We were22 encouraged by Mr. Archie and the Mayor's23 visit to Allentown, and one of the things24 that stuck in my mind, Mr. Archie, was25 253 5/24/11 - WHOLE - BILL 110135, ETC.1 the fact that the Allentown School Board2 buys the products that are produced by3 the vocational schools. Is there a plan4 that maybe in doing so, we give young5 people a craft, but we also reduce our6 procurement liability and payments? Is7 that underway?8
Yeah. That's9 why we have him working with us, to see10 if we can --11
No, we didn't14 steal him from Allentown, but we have had15 Mr. Hornberger working with us on a16 long-range plan, and that plan we hope17 will be developed more fully over the18 course of the next year. What we're19 doing this year is actually reducing the20 number of courses. You see that we have21 a lot of young people who are in, for22 instance, culinary arts, but they're not23 leaving -- they're not in full certified24 programs. So we're saying, you know25 254 5/24/11 - WHOLE - BILL 110135, ETC.1 what, we're going to reduce the number of2 culinary art courses and at these3 designated Schools of Excellence, young4 people can go there and know that they5 will leave with a certificate.6
This body11 passed the Intern Tax Credit law, which12 gives private-sector people incentives,13 tax incentives, to hire these young14 people and give them what we would call a15 stipend. We'd love to pull together16 logistically as they ask these17 Councilpeople for their support to bring18 these establishments in the City.19 Irrespective of what people think, this20 is a great place to locate your business.21 We are within one day's truck ride of22 one-third of the country's population.23 Do not get it twisted. This is a good24 city. And so as they start to come in25 255 5/24/11 - WHOLE - BILL 110135, ETC.1 and realize that, we want to pair them to2 you almost to create that synergy. All3 right? Thank you.4 Thank you, Madam Chair.5
Thank6 you.7 Councilman Kenney, you haven't8 had a chance today, so we'll let you go9 next and then we'll go back to our --10
Thank you,11 Madam Chair.12 First of all, I want to thank13 you for being here all day. We know how14 important this is, and you don't mind15 doing it, but it's a long day.16 I want to apologize for not17 being here this morning. I had a18 longstanding 16-year commitment to speak19 at Roman Catholic High School, which I've20 done every year for 16 years. So I want21 to let you know where I was. I just22 wasn't hanging out in the hallway.23 I want to try to encapsulate24 this whole conversation to a degree.25 256 5/24/11 - WHOLE - BILL 110135, ETC.1 What is the full amount -- let me go back2 for a second, because I made some comment3 earlier about the cuts to poor districts4 and the cuts to rich districts.5 What is the projected surplus6 of the Commonwealth of Pennsylvania for7 this year?8
As of the end of9 April, state tax collections were 53010 million over the Governor's estimate. In11 other words, the Governor has projected a12 balanced budget this year with 53013 million less that has come in already.14 Now, we still have two more months to go.15 April is the highest collection month.16 However, May is the second highest17 collection month. So it is possible that18 by the end of June, the surplus, although19 the Governor doesn't want to call it a20 surplus, the surplus could be over 53021 million. But there's 530 million in the22 bank, not in this year's state budget,23 not in next year's state budget, already24 in the state's bank account.25 257 5/24/11 - WHOLE - BILL 110135, ETC.1
And I've2 heard as much, unofficially, as much as3 800 million.4
Which makes7 those numbers even more unconscionable,8 but that's another story.9 How much money are you being10 asked to absorb in cuts totally, both11 state and federal?12
We've all15 committed and we're going to continue to16 do our best to get those state cuts17 reduced so that there's less impact, and18 we're going to talk to SEPTA and try to19 do that little arrangement to save some20 additional dollars.21 How many hours have you spent22 on that document that we're dealing with?23 As difficult as that document is, how24 many hours have you and your staff spent25 258 5/24/11 - WHOLE - BILL 110135, ETC.1 on it? How many days? You can give me2 days, you can give me weeks.3
Hundreds of6 hours. How many people have had their7 hands on that document dealing with8 recommending cuts and levels of cuts, all9 this stuff?10
Councilman Kenney,11 you see a great deal of them back here,12 and principals included.13
