COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE OF THE WHOLE - - - Tuesday, 3/19/02 a.m. 6 Room 400, City Hall Philadelphia, PA 7 - - - 8 9 10 PHILADELPHIA SCHOOL DISTRICT FY '03 BUDGET HEARINGS PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE L. BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DICICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 3/19/02 COMMITTEE OF THE WHOLE INDEX FY '03 SCHOOL DISTRICT BUDGET HEARINGS WITNESS James Nevels, School Reform Committee Chairman... Sandra Dungee-Glenn, SRC Member.................. 11 Dr. Deidre Farmbry, Superintendent............... 17 James Doosey, CFO................................ 52 Michael Masch, SRC Member........................ 167 Dr. James Gallagher, State Board of Education.... 267 Tom McGlinchey, COO, Facilities and Construction 279 * * * 3 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS
Good morning, everyone. This is the public hearing of the Committee of the Whole regarding Bill Nos. 020031, 020032, 020033, 020034 and 020040. I would ask Mr. McPherson to please read the title of the bills. MR. McPHERSON: Bill No. 020031, an Ordinance amending Section 19-1301 of the Philadelphia Code, entitled "Real Estate Taxes," to decrease the rate of tax on real estate with the City of Philadelphia, under certain terms and conditions. Bill No. 020032, an Ordinance amending Section Chapter 19-1800 of the Philadelphia Code, entitled "School Tax Authorization," by amending Section 19-1806 to further authorize the Board of Education of the School District of Philadelphia to impose a tax on the use or occupancy of real estate within the School District of Philadelphia. Bill No. 020033, an Ordinance amending Section 19-1801 of the Philadelphia Code to further authorize the Board of Education of the School District of Philadelphia to impose a tax on real estate within the City of Philadelphia and to 4 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS change the tax rate under certain terms and conditions. Bill No. 020034, an Ordinance amending Section 19-1800 of the Philadelphia Code entitled, "School Tax Authorization," by amending Section 7 19-1804 entitled, "Authorization of Net Income Tax," to further authorize the Board of Education of the School District of Philadelphia to impose a tax on net income from new property and tangible and intangible personal property of residents of the School District of Philadelphia and by making technical amendments all under certain terms and conditions. Bill No. 020040, an Ordinance 16 authorizing transfers and appropriations for Fiscal Year 2002 from the Grants Revenue Fund, the Director of Finance-Provision for other grants to the general fund, the Director of Finance Contributions to the School District.
Thank you. Mr. Nevels, I invite to the witness table, and I would also suggest anyone else that will be testifying join you at the witness table. Thank you. 5 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS
I believe my colleagues all have a copy of Mr. Nevels' testimony.
I believe so. Good morning. Good morning, Council President Verna.
Councilwoman Miller and Council members. I want to thank you for the opportunity to review with you the current state of the School District of Philadelphia. I, like my fellow School Reform Commission members, like Sandra Dungee Glenn, to my left, Jim Gallagher, who is behind her and to her left, Mike Masch, who is also here, and Dan Whelan, who has a funereal responsibility this morning, accepted the volunteer position with the knowledge that reforming the 7th largest School District in the nation would be a difficult and challenging task. All of us are volunteers. We all have other 6 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS jobs, but providing hope for Philadelphia District school students, your students, our students, their parents, their teachers and community leaders is our passion. And, like you, we are extremely troubled that our schools are not better. For years the District has faced tremendous challenges on all fronts, academically, financially, operationally, in safety, in leadership and in our facilities. As you know all too well, most students in this District are not reading at grade level. More than half scored in the bottom quartile in math and reading on the Pennsylvania Systems of Schools Assessment Test, or commonly known as the PSSA, and 40 percent of our students are dropping out before graduation. I also might add, as I had a conversation with the majority leader in talking about the fact, that approximately 40 percent of our fourth graders also cannot read. And if this School District is ailing academically, it is in cardiac arrest financially. 7 billion dollars. It is faced with an additional billion dollars in debt. We are dealing with poor 7 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS financial and operational controls and little comparison of actual to budgeted expenditures. We face an enormous preexisting structural deficit. This is why one of the first acts of the commission was to order a $300 million bond issue to deal with this year's operating deficit. Frankly, none of us are happy about this because it is tantamount, in effect, to being forced to put your groceries on your Mastercard. Much of what the School Reform Commission has discovered in the past 80 days has not been pretty. But I can tell you, and I'm pleased to report, and we are pleased to report, that there is much worth salvaging. During the course of my term and also as interim, I have enjoyed the pleasant practice of being able to visit our children and their educators in public schools on a weekly basis, albeit recently I haven't had that opportunity during this budgetary session. I visited Strawberry Mansion High School not long ago. You're all familiar with the neighborhood. It is a tough place for kids. But there were a number of things I saw there that impressed me. One of them was a girl coming to 8 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS school through metal detectors and security checkpoints with her baby. I was startled at first to see that. Then I was proud, proud that this young woman's education meant enough to her that she was coming to school, baby in tow. It is for this young woman, her baby and the 214,000 students in the School District of Philadelphia that the commission, me and my colleagues, need to do a better job. The District needs change. The needs are urgent and cannot wait. Nobody can be satisfied with the status quo. Philadelphia has suffered from poor performance in too many schools, failing too many kids for too long. Many have described the reform in the School District of Philadelphia as an experiment. The commission views it as an imperative. We are not here to conduct research. We are here because we have been asked by Mayor Street and Governor Schweiker to solve this problem. The issues that plague the School District of Philadelphia today did not begin overnight and will not be fixed overnight, but it is the mission of the School Reform Commission to resolve them.
We have devised a plan to right the 9 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS course for this District. It is a complicated plan because the problems are inherently complex. In solving these problems the School Reform Commission has control and influence over a great many things in the District, but we face many constraints. We have devised and are recommending a school District spending plan for which we seek city, state and federal funding. As responsible stewards, the commission must approve and monitor the utilization of those funds as well as hire and supervise the staff that lead the District, but the city, federal and state governments decide how much funding we receive and what statutory and regulatory directives, mandates and constraints we must follow in carrying out our work. We face a particular challenge of working in a system in which no single government funds and regulates the School District. There is no consensus between the governmental entities as to how the responsibilities for funding and regulating the School District should be apportioned. We know that the Mayor, the Governor, the City Council and members of the General Assembly all want to see 10 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS positive change in the School District of Philadelphia. Over the past 80 or so days it has become clear that there is not unanimity among elected officials as to what changes are needed and how they should be implemented. The only point on which there seems to be a significant consensus is that the status quo is not acceptable. The SRC recognizes that elected officials are urging us to do many things, some of which are contradictory to one another, some of them are not possible within the confines of the existing School District budget. How do we intend to respond to this complicated reality? All we go do is proceed with open minds, be willing to listen and to learn for all who care about our children and who want to make our schools safer and more effective. We are committed to positive change. We are determined to spend public dollars wisely. We are insistent on accountability, that is, our own need to be accountable to the public and its representatives, including this body, as well as our employees and our contractors' needs to be accountable to us and to the public. We are ready to try new thoughtful 11 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS and deliberative approaches that promise to improve educational outcomes, and we are prepared to change course if evidence suggests that some of our strategies are not working. Our bottom line is this: We are bound and determined to act boldly and relentlessly to make things better for our children. The School Reform Commission is off to a good start. We have already achieved capital and operational savings. While it is never easy to lay off employees, we have set a plan in motion to achieve $25 million in savings by eliminating redundancies and identifying operational efficiencies in the District's headquarters. In addition, for the first time in recent history, we have had cost cutting and a plan in which schools will be painted and renovated for opening in the fall. We plan in the coming weeks to announce the details of our Educational Reform Advisory Committee which will provide local accountability in each of the academic areas. This is part of our commitment to provide suitable opportunity for parent and community input, realizing this patient 12 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS is in critical condition and requires immediate treatment. This is a matter that is so important that I have asked my colleague, Miss Glenn, to talk with us a little bit about how the Educational Reform Advisory Committees will operate and also the general planning to involve public involvement in this very important matter. Sandy, please.
