you do need to keep in mind that in FY '98-'99, the School District did approve 11 new charters. And so when you add those to the 4 that we already have, the 213,000 students includes approximately 3800 school students in the charters.
Are these students 249 PUBLIC HEARING - COMMITTEE OF THE WHOLE who had not been public school students before?
Not necessarily all of them, but most of them are, but -- but --
Most of them have been -- are from the Philadelphia public schools.
So those are not net new students. I mean, they're just shipped there. And last year, they were in Building A, but next year, they're in Building B.
That's right. They're not net. I just wanted to point out in terms of the students that we anticipate being in the Philadelphia schools, that number is about 209,000. And so if you add the 3800, you're up to 213.
And the reason that we continue to include them in our roll end projections is because that's the basis upon which we get our subsidies from the Commonwealth. 250 PUBLIC HEARING - COMMITTEE OF THE WHOLE
Now, we might entertain this discussion in the cuts discussion, but since we're talking about enrollment, you mentioned that it did not necessitate the same number of teachers. One might try to reasonably argue that you would keep a certain, what could be looked at as an extra, level of teachers and thereby cut down on class size. Is that possible? SUPT. HORNBECK: Certainly.
Was there a conscious, slash, fiscal decision made to not pursue that particular strategy? I mean, we already had these people in the system. There seems to be some who indicate that there are tremendous benefits to cutting class size. How you do you -- how do you make that decision? SUPT. HORNBECK: Two observations. One is, these are not people who are in system, who won't be in the system. These would be positions, by and large, that would be filled with people. We're not laying people off. 251 PUBLIC HEARING - COMMITTEE OF THE WHOLE For example, this year, we had to hire 900 people in order to fill the positions that we have. So we won't have to lay people off to do it; we simply won't have to hire as many new people. But what we did make the decision about, and in a large sense, for fiscal reasons, was not to go after smaller class sizes for '98-'99. We decided, quite frankly, because, in a sense, it's an election year. And we decided that we couldn't do what was necessary to deal with the smaller class sizes during '98-'99, that we would delay that anticipation again for another year. And when we're here a year from now, you will see in our budget projection, our budget request, a movement to have smaller class sizes across the board, K to 3. But we decided not to use this leveling better calculation of numbers of kids as an early partial ploy towards smaller size.
Well, not to be argumentative, because you know that's not my 252 PUBLIC HEARING - COMMITTEE OF THE WHOLE style. But I mean, every year's an election year for somebody. There might even be one around here next year. What do you have to do, I guess, that is either so offensive to whoever's running this year in order to get to the class size debate, discussion, fight and I guess eventually funding that, you know, causes you to say, Well, we won't do it this year because we've got this election, we'll come at it next year. I mean, what's involved in that. SUPT. HORNBECK: Well, the reason for my reference to elections is that it is our judgment, as I've suggested many times, that the solution to this is in Harrisburg, not here. And while there may be an election next year, it won't be in Harrisburg, it will be here. And we are -- unless you all were to seriously slash the tax rate, or cease to do --
Or increase it. SUPT. HORNBECK: -- as much as you have in the past, I don't expect to be here looking for the solution to the fiscal problem in the City. I continue to see the solution to the fiscal problem 253 PUBLIC HEARING - COMMITTEE OF THE WHOLE in Harrisburg.
Okay, all right. Mr. Armbrister, I think that has now brought us up to February '98, you're at $94 million.
That's exactly right. That's where we were. And then subsequent to the printing of the bit document and everything else, we were advised that the City, which, on our behalf, had been pursuing the UNO tax litigation successfully settled that. And that results in payments to the School District of $4.5 million dollars for each of the next 6 years, including the current fiscal year. So when you take the $4.5 million over 2 years and then project it into next year's budget, it reduces the $94 million to $9 million. So that's how we get to 85.
Well, that's because you've got the $5 million in surplus from '98 --
And it's important to note that the $5 million carry-over wouldn't be $5 million but for the 4-1/2. Remember, in the document, it was slightly under $1 million, so you add the 4-1/2 to that for this year and take the 4-1/2 next year so it's a 2-year effect of $9 million.