Working18 literally hundreds of hours to examine a19 document that we're in a situation to20 deal with beyond our control at this21 point. So there are some things we can22 do to mitigate this stuff with our23 legislative delegation, with the24 Governor, whoever. You're not going to25 259 5/24/11 - WHOLE - BILL 110135, ETC.1 kick him too hard yet because we want to2 see if he can maybe make that better,3 but -- and all the other things we're4 doing. And you're asking us for 755 million; is that the number?6
75 to 100.8 I like to go on the low end. It makes9 life easier. But 75 to 100 million.10
All right,16 75 to 110, or somewhere in there.17 And if we don't do it, we're18 going to lose the major portions -- the19 all-day kindergarten is going to get20 half, all this stuff we've talked about,21 transportation, alternative schools, all22 that stuff. So in the end, the decision23 is whether we decide to provide it or we24 don't.25 260 5/24/11 - WHOLE - BILL 110135, ETC.1
And you can3 profess all your love for children. You4 can profess your love of public5 education. You can profess anything you6 like, but when push comes to shove, you7 need to do the heavy lift and sometimes8 make a decision that's not popular, but9 that you think might be right. Because I10 can't imagine these young children and11 older children, but mostly younger12 children it really would affect, I guess,13 the most, dealing with these cuts.14 Now, I don't know what form15 this help is going to come in and I don't16 know what combination of revenue sources17 or assistance or whatever it is, but at18 the end of the day, either we decide as a19 group to provide that help or we don't.20 And no profession of wonderfulness is21 ever going to make that choice any22 easier, or if you decide not to do it, to23 make these cuts any palatable, less24 palatable than they are already.25 261 5/24/11 - WHOLE - BILL 110135, ETC.1 So I think in the end, I2 understand all the work you put into it.3 I understand how difficult these choices4 are, and I understand how difficult our5 job is, because we wouldn't be here if6 the job wasn't difficult, but in the end,7 I'm hoping to be able to help you get8 where you want to be. And I do9 appreciate your patience and your help10 and your hard work, and I do want to say11 for -- I said this in the briefing12 yesterday. No one in this briefing room13 or in this Chamber can argue that the14 improvements in the School District over15 the last number of years have been16 substantial. When it comes to the test17 scores of our children, they are going18 up, and they're going up dramatically.19 So it's our choice in the end,20 but I just think that we can talk and21 talk and talk and talk some more, but in22 the end, you're going to have to decide23 whether you want to lift it or you don't24 want to lift it, and that's where I think25 262 5/24/11 - WHOLE - BILL 110135, ETC.1 we're at. So good luck, and we hope to2 be able to be there for you.3
Thank you,8 Madam Chair.9 This has been a marathon, and I10 am going to abbreviate, severely11 abbreviate, a line of questioning and12 comments and simply put Councilman13 Kenney's remarks in bold letters,14 underscored, with exclamation points. I15 join him and others who are committed to16 us figuring it out. And as he has said,17 we don't know yet what that will look18 like. It will end up with a combination19 of ideas and proposals, but that's why we20 ask to come here, so that we can21 participate in complex decision-making.22 So I say that for the record.23 A few comments. I want to24 underscore Councilwoman Donna Reed25 263 5/24/11 - WHOLE - BILL 110135, ETC.1 Miller's request for charter schools, and2 my reason for asking that is, very often3 we get calls from parents who are seeking4 help, guidance and referrals around5 charter schools. So when we can provide6 them accurate, informed information about7 what's really happening academic at those8 schools, it helps us help them better.9 If we rewind back to where10 Councilman Goode started this morning and11 now having come back, to have a more12 clarified, real number on what your needs13 are informs how we go forward. So that I14 think needed to happen, because now we15 know what priorities we care about.16 The good news I think is you17 came with some priorities. There are18 many of us who agree with these19 priorities, particularly on full-day20 kindergarten. I think that's21 non-negotiable and is not even a22 conversation when we look at what23 research tells us.24 Also, the Parents United for25 264 5/24/11 - WHOLE - BILL 110135, ETC.1 Public Education also stipulate what2 their priorities are, full-day3 kindergarten and restoring free4 transportation for all school-age5 students. So the question to that is,6 given where there's great alignment from7 a number of different stakeholders, what8 has been the process where parents have9 been engaged in helping you figure out10 what the priorities have been? If you11 could just speak to that briefly for the12 record.13
