I'm not familiar with how that $20 million is going to be structure, Councilman. If it's going to be structured the same as the $15 million, I think you are probably correct, that it will be subject to the Act 46 automatic recurrence if there is a takeover. But I don't know that it's going to be structured that same way, Councilman.
I understand. Let me ask this last question, then, either for the District or I see our Finance Director is here. What are the current obligations from the School District to the City of Philadelphia for any and all services? Is there anything that the District has to either transfer funds, write a check, or have any other financial relationship with the City for services 177 6/5/00 - FISCAL STABILITY - RES. 000232 rendered or due. Whether it's picking up debris, utilities, anything, what does the District pay to the City on an annual basis?
For water, for gas, if we add that in. For trash collection, for basic services like that, City services, we're still south of $5 million.
We're south of $5 million I can get back to you with a precise number, but it's not even 5 million.
Interesting. Councilwoman Brown? Councilman Cohen, were you trying to --
I was going to raise specifically one question following Councilman Nutter. Mr. Feder, wouldn't it be true that whatever the City structured, if it did structure some way to try to shelter the funds, wouldn't that mean that the State -- it would be valid only if the State accepted that, or would we have to go 178 6/5/00 - FISCAL STABILITY - RES. 000232 to court and we'd never know what the answer is until the court finally decided it? We have no self-executing method of guaranteeing that anything we would structure would actually safeguard that money from being required to be paid to the State under the Act 46.
Act 46 has never been invoked. I can't tell you with any certainty how it's going to be interpreted. I mean, depending on how that payment is structured, there might be some pretty good level of certainty, and there might also be some ways where we would be uncertain, you are correct. It depends on how it's structured, Councilman.
Well, could you give me some idea of how it could be structured in a way that would create a certainty that we would know that that money is, in fact, sheltered and not subject to attack by the State?
I don't think there's an answer to that question. I mean, there's -- SECRETARY KAHN: I'm just going to ask 179 6/5/00 - FISCAL STABILITY - RES. 000232 the City Finance Director to come up, please.
And while she's coming up, if my question was too narrow, which may have generated a more narrow response, I would remove the restriction on the question and rephrase it such that what I was trying to get at was, all of the School District's cost that it pays for service or has to expend dollars either to the City or any other governmental agency or body related to the City. For instance, you may have taken a more narrow view that you don't pay for your gas expenditures to the City. Maybe someone took that to mean, well, no, we pay PGW. So I'd like to broaden that particular question to gas, water, or any other service provided by any other local agency or authority for which the District has a financial obligation. SECRETARY KAHN: I think that's fine. Let me just say before turning over the microphone, you know, we will respond as best that we can, but I think that the Mayor made it clear when he was here this morning also that we don't have the proposal yet or the recommendation. We are truly just beginning now to explore the 180 6/5/00 - FISCAL STABILITY - RES. 000232 possibilities. So, you know, it's not a matter of not trying to be responsive. It's really a matter of not having done the --
Just to make sure we understand what the question and what you think you're responding to. SECRETARY KAHN: Sure.
I was not asking, for instance, where the $20 million was coming from or what the structure of the was. What I 13 was asking on -- specifically on the point of Act 14 46, what does it say, what does it mean, and what 15 if anything the City could do? You will recall 16 from the briefing the other day, the phrase was 17 used "shelter." 18 Now, I don't see any shelter in this. 19 But as you know, I am not an attorney, but I did 20 learn how to read at a fairly early age. So, I mean, if someone tells me that there is language in here that allows for this, quote/unquote, shelter, I'd like to understand it. I understand the component of forgiveness of debts and obligations, and maybe 181 6/5/00 - FISCAL STABILITY - RES. 000232 that's completely in, maybe that's a question mark, and I'd be willing to make that argument. But in the way that we normally fund the District, either through property taxes, use and occupancy or now the recent $15 million, and if we're talking about more, based on this 8 language, I do not understand how you get around 9 that particular provision and say that it is only 10 one time and it is not subject to this. 11 And if there is a way to do that, I'd 12 like to know what it is. 13 SECRETARY KAHN: I understand, and 14 that's the focus of the discussion now. All I'm 15 saying is it may well be that we haven't -- the 16 team sort of hasn't come up with the suggestions 17 yet or the proposals that would enable the lawyers 18 to look at it and say, Oh, now that's one that 19 maybe we could protect. 20 And so that's the process we're in now, and I just don't know the answer to that yet.
Right. And you would certainly understand and appreciate that pretty much whatever you come up with that may potentially violate the intention and spirit of 182 6/5/00 - FISCAL STABILITY - RES. 000232 the passing of this Act 46, you know that it would take about a heartbeat to have it changed. SECRETARY KAHN: Correct. Although I will say that we have in the course of --
Act 46 will be amended in less than a minute. If we found some -- first of all, I can't see how you could read this and think that there's any leeway to shelter anything. But even if the best lawyers in the country come up with a way to craft this, they're going to amend it in less time than it takes to blink an eye. Or better yet, they'll take the $20 million out of our hide somewhere else. I mean, I don't know what we believe we're dealing with here, but you're dealing with a body that can move swiftly when wants to, and if it feels that is been gone around, will change this legislation to cover every possibility, including the one we crafted to so-called shelter the 20 or 15. I mean, I think it's very naive to think we're going to be able to find a vehicle or a shelter that's going to blind-side these people 183 6/5/00 - FISCAL STABILITY - RES. 000232 who -- the people who crafted this and passed it did it with a specific intent. I mean, you can read it, it's pretty clear what they were intending to do, and that was send a message to play around and you'll have this problem. And my point is that if you're going to try to, quote/unquote, shelter it, they will change the law. We're not in a position of strength here. I just find it frustrating or surprising that that's the approach we're taking, that somehow, we're going to outfox these guys who are now going to just simply change the law. I mean, we passed -- Angel Ortiz, we passed the assault weapons ban. How long did it take to change that?
Gone. I mean, you may be to negotiate this with them, where the Governor's Office and the legislative leadership will agree to allow you to shelter it, but if you think you're going to fund some crafty legal maneuver, don't hold your breath.
Right. And I 184 6/5/00 - FISCAL STABILITY - RES. 000232 appreciate the Councilman's statement. I mean, part of the reason I was trying to get to any of that is -- I mean, I think ultimately, it becomes fairly self-evident that, one, there may not be anything to do; and, two, even if there were, why would we take ourselves through that exercise? Because at least in our process, the time it would take from the introduction of the transfer of any dollars, before the Council session was over on that Thursday, the change would be made, we'd be done. So, I mean, I just don't -- I don't want anybody to spend any unnecessary time trying to look for something that either, one, doesn't exist; or, two, will, you know be blown out before we finish this discussion.
Well, Councilman, there are a couple of things. First of all, I think we would -- the environment in which all of this would be done would be the environment that we described earlier. We're in communication with the Governor's Office and you would have some communication with the Administration about what 185 6/5/00 - FISCAL STABILITY - RES. 000232 its intentions would be with respect to any outcome. The other thing is that, I'm not -- I guess I don't want to venture down the road of defending lawyers up here, but I do think that when the time is right, you would probably see confidential advice from your counsel about what the consequence of any proposed action would be and that that's something that you would, you know, rely on and make a decision accordingly. I'm a little nervous to the extent of which we're in a public forum talking about -- and maybe this is just kind of the lawyer concern -- I'm not up here as a lawyer -- about getting into that discussion in this public forum.