Good morning. We want to assure that you the issue of providing a meaningful way for the commission to receive parental and community input has been given very, very serious consideration, and we are looking in very short order, hopefully, in the next week or so, to unveil the mechanism and the structures that we intend to put in place to have a permanent and a way for the commission to interact with community and parents. And let me try to give you an outline of what the mechanism would be and what the committees would look like. To begin with, we want to create an opportunity in each of our academic areas for the development of what we are calling Education Reform Committees. These committees would be, as I said, 13 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS established in each academic area and would consist of parents, community members, students, probably members of our administration and teachers who would meet on a regular basis. We are at this point proposing that they meet monthly to receive input from the schools and parents in that academic area on issues that are of concern to them. We have academic areas. Each 10 academic area would then select a representative to be part of a City-wide Education Reform Council that would meet regularly with the SRC. The area representatives would be joined by at large members. We are at this point considering 10 to at large 15 members to join with our area representatives to make up what would be a City-wide Education Reform Council. That council would meet on a regular basis with the SRC to consult with us, to advise us on the variety of issues that will be coming before us. That is the permanent structure that the SRC is looking to put in place to engage community input and to have a regular means for parents and other members of the community to interact with us. We also are very aware of the very significant concerns that have been raised as we 14 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS move forward on the consideration of educational providers or managers to participate with some number of our schools. In order to give parents and other community members who may want information or may have concerns as that program is rolled out, we also are planning to, after we have identified the potential schools that may be impacted, to create opportunities through town meetings with each of the schools in areas in which schools may be affected, so that, again, parents and community members can come and hear what the plan of action is intended to be and also to give us their concerns and their suggestions of what reform would look like at their particular schools. That, again, is in direct response to this issue of having educational providers work with some number of our schools. So those are two components of community involvement and input that we do intend to implement in very short order. As you know, we work on a very aggressive time line, and we know that this is -- there will be a lot of details that need to be worked out on this, but that is the framework that we are proceeding on. Thank you, Mr. Nevels. 15 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS
Thank you. When schools open in the fall, we will see a very new School District with the application of best educational, operational and financial practices that we will have gleaned from some of the best consultants in the United States. Also, parents and students will have a greater choice in terms of educational options in the form of community partnership schools, charter schools and traditional, but vastly improved, public schools as well. We have laid the foundation for serious financial and academic reform in Philadelphia. We are gaining momentum. But we need your help, all of your help, in implementing the four cornerstones of a return to fiscal sanity. Completion of deficit financing immediately to repair the structural deficit that preceded us, additional city revenue, additional Commonwealth revenue and greater efficiency and accountability and stewardship of funds by the District. Partner with us to help our students, to help your students, to be successful. Jim Doosey, the District's Chief Financial Officer, will describe our financial 16 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS strategy in greater detail. But without each piece of the financing being in place, including the $300 million in deficit financing, $45 million from the city and $75 million from the Commonwealth, the School District will not be able to operate. We well understand that deficit financing is not a panacea but will provide us the time, the very precious time we need, to develop more long-term solutions to the District's financial stability. Deficit financing makes sense if all who share the responsibility for the future of the School District, the SRC itself, the Governor, the Mayor, this body and the General Assembly, use that time to reach consensus on a longer term plan to achieve financial stability. Additionally, we must work relentlessly to improve academic achievement for Philadelphia's school children. This bridge is what the city achieved when it issued its deficit financing bond in 1992. Deficit financing played an important role in enabling the city to restore fiscal stability, and deficit financing can help the School District to achieve the same goal. 17 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS While fiscal health is the key to long-term stability in the School District, education, education is the product and the mission of the Philadelphia School District. We want you to understand where we stand financially, but first, first and foremost, we want to tell you where we stand educationally. There's been much conversation about the finances, but let us underline this: The children's education is what the primary mission of this institution is about. And we want to tell you about the plan to move forward in terms of educational goals and strategy. Then we will show you the financial implications of that educational strategy. I would like to introduce the District's Chief Academic Officer and Acting Superintendent Dr. Deirdre Farmbry. Deirdre.
Thank you, Mr. Nevels. Good morning, President Verna, Councilwoman Miller and Council members. Thank you for the opportunity to update you on the educational progress being made in the School District of Philadelphia and how we are 18 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS working harder to build on the success we have already seen. As was the case last year when I spoke before City Council, we are now in the midst of a major transformation in the management and organization of the District. As it was last year, my role as Chief Academic Officer and now Acting Superintendent is to evaluate and promote sound educational policies and programs that support the key clients in this School District, our students. And just as it was last year, the District's mission is to provide all students with the educational skills and tools needed to be productive and engage citizens ready to compete in the 21st century. Let me state up front, in a succinct way, what our organization is all about. In a nutshell, our goal is to provide all children with the skills and knowledge they need to live a satisfying and self-sufficient life. How are we doing? I would be the first to say getting better, but far from good enough. Tests remain the most clearly understood measure of student progress, so let us begin by looking at our test scores. The standardized tests we use to assess student progress are the state's 19 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS instrument known as the Pennsylvania System of School Achievement, or PSSA, and the Stanford Achievement Test, Ninth Edition, commonly referred to as the SAT-9. The PSSA tests students in grades 5, and in reading and mathematics. 7 PSSA results from 1996 to 2001 have been 8 rising across all grades and subjects. In fact, the 9 Commonwealth of Pennsylvania has recognized the 10 District for both improved scores and student 11 attendance on the PSSA. 9 million of the state's awards for improved performance on the PSSA's, schools received 15 $761,869 of the awards for improved attendance, and 16 four of our schools received awards in both 17 categories. A total of 95 different schools earned 18 awards, and two, M. H. Stanton and Wistar, earned a 19 new award, the Governor's achievement school awards 20 for continued achievement in test scores over three 21 consecutive years. 22 However, we know that we have more progress to make at an accelerated rate. Yes, 176 of our schools were identified on the state's empowerment list as low performing schools. Yes, 20 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS although from 2000 to 2001 PSSA scores increased in both reading and mathematics in grades and and 4 in mathematics at grade 5, we are concerned that the 5 grade 5 reading scores declined, although they are 6 higher than they were in the baseline year of 1996. 7 We take this data very seriously and are working 8 hard to lift all of our schools and to work to 9 prevent slippage. 10 The SAT-9, the other standardized test 11 we presently use, measures student progress in reading, math and science, with graduated scores from Below Basic I to Advanced. Although it is the PSSA that is the State's measure of progress, we use the SAT-9 to give us a national perspective, that is, to see how students in our District perform relative to students in other urban districts across the country that also use the test. By contrast, the PSSA results can be used to make a comparison only with other Pennsylvania districts. In the world of standardized tests, the SAT-9 has a reputation as being more rigorous than many other tests. Based on SAT-9 results from 1996 to 2001, scores went up and then hit a plateau, remaining stable in reading at grades 3, 4 and 7. 21 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS We are concerned that the reading scores decreased in grade 10. In mathematics, scores at grades and remain stable, but declined at grades and 10. Science scores have declined at every grade except 11.
Admittedly, there is a great deal of hard work ahead of us to bring every student to high levels of achievement. On a more positive note, scores of our English language learners and students with disabilities were stable over the past year and have improved from the 1996 baseline year. In summary, participation rates have increased on both the PSSA and the SAT-9 since the baseline year. Both tests show growth in reading and math in the elementary grades. Secondary scores are mixed, with more growth indicated both in the past year and over time on the PSSA than on the SAT-9. I do feel compelled to point out that years of rising test scores in the early grades on one of the hardest standardized tests available suggests that the District's investment in full-day kindergarten, in reduced class size early Balanced Literacy and in intensive teacher training is an 22 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS investment yielding positive outcomes. I thank the members of City Council for your investment in these intervention strategies that we know have made a difference, particularly at the early grades. We are making progress, but we need to accelerate that progress. And we have to continue to key in and work on vulnerable areas, as identified by the year-by-year analysis of these two tests. Our middle grades in high schools pose unique challenges and ripe opportunities for improvement as students at the elementary level who have been making positive gains are now progressing into middle school and high school as we have been aggressively working on resources and gathering support to improve the instruction they will encounter. A middle years Balanced Literacy Framework is completed, complementing the techniques highlighted in the K through 3 early Balanced Literacy Framework. Both frameworks serve as the content of professional development sessions to help all teachers hone their skills as literacy instructors. Work is ongoing to place similar literacy supports in the hands of high school teachers. 23 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS Through a grant received from the National Science Foundation, 100 teachers are in training to be science and math Fellows equipped with the skills to help their colleagues gain a higher degree of comfort in teaching science and math in more engaging ways to stimulate and maintain student interest. Before we leave the subject of standardized tests, I think it is important to update you on one particular facet of our assessment operations. In the spirit of sound management of scarce resource and in recognition of the high state-wide test we administer each year, I have ordered a total rethinking of the continued broad use of the SAT-9. Already we have reduced our use of the SAT-9. " Now, how are we moving forward? What is the foundation on which we, the educators, in the Philadelphia Public Schools are grounding our 24 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS efforts? The guide for our work is a document called The Curriculum Renewal Plan, a document not only satisfying teachers' requests for more guidance about what to teach at each grade level, but also satisfying a requirement of the District's longstanding desegregation case. Approved in the fall of 2001 by both the Commonwealth Court of Pennsylvania and the Pennsylvania Human Relations Commission, the plan serves as the basis for all instructional planning in the District at this time. In the fall, I sent each member of council a copy of the plan with the expectation that it would enable you to be conversant with your constituency regarding the educational priorities of the District. Permit me to reiterate the four goals of the plan.