We did have a14 series of budget hearings before we15 started this process and we asked parents16 and community members to prioritize for17 us. That's why I think you're seeing18 some agreement. And we've gone back out19 and we've pretty much -- as hard as it20 was trying to make these awful decisions21 about what to put in the budget reduction22 cuts, one of the things that -- I mean,23 the things that you see there were the24 things that parents -- that were25 265 5/24/11 - WHOLE - BILL 110135, ETC.1 important to them. Class sizes stayed2 small. They said that. Full-day3 kindergarten, we didn't know that was4 going to be even an issue, because we5 thought we were going to get that block6 grant back in the budget this year. But7 they talked about art and music being8 important, lower class sizes. Safety was9 an issue for them and enrichment, summer10 school. Because our summer school last11 year was not only something that was good12 for young people and the young people who13 did go did show they didn't regress as14 much as those that did not and it didn't15 matter where they were on the16 instructional continuum, if they were17 behind, if they were on grade level. So18 there was an economic, social value to19 that also.20
We had, I'm22 sorry, nine meetings before and then I23 think we've had nine -- we're finishing24 up with the last meeting. So it will be25 266 5/24/11 - WHOLE - BILL 110135, ETC.1 about 18 community meetings we've had on2 this budget.3
And one4 important stakeholder that has been5 insinuated but not fully talked about is6 the Philadelphia Federation of Teachers,7 who also have weighed in, I would8 imagine, in some way, privately I would9 presume, on what these priorities should10 look like. Is that fair to say?11
That would not12 be fair to say that they weighed in on13 it.14
All right,15 then. Councilman Clarke had to leave,16 but he wanted me to put on the record,17 when will the SRC vote on your budget?18 What's your projected date?19
And the21 potential dilemma that he raised is,22 Philadelphia City Council has its23 schedule, action or proceedings, and our24 time clock to figure out how we help may25 267 5/24/11 - WHOLE - BILL 110135, ETC.1 not be in sync with what your stipulated2 deadline is. So I put that -- maybe you3 can respond to that in Councilman4 Clarke's absence.5
The May 31st6 deadline established in the Philadelphia7 Home Rule Charter, and it harkens back to8 a time when the primary source of funding9 for the School District was local taxes.10 As we've noted, half of our funding now11 comes from the state, and the state never12 adopts a budget by May 31st. In fact, in13 recent years, they've rarely adopted a14 budget by June 30th.15 So the vote that -- the School16 Reform Commission is required to take a17 vote on May 31st, but it will necessarily18 have to be a provisional budget and19 subject to amendment based on the actions20 of this body and the Pennsylvania General21 Assembly. And I think we've discussed22 among ourselves that we will make it23 clear that it is a provisional vote and24 that the School Reform Commission will25 268 5/24/11 - WHOLE - BILL 110135, ETC.1 need to reconvene probably at the very2 end of June to consider how the budget3 will be revised based on the actions of4 this body and the General Assembly so5 that we'll have a working budget going6 into the next fiscal year and school7 year.8
Okay.9 Councilwoman Quinones-Sanchez gave a lot10 of discussion to the alternative11 programming, and it was stated in the12 testimony that five programs are coming13 in-house. Just say again the reason14 behind that decision.15
Mr. Wright can16 come back up. It was partly an economic17 decision. We cut the program back $2518 million.19
And we have been22 building in-house programs over the last23 two years. We will still have, as I24 said, some programs that are provided for25 269 5/24/11 - WHOLE - BILL 110135, ETC.1 young people by outside providers.2
But if we3 round a contract -- and we did not get4 into a lot of that today, but you gave5 numbers around 129 million for6 professional services. Speak to where7 the District has moved to with regards to8 ensuring that women and minority get fair9 opportunity and access with -- let's10 start with professional contracts.11