I appreciate your concern. It is a discussion that we cannot avoid, because if we weren't here today on a resolution 24 but we were in a public hearing on a bill to make such a transfer -- 186 6/5/00 - FISCAL STABILITY - RES. 000232
I mean, it would appear to be, unless Mr. Feder can convince us otherwise, that if we are being asked to do something at some point in time, the way that we ultimately conduct our affairs and take an action is by a vote. We take all our votes in public, we have a public hearing. We would ask the same questions at that public hearing, 'cause we're going to have the same documents and information, and someone will still have to answer the question of, would this appropriation, however much it is, be subject to Act 46? Now, maybe we won't have all the answers to that before we come into that public hearing, and we'll have all the confidential memos and we'll have a few private briefings and all of that. But you know as well as I do, that we're still going to have that discussion right here in this room, under these same circumstances, asking the same questions. Now, maybe there will be better answers on that day, but --
Right. And then you will 187 6/5/00 - FISCAL STABILITY - RES. 000232 be dealing with something tangible that's already structured.
Right. Okay. Now, we're going back to what does the District owe the City or any other local governmental agency under any circumstances or condition that you have to expend dollars for.
Janice Davis. Rhonda Chatzkel was correct. It's approximately $5 million in the utilities and gas, water and trash.
All right. It is what it is, I guess. I mean, I think some of us are actually somewhat surprised at the size of that number, as compared to a much higher number. But you said gas, water and trash?
We will go back. We asked staff last week to come up with expenses, and the analysts that are in our treasury office gave me a list. Obviously, it's a significant issue, and we will be meeting to talk about uncovering --
For instance, 188 6/5/00 - FISCAL STABILITY - RES. 000232 what's the School District's electric bill, total?
Right. That wasn't even a part of the question, just an add-on to the question. I mean, I just wanted to --
Our total utility bill 10 is about $40 million. I can't break it down off the top of my head between electric, gas, and oil.
I mean, we obviously have a direct relationship with gas and water. Obviously, electric is with a private utility. But, I mean, one, it would be interesting to know what that issue is; and, two, as we try to get around to what we think are our friends and partners in all of this, it would be helpful to know.
There's another footnote, Councilman, which is probably many of our 189 6/5/00 - FISCAL STABILITY - RES. 000232 buildings have dual capacity gas and oil. And at least my understanding is that we were doing pretty well under our spot oil purchase contracts. We were probably not buying a lot of gas. And, you know, the direction from you is flip the switch and burn the gas instead of the oil. I mean, that would not be the cost-effective way of doing it, but it would be one way of shifting costs.
Given PGW's situation, they'd probably be glad if you were using gas, right? And you're a good-paying customer. All right thank you. (Laughter.)
Getting away from that, Blondell Reynolds left, and she had one question that she wanted to ask. In terms of professional development and the problems that we have had historically in terms of math and science, and in that sort of instance, we have had in our classroom and in our 190 6/5/00 - FISCAL STABILITY - RES. 000232 schools individuals really that in many times have not been as developed and as professional in those areas as they should have been. And what, if anything, is going to be the impact on those areas of these cuts in terms of professional development and so on? SUPERINTENDENT HORNBECK: Well, my hope is that we're going to get, for example, a new renewal very large national science foundation grant that will minimize the impact on math and science. If we don't get that, then math and science, along with other areas, will be impacted, my guess is, to the tune of percent, 'cause 15 that's the amount of impact of professional 16 development generally. 17 We are at -- there are three stages to 18 successfully secure that grant; we have success- 19 fully passed two of them at this point. It's my 20 hope that we'll get it. We've got a $15 million one from 5 years ago, that 5 years is up now, and so I hope that that will come back in. It's been, in fact, in these 4th-grade scores that you've just seen, we enjoyed just in this last year a 17 percent improvement in 4th-grade science 191 6/5/00 - FISCAL STABILITY - RES. 000232 achievement. It takes us overall to 63 percent of our 4th-graders now being at the basic level and above in science. And one of the reasons that is so is because of the improvement in professional development for our teachers, for all of the reasons that you just suggested that that helps. And we were able to do that because of the National Science Foundation grant that we got when we submitted the Children Achieving grant proposal five years ago.
Thank you. And going back to the $20 million -- and, again, I repeat myself. It is real eerily reminiscent of 1988 and 1989 in the City, because these very same discussions we were having as Councilpersons here in terms of the City budget. And I was wondering, and I was just discussing it with Joe Vignola, 'cause we're going to have to go over the discussion of where and how we're going to get $20 million from a budget that we just approved, and that's going to be quite an intensive discussion. Or, if there's going to be a -- as I Joe and I discussed here, a -- an accounting aspect to this of raising the revenue 192 6/5/00 - FISCAL STABILITY - RES. 000232 projections, that would have an impact in terms of the Five-Year Plan. And going into January and March of next year, us sitting here, wondering whether we will include the $20 million that we have transferred to the Board as of this period, do we include that $20 million in next year's operating budget? And if we do include that $20 million in next year's operating budget, we still don't know, as the discussion that has been held here, what is the reaction of the State and what is it that we have done in terms of the Act that was just passed by the State legislature and signed by the Governor. And what does the Board do then to get that $20 million, and where's it going to come from? And so these are all questions because we have a very short window opening here in order to begin resolving this and maybe might it not be better at this point in time for us to confront the whole issue of school funding once and for all and maybe let the State take it over. Because to be back here in March -- and I believe that we will be back here in March, because we will not 193 6/5/00 - FISCAL STABILITY - RES. 000232 resolve this in seven months. We have huge issues of the union contract, both at the school level and at the City levels. We have the issues of PGW that are mounting upon us and coming that we are going to have to confront. We have billion-dollar stadiums that we plan to build, and we have a very reasonable question to ask: where is that $20 million going to come from, how are we going to replace it, what is the impact on our budget, and how are we going to protect that over the next five years? Those are just questions I have, Madam President.
And, Mr. Ramos, if in fact this $20 million were forthcoming, when would that be part of the so-called "deal"? Would we have to pass something before we recessed in June or just wait until next year?
Well, I will defer to Rhonda Chatzkel on any of the cash-flow issues school tax flow issues. I believe it's simply a cash flow matter we would budget if we know it's 194 6/5/00 - FISCAL STABILITY - RES. 000232 coming. With respect to next year, I would posit that you're talking about Fiscal Year 2002. It's not a -- you know, the issues are much bigger than the or another, you know -- or carrying 7 over the other revenue enhancements and reductions 8 from this year. This budget will again grow. I 9 mean, just the same amount of services carried 10 forward will grow beyond our capacity to deal with 11 it, which is why -- 12
So are you 13 saying that we may not need the 20 million 14 additional dollars, or are -- 15
No, I thought you were 16 talking about the next following year. 17
No, I'm 18 talking about from now until June, next June. 19
And this is just a cash-flow answer, but we would want that $20 million to be received by the spring or before, by April or before.