They are, number one, to implement a core curriculum built on the District's academic standards; two, to match our curriculum with how we measure and report student performance; three, to meet the needs of special populations of students by providing opportunities and resources for staff to increase their ability to effectively teach the District's multicultural, multilingual and racially 25 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS diverse students, and, four, to connect professional education to our core curriculum and assessment strategies. These four goals have guided the work of staff in administrative offices. They have reframed the content of administrative meetings, whether they be cabinet meetings, instructional council meetings, senior leadership development meetings, staff meetings between area academic officers and their principals or meetings between principals and their staffs. The Curriculum Renewal Plan has defined the content of professional development sessions with a full day professional development session on Monday, April 1st dedicated across the city to teacher input to the course guides and units of study that will constitute 50 percent of a teacher's instructional repertoire as we strive for greater uniformity in terms of students educational experiences across the city. I am pleased to say that we are on target, according to the time line in the Curriculum Renewal Plan and even ahead of schedule in some areas. That is an indication of how seriously we have taken the charge to be more aggressive in 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS bringing about an equitable educational program provided by teachers having at their fingertips more detailed road maps for getting students from where they are to where they need to be. Another more detailed road map that we completed and distributed this year is the new more descriptive report card for students in kindergarten through third grade. As parents need to know more than an A, B or C indicates, we now have a reporting system using terminology reflective of the progress a student is making towards learning, advanced, proficient, basic and below basic, and showing what a child will need to learn next. In essence, what is shown is a developmental continuum of reading and writing skills, highlighting a point in time on an instructional road to be traveled. Long-range plans as outlined in the curriculum renewal plan call for changes to the report card for students above the third grade as well. In addition to the District's empowerment plan, which I spoke about in detail at last year's council hearings, the Curriculum Renewal Plan is the educational plan for the school district of Philadelphia. The plan builds on the previous 27 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS efforts of people who contributed to the various editions of the curriculum frameworks, yet responds to the need for a more detailed guide. Monitored adherence to the Curriculum Renewal Plan guarantees that the work students receive is matched to state and District standards. Monitored adherence guarantees a limit to the free range of activities and broad range of instructional materials this District has been accused of promoting to the detriment of children. What we need now is an assurance that the resources will be forthcoming to support the heightened expectations for instructional rigor and an assurance that whoever comes to act as a consultant or to actually take over the critical work of curriculum instruction for the District will follow the time line of the work already put in place in the Curriculum Renewal Plan. Since we do have a plan for teaching and learning, I'd like to report on an area we know is critical for any element of a plan to come to fruition. That area is staffing. I am pleased to be able to state that we started the 2001-2002 school year with far fewer teacher vacancies than in 28 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS the past.
For example, at the start of the current school year, we had 95 teacher vacancies out of the approximately 13,000 teachers in the Philadelphia public schools. Compare that to the 281 vacancies at the outset of the 1999-2000 school year and you will see that we achieved a 66 percent reduction in vacancies. While the number of teacher vacancies is a moving target and fluctuates from day to day, data throughout that year continue to show us in a much better position than at a comparable point last year. Admittedly, teacher recruitment nationally continues to be an endless and challenging task, particularly for urban districts, and we speculate that this recruiting season uncertainties about the future of the District and, indeed, of individual schools may once again deter some teacher candidates who otherwise might be interested in teaching in the Philadelphia public schools and heighten the challenge of filling our classrooms with certified professionals. Our students and schools continue to benefit from our innovative literacy intern teacher 29 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS program. Through that program men and women with Bachelor's degrees are paired with appointed teachers. Together these teams of teachers, one intern to one appointed teacher, work intensively with students in kindergarten, first and second grades with the effect of reducing the student/teacher ratio by 50 percent. While teaching, the interns take courses to enable them to receive permanent teacher certification. To date, this program has brought 989 literacy intern teachers to 197 schools. This year interns have taken their 14 enthusiasm and skills to our middle schools. In 15 addition, 31 interns are scheduled to be fully 16 certified teachers by September. They have made a 17 commitment to stay in our District. That is a plus 18 for them, for our schools and for our students. 19 Next, I'd like to update you on the 20 results of the academic reorganization begun last 21 spring since I last tested before Council. 22 Shortly after my last appearance here, 23 the former interim CEO, Philip R. Goldsmith, and I 24 agreed to overhaul the District's academic administrative structure, starting at the top. And 30 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS the top in the School District means from central administration at 21st Street and Kennedy Center outward to the field. The primary objective of the plan was first to make schools center stage by reallocating as many resources, especially educators, into classrooms. The second objective was to provide better, faster and more consistent service to parents and children. 5 million. As part of this reorganization, we eliminated the former system of neighborhood 14 offices called clusters and established 10 area 15 academic offices which also respect the neighborhood 16 school feeder concept. 17 However, the Area Academic Officers, or 18 AAO's, focus more strategically on instruction, 19 assisted by a core of 66 coaches across the city 20 assigned to work with teachers in schools to 21 demonstrate practices to improve student 22 achievement. In addition to scaling back the number of personnel assigned to central office and to the area academic offices, we established new offices, 31 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS such as the office of family and student support services, the office of instructional and behavioral intervention and the office of principal and teacher development, to plan strategically for improvements in the quality of services to support students and staff. Phil Goldsmith, however, kept a very careful eye on the size of staff for each office established and held fast to his pledge of having a greatly reduced number of people in central offices and more personnel directly in schools. How has the field reacted to the changes and to the rationale for making them?
In the fall, one of our first training days for teachers and other staff a principal e-mailed me to let me know of her satisfaction by saying, and I quote, "For the first time in my 34 years in the District, we spent all of our time at our staff meeting on instruction. Thank you, thank you, thank you," end of quote. Members of Council are more intimately aware than most about the difficulties inherent in making such a seismic shift in the culture of an institution and the barriers to such changes that leaders must confront. Yet, even in the midst of last year's budget crisis, I am proud to say that 32 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS over last summer and throughout last fall we completed the transition from cluster to AAO and scaled back central offices as expeditiously as possible. Services to pupils and parents were supplied throughout the summer by staff who simultaneously picked up offices and shifted documents, yet still put students' needs first. I expect the same will happen this summer. And more than one hundred experienced and highly skilled educators moved back to schools and classrooms. One challenge facing all districts, including the School District of Philadelphia is the challenge of raising the bar of expectations given the increasingly competitive and technical job markets its graduates will enter while being able to support students in meeting heightened expectations. We struggle with that dilemma as we realize that if students are to meet the promotion and graduation requirements adopted by the former School Board on June 11th, 2001, then resources must be made available to assist students. Our graduation and promotion requirements have put an end to social promotion, meaning that students previously passed on, even if 33 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS they had not demonstrated mastery, are retained. For these students to succeed, they must have intensive instructional interventions and extended time opportunities if they are to meet our measure of what constitutes promotion. We increase the number of subjects students must pass at grades 4 and 8 in order to move on to the next grade. At grade 4 we added a score requirement which must be met on the SAT-9 assessment. 5, in order to graduate with the additional subjects being one more year of math, one more year of science and two years of a world language. These increased promotion and graduation requirements make for an ambitious agenda which demands that we a require additional world language, math and science teachers through non-traditional recruitment efforts. These increased promotion and graduation requirements demand the conceptualization and implementation of a different type of summer program, such as an algebra institute for students who need extra time to master this gatekeeping subject, a world language institute 34 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS to provide access for students caught in the reality of a nationwide shortage of world language teachers, remedial opportunities for students to whom we are saying as a system through a deliberate policy change that mediocrity has no merit in today's marketplace. Although we have raised the bar, each year the reality of financial retrenchment butts heads with what we consider to be a responsible and responsive instructional platform erected on high expectations. We face the dilemma of desiring to be rigorous, yet pulling back when we realize that our expectations exceed our internal capacity to support students in meeting them. For the past few years, we have reviewed finances each spring to determine the scope and magnitude of the summer program, aware that without ample offerings some students will be unable to remain on time in what we want desperately to be only a 12-ear journey through school. Determining the range of support for this year's summer program based on what we can afford is one of the tasks awaiting me this week.
In the name of being responsible and 35 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS responsive, we in the District are proud to the extent to which we have in the name of all children instituted programs and practices to assist in the reentry of students on the verge of dropping out of school and into a future of limited options. I am referring specifically to Twilight and TOPS at the comprehensive high schools from o'clock until o'clock daily. Twilight schools meet the needs of over-aged, under-credentialed students still committed to earning a high school diploma. To participate in twilight school, a student must be between the ages of and 24, have at least 10 high 14 school credits and be receptive to an accelerated 15 rate of credit accumulation. 16 Twilight schools have become a beacon of 17 hope for students facing many adult responsibilities 18 that have interrupted their adolescence, such as the young lady with baby in tow that Mr. Nevels just referred to, placing demands on them that make a 3 o'clock day a viable option. Twilight schools are also a beacon of hope for students who find the size of the student population during the school day and all of the temptations therein not conducive to a focus on instruction. 36 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS And are they successful? In June of 2001, 87 percent of the twilight students who had made it to the senior year graduated. These are students who could conceivably be in society without a credential society deems important. TOPS is an acronym for Transitional Opportunities Promoting Success. TOPS is a partnership between the School District of Philadelphia and Communities and Schools, Inc. The purpose of TOPS is to provide an alternative educational environment and curriculum for middle and high school students who either are returning to school from non-traditional situations, such as incarcerations, are experiencing severe family stressors, are disciplinary transfers or having difficulty in attending or achieving in their traditional school settings. The program operates in classrooms spread across 10 comprehensive high schools and two middle schools. Ninety percent of the students in TOPS graduated in June 2000. More familiar to many is CEP, Community Educational Partners, a temporary placement for students in grades 6 through 12 whose behaviors have necessitated removal from the regular school 37 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS setting. At its new site, CEP currently instructs 1,020 students. Our summer reorganization of the District, leading to the newly created Office of Instructional and Behavioral Intervention, has resulted in a streamlining of the process for a student to be admitted to CEP and a more coordinated approach to the return of students to their regular school. The state's compulsory education law compels the District to work on multiple fronts and with multiple partners to insure a successful route to graduation for students acceptable to dropping out. Under the auspices of the Office of Instructional and Behavioral Intervention, programs have been put in place and are being fine tuned to address issues such as truancy, discipline and the transition needs of the more than 1,700 students annually returning to the School District from court ordered placements. Yesterday's story in the Daily News was real. For three years, I was the principal of the school featured in the article. For me, reading the story was deja vu. I am pleased to say that I was the principal who lobbied hard and won to get a 38 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS probation officer for the school. I see that nine years later the same probation officer is still there and he and the principal are facing the same challenges.