Councilwoman, on12 an average basis, our professional13 services contracts are about 30 percent14 M/WBE and actually higher on design,15 architectural services when it comes to16 construction or some of the renovations17 that we do. Our overall goal right now18 is 20 percent. We are actually going to19 be presenting to the SRC soon some20 recommendations for changes in M/WBE. We21 want to be more in line with where the22 City is going, looking at the City's23 disparity study, using that as a basis as24 opposed to doing our own, and also25 270 5/24/11 - WHOLE - BILL 110135, ETC.1 reporting out on the same basis that the2 City's OEO office does.3
So to link4 what you just said with Councilman Jones'5 ongoing interest in vocational education,6 under the former Chairman -- and7 Councilman Goode may remember this far8 better than I -- there was something that9 was called a Project Labor Agreement.10 And so maybe not now, but for sure before11 we -- maybe even in the fall, I'd be12 curious to know, how far along are we in13 making sure that young people that attend14 our vocational schools really do get15 first opportunity and first shake at16 being on those construction projects that17 are being built in our neighborhoods18 where you have young people who are19 unemployed. So we really need to revisit20 that and get a handle on where that is21 and where it needs to go.22
Right. And I23 think with the Facilities Master Plan,24 there's an opportunity. When you had a25 271 5/24/11 - WHOLE - BILL 110135, ETC.1 huge building program, of course, it2 opened up some doors. That's more or3 less come to a close, but the Facilities4 Master Plan will offer some opportunities5 for everything from painting to6 electrical work, plumbing, et cetera.7 But we have to -- so we'll have to redo8 the Project Labor Agreement. The one we9 had has essentially sunsetted and we're10 necessarily under those principles, we11 still use those, but we do not have one12 currently, but we're still talking to the13 building trades about that.14
Very well.15 So let me just go through these notes16 real quick. There's a lot of discussion17 given to ESL and graduation rates.18 Significant improvement with math and19 reading scores. Bravo, when we look to20 see where we are as a nation when it21 comes to math and reading compared to22 what's happening around the world. So23 has the District conducted a study to24 understand the purpose behind this25 272 5/24/11 - WHOLE - BILL 110135, ETC.1 improvement? What has contributed to2 that? Can you put your finger on it?3 How do you measure and monitor the4 significant improvement that has happened5 in math and reading scores? If you can6 speak to that briefly.7
Well, we are8 closely looking at and trying to do our9 own in-house research, and actually you10 heard me talk about ARC, the11 Accountability Review Council. They look12 at our programs, and they also hired an13 outside firm to look at specifics that14 they want to address annually. In this15 last year, they looked at our renaissance16 school program, and that was Research for17 Action. We do our own in-house research.18 Like one of the things we wanted to look19 at was the value of summer school. So we20 looked at those young people that went to21 summer school, for instance, and those22 that did not, and we were able to look at23 their first predicted test that they take24 in October, all of our young people, to25 273 5/24/11 - WHOLE - BILL 110135, ETC.1 take a look at who regressed and who did2 not. And so that's what we're trying to3 do. And actually as we were making some4 of these tough decisions, we were5 eliminating programs and services that6 didn't -- we didn't seem to be able to7 correlate with growth.8 So we're trying to closely look9 at -- we haven't had but three years, two10 years with Imagine 2014 and some of the11 programs, but we agonized over what to12 keep, but in the end, we looked at what13 were the programs that we believe were14 getting us significant student15 achievement and yield with positive16 student outcomes.17
Just a18 couple more. Around the alternative19 schools, I'd be curious to know what is20 the role of parents or guardians when it21 comes to the admission of young people in22 these schools? What duty, what23 responsibility do we place on them? What24 is their role in the equation?25 274 5/24/11 - WHOLE - BILL 110135, ETC.1
Well, I'm going2 to ask Ben to come up, but I know that in3 our Multiple Pathways, many of these4 young people are 18 and older. They've5 come through the school system or6 through -- or they didn't come through,7 they didn't finish. So they can make8 these choices without their parents.9