Thank you. 195 6/5/00 - FISCAL STABILITY - RES. 000232 I just have another question. It's my understanding that the Administration's strategy of keeping the schools open is to manage the District's cash flow, as you say, till classes are over in June of 2001, and that the State and City will try to work out a permanent solution. Is that correct, am I correct thus far?
What happens if the solution is not agreed to by then? and will you be able to pay the teachers and your various vendors what they are owed?
We have a cash issue that happens in June. And in order to continue in operations, we need to fill some of the gap that we've identified. That's absolutely true. Our expectation, though, although we will have conversations with Council next March, is to do a long-term plan, to begin a long-term plan to involve whoever wants to be involved in that plan, which we expect to take four to five months. To let you know the status of our examination, we're going to look at our 196 6/5/00 - FISCAL STABILITY - RES. 000232 expenditures, we're going to look at benchmarking -- Councilman Nutter brought in information about Chicago -- we will do that for every class of expenditures. We'll look at State funding and we'll look at local funding. We need to do all of that.
I remember last year at this time we were all very concerned about the teacher shortage. What is the shortage as of today? SUPERINTENDENT HORNBECK: During the course of the '99-2000 year, once we got past about October, we carried an average of roughly 150 vacancies a day, which is down from the previous year, but it's --
I believe last year at this time, it was 250. What is it today? SUPERINTENDENT HORNBECK: Today, I can't tell you what it is this morning. My guess is that it's somewhere again in that 150 range. 197 6/5/00 - FISCAL STABILITY - RES. 000232
Yes. And that was after we relaxed the residency requirement? SUPERINTENDENT HORNBECK: I'm sorry?
That was after we relaxed the residency requirement? SUPERINTENDENT HORNBECK: There are two major -- well, really three, three important things that have taken place. One is the extension of the residency to a three-year period rather than a one-year. Secondly, we offered the $4500 bonus -- $1500 in the first year and the other $3,000 in the 37th month after somebody was -- continued to teach and was a resident. And thirdly, we have strengthened significantly the human resources capacity for recruitment. And the reduction in the number of vacancies has occurred at the same time that there's been at least a 50 percent increase in the number of people we needed to recruit, so that it's -- the success of those three principal initiatives has been pretty substantial.
And I assume that we're continuing our recruitment policy? 198 6/5/00 - FISCAL STABILITY - RES. 000232 SUPERINTENDENT HORNBECK: We are, indeed. We expect to again this next year need --
Are we beginning to take applications now? SUPERINTENDENT HORNBECK: Oh, we've been taking 'em. We've been hiring people since February. One of the things that we did a few years ago -- it used to be that we didn't hire -- actually offer jobs to people until August. You can imagine that impact on who was still around without a job in August. And three or four years ago, we began to move that methodically forward so that this year, we started offering people jobs in February and March.
I have a couple questions on the budget process. What is -- from your perspective, what's the level of involvement by the City in the School District budget process, the development of the budget up to the point where the budget is presented to the Board?
Basically what was it or what should it be? 199 6/5/00 - FISCAL STABILITY - RES. 000232
Well, tell me where it has been and then tell me what you plan to do.
As I said in my testimony, this has been an extraordinary year. We had started off in our initial lump-sum statement saying that we were going to work toward $15 million in cuts, learned that we were going to have to do twice that amount, and were -- at the same time, the new board was coming on. We had the benefit really of having a new Board member that could chair a finance committee, who is a veteran of these extraordinary circumstances. And, you know, through May 31st, at 6:45 at night, people were working on getting this done. That's not -- I mean, it's not the ideal situation under any circumstances. We'd like to work our way back to kind of more normal circumstances. Under those normal circumstances, I would hope that especially with the increasing committed from City Council and a change in the City Charter that we would use -- that we would 200 6/5/00 - FISCAL STABILITY - RES. 000232 use the meetings required under the change in the City Charter for the budget process. And, quite frankly, that it not -- that it be a more dynamic process throughout the year. We should have more formal briefings. But I would say that we also, more importantly, need to have the informal briefings to just -- so that when we get here, a lot of the background is already established. I mean we may want to repeat that for the public and so forth, but I think that that needs to happen. And I wish we would have had better circumstances this year to really communicate better to City Council.
Right. Well, I understand that. Now let me ask this more direct question. In the past, has the City's Finance Director had any particular official or unofficial role in the development of the School District's budget prior to its presentation to the Board?
Not that I know of. Our 201 6/5/00 - FISCAL STABILITY - RES. 000232 finance people regularly talk to -- at least have had some communications with Council and City finance people, but I don't think there's been a formal -- SUPERINTENDENT HORNBECK: Well, there's always the connection in the context of expected tax receipts and those kinds of projections so that the projections, as it relates to the City budget and the School District budget, are the same, but the kind of line-item-by-line-item considerations, no, there has not been a routine engagement.
Well, in the realm of increased communication, increased involvement, do you think that it would be helpful to have both individuals from the Office of the Director of Finance as well as City Council technical people involved at some level in your process, similar to the way that we are generally involved in the City budget process? SECRETARY KAHN: I would say a couple things. There was actually more City involvement this year in the sense of my presence and my participation, and I had the advantage of having 202 6/5/00 - FISCAL STABILITY - RES. 000232 been on the Board and having that perspective of having gone through the years of the budget-cutting from that vantage point and now here. To the extent that I discussed those issues, you know, at cabinet, I think that as we go through this again, we can, you know, start to formalize these and maybe get City finance more involved the process. Certainly, the Mayor was involved and kept apprised as we went through the process. There are other mechanism in place. As part of the mayor's Transition Team, there's the Fiscal Assessment Committee on Oversight of the School District, and they have -- members of that group have participated and attended the public budget hearings that were held at the School District. And we've got another initiative that's about to launch this week, was a part of the Mayor's challenge of seeing if we can reduce the cost, as he mentioned this morning, of over $100 million. This initiative we're putting together that we've dubbed for the time being "Project Connect," that Council President Verna has asked 203 6/5/00 - FISCAL STABILITY - RES. 000232 Charlie McPherson to represent her on and that the Mayor has asked and he's agreed, Councilman O'Neill. In addition, we have representatives from the City Controller's Office and from the School District and the City Administration, and we will be working together.
I'm sorry, I'm not as familiar with some of these particular committees and provisions. Could you -- the last part about Councilman involvement, could you go back over that, please? SECRETARY KAHN: Yeah. This was a new group that grew out of, again, the Mayor's challenge to the School District to find this $100 million over time and see if we could reduce costs. One of the themes of that was looking at -- it's been raised in this chamber several times, of looking at closer collaboration between the City and the School District, picking up on some of the recommendations and suggestions that had been made, for example, in previous controller reports and other initiatives, looking at things like Fleet Management, like Human Services, and looking at whether there is the potential to put 204 6/5/00 - FISCAL STABILITY - RES. 000232 those together. So what I did, at the Mayor's direction, to put that together is to have Pedro and I convene and cochair a group that, again, has representatives from the City Administration, from the School District Administration, from the Controller's Office, from City Council, from the private sector, and we'll be holding our first meeting on Wednesday to start to look at and identify what the topics would be and what the potential areas are that would be right for analysis.