A guiding document for the work of the Office of Instructional and Behavioral Invervention is the school District's comprehensive safety plan, also approved in the fall by the Commonwealth Court and the Pennsylvania Human Relations Commission. As we continue along the path of the improvement, there are other vehicles and ideas working in support of our efforts. The current contract between the School District and the Philadelphia Federation of Teachers provides the District with more flexibility to manage generally. Specifically, a longer school day provides for increased instructional time. Teacher transfers now occur much sooner, allowing for earlier placement of new teachers, a known factor in teacher retention and helping to curb the negative impact of disruptive teacher transfers throughout the fall. In addition, by utilizing a contract waiver provision, staff now have a real choice in deciding the composition of their school teams by 39 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS exercising an option known as site-based selection. With site selection, a school committee of the principal and some teachers select staff on site to fill vacancies. Fifteen schools participated successfully in site selection last year and 29 will be participating this year. To address the multiple factors of competitive salaries, teacher quality and student achievement, the contract with the Federation also provides for the development of an enhanced compensation system whereby a teacher progresses along a higher salary scale through demonstrated excellence in classroom practice and content knowledge. The enhanced compensation system also provides bonuses for certified teachers in specified areas of critical need, currently, math, chemistry, physics, Spanish, special education and bilingual education and in certain schools with a history of difficulty in filling their vacancies. Yes, the current contract makes a start for the massive change we know is needed to accelerate student achievement. We must employ the provisions of the contract aggressively to bring about the necessary reforms. 40 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS In addition to the contract as a support moving forward, we have the great ideas of teachers and principals who know what they need to improve the instructional climate and educational outcomes. Listen to some representative items from high school principals who over the course of the year have engaged in serious sessions defining from their own experience base the critical elements of high school reform: Funding for a full-time reading diagnostician for high school students who are grades behind in their reading levels; funding for a math, science and English department head for every high school; funding for an assistant principal at each high school to focus solely on instructional improvements; funding for adequate staff to fully support block scheduling; funding for more eighth to ninth grade transitional programs; funding for science lab upgrades; funding for specialized program for repeating ninth graders; funding to upgrade all shops and labs to industry standards, funding for an in-house coordinator to monitor and implement a more meaningful job shadowing and internship program for students; and, finally, funding for more alternative settings for disruptive 41 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS youth. As this list demonstrates, we have the voice of experts right here in our midst. Our principals and teachers know what they need and are very candid in stating it. With each need, however, there is a price tag attached. Years ago, the late Ronald Edmonds, Professor of Education at Michigan State University and father of the effective schools movement, issue four basic tenets for school improvement.
His work has been recast by many other educational scholars and now it's being repackaged in Madison Avenue glitter and glitz by entrepreneurs trying to capitalize on the common sense nature of these basic educational truths, that effective schools need the principal's leadership and attention focused on the quality of instruction, they need a pervasive and broadly understood instructional focus, they need an orderly safe climate conducive to teaching and learning, they need teacher behaviors that convey the expectation that all students are expected to obtain at least minimal mastery, and, finally, they require the use of pupil -- of measurements of pupil achievement as the basis of program evaluation. 42 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS Since I spoke before you last year, I can earnestly say that we have adhered to these principles and have established programs designed to support each of the guiding premises. As always, adequate resources remain the key to our capacity to build upon work already begun. And, now, let us close with some aspects of that work we're celebrating. Just last week President Bush acknowledged our efforts in promoting service learning and volunteerism at his March 12th round table at the Kimmel Center. Stephanie Oliver of University City High School spoke movingly of her success in helping younger children become better readers in a literacy service learning program. Five students from the Girard Academic Music Program, better known as GAMP, will be participating with the Philadelphia Orchestra on April 15th at the Kimmel Center in a concert called Celebrating Bernstein. These students are Elizabeth Sestito, Erica Gagliardi, Leihzel Baybayon, Justin Gonzalez and Donald Manigly. In case you missed the recent article in the Philadelphia Inquirer, Overbrook High School's Mock trial team was a finalist in the Philadelphia 43 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS mock trial competition. Its second place finish qualifies the team for the state contest. D. quality work" by a judge at this year's Siemens Westinghouse Science and Technology Competition. Sasha, as she is known by classmates and teachers, won a second place in the national level of this contest. " Ladies and gentlemen, I realize I'm being lengthy, but with many of my other staff members, we may not be here again to tell the story...
I believe Councilman Nutter would like to be recognized.
Thank you, Madam President. 44 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS Madam President the first time that I may actually be going crazy. There is a sound coming out of our speaker system apparently related -- I don't know whether it's electronic or there's a beeper or a phone near an open mic. I am apparently the only person hearing it. Never mind that. I will seek assistance from the community behavioral health system and I will leave right now.
We will have it checked out. It is really affecting my...
Thank you, President Verna. As I said, I'm almost finished. I may not be here next year to tell this story, so I would really like to highlight our students' success. And how about Gratz High student-athlete Malcolm Wells? He has been chosen by the People to People Sports Ambassadors Program to play summer basketball in Australia this year and to attend the Australian Institute of Sports in that nation's capital city, Camberra. He is one of only four young people selected from a field of 5,000 student 45 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS athletes. Simon Gratz High school can also boast of having the first student in the city to earn a CCNA certificate, boosting her earning capacity as she now armed with a document commanding a high starting salary in the highly technical field of web design, computer technology and networking infrastructure. Again, I repeat, that student is from Simon Gratz High school. There will be seven teams of students representing West Philadelphia High School, Mastbaum, Frankford, Edison High, Washington, Bok and Central competing at Drexel next weekend in the FIRST Robotics Regional Competition, hoping to make it to the nationals in Orlando in April. I thank the Daily News, Ronnie Polinasky, in particular, for an article alerting the public of funding needs of deserving students trying to get to Orlando. Students from five high schools, Mastbaum, Edison, Swenson, Dobbins and Northeast, present culinary demonstrations every third Friday of the month at Reading Terminal Market. An electric car, made by students at 46 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS West Philadelphia High School, will compete in the Tour de Sol in April; Saul students took cattle to Mexico as part of the Export for Scholars program; Saul and Lincoln had exhibits at the Philadelphia Flower Show, with the Lincoln exhibit winning an award. Eighteen Mastbaum and Kensington students are participating in a Lockheed Martin apprenticeship program, and across the city, over 1,600 students are enrolled in Cisco classes in 12 high schools with an addition 544 students enrolled 13 in Web Design and Unix classes. 14 On my mantle at home sits a ceramic bust 15 I purchased last year from a CAPA student who 16 exhibited at the District's annual Young Artists 17 Exhibit, soon to adorn the hallways at the 18 District's administration building. Guests to my 19 home have marveled at the work, equating the 20 attention to detail with that of the works of 21 prominent scholars displayed in renowned museums. 22 A few people, including the student 23 sculptor himself, were surprised upon learning that 24 I was willing to pay a four-figure amount for a 25 piece of amateur artwork. But in reality, who is 47 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS more deserving than our students of tangible evidence of a reward of a job well done. We are all proud of these outstanding Philadelphia public school students and commend them for their dedication to what we call hope is the number one priority in a student's life, their focus on school. In addition to the accomplishments of outstanding students, I tip my hat to the exemplary practices of dedicated staff who, in times of uncertainty, could flee to the many suburban communities that seek our professionals and rave about the quality of their preparation. Yet, they have chosen to stay and go the extra mile to promote success for Philadelphia's students. Let's spotlight the efforts of the Ferguson School staff around an important initiative, attendance. Ferguson celebrated its 100 students who had 100 days of perfect attendance this year. The students recently formed the figure "100" in the schoolyard and were filmed from above by a crew from Channel 3. We appreciate Ferguson's successful emphasis on student attendance. Our teachers continue to make us proud.