They want to11 come back.12 On the other hand, we have13 students that our in our disciplinary14 process, and those parents for young15 people who were under 18 do have to agree16 that their child will go into the17 disciplinary process or program and/or18 they can make other arrangements. If the19 child is expelled, the parent can decide20 whether to use our services or other21 services. But for the Multiple Pathways,22 the programs that we're talking about,23 the transitional programs, those are24 young people who left our school system25 275 5/24/11 - WHOLE - BILL 110135, ETC.1 and now are coming back, didn't graduate2 and now want to finish, didn't have3 enough -- under-credited, overage, and4 many of them can make those choices5 without their parents. And we can't --6 where they're underage, we can talk to7 their parents, but most of them are8 overage, under-credited or they actually9 dropped out of school and want to come10 back.11
That helps12 explain that.13 Just one thought for14 consideration. The Mayor's Office of15 Sustainability has done a lot of work,16 research and documents on how to grow a17 greener city. So to the extent that as18 you move forward with the Master19 Facilities Plan, there would be some20 value in not redoing some of the work21 they've already done and just look to22 capture what you can use, because therein23 saves time and money.24
We've actually25 276 5/24/11 - WHOLE - BILL 110135, ETC.1 been working with the Mayor's Office on2 not only Green 2015, the whole idea of3 taking impervious hard surfaces and4 flipping them into green space, trees,5 that kind of thing, but also all of the6 work that we're going to do is towards a7 sustainable end. So that's terrific.8
Very good.9 Graduation coaches, what was10 the graduation rate for the School11 District last year and how does this12 compare to rates a couple of years13 before? And then just speak to the value14 of the graduation coaches. Are they15 still in place? Are they going to be16 cut, when there you can actually see a17 connect between their value or them being18 in place and the actual increase in19 graduation rates.20
The six-year21 graduation rate -- and for me that's a22 problem, that we now talk about23 graduation rates over six years instead24 of four. I don't know when that changed,25 277 5/24/11 - WHOLE - BILL 110135, ETC.1 but it changed sometime in the last2 decade. So we're measuring now six-year3 graduation rates.4 It has gone from 59 percent to5 63 percent in two years. So we are6 making significant progress, but we've7 done a lot of things, including8 graduation three times a year, graduation9 in June like we traditionally have done10 graduation and full-day -- because we11 have full day offerings in high school,12 young people who are behind could catch13 up. So we had a thousand young people --14 I mean, 700 young people last year15 graduate in August as opposed to 100 over16 the years before traditionally. And then17 this year we instituted February18 graduation, and another 400 young people19 graduated.20 So we anticipate that the21 graduation rate will continue to go up,22 because we have multiple things going on23 right now to help young people who are24 behind catch up and to give young people25 278 5/24/11 - WHOLE - BILL 110135, ETC.1 a chance who want to leave, go on to2 college early, the opportunity to do3 that.4
Okay. My5 remaining questions have already been6 fully discussed, charter schools and the7 like, English as a second language,8 Facilities Master Plan. So I am going9 to -- well, police officers, we talked10 about that as well.11 That completes my questioning.12 Thank you very much.13
Thank you16 very, very much.17 Thank you, Madam Chair.18
Thank19 you, Councilwoman.20 Dr. Ackerman, we ask you to21 acknowledge another member of the SRC22 present.23
Yes. Our24 Commissioner Johnny Irizarry is here.25 279 5/24/11 - WHOLE - BILL 110135, ETC.1 When we introduced the Commissioners this2 morning, he wasn't here. He came in3 after.4
Thank5 you. Thank you for your attendance.6 Councilman Goode.7
Thank you,8 Madam Chair.9 Good afternoon. We've made a10 lot of progress today. We've had a lot11 of discussion about potential cuts and12 what we might be able to invest in in13 terms of restoring some of those cuts.14 There are a list of items in your15 presentation that are not among those16 things to be cut because they are subject17 to mandate or difficult to cut. Can you18 tell which of these items are not19 actually mandates, but simply difficult20 to cut, in your estimation?21