I think you were here when I asked the Mayor this morning, and I didn't get an opportunity to ask Mr. Ramos on behalf of the Board the same question, which had to do with an increased involvement by the City and by City Council in the School District budgeting process. I'm, one, going to assume that you heard the Mayor's response to that, but I'd like to get your response on the record in terms of whether you would support such a change, which actually would need State legislative action to 205 6/5/00 - FISCAL STABILITY - RES. 000232 make that happen.
Well, I didn't hear the reference this morning to State legislative action, but I did hear the Mayor respond to the question about more regular involvement and having some, I think in your words, more formal involvement on the part of City Council in the budget process.
Specifically, the question was, will you support additional oversight and involvement in the School District budget process by the City and City Council?
Okay, all right. Thank you. I would like to ask, 'cause I'm assuming that we're probably going to spend some more time together at a later point in time. There has been much made about the contract with -- primarily with the PFT, but it may be other contracts that come under scrutiny, but with regard to the PFT contract, could someone perform an analysis in a chart fashion to make a 206 6/5/00 - FISCAL STABILITY - RES. 000232 comparison on the major items that people like to talk about, about the contract -- whether it's number of days, prep time, salary, and a wide variety of, you know, whatever might be the top ten issues in a contract that have to do with how education happens in a classroom, and the resources that you have and who can tell who what to do and who has control over placement of the teachers and who hires and who fires, and all of those types of issues. More the big issues, the hot-button issues in a contract. Could someone provide a comparison to us, to the Chair, of the Philadelphia contract versus the contracts of other school districts in the Commonwealth, and whether they are the -- whatever anyone wants to call -- the high-performing school districts, as compared to some that might be on either these distress lists or empowerment lists or any other list. But I would like to see a comparison between the Philadelphia PFT contract, the School District contract, and what goes on in Lower Merion, what goes on in Radnor, what goes on in some other places near and far that are, 207 6/5/00 - FISCAL STABILITY - RES. 000232 quote/unquote, considered the better-performing school districts by someone else's standards.
There is at least one organization that I know of that has done some comparison of collective bargaining contracts, and it's more national than regional. And maybe the thing to do would be to ask for us to relay this request so that it's coming from a third party, not from the District. I mean, I don't want to --
We could be the third party making the request. I don't really care who makes the request.
'Cause I don't want to do something that would be seen as acting in bad faith with respect to the --
All right, I understand that and I respect that. While it would be interesting to see a comparison between us and New York and L.A. and Boston and all of those places, you know, they don't get funded by the Commonwealth of 208 6/5/00 - FISCAL STABILITY - RES. 000232 Pennsylvania. And so I need a comparison of directs that are all subject -- we had the discussion earlier about the formula, everybody's subject to a school code of 49. I mean, it's got to be-- it really has to be an apples-to-apples comparison between districts that are also subjected to the same provisions. I know Councilman Kenney is trying to get a question in.
Thank you. Could you explain -- I just was talking with a staff person and I kind of got a secondhand description of this committee that was formed by the Mayor. Could you kind of tell me what it's about, what the name of it is. SECRETARY KAHN: Again, this grew out of the Mayor's challenge in the letter he sent to Pedro. I believe it was in April, where it was -- yeah, it was after the passage of the preliminary budget, wherein he challenged the District to save -- $100 million was the figure that he put out over, you know, several years into looking at really new ways of doing things. And one of the themes in that letter 209 6/5/00 - FISCAL STABILITY - RES. 000232 was really picking up on certain controller's reports, for example, recommendations in the past, and other reports about looking at ways of potentially consolidating or closer collaboration -- and I believe you've asked about this in the past -- between the City and the School District.
That part you're telling me now I did hear. SECRETARY KAHN: Okay. So what he did -- or what I did and Pedro did, at his direction, was to convene or appoint -- and we sent out an initial memo on this -- a committee that we would cochair that would consist of members of the School District Administration and the City Administration, representing the City Controller and his representative. The Mayor discussed with -- Council President Verna certainly wanted Council participation on that, and --
Do you know when this conversation took place with the Council President? SECRETARY KAHN: I'm not sure exactly when it was.
Wednesday. 210 6/5/00 - FISCAL STABILITY - RES. 000232
Okay. I'm just curious as to whether there was any involvement with the Committee on -- the Education Committee Chair, members of the Education Committee, or any of other individuals that are, I guess, ordained with the task of dealing with education. SECRETARY KAHN: With all due respect, it was prior to Wednesday, and that's -- I mean, I had sent out the letter and I had been told a while ago that the President had requested Charlie, and I had sent a letter to Councilman O'Neill, again, you know, at his request, inviting him to participate.
At whose request? SECRETARY KAHN: At the Mayor's request. Actually, the Mayor sent the letter inviting him to participate, and I'd have to go back and look at the dates, you know, of those meetings -- of those letters.
Well, I guess it's 211 6/5/00 - FISCAL STABILITY - RES. 000232 not as important, but I think their recollection is, it was Wednesday. But I guess my question is, what is the view of the Secretary of Education and the Education Team when it comes to the Committee on Education of the City Council of Philadelphia? Just out of curiosity, what do you think their role is? SECRETARY KAHN: You know, I've had both telephone conversations and personal meetings with the Chair of that committee. I think, again, it --
As it relates to this particular effort? SECRETARY KAHN: I believe the last time we met, we did discuss it. I'd have to go back and check what, but I thought that we had discussed that. And, you know, this is both an education issue as well as, you know, a City operational issue and a School District administration management issue. I think, frankly, you know, we need to be a better job, as Pedro has indicated, of just getting the routine communications down, and 212 6/5/00 - FISCAL STABILITY - RES. 000232 that's something that we need to work on. If we want more representation from City Council on that group, I'm sure that we can do that.
But I'm not suggesting that; what I'm suggesting is that I was under the impression that we were going to have a different level of involvement and a different level of information if, according to Council President and her fiscal person, Wednesday seems to be somewhat inadequate. And also I would say that not having input from the Education Chairman is somewhat inadequate also. Making appointments of Councilmembers to various committees without at least talking to the Chair of the Education Committee, I think, is something that is somewhat lacking in communications. It's just my personal opinion. And if there is a desire to have a continued more open and more integrated involvement of Councilmembers, I don't know whether that's necessarily the way to get it done. SECRETARY KAHN: Your suggestion is well taken. 213 6/5/00 - FISCAL STABILITY - RES. 000232
Mr. Ramos, we probably won't get through all of this portion of the questions for today, and I would ask if you could be responsive upon your return. I have a copy of a letter dated April 26, 2000 from the Majority Leader of the House of the State legislature. Do you recall that letter?
From representative Perzel, which lays out in bullet point -- or I think these are actually diamonds.
It's a number of suggestions for ways that the District can reduce costs. He talked about the audits that have been out there, which this School Finance Committee, whatever it's called, has been looking at.
Has there been a 214 6/5/00 - FISCAL STABILITY - RES. 000232 response to that letter?