48 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS For example, I am pleased to report that two candidates for this year's Pennsylvania Teacher of the Year hail from the School District of Philadelphia. They are Donald Snyder, a science teacher at South Philadelphia High School, and Patricia Matthews, who teaches at Woodrow Wilson Middle School. Either would be a worthy Pennsylvania Teacher of the Year! In addition, Regina Goldstein, a mathematics teacher at Washington High School, and Barry Ratmansky, a science teacher at Wilson Middle School, recently were recognized as top Delaware Valley math and science teachers, respectively, by the Delaware Valley Engineers' Week Council. I think that it is great to have our educators recognized for quality math and science teaching by professional engineers who use math and science in their daily work. Finally, did you know that 14 School District teachers have completed course work to be credentialed as Cisco Certified Networking Associates? Such an accomplishment is an industry-recognized standard that indicates knowledge of computer networking. These educators 49 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS teach in the Cisco Networking Academies that are now in operation in more than of our neighborhood 4 high schools. We have been told by industry leader, 5 Cisco Systems, that the School District of 6 Philadelphia has more CCNA's than any other business 7 or organization in the country. 8 In essence, what we have done since last 9 year when I addressed you is re-organize, 10 re-strategize and re-energize. Yet, two critical 11 r's, resources and recognition, remain elusive. 12 Before school opened last fall, I 13 charged principals, assistant principals and other 14 leaders of our District to become agents of change; 15 to foster a spirit of "school pride," to bolster the 16 reality of belonging to a school "family" and a 17 sense of community. I believe it is that strong 18 school pride and a strong sense of community that 19 has sustained the District family through the 20 extraordinary changes and unprecedented challenges 21 of the last year and reinforced our commitment to 22 remain focused on our children. 23 In conclusion, let me say that 24 overseeing the School District of Philadelphia 25 today, the state's largest and the nation's seventh 50 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS largest, requires an understanding of the context of our work and the accompanying challenges, educational, financial and political, that confront all urban school district's, with differences from site to site being more of scale than of type. But oh how scale matters when judging the capacity of any external agency or body claiming to have the answer. Much good, solid instruction and learning goes on each day in the District. Strengthening our performance across the city remains my top priority, my biggest goal, my singular focus. However, as members of this body know better than most, resources are required to make that happen across our entire District, in every one of our 9,000 classrooms. As a public institution, we have a particular obligation to manage our scarce resources in the most effective manner possible, and to maximize those resources for creating and sustaining our students' academic progress. I have repeated stressed "focus, focus, focus" as the mantra for the students and staff this year. While focusing has been a real challenge, 51 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS given the change in governance that came about on December 21st and the tension that preceded it, our students and staff have made us proud in many ways. My hope right now is that in the current chaotic environment, staff and students will continue to be able to focus, particularly, through the period of April, the testing period, which puts us year after year on somebody's list.
Overseeing this District requires a profound faith in the power of education to transform lives, build futures and connect communities. During these difficult days, I have when comforted by the fact that I can relay on your sharing these core values and your shared commitment to the 200,000 students who rely on you as well as on us. Thank you for your attention and for your past and future support. The next presentation is by the District's new Chief Financial Officer, James Doosey.
Pull your chair up to the witness table. Thank you. 52 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS Good morning.
Good morning. Good morning President Verna, Councilwoman Miller, Council members. Thank you for this opportunity to share with you the financial picture of the School District of Philadelphia. While it is the District's mission to educate children, public education in the city cannot continue in the current financial situation. If things do not change now, before the end of the current school year, the District will face a choice between canceling more than $150 million in educational programs or declaring bankruptcy. None of us wants to see that happen, not the School Reform Commission, not this City Council, nor the Mayor, the Governor, nor the state legislators, and certainly not the parents who have trusted all of us to provide an education for their children. The current financial picture is grim. Commitments must be made and upheld by all stakeholders in order for this house of cards to stabilize, but there is reason for hope that financial health can be restored in the District. But, first, please allow me to take you 53 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS back a year ago since the current financial crisis precedes the School Reform Commission's arrival. At that time the District presented a 2001 budget with a unfunded $197 million revenue gap and a structural deficit of $242 million proposed for the current fiscal year. Working together with counsel's help, $20 million in savings were realized by eliminating clusters, establishing AAO's with the hope that additional revenue streams or expense reductions would subsequently be identified to close this $197 million gap. The SRC has continued that rationalization process and can now report a projected 2001 operating deficit for the current year of $107 million, a deficit which is further reduced to $62 million should council approve the Mayor's request for an additional $45 million grant this year. But so much more needs to be done, and done now. To obtain budget balance, the District's revenue and spending growth must match. If the District's spending growth could be kept to a to percent per year rate, the city and state could provide funding increases at the same levels 54 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS currently and the budget would be balanced. Unfortunately, that is not the reality with which we are dealing. The School District has a number of structural problems which preceded the SRC and will continue regardless of any action the SRC takes this year. First, expenses exceed revenues. Primarily due to uncontrollable items such as special education costs, charter schools, ESL, medical insurance premiums and the increased costs to the state teacher retirement program. In all these instances, our contributions are dictated to us by the State, the federal government or the District's various collective bargaining agreements already in place. We have had a productive 80 days; overtime has been curtailed, spending reduced redundant positions identified, all without negatively impacting the educational environment for our children. Still, we have a accumulative deficit of $174 million. We're counting on the $45 million that the Mayor has committed to the District as a contribution to last year's teachers' contract and is the part of the bill that is before you. We're 55 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS counting on the city and the Commonwealth to honor their commitments for additional funding next year, and, last, we are counting on ourselves to make the District as efficient as possible. But we need your help in implementing two of the four cornerstones of this return to fiscal sanity. We need counsel to support the District immediately in obtaining $300 million in deficit financing, and we need your help in supporting the Mayor's request for an additional $45 million this year and in future years.
With this 45 million, our June deficit would end with a current operating loss of $62 million, and the cumulative structural deficit would be reduced to $129 million, a cumulative deficit that would be eliminated by the receipt of bond proceeds. Do we think this is great news? Of course not. But it moves us closer to where we need to be. However, in the proposed 2003 budget, expenses continue to increase faster than revenues. 9 56 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS percent increase in local taxes. 9 percent. Excluding the staffing plan announced last Friday, the District's expenses will increase by 8 percent. Again, the big drivers are special education up 8 percent, charters schools 36 percent, medical insurance premiums percent, and our state 13 retirement contribution up 417 percent. 14 Additionally, salaries for the Philadelphia Federation Teachers contract and CASA agreements will increase 4 percent this year. 5 percent versus an 8 percent increase in expenses. It is for this reason that the School Reform Commission turned a critical eye towards headquarters staffing and announced the plan to save $25 million for 2003 and each succeeding year. 9 percent. Even with all these changes, we anticipate ending 2003 with an operating deficit of $56 million, not enough to balance the budget, but a material and necessary step in the right direction. For 2004, of the $300 million the District plans to borrow, only $115 million will remain. What are the District's options going forward? Should expenses continue to exceed revenue in 2004 and subsequent years, the School Reform Commission has two choices; reduce non-educational expenses or implement material programmatic changes to reduce school-based expenses. The choices are not easy. We will continue to focus our efforts on obtaining additional efficiencies from the District's business operations before considering any material reduction in the delivery of school services. The SRC in a little more than 80 days has implemented actions to reduce the cumulative operating deficit from $174 to $129 million. You have all read in the papers the issue of partnership schools. While the SRC is finalizing the structure and nature of these 58 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS schools, we are committed that this initiative not detract financially from the District's own schools. We welcome the help of the various entities interested in managing these schools, but to be fair, cannot justify allocating more money to these schools than to the schools operated by District personnel over the term of any contract. This District is in financial crisis and has been for some time. The numbers cannot be massaged. The SRC is accelerating responsible strategies initially proposed under interim Chief Executive Officer Phil Goldsmith, but our efforts will not be enough to change the picture on our own. All three partners need to do their part; the city the state, and the District. We respectfully ask that the city honor the terms of the Mayor's agreement with Governor Schweiker. And there are numerous policy issues to be discussed in the classroom, we ask that you support our efforts to improve operational efficiencies in our headquarters and back office functions. We also respectfully ask the state to honor the terms of the Governor's agreement with the 59 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS Mayor by providing an additional $75 million in addition to the basic educational subsidy on an ongoing basis to support our request for legislative -- I'm sorry, and to support our request for legislative changes necessary to immediately issue $300 million in deficit financing, and we ask them to support our efforts to improve efficiencies in both business and classroom as well. For ourselves, the District has to do its part to be more effective in how we spend the resources provided to us.
We have and must continue to embrace financial stewardship and academic accountability. As equal partners, we must begin to craft a better future for the children of Philadelphia. If any of the three partners do not do their part, the hope and promise of reform in Philadelphia unravels. If the state does not amend the Public Debt Act this spring to enable the District to sell $300 million in 30-year bonds, the District will not have sufficient cash to operate at the end of the school year. I invite you to think back to 1992 when the city issued its own deficit financing bonds. 60 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS Deficit financing played a critical role in enabling the city to restore fiscal stability. Where would the city be today if it weren't for that bold and courageous decision by this body. The deficit financing bought the city the time to get its house in order and that's exactly what the School District needs. Deficit financing only makes sense if all who are responsible for the future of the School District use the time of the deficit financing buys to reach consensus on longer term plans to achieve financial and academic stability. If the deficit financing is put in place, but the city fails to honor the terms of the Mayor's agreement to provide $45 million in additional revenue, then the state may decline to provide its $75 million share and the District will be in exactly the same position and run out of money a year from now. The additional funding from the city and state is critical to the ongoing financial viability of the School District of Philadelphia regardless of the outcome of partnership schools or any other academic changes. On behalf of the School Reform 61 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS Commission, I ask for your continued support as the SRC continues its work in transforming this District and giving our students the promise of a better School District of Philadelphia. Thank you.