The question24 is, which of these items are simply25 280 5/24/11 - WHOLE - BILL 110135, ETC.1 difficult to cut rather than actually2 mandated on the list that you have on3 of the presentation. I'm just4 asking which aren't mandated or difficult5 to cut.6
The only one that7 we would put in the difficult to cut8 category really is special ed and special9 ed transportation. First of all, special10 ed transportation, because one of the11 things we are challenging ourselves on is12 to run our transportation operation more13 efficiently.14
I'm going to19 ask you the question very simply so we20 can save some time. What on the list is21 not mandated?22
I'm trying to make23 the distinction. The service is24 mandated; the particular level of25 281 5/24/11 - WHOLE - BILL 110135, ETC.1 spending we have budgeted may not be. So2 if we can find what's difficult is to3 provide them -- everything on here is4 mandated. Every single thing is5 mandated.6
Right. Not in9 terms of necessarily that particular10 cost. So that's the difficult thing.11
That's a12 very important clarification. So these13 are not mandated costs?14
That's the16 question now. These are not mandated17 costs?18
So, as I said,19 special ed is the only one that I would20 say there's not a mandated cost. We're21 looking for ways to provide the service22 more efficiently.23
Okay. So24 debt service and temporary borrowing,25 282 5/24/11 - WHOLE - BILL 110135, ETC.1 explain to me how that is a mandated2 cost. If you've already borrowed the3 money, I can understand how it's4 mandated. If you intend to do more5 borrowing, then it's not mandated. It's6 still a decision of how much more7 borrowing you're going to do.8
That's correct.9 What you're seeing here is the debt10 service we are already obligated to pay11 on borrowings the School District has12 conducted in the past.13
So this $25414 million is a reflection of money that is15 absolutely mandated cost?16
This is all19 borrowing that has already taken place?20
Do you22 intend to be taking on any more debt23 service?24
Yes, and I would25 283 5/24/11 - WHOLE - BILL 110135, ETC.1 direct your attention and the attention2 of the other Councilmembers to the3 next-to-last page in the Budget and4 Brief, , which is the summary of5 the capital improvement plan, and in the6 detailed budget, we have more7 information. But this budget calls for8 $160 million capital expenditure level9 next year, with the debt being issued10 probably in the fall at that $160 million11 level, and we identify the things that we12 need to spend that money on.13
So how much14 more in debt service are you taking on?15
So that will be --16 well, that will be about, depending -- we17 don't know based on interest rates, but18 somewhere in the vicinity of $13 to $1719 million, depending on what interest rates20 are, annual debt service, depending on21 what interest rates are.22
And that has23 to be done in Fiscal Year '11 and '12?24
Because we run all3 of our capital programs pay as you go.4 Basically we don't go into the capital5 markets to borrow until our capital6 projects fund is close to depletion. So7 it's just-in-time borrowing.8
The work has to be11 done because in some cases, construction12 projects are already underway, like West13 Philadelphia High School. In some cases,14 in fact the majority of the funding,15 $101.1 million, is for lifecycle16 replacements where components of our17 buildings are coming to the end of their18 useful life, boilers, facades, roof19 replacements, window replacements,20 electrical systems. Those are the major21 components.22
Councilman,23 there's also reimbursement on some of24 those items, the state's planned-time25 285 5/24/11 - WHOLE - BILL 110135, ETC.1 programs. So we do borrow and then we2 get some reimbursement back from the3 state.4
Okay. I'm5 not clear there's not some flexibility6 there, but I'll leave it alone, because I7 do believe that infrastructure and8 capital projects are important. What I9 will focus on, though, is part of that10 debt service and temporary borrowing we11 had discussion in the briefing about12 interest rate swaps, and I believe the13 response you gave, Mr. Masch, may not14 have been a full response. I asked15 whether interest rate swaps had cost the16 School District any money, and you said17 they had not because those swaps have18 been ended. The question now is, did you19 pay to get out of the swaps?20
I don't remember24 the number. We will get it for you.25 286 5/24/11 - WHOLE - BILL 110135, ETC.1 What I can tell you about the transaction2 is --3