There has not been a written formal response to that letter, but there has been action consistent with that letter. And I -- and I -- well, no, there was not a letter back, but I was getting asked about it around the time that I was getting the letter from members of the press, and I did respond to it. I thought that not only were there many of the things we were already doing, we were going to continue to do. There were some other things in there. And, frankly, I thought there was a -- you know, I appreciated the positive tone of the letter from Representative Perzel. He's been -- you know, he's somebody we're seeking to build a better relationship with, and he's already been helpful with respect to funding for the alternative school.
Two things. One on of the letter, and I'd like to read it into the record and then I'd like to get your response to this. One of the points reads: "Philadelphia City government has not been as committed to the support of its own 215 6/5/00 - FISCAL STABILITY - RES. 000232 schools as other local governments in the Commonwealth. The statewide measure of local tax effort in support of public education is called the 'equalized mill.' "In the last year audited, 1996 to 1997, the statewide average equalized millage was 20.6. The average for the other urban 9 districts in the State (like Pittsburgh, Allentown 10 Harrisburg, and Chester Upland) was 26.2. 11 Philadelphia's was only 19.4. 12 "City Council is currently projecting a 13 budget surplus of over $200 million, yet has 14 indicated of that surplus, it only wants to 15 earmark to million more for the City schools. 16 If the City wants the State to show a greater 17 financial commitment to Philadelphia schools, it 18 is time for the City to do likewise." 19 Now, a couple questions. One, is there 20 any dispute or is there, in fact, agreement on the 21 statement or facts as laid out in the letter with 22 regard to the statewide average at 20.6, the 23 average of the other 23 urban districts at 26.2, and Philadelphia's number at 19.4? Are those accurate? 216 6/5/00 - FISCAL STABILITY - RES. 000232
I don't -- Councilman Nutter, I wouldn't have a basis for telling you that I have any independent information about whether those numbers are accurate or inaccurate. I would assume that they're accurate given the source. Local tax effort information that I'm a little more familiar with is the fact that Philadelphia residents are probably the most taxed residents in the entire state when you take into account the multiple layers of taxes. We are not like Pittsburgh, you know, that doesn't have to support a city county and a district all at once.
Okay. Is it possible, though, in the context of trying to get answers to either suggestions or question marks that are left hanging out there, one, is it possible to get the definitive answer to the accuracy of these figures?
Two, could someone calculate if the 19.4 figure is correct and if the average for the other urban 23 districts is 26.2, and it would be helpful to know what the actual 217 6/5/00 - FISCAL STABILITY - RES. 000232 number is for the districts, through which it was arrived at the 26.2 figure, and if the statewide average is in fact 20.6, what I would like to know and to ask someone to calculate is, what would the Philadelphia effort in dollars and cents be at the 20.6 level; or at this average of the other urban districts at 26.2? 9
Provide the statewide 16 average. You said the average of 23 urban 17 districts, you said you wanted to also see the 23 18 urban districts and what they actually were? 19
Right, what their 20 actual equalized mill rate was. 21
And then the Philadelphia 22 -- and then -- and maybe columns over what would 23 Philadelphia be if it were --
Right. Show us what the 19.4 is, if that's accurate, in actual 218 6/5/00 - FISCAL STABILITY - RES. 000232 dollar figure. Then tell me what it is when you go to 20.6, and then tell me what it is when it guess to 26.2.
Now, do you know what the Representative is referring to in this -- later on in that same paragraph, talking about the $200 million surplus, and yet the City is only indicating an additional to million more for the City schools; do you know what that means?
I don't know what the reference to or million dollars more was about.
Okay. Well, notwithstanding, I guess, your conversations with the Representative or with his people, if all of the items in this letter were given to you by one of us as outstanding questions or issues, is it possible to get an answer to all of the points that are raised in this letter so that we have the benefit of -- I mean, to some extent, we don't have benefit of whatever your conversations are with the Representative or other people in Harrisburg as it relates to some of these items. 219 6/5/00 - FISCAL STABILITY - RES. 000232 I think your testimony was, you have not formally responded in writing, but you've had conversations from the moment letter hit the airwaves.
And many of these issues, as you know, are not issues first raised in the letter from Representative Perzel. These are all issues that have --
But if you'd like us to address those issues again, using his letter as kind of the reference point, we can do that.
Yes. What I would like is if a memo or whatever the form is --
"In response to the items raised in the April 26, 2000 letter from Representative Perzel, these are our specific answers to each of the points raised." That would be very helpful. That's all I have. Now that you've agreed to go through those points, I don't need to go through the letter. 220 6/5/00 - FISCAL STABILITY - RES. 000232
Are there any other questions from members of the committee? (No further questions.)
Thank you. Mr. Vignola, would you take the witness table? Mr. Ramos, I'm sure that you want to leave and get a bite to eat. I want everybody else to know, if they're leaving, that we will be recessing this hearing until Wednesday, June the 7th, at 1 o'clock, at which time we would like to have Mr. Masch and all of the other financial people in attendance, please. That's Wednesday, the 7th, at o'clock. (Witness comes forward.) 221 6/5/00 - FISCAL STABILITY - RES. 000232
Good afternoon, and thank you for your patience. I know you've been sitting here since 9:30, and I appreciate it.
Good afternoon Council President Verna and members of City Council. My name is Joseph C. Vignola, and I'm the Executive Director of the Pennsylvania Intergovernmental Cooperation Authority, known as "PICA." It's been a long day for all of us, and in light of your statement about the recess of this hearing into July 1 --
With the permission of the Chair, what I would like is, and for the benefit of stenographer is to have my letter -- or my testimony fully set forth in the record, you know, at this time, without my reading it. (Mr. Vignola's written testimony attached hereto.)
But what I would like to do, in taking a few minutes before I open up for questions, and I will make myself available on June 7th at what p.m. 222 1 6/5/00 - FISCAL STABILITY - RES. 000232 What I do want to say on behalf PICA is to quote from the bottom of , beginning of , I said, "While none can disagree that the fiscal stability of the School District is critical, it cannot be provided at the expense of the City's fiscal stability. Any solution which directs additional City General Fund dollars to the School District could require a revision to the City's Five-Year Plan, and any such revision would require approval of PICA. "One-shot fixes to the School District's Fiscal Year 2001 budget problem worked out with the Commonwealth on May 31st has, to my mind, done no more than provide little more time to work for a long-term solution for the School District's fiscal situation. Failure to act with a sense of urgency during this brief window of opportunity would be a dereliction of duty by all parties concerned with the education of Philadelphia's children." Madam Chair, my testimony goes a little bit further, but I think that's the critical point. I will make myself available now for 223 6/5/00 - FISCAL STABILITY - RES. 000232 questions. And as I've said, I will be back here on the 7th, when we start talking at fiscal issues more. And it's at your pleasure, Madam Chair, what you would like to do at this point.
Are there any other questions of Mr. Vignola at this point in time? The Chair recognizes Councilman DiCicco.