Thank you very much. I do notice that just about every Council member has his or her light on. We will have a first go around. Each council person will may have five minutes, and then, of course, the second go around will be another five minutes. Mr. Nevels, is the state's $75 million a permanent commitment.
The appropriation, as I understand it, is an ongoing appropriation.
I do notice in the Governor's budget it only shows the payment or appropriation through '05-'06 and stops the appropriation or payment in '06-'07.
Council President, we have a letter from the office of budget that provides that correction and looks to an ongoing appropriation. 62 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS
Thank you. Mr. Nevels, would you say the SRC would like to see City Council approve the FY '02 request for the $45 million,thus the SRC take the same position as the administration of the appropriation of the $45 million does not obligate the city to pay under Act 46.
I'm sorry. I didn't hear you. As point of information, are you saying it doesn't obligate us or it does obligate us?
As point of information, as part of the proposal that will be presented to the Pennsylvania House and Pennsylvania Senate to enable the District to have a one-time window for deficit financing, as part of that provision, the City Solicitor's Office with the help of the School District legal counsel has crafted language specifically to state that local support -- I'm sorry, that the $45 million that would be received in fiscal year '02 is excluded from the local 63 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS support calculation and that the baseline for local support will be the fiscal year'03 calculation going forward at which point in time $45 million from the city and $75 million from the state would be assumed to be received as part of the Mayor and the Governor's proposal.
Assuming the legislature passes, yea, and assuming that this body passes it as well or approves as well.
Mr. Nevels, it's my understanding that you have financial background. Would you advise a client to borrow $300 million over 30 years to cover, at best, a few years of operating deficits, but at the end of the day there is not a solution to the District's structural deficit?
Council President, I would for the following reason and in certain circumstances in my role as a financial advisor with the Swarthmore Group have done that, but that deficit financing has to be part and parcel of a complete plan that provides time to put in place the 64 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS necessary ingredients of a systemic solution. But let me add something that is also very important to note. We have no other alternative in terms of delivering services and education to that precious resource of ours, the children. If it's not there, we close shop.
Okay. But can you tell us what are the estimated total payments over the life of the bonds?
Quite frankly, Madam President, the total payments would be...
Quite frankly, the total payments over the life of the bond would be $25 million per year times the 30-year term.
So we're talking about approximately $750 million --
-- for a $300 million that we're borrowing. 65 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS
When do we anticipate that our friends in Harrisburg will be addressing the 30-year bond issue? I know that we're only allowed to go out for a 10-year bond issue.
My understanding, on advice of legal counsel, is that we are permitted to go out 30 years with the change in the Public Debt Act, and my understanding of the current schedule is that this bill will be discussed next week when the house is in session.
Council President, what has occurred is that the Governor's office has signed off on the legislation. It is in the hopper, and is -- I'm advised by people in Harrisburg and in the legislature that it's one legislated day away from being brought to the floor.
Madam President, I'm glad to defer to someone else. I have all mine in writing and so I can defer. I can hold my questions to later. 66 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS
With that being said, Councilman Kenney. You were number two until you asked the question that went off the screen.
Thank you. Thank you very much for your testimony. Mr. Nevels, I had a chance and opportunity to meet with you and sit for an hour or so and find you to be very forthright and well-meaning individual, very honest person, and I think you have a very difficult job ahead of you, and I admire your taking on this non-paid position and all the grief that you've taken publicly and politically as a result of trying to do the right thing. So my comments, please don't take them in any way personally because they're not intended to be. Back in 1991, '92, when the city was facing bankruptcy, basically, there was an effort that was thwarted for the city to basically borrow $300 million to get itself through a temporary period of inability to pay bills and pay vendors and basically facing bankruptcy. 67 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS As a result of the thwarting of the borrowing, there was a lot of criticism towards the city controllers or some members of the legislature for doing that. But in the end, I think that's what really kind of saved the city because it focused and heightened the attention to the city's fiscal problems which and then in 1992 allowed the city, as Mr. Doosey testified but didn't totally include all the factors of that borrowing, included PICA, included a firm revenue stream to pay the PICA debt and got us out of our structural problems. And the only reason, in my opinion because I was there at the time that that happened, is because the city was bankrupt. My concern about the request, not the $45 million, I think the city should probably be giving more than $45 million to the schools, I think it's been shortchanging it for a long time, my concern relative to $300 million deficit financing is that we basically mortgaged 30 years of our future to get us two years of breathing room with no 23 plan. We don't even know yet and from -- maybe your discussions with members of the house indicate differently, but my discussions with many members of 68 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS the house indicate a real severe concern and almost inability to vote for that $75 million when 1 percent additional revenue is coming back to their own district. So that's a political problem that we face. It may be difficult to accept, but in the end, the way this gets solved is that we hit the wall. And we're right near the wall. And a few years ago, there was a major press conference with then Mayor Rendell and Council President Street that said we're going to put this train on the track and we're going to head it towards the wall. We're not going to cut educational programs. We're not going to cut classroom resources. We're going to let this train keep on going until the responsible people in Harrisburg and in the city fix this problem for long term. This $300 million in my opinion is a very expensive way to buy us two years. Unless it hits the wall, unless politicians like ourselves and in Harrisburg are forced to make tough decisions to fix this thing permanently, this two years is going to be a very expensive two years to pay for. There is no plan that I can see. There 69 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS is no -- it's been alluded to that, you know, the terms of the agreement with the Governor and the Mayor. What terms? None of us have ever seen the terms. Are the terms even written down. So, I don't want the schools to close in September. I would like to see them open. But I'll tell you what, two years from now we're going to be sitting in the same room, having the same discussion without a plan and without a solution, with a $750 million load on the backs of the taxpayers of the city, and in the end it doesn't get solved in this form. And, you know, time will tell, but I think this is a political solution to this problem and not a structural financial solution to this problem. And I cannot abide by borrowing $300 million on the taxpayer to get us two years of breathing room 18 without a plan.
And it's just my opinion, and I can't vote for any -- I will vote for the money 45 or more. You want to put more on the table? I'll be happy to put more on the table. But I'm not going to vote to mortgage the city's future because we don't have a plan to fix this problem long term. And it may get some people through political issues 70 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS in the next two years, but it's not going to solve the problem with the School District. So, I just would like your comments on that particular phase of the $300 million deficit financing borrowed.
Thank you, Councilman, and I appreciate and share your concerns. What I can say to you, and I think I can say it on behalf of the Commissioners, my fellow Commissioners, that is we're optimists because you don't take this non-paying job and put up with great grief without being an optimist. Specifically what we believe is that there will be a long-term solution. The differentiating factor this time around when comparisons are made to the fiscal 1992 crisis confronting the city is a very important one, and I will bring it back to the subject again and again and again, and that is we are dealing with children in need, we are dealing with children who we know are not testing where they should, we are dealing with children in shelters. And I cannot countenance or abide by a situation where we run the train with those children on board into the wall, whereas in 71 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS terms of the fiscal crisis, there were actions that could be taken to curtail city services but have those essential services continue to be provided. We're talking about children's education. I will not be responsible for impacting that and running that into the wall.
And no one's suggesting that you do. You didn't put this train on the track. This train was put on the track a number of years ago by then Mayor Rendell and then Council President Street. My concern, however, is the $700 million or more that we're going to pay to borrow this money simply extends the track or puts it on a different route till it gets to the wall in 2004. And the difference between the PICA situation in '92 and the situation here now is there is no program, there is no legislation, there is no dedicated revenue source, there is no plan, other than to borrow the money and let's be optimistic. And I admire your optimism. But we have fiduciary responsibility not only to the school system but to the city as a whole. And the concern is is that when we did 72 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS the deficit finance borrowing in '92, we knew what the rules were. We knew that PICA was going to be in place to protect the city's interest, we knew that the 1 percent sales tax was going to be -- we knew all these things. We don't know any of these things today, and what I do know is that elected officials on any level, whether it's local, state or federal, faced with a crisis, faced with a bankruptcy, faced with the school potentially not opening in September may be more inclined to fix it then than they will be to wait for two years and see how it goes. That's just been my experience with government politics. I remember in '92 none of us in this room ever wanted to do anything wrong because we were afraid we were going to be the ones responsible for sending the city over the brink. Harrisburg was cooperative because nobody wanted to send the city over the brink. And I think until you get to that point, this is just putting off the inevitable, giving elected officials and politicians breathing room to delay. And the delay will continue for the next two years, and I'm telling you we'll be back in this room again in 2004 having the same discussion 73 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS with a $700 million or more price tag on top of it, And that's my opinion. I respect your views and I respect you being here, I respect you personally. I just think it's a major mistake for us to do this to allow that breathing room, as you say, because politicians use the breathing room to delay. Thank you.
Good morning. I'd just like to say as Chair of the Education Committee and on behalf of my fellow Council members, I want to welcome you and to recognize the commitment of time and passion and expertise you bring to your membership on the School Reform Commission and that statement is for all the SRC members because we really do appreciate it. And I know you keep emphasizing that you're a volunteer. We know you're volunteers. I think you're great volunteers, and I just want to say thank you for volunteering to help Philadelphia's children.
I want to 74 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS additionally thank and recognize the skill and dedication of Dr. Farmbry and in her mission to transform the lives, build the futures and convey, connect the communities to our city with a sound education policy. I do have a lot of questions regarding a lot of what you wrote, Dr. Farmbry, and I have some additional questions to Sandra about the public accountability issue. And I will get to those, but I just wanted to say that and give other Council members an opportunity to ask questions. One thing that I must ask now, some Council members do not remember receiving The Curriculum Renewal Plan. I know you said you sent it out in June. We know you have it, Councilwoman Blackwell has hers, but there are other Council members that cannot remember receiving it.
So we need to get other copies. Thank you, Madam President.
You're welcome. 75 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS The Chair recognizes Councilman Goode.
Thank you, Madam President. I have some separate questions. First I wanted to, believe it or not, completely concur with what Councilman Kenney said. I'm in full agreement. I just wanted to add some things to the record on that matter, though. The truth of the matter is that PICA legislation was sought...
Councilman, I'm sorry. There's entirely too much noise at this end of the room, and we can't hear you. Thank you.
I want to say I'm in complete concurrence with -- what Councilman Kenney said, I completely concur that this is a very hefty borrowing with a lot of things not put in order before we make this decision. And I wanted to clear the record and add to the record in terms of what happened back in 1991 and 1992 and people talk about as a fuzzy period as spanning two administrations. It was actually the Goode administration that sought the PICA legislation, it was the Goode administration that sought the percent increase, 76 1 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS it was the Goode administration that was ready to release a five-year financial plan that the Rendell administration coming in had to hold off on. This was not a plan done by the Goode administration or the Rendell administration but done by financial consultants outside. A lot of those things were put in order before the council of '92 and the Mayor of '92 came, and a lot was put in order before they made the heavy decisions that have to be made in terms of that type of borrowing. But I want to turn my attention to not the past but to the future and what really framework for reform exists or doesn't exist. Mr. Nevels, it is my belief that in terms of the framework for reform, it would have to be contained within a teacher's contract. I'm going to ask you for your personal opinion and philosophy where applicable, and if the Reform Commission has already made any decisions on these matters, you're feeling or their feelings toward that. What role do you think the teacher's contract plays in school reform? Is the current contract helpful or harmful in reform efforts and what necessary changes have you already identified 77 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS for the next contract?
Thank you for that question, Councilman. The linchpin of any reform effort, whether it is improved public schools, charter schools or partnership schools, requires that we look closely at the Collective Bargaining Agreement. There are, as Dr. Farmbry alluded to, at least two provisions of that contract that provide some great support for reforms. Those items are the site-based selection which reference the opportunity to create teaching communities without regard to seniority rules, and then the second is a merit pay provision. That is the very good news. The bad news, however, is that these provisions have not been widely practiced in the School District for any number of reasons, not the least of which is the grievance process, and have been tied up in grievance litigation. It would be our hope that when the commission sits down with our partners at the PFD, that we can evaluate and see the ways in which we can effectuate those two provisions. In addition, there are provisions under 78 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS the act that relate to the administration of reconstituted schools or other independent schools.
I'm actually more interested in finding out whether you think the current contract is helpful or harmful to your school reform efforts.
It is helpful in respect of those two matters. We have asked legal counsel to put together a list of other things that we would like to see changed and obviously...
Would you be seeking massive changes in the next school contract with teachers?
Site-based selection is what used to be called school-based management.
Well, let's talk about school-based management. What role do you think school-based management plays in school reform.
School-based management is very important and one of the things that we're 79 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS looking at in terms of the RFQ's that are currently outstanding, Request for Qualifications, is a manner in which we can have our Chief Executive Officers in the buildings, namely, those principals, have their skills enhanced in terms of budgeting. One of the things that was somewhat disappointing to me upon arrival on December 21st was that there have not been building audits at any time, financial audits. And I think that in terms of a bottom up preparation of budgets and so on, we certainly are moving toward that and Mr. Doosey and I and staff are looking to isolate the buildings in order to work with principals in terms of employing best practices.
Thank you. We'll be back to you, Councilman. The Chair recognizes Councilman Clarke.
Thank you, Madam President. Good morning. Councilman Goode, believe it or not, I actually agree with a substantial amount of what Councilman Kenney said also. I don't know what's going on in here today. 80 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS Actually, I do agree to a large degree, but the reality is is that the things that need to happen to reform our schools will not happen this year. We have a certain Governor's race coming up. The individuals who are in the race will not talk about that issue because the reality is is that we need state-wide tax reform. This is a band-aid approach, a large band-aid, a much needed band-aid, and we ultimately will get to that discussion. This is not the only municipality in the state of Pennsylvania that has a deficit, a substantial deficit, and at some point we will have that discussion, and I hope we have it immediately after the November election. I just actually wanted to ask a couple of questions with respect to some of the earlier testimony. One, Miss Glenn, you had referenced the city-wide advisory group. I know that that was a part of some of the discussion earlier at Council and I think Councilman Nutter had actually introduced legislation that referenced some levels of participation and we all were very concerned about what we perceived as the inability to have the appropriate level of participation on the parental 81 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS level and you referenced these areas and you talked about certain members being on these groups in the 10 area. Can you kind of clarify that for me. There will be 10 individuals selected per area, they will elect one individual, and my question with respect to that one individual, because I believe in your testimony you said that parents, students and staff will actually be a part of those groups, will the one individual be limited to parents, students or staff, could it be any of them?
First of all, Councilman, let me say that this is still a work in progress to some degree, so not all of the details have been worked out. But the framework that we are operating on is that the city-wide advisory council would be an outgrowth of 10 area councils or committees. Those committees would be established in each academic area and would represent the parents, students and, to some extent, probably, staff and community members from the schools in those areas. We have not defined a number per se in terms of the membership of those area committees. 82 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS We want to make sure that it is an adequate and large enough number to accommodate interest from parents and students, community members from the participating schools. Some of our academic areas have as many as 30 to 40 schools that make up that academic area. So we want to make sure that folks have an opportunity to participate. So that final number has not been worked out. The councils, I suspect, would be in the range of, let's say, to 30, 35 members in those 13 area councils, something like that. Those area 14 councils would select or elect, depending on the 15 process, but would determine a representative from 16 their area that would sit on this city-wide council. 17 So that in the city-wide council we would have a 18 representative from each of our 10 areas, and in 19 addition to that, we are looking at also appointing 20 at large members from the community that may represent other constituencies that we would like to hear from to be part of that city-wide council. Does that help to clarify?
Yeah, somewhat. With respect to that in the formulation, because you 83 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS said this is a still a work in progress, and formulation of this whole advisory council structure, who's included? Are the parents groups or the friends of the school's groups involved in this, or is this simply the SRC putting this together?
At this point it is the recommendations from some of our consultants and staff to the SRC. I can just speak for myself. I've had some conversation with some of what I consider our stakeholders and folks who have been advocates who work with schools to have their input and they've helped to give me a framework and some ideas, and I think that is represented in what you are hearing today.
Madam President, do I have time for one more question?
I don't think I can get this question asked in eight seconds.
He who hesitates... 84 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS
I disagree with Jim Kenney totally. It seems like my colleagues at the table here, in essence, dealt with form instead of substance except for Miss Deirdre Farmbry, and it's sort of like discussing what shape the table is going to be. And, Mr. Nevels, you say that we are in the cardiac arrest financially and ailing academically. I don't think anyone in this room, in this city, can say that we haven't been through a process in which a school system ailed academically. Miss Farmbry actually describes a school system that, although still bedridden, from what I read in her statement, it was on the way to recovery. If the parents of that child that is in the process of recovery could move into a cleaner apartment with heat, with beds, could give it clothing and sustenance and really provide it with the -- that child with the resources so that it could recover, 85 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS it seems like Miss Deidre describes a system that really was applying the educational principals that we needed to. And I take it by one of her phrases dealing with Mr. Ronald Edmonds, Professor of Education at Michigan State University and Father Of the Effective School Movement, issued four basic tenets for school improvement, see, I mean, we're not dealing with rocket science here. We're dealing with proven principles of education that other people have tried and applied and suceeded, whether you are black, latino, poor or rich. His work has been recapped by many other educational scholars, and I like this phrase, "And now we package in Madison Avenue glitter and glitz by entrepreneurs trying to capitalize on the common sense nature of these basic educational truths." I think I put the Anderson (phonetic) project and those institutions in that category. But like I think Councilman Kenney said, neither the $75 nor the $45 million really impact on the long-term structural deficit and resolve our problem; the train with the kids in it, still on the tracks, still speeding towards a crash. We're not providing that ailing body with the medicine that 86 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS that ailing body needs to recover. Councilman Clarke says that this is a much needed band-aid. But, you see, we have spoken about much needed band-aid in this council since 1990, '91. In '93 Jannie Blackwell and I held hearings here. In '94-'95 Judge Doris Smith had the case and put forward a plan, an incredible plan, I think a plan put together by the best educational minds in the country. It was ignored, totally, totally ignored, these same basic truths that we say and Miss Farmbry describes a system. Councilman Cohen said to me, All we need is to apply what the superintendent is saying. All we need to do is give her the resources necessary to build new schools, hire more teachers, train better teachers, lower the classroom size. So all of this other stuff that we speak about, and these are forms, they're not substance, partnerships, community partnerships are all --
Councilman, I don't want to interrupt you but your five minutes are up.