I really4 just need the number. The information I5 have says you paid $63 million to Morgan6 Stanley, Goldman Sachs and Wells Fargo to7 cancel five swaps.8
Well, first of all,9 those were institutions that were10 handling the transaction. So the money11 didn't go to them. They were not12 necessarily the holders of the13 counter-party agreements.14 Yes, we had to pay money to15 unwind the swaps, but the reason that we16 waited to go into the market was, you17 have to look at the total transaction --18
I would19 prefer rather than give me the type of20 answer you gave me yesterday, which was21 not complete, I want a full accounting22 for what you paid to them, why you paid23 it to them --24
I will give you a25 287 5/24/11 - WHOLE - BILL 110135, ETC.1 full --2
-- how much3 you paid and whether that was actually a4 mistake in terms of how you handle the5 refinancing and whether you should have6 ever been going from a fixed to a7 variable rate to begin with, and included8 in that I'd like to know what your9 interest rate swap policy is now, because10 while you said you will not enter into11 future swaps, if this potentially cost12 the District tens of millions of dollars,13 that's something that needs to be14 accounted for.15
Well, when you16 enter into and then unwind a swap17 transaction, you need to look at what you18 put in and what you got out over the19 entire life of the transaction, and we20 netted a gain on the transaction in its21 totality. In addition, the --22
It doesn't23 mean the way you handled the swap didn't24 still lose money. So you may have had a25 288 5/24/11 - WHOLE - BILL 110135, ETC.1 net gain, but you still may have made2 mistakes along the way that cost tens of3 millions of dollars in terms of even4 engaging in a swap to begin with.5
Right. While that6 is theoretically possible, it was not the7 experience of the School District, and as8 I said to you yesterday, we realized9 gains. We were on the verge of realizing10 losses. We did have to pay to unwind the11 swaps. And that was not the question I12 was asked yesterday, but there's no13 question that was part of the transaction14 in December. But the net gain15 budgetarily to the School District from16 that transaction was $19.2 million in17 December. So we did not lose money on18 that transaction.19
So we will provide22 you with the full details, including the23 source and use and the history of the24 swaps.25 289 5/24/11 - WHOLE - BILL 110135, ETC.1
That means if we4 had held the swaps, we would have started5 to lose money on them.6
Had you not7 entered the swaps, what would have been8 your experience?9
Well, over the --10 we've actually done the analysis. Over11 the period of time that we held the12 swaps, if we had simply had conventional13 fixed-rate debt, we would have had a14 worse position. We would have had higher15 borrowing costs than we did with the16 swaps.17 I want to emphasize, no one who18 is currently on the School Reform19 Commission or in the senior management of20 the District, including Dr. Ackerman and21 myself, was a party to those transactions22 when they were entered into.23
So as I24 mentioned, include your swaps policy,25 290 5/24/11 - WHOLE - BILL 110135, ETC.1 your current swaps policy, and also2 include that analysis of the swaps that3 proves that you didn't lose money by4 entering into the swaps.5
Thank10 you very much.11 Are there any other questions12 from members of Council?13 (No response.)14
Seeing18 none, then we will recess this hearing19 until 1:00 p.m. tomorrow where the public20 will come to testify. We hope to have21 you on board so that we may be able to22 refer some of the questions that come to23 you to work on.24 Thank you very much. Thank you25 291 5/24/11 - WHOLE - BILL 110135, ETC.1 all.2
I3 would just like to add -- I would like my4 colleagues to hear me. We do have, as of5 this moment, 65 witnesses that would like6 to testify tomorrow. So I ask that you7 all be here and try to be prompt, please.8 Thank you.9 (Committee of the Whole10 recessed at 5:15 p.m.)11 - - -12 13 14 15 16 292 CERTIFICATE2 I HEREBY CERTIFY that the3 proceedings, evidence and objections are4 contained fully and accurately in the5 stenographic notes taken by me upon the6 foregoing matter on May 24, 2011, and that7 this is a true and correct transcript of same.8 --------------------13 MICHELE L. MURPHY14 RPR-Notary Public15 (The foregoing certification of this19 transcript does not apply to any reproduction20 of the same by any means, unless under the21 direct control and/or supervision of the22 certifying reporter.)23