Thank you, Madam President. Thank you, Mr. Vignola, for staying. I know you went over this quickly. You mentioned something about the Five-Year Plan, that whatever action we decide to take could -- or would require approval by PICA. Hypothetically, if we were to agree to the $20 million, obviously, that would have an impact on the Five-Year Plan, based on the numbers that PICA has been supplying to us over the last couple of years indicating that at the end of the Five-Year Plan, we would have a surplus around $5 million, barring any unforeseen contract negotiations, etc. 224 6/5/00 - FISCAL STABILITY - RES. 000232 So, in effect, the million, if this Council were to agree to it, would require action on behalf of PICA, right? I don't think there's any --
I don't -- I don't 7 disagree with that statement, Councilman, but when 8 we look at a plan -- an example being -- and when 9 you look at the City Manager's quarterly reports, 10 the one that was just published on May 15th versus 11 the one that was published on February 15th, you 12 will see that there's an increase in revenues 13 projected for the City. Approximately $26 14 million. 15 So this year, there is -- in this 16 fiscal year ending June 30th, there's additional 17 revenues. If there's action appropriated that 18 money from this fiscal year, maybe there would be 19 an impact on the Five-Year Plan. But the concern 20 is that whatever the lawyers say about the Economic Empowerment Act, if that $20 million is then committed in addition to the $15 million that's already in the Five-Year Plan, then you have a $100 million impact, and that definitely causes a variance within the Five-Year Plan. Then 225 6/5/00 - FISCAL STABILITY - RES. 000232 when you add what labor negotiations the City's going to enter into, that causes a variance and we have to look at in total. But if it happened in the next three weeks, before June 30th, you know, technically, there may not be an impact on Five-Year Plan that City Council passed in March of this year.
The $26 million in -- I'm sure I read somewhere but maybe you could refresh my memory. Is that in anticipation of -- just for this one year, they're anticipating additional revenue.
Yes, above what was forecast in the targeted budget, and that's just from reading, 'cause I read those reports. I like to fall asleep at night and that's good for that.
The RNC probably has something to do with -- has everything to do with what we're today, I think, for that matter, more than I would like. Who blinks first, us or the other side, right? Thank you. Thank you, Madam Chair.
Thank you. The Chair recognizes Councilman Kenney. 226 6/5/00 - FISCAL STABILITY - RES. 000232
Thank you. Mr. Vignola, in line with Councilman DiCicco's question, I would like to go one step further and ask if PICA could -- and I don't know whether it's in your purview to request it, to do an examination of Act 46 as it relates to the potential request -- or not potential, but the actual request for the $20 million in addition to the $15 million from the City for this year. And to issue some opinion or advisory to us as to what problems we may be exposing ourselves to in the event that we approve the requested $20 million. And also, what I would also suggest is, based on Councilman -- or request is, under Councilman Ortiz's line of questioning, what effect would the raising of revenue estimates and/or the lowering of expenses, the raising of the ceiling or the lowering of the floor would do to our standing both with the rating agencies and with PICA and just in general.
Well, let me answer the first and the third part. The second part, for the $20 million, I will have to get back to you in writing. 227 6/5/00 - FISCAL STABILITY - RES. 000232 It wasn't until this Five-Year Plan that the City recognized the $15 million as part of the Five-Year Plan. The Rendell Administration consistently said, If we have the money available, we're going to do it. You may recall in last year's report on the Five-Year Plan, the one issued in June of '99, we were critical of the City in doing that. Mayor Street and this Council remedied that in this Five-Year Plan, so the $15 million is accounted for, not only next fiscal year, but in the fall, the outgrowing going fiscal years. As I said, in regard to the $20 million, I would like an opportunity to get back to the Chair and get back to you. In regard to raising revenue estimates, that begins the whole philosophy of PICA, and I guess it's my philosophy as being a former member of this body and not wanting PICA to dictate policy to the elected officials of the City of Philadelphia. But also, having been controller in the '80s, before we ran into the financial situation that we had, realizing that revenues are our concern. 228 6/5/00 - FISCAL STABILITY - RES. 000232 What we look at PICA is not so much how the City and how City Council wants to appropriate the individual line-item expenditures, but we look at the total revenue projections, and are they reasonable in light of what we foresee the economy to be, in light what we see all the other indices involving the budgeting of local government. Based on that number, we arrive at, well, is the gross number viable? And if the gross number is viable, then it's my belief -- and I share it with my board and my board has accepted it for the past four years I've been there -- that how the City wants to spend its money, as long as it fully funds its mandated services is fine. Right now, we have said that the revenue projections for the next fiscal year beginning this July 1 and for the four succeeding years are reasonable, and that the growth in those revenue projections are reasonable. If the Mayor came back and tried to tinker with the revenue projections, you know, although I wasn't in elected office in the late '80s, that does smack of what happened in the late '80s, and it's something that PICA would take 229 6/5/00 - FISCAL STABILITY - RES. 000232 a very dim view of. And I don't want you need me to further put that in writing. That just to say that, Well, we're going to get $20 million more from the sale of widgets in the City and the City's going into the widget business, that wouldn't fly with the staff of PICA or the Board. So tinkering with revenue projections to give some other governmental entity more money is not going to work with us.
Okay. But could you please check with the Board and your staff as to whether or not it's sensible and appropriate for you to give us an opinion vis-a-vis Act 46 and the current requirements and --
It's the takeover legislation. I mean, what happens next year if we put this money up and how it impacts the Five-Year Plan?
No. Pursuant to the PICA 230 6/5/00 - FISCAL STABILITY - RES. 000232 Act, when we're asked for those type of comments, we're allowed to comment on legislation, so --
Thank you. Any other questions? The Chair recognizes Councilman Nutter.
Mr. Vignola, good afternoon and, again, thank you for staying. I read through your testimony very quickly. And while it is crystal-clear in my mind what the relationship and responsibility with regard to PICA and the City of Philadelphia is, there from time to time is floated around, and I thought I read something in some two sentences of the voluminous PICA Act that may have had something possibly to do with the School District. Could you provide any clarity on the issue of what statutory authority exists with 231 6/5/00 - FISCAL STABILITY - RES. 000232 regard to PICA and any involvement with the School District of Philadelphia?
Yes, Councilman Nutter. The PICA Act speaks to corporate entities of the City of Philadelphia and refers to the School District as "a corporate entity." The cooperation agreement between the City of Philadelphia and Pennsylvania Intergovernmental Authority talks about corporate entities and talks about the School District in that the City will provide information in regard to the School District to PICA should PICA request it. In fact, it was last year when we started talking about this $15 million that was not included in the five-year budget that part of our ongoing review, we had a telephone conference with Superintendent Hornbeck, and he indicated to us and said, well, he is counting on the $15 million, not only for the current fiscal year, but for future fiscal years, and that led to our comment in last year's report on the City's Five-Year Plan that the right hand's not talking to the left hand, 'cause one agency is saying, yes, we're going to continue to go get it; the other agency says no, case-by-case year, and 232 6/5/00 - FISCAL STABILITY - RES. 000232 that's why we were pleased that the Mayor and City Council in the current Five-Year Plan that's going to go in effect in less than a month allocates that money. So there is some fiscal connection in terms of reporting requirements. What you may also be referring to is back four years ago now, when Judge Smith entered her findings of fact and conclusions of law in regard to the school desegregation case, Judge Smith ordered the School District to open its books for PICA's inspection to determine if the $45.2 million, or $45.6 million, she was awarding the School District from the State to implement her ruling, what part of it was necessary. She could not order PICA to do it since we were not a party of it; she could only ask PICA to oversee. I polled my board at that time, and my board was very interested and wanted to cooperate with the courts in order to resolve the matter. That matter was stayed by the Supreme Court. And when the Supreme Court, May, a year ago, issued its new school desegregation opinion, it overturned Judge Smith's opinion, not vis-a-vis PICA's oversight jurisdiction, but because the 233 6/5/00 - FISCAL STABILITY - RES. 000232 judge didn't have the authority to join the City and the State as parties to an appellate proceeding. What is interesting to note, in the hearings before Judge Smith, on which she based her findings of fact, both the expert witness for the Commonwealth of Pennsylvania and the expert witness for the City of Philadelphia said there should be some sort of fiscal oversight board. And the board that was mentioned in the testimony of David L. Cohen, who was testifying on behalf of the City, the former Chief of Staff of the City, specifically recommended PICA, and the judge named PICA.
Let me ask you a quick question, and thank you for that response. When you made reference to the corporate entity language --
-- again, it was always crystal-clear in my mind that PICA had the right to do virtually anything, if you will, with the City, but I thought I heard you say earlier in your response that you had to get the information 234 6/5/00 - FISCAL STABILITY - RES. 000232 about the School District through the City. And I don't understand why, based on the Act -- and maybe I'm not reading some parts of it correctly -- why PICA would have to do anything through the City relative to the School District, which is a corporate entity of its own, and why you wouldn't be able to get the information directly because of PICA statute authority.
Okay. I apologize for the confusion. We asked the School District, you know, directly, in the event that an entity would resist turning that information over, then the City is obligated, through the cooperation agreement, to see that that information is supplied.
All right. Well, what I'm referring to is, in the Act, there is a Section C that talks about specific powers. And it reads as follows: "In addition to the powers and duties set forth elsewhere in this Act, the Authority shall have the specific powers: "1. To obtain copies of all reports regarding the revenues, expenditures, budgets, 235 6/5/00 - FISCAL STABILITY - RES. 000232 costs, plans, operations, estimates, and any other financial or budgetary matters of an assisted city or any corporate entity. "2. To obtain additional reports on the above matters in such form as are deemed necessary by the Authority." And there's another part of the same act that talks about documents and examinations to be reviewed or undertaken by the Authority. "The Authority shall receive from an assisted city and review the reports, documents, budgetary and financial planning data, and other information prepared by or on behalf of such assisted city, and which are to be made available to the Authority under this Act. "2. Receive from a corporate entity or school district and review the reports, documents, budgetary and financial planning data, and other information prepared by or on behalf of a corporate entity or school district and which are to be made available to the Authority under this Act as the Authority deems necessary to accomplish the purpose of this Act." I mean, I'm almost kind of getting the 236 6/5/00 - FISCAL STABILITY - RES. 000232 impression that you're potentially asking for permission to have something for which, from PICA's perspective, no permission is required?
No, I'm not saying that. What I was trying to say -- and I'll try to say it again -- is that we can ask for those reports, and we're entitled to them as of right. And we get the general reports, the budget documents and the reports. But unlike with the City, where we could go in and ask for individual work papers and individual supporting documentation, that is not, you know, so clear.
What gives you that authority to make that level of requests with the City?
The Act itself, the specific Act itself and the cooperation agreement.
And you can't do that with the School District because. . . ?
But what I'm also suggesting is, lawyers can disagree as to the 237 6/5/00 - FISCAL STABILITY - RES. 000232 level of detail that is appropriate, given the language of the Act and the cooperation agreement. So I'm -- I guess I'm being a little bit of a Philadelphia lawyer in answering your question. You know, I believe PICA has that authority. To the extent that we ask for information, we get the information, you know, we want, because we don't need the detailed information that -- with the School District that we need for, you know, for the City or for capital programs, you know, with the City. You know, we have requests for street pavings. There was a request put in for --
We've had a view projects over there that you really seemed interested in, and I didn't know why, but okay, all right. Thank you.
Are there any other questions of members of the committee or 238 6/5/00 - FISCAL STABILITY - RES. 000232 Councilmembers? (No further questions.)
Madam Chair, I'd just like to just make a statement. You were apologetic for me waiting here, but will tell you that on behalf of PICA's staff, it was better for me to sit here and listen to all of this so I could report back, and it was, you know, very worthwhile. So I did not mind at all listening to everyone's testimony that precede me.
Oh, I'm glad to hear that. Thank you. We had three witnesses that wanted to come in, and I don't know if they're still here. I believe Shelly Janoff was here earlier and apparently had to leave. Michael Churchill? (Witness comes forward.)
And I believe Reverend Robert Shine was on the witness list but apparently left. Good afternoon. Thank you for your patience.
Thank you. 239 6/5/00 - FISCAL STABILITY - RES. 000232 I have a statement here if people would like to distribute it. Essentially, I want to start from where Mr. Vignola just started, which was that you have a short time to take care of a long-term problem that's in front of you, and the long-term problem is not just dealing with --
I'm sorry. Mr. Churchill, before you proceed, just identify yourself for the record.
Yes. I'm Michael Churchill. I'm chief counsel of the Public Interest Law Center of Philadelphia.
The long-term problem that you have is not just the structural deficit but is the full issue of how to make and solve the underfunding problem that has been confronting Philadelphia school children. Councilwoman Miller had asked, how much money does the School District really need? The Superintendent has prepared a budget for the Opportunities to Learn, which would cost around $300 to $350 million to enable Philadelphia 240 6/5/00 - FISCAL STABILITY - RES. 000232 students to have the same class sizes as suburban students, summer schools, a longer school day for children needing more instructional time, better trained teachers, sufficient preschool classes. In addition, the structural deficit that you've heard about arising from the changes in the funding in the State's formula from now almost ten years ago is around $100 million. These are large numbers, and many politicians have dismissed them as unrealistic and "Never-Never Land," even if you were to phase those in over three to four years. But expenditures of that level are not out of sight and they're not considered unrealistic for students in many other districts around the State. The $400 million approximately that we're talking about, when divided by the 230,000 students in the District, is a little less than $2,000 a student. And as you heard from the Superintendent, the average suburban district spends $2,000 more per student than the District currently does. And if we use the New Jersey standard 241 6/5/00 - FISCAL STABILITY - RES. 000232 for parity, that the level of average expenditures should be the same as for the top percent of 4 the districts in the State, that amount would be 5 about $2,429 more per student a year, or 6 $509 million for Philadelphia. 7 So the Superintendent's budget is not 8 far from the goal, which I urge you to set a 9 parity. And I believe that is the goal that ought 10 to be the long-term issue that is on the table for 11 next year. 12 Now, if we were to receive funding at 13 that level, we'd have to deal with a lot of myths 14 in Harrisburg saying that say we are already 15 getting our share -- in fact, more than our share 16 -- and to end the political isolation that has 17 been the main problem -- part of the problem for 18 so many years up there. 19 The first myth is that we already get 20 more money per student than any other district in the State, and that is just plain wrong. There are 187 of them that get more, including Pittsburgh, more per student, including York, and including Reading. The State funds in those districts are also a larger portion of those 242 6/5/00 - FISCAL STABILITY - RES. 000232 districts' budgets than it is in Philadelphia. A second myth, which you also heard, I think, answered this morning was that State funding has been going up. 9 percent, according to the Five-Year Plan, when measured in real terms between Fiscal Year '93 and Fiscal Year '98. That comes out of the Five-Year Plan that was submitted to and recently approved by the PICA Board. Even when you take inflation out, Philadelphia has been receiving a much smaller share of the increase in State funding in the last ten years. And if Philadelphia had gotten the same share increase in State funding that the rest of the State had gotten since 1990, Philadelphia would have an additional $118 million this year. Now, that is a measure of how the State has been treating Philadelphia since they changed the formula. Some -- I believe you asked, Madam Chair, what had been the effect? And when all is said and done, the rest of the State had gotten an increase that would have given us, if we had gotten the same increase, $118 million more. 243 6/5/00 - FISCAL STABILITY - RES. 000232 Finally, you just asked, Councilman Nutter, what is the effect of the amount of the relatively low share that Philadelphia gives out of its own local funds? 3.
And at that difference, if we 10 were to reach the statewide average, it would 11 require $125 million more from the City to reach 12 the State average. 13 Now, we know how much difficulty it is 14 just reaching $20 million that we're talking about 15 here. We understand how far out of sight that 16 $125 million is that Representative Perzel was 17 alluding to. The reason, by the way, that it is 18 so much more difficult for Philadelphia to come up 19 with the same share as so many other districts is 20 because of the huge amounts that have to go into 21 county-based programs in the City's budget -- essentially courts and children's services. The Greater Philadelphia First study that Superintendent Hornbeck referred to showed that if we were paying the same taxes for county 244 6/5/00 - FISCAL STABILITY - RES. 000232 functions as Pittsburgh, we would have $479 million, which we could free to the school system. But we're not in that situation, which is why we must look to the State for this difference. Finally, I think it is clear that the School District has shown that additional funds would be well-used. The increases in the scores that have come about, with the very small amounts of additional money that they've had, is very impressive. They have a plan. The plan is very specific about where the new money would go to: reducing class size, upgrading teacher competency, increasing early-childhood programs. This is a very ripe situation for the State to put whatever controls they would like, either through a PICA oversight board, through your own oversight here, or any other mechanism they would like, to be assured that any additional funding would go for the very specific purposes that we all agree on are necessary. So I want to close just by saying that we have a -- not just a Philadelphia crisis going on in the State, however, but a statewide crisis. 245 6/5/00 - FISCAL STABILITY - RES. 000232 As Superintendent Hornbeck said, it is -- we've gone from 55 percent funding for public education coming from the State to about 35 percent. This has affected many, many other districts. There are 181 districts that have gaps greater than Philadelphia's, who have lower spending than Philadelphia. There are 360 who have gaps of over $1,500 between what they can spend and what the top 100 schools -- the average of the top 100 school districts could spend. So there are potentially a lot of allies if we were to end up saying, Fix Philadelphia's problem and fix the rest of the State's problem. At $400 million, there's no way that you're going to get Philadelphia's problems fixed by themselves. But if you start to think there are other districts who have similar problems from around the State, almost two-thirds of the districts with very substantial gaps because of this large underfunding, I think that we can finally end the isolation that we have held in Harrisburg. And I urge this group to use its influence with both the School District and with 246 6/5/00 - FISCAL STABILITY - RES. 000232 the Mayor and yourselves to start brining in the school board chairmen and the State representatives from those other districts so that we can begin to forge that kind of an alliance. If we do that, the numbers that I am talking about will no longer seem in "Never-Never Land," but you would agree with me that they are just and also realistic. Thank you.
Thank you very much. You've been extremely patient.
Well, I'm glad to be here because you've been asking all of the right questions about the very fundamentals of how we've gotten into this situation, and it's been a pleasure to listen to.
And may I say that I found your testimony very informative. At this time, the Chair recognizes Councilman Ortiz.
Hi, Mike. We had hearings here seven years ago and we brought the grouping that was taking the State to court at that time. And we asked at that 247 6/5/00 - FISCAL STABILITY - RES. 000232 point -- City Council held hearings for a few days, and we published a report, and we asked for that relationship to begin to be established, and nothing happened. Actually, we were told at that point that it would disturb the backroom deals that were being done to try to secure funding. And that didn't work. And your statement here about the myth that -- and I think we all see that, and I like your strategy of recommending that we begin getting everybody together and for us to begin and initiate this political process of bringing the school board members from across the State. But in essence, isn't that running counter to this deal that we just made? which a lot of us have a lot of questions about, because it doesn't resolve the issue, and I don't know how it takes us any nearer to resolving the issue since the structural and political conditions remain the same. Could you elaborate on that? And could you say to me how it was that we came to drop the lawsuit? And were all of parties to that lawsuit consulted before the lawsuit was dropped, or postponed? 248 6/5/00 - FISCAL STABILITY - RES. 000232
Or even postponed. I assume that there will be motions that will be submitted to the court to have that happen, but I can tell you no, all the parties were not consulted before the City and the State agreed that that would be the request that they would make. On the other hand, there is -- it is clear that the State and the City are now engaged in a process of consulting. And I think what I've heard in your question is, should we just sit back and let that consultation work as if there was good will that would solve the problem? And I would like to urge you that you're correct, that it will take more than that, and that finding allies and the State who have the same interests will help you in getting more money. I don't think -- I mean, one of the excuses that the Governor made why he is putting in so little money this time was that he didn't have the legislature with him. And I think it's 249 6/5/00 - FISCAL STABILITY - RES. 000232 important to move on the legislature and show them that many of their own constituents would benefit from solutions to the declining State's share of the education budget. It's been well publicized that in Delaware County, the Chair of the commissioners there, Wally Nunn, has been complaining about the impact that has been on those school districts from underfunding by the State and the severe consequences it's had for tax rates there. They are not alone. There are a lot of people around the State that have been complaining about the high impact of high school expenditures, and that's happened because the State has been shifting them; they've been shifting from the State budget onto the local property taxes. And that's in part what's been happening in Philadelphia. Philadelphia has less resources to put into that than many of these other places, and that's why we need to get together with them and say no, it is time to start using the State budget as a way of dealing with a statewide problem. Because if Philadelphia students can't 250 6/5/00 - FISCAL STABILITY - RES. 000232 read and can't write and if Philadelphia students stay on welfare and if Philadelphia students aren't participating in the economy, the whole state is going to suffer. It's not just a Philadelphia problem.
That is the perception, isn't it? That is the perception.
Well, they think that it's just a Philadelphia problem, but it's not. And one of the things that the PICA Five-Year Plan says is that the quality of public education in Philadelphia remains a critical factor to the ability to attract and retain businesses and residents. This is an economic development issue. And it is not -- as all other economic development issues, it's not just for the City; it affects the whole region. And we need to have allies. And it was interesting to me in that in that lawsuit that you were talking about, the rural school district one, in the end, even the associations of suburban school superintendents came and filed an amicus brief to say, We support that litigation, and got together and -- 251 6/5/00 - FISCAL STABILITY - RES. 000232
Well, we had an opportunity to early on join in partnership with that, and we refused -- the executive branch --