Let me finish my statement. 87 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS (Continued) -- are all less form, not substance. And I have not heard except, for Miss Farmbry, a plan of what is going to happen. I have two kids in public school, so I have to make a decision between now and May as to whether those two kids, now in second and fifth grade, are going to go to public school in September. Actually, these hearings will make me decide that. You have to convince me that the plan you have, and I haven't heard it yet, is going to provide a stable learning environment. I haven't heard it yet. And I don't think $75 or $45 million is going to do that.
I don't know whether anyone at the table would like to answer some of the comments made by the Councilman.
I believe that there are a number of issues and questions embedded in the Councilman's question. One of the things that has been recurrent over the last day or two in our visit to Harrisburg and our visits to this chamber are the requests, the please, the very, very deep concern about addressing a dedicated revenue source. There 88 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS can be no question that that will be an important ingredient to realizing educational reform in the Commonwealth and in the city. However, as the Councilman said, there are political circumstances that exist right now that may prevent that from being addressed, so that places us in a situation where we need some time. I believe that it is very important to buy that time. The second issue I believe that is embedded in the Councilman's remarks is the use of current resources, of resources that we have and how we deploy those resources. I frankly believe that there is a need for ongoing continued and best practices to be practiced and applied in the School District of Philadelphia. On December 21st, when I arrived, there was not a reconciliation of actual to budget. That's tantamount to not having your checkbook balanced on a monthly basis. I don't believe that that is doing the best by the use and management of resources that ultimately are going to be applied to the teaching of children. There is much work to be done, and I think that as the Mayor has wisely said, this is a 89 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS School District that perhaps isn't as bad as its supporters may think -- as it's supporters may think or not as good as its supporters may think or as bad as its detractors may think. That may well be the reality. However, there is no question of the statistics. Yes, there has been improvement in scores. However, it's not good enough. And we have children that are seriously at risk, have ongoing problems, and that is why we propose to take very serious measures to address those children and their needs.
But I have not heard the word instruction in any of the facts coming from the Reform Commission. We have talked about cutting money and staff. We don't know who you're cutting, we don't know what offices, what hierarchy of the Parkway are being cut. Persons may be cut but offices and departments that may be redundant, it is not very clear whether they're being cut, and we have not heard how any of those monies that are saved are going to be redirected to instruction.
Councilman, that is going to be your question on your second go around. I just don't want you to take advantage of 90 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS my kindness, please.
We would all ask Councilman Ortiz to not anger the Chair. The rest of us have some things that we'd like to do and we'd like it not taken out on us. Good morning, Mr. Chairman and members of the SRC. Let me try to ask a couple of questions at the same time. Mr. Chairman, I read through your testimony. I appreciate your commitment, as well as all the members of the SRC, to this particular cause. I do have to tell you, though, that I was struck by the testimony in the context of we have, in fact, heard this story before at virtually every -- and it's actually a misnomer to call these budget hearings -- at every tax reauthorization hearing, because we don't approve the School District's budget, never had. And so my question of in the context of we have heard all this before is how and why will things be different is one; the second is what specific actions will the SRC take to insure fiscal stability, educational excellence, safety in 91 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS schools and operational improvement; and, third, you mentioned a response to a question from the Chair about a letter from the Budget Office, I'm assuming that's the Commonwealth Budget Office or the Governor's Budget Office, and I would ask if you could provide council through the Chair with a copy of that commitment letter regarding the $75 million.
Certainly. The widest topic, what's different, what's different is there an historic agreement between the Commonwealth and the Mayor, and I believe that that is unprecedented. What was considered to be an inevitable hostile takeover, if you will, described in the press is, indeed, a partnership. That together with the confluence of the interest of the business community and this body along with the General Assembly and the height and realization that this is a short term band-aid, Councilman, is what makes the difference. It is those confluence of events. Let's talk for a second about specific operational improvement and financial improvements, and what I'd like to do, Jim, is I'd like you to outline some of the best practices that we're 92 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS looking at and that we have included.
Mr. Chairman, if you will, if I can hear one of your responses and then hear from Mr. Doosey. Did I say that correctly, Doosey?
Could you describe for me -- I mean, it's kind of almost first and obvious, what is the agreement between the city and the Commonwealth? And, second, could you describe the difference from your perspective between the current agreement and what a hostile takeover would look like.
Let me respond to what the agreement is. It is my understanding as of December 21st that the Commonwealth and the city would enter into a funding agreement, and that's what we're here for, as well as a $300 million step deficit financing, that the text of that agreement has not been placed in writing, and it is my further understanding that the parties are negotiating or writing that down as we speak. You asked me what would be the 93 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS difference between a partnership and a hostile takeover. I think the evidence in that is the operation of the commission and the fact that there has been put in place upon its constitution and formation a deliberative fair open process for bringing about specific changes in terms of the central office operation and also the operation of the delivering of school education. There has not been acrimony in this commission. There has not been partisanship. There has, in fact, been a collaborative arrangement where we have all worked together. I think that's the hallmark that points out the difference.
I appreciate that response. Let me just ask this question, though, again in the same context. Friendly partnership versus hostile takeover. Would there be a difference in what I look at as four such elements, and I think other people have mentioned these in the past. Would there be a difference in anyone's notion of financial stability, educational excellence, safety in schools and operational management.
In a hostile takeover, I 94 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS would envision that it would be one party that is involved in those matters. In this case, if it had been a hostile takeover by the Commonwealth, you would have had the Commonwealth acting to achieve those goals. That's not the case.
Probably through an entity somewhat similar to the SRC?
I would imagine so. That would be entirely differently constituted and would not have the hallmarks of cooperation that this body has.
Okay. All right. I interrupted your direction to Mr. Doosey to respond to an earlier question.
Thank you, Councilman. You had raised the issue of specific examples of what the SRC has done. Since our arrival, we have reduced overtime to the point where a ranking senior executive has to sign off on it, we have identified $15 million in capital projects that were scheduled for completion that were identified not to be necessary, and we are currently in the 95 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS process on a function-by-function basis evaluating back office or central office administration functions in an attempt to see where additional deficiencies exist. It is through these actions which were initiated under Mr. Goldsmith initially, we've just accelerated the process, that we've been able to save, round numbers, $70 million and to reduce the projected operating deficit for this year from $177 million to $107 million.
I'm going to follow my own advice and not tempt the Chair.
May I have a word on that, because I have a question on that. Councilman NUTTER: I can wait until my turn comes back.
Can you identify for us exactly where the $70 million in savings are? I know you talk about overtime. How much in overtime? How much in the central office?
Madam chairman, if you would refer -- I believe you've received Exhibit A to my testimony, where the $70 million is the 96 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS differential between the $177 million adopted budget for and the $66 million -- 61,783,000 for , it's that difference excluding the $45 million that is requested from this body for an additional city grant. Some of the items are common issues. For example, we've had a warm winter, so we've saved utility costs. That would be a total of -- let me run down the list here. We have charter school enrollments lower than anticipated for $14 million...
The differential is when the budget was prepared by my predecessor, the assumption was made the charter school enrollments would track at the rate of 90 percent occupancy. For this current year it has been 83 percent occupancy. So, frankly, there have been less students in charter schools and, therefore, less of a cash drain on the District.
I don't know about my colleagues, but I will tell you that it's my understanding that at every charter school they have a very lengthy waiting list. 97 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS So I don't know how you can account for it.
I think part of the problem, with all due respect, is that there are a number of charter schools that have permitted enrollments of hundreds more than their current physical buildings can sustain and that that is the reason for the waiting lists. It is not -- to my understanding, it is not an issue where they do not have the ability under the current charter to enroll more students. They just simply cannot physically accommodate them.
We'll take a look at that. In the meantime, the Chair recognizes Councilwoman Brown.
Madam President, good afternoon, members of the School Reform Commission, in no way to diminish the important discussion and dialogue around the deficit and the finances of the School District, I would like to turn our discussion for the five minutes I have to the children most at risk and those children in the lower performing schools and recognizing that we are 98 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS dealing in what we know to be uncharted waters and unprecedented circumstances in two ways, one with the creation of the School Reform Commission but also with the new advent and phenomena known as our private contractors, please answer these questions. Will the schools run by the School District be funded at the same level or in an equitable fashion as those run by private contractors? And if you have not resolved the answer to the question, what kind of measures are you going to put in place to insure that all the students, irrespective of where they are academically, are receiving the same similar resources.
Councilwoman, thank you. In terms of the equity question, I'm going to ask Jim Doosey to address that as he addressed them in his remarks.
To the first question, Councilwoman Brown, there will be no added funds available to partnership schools, but they will be funded identical to the same level as the existing District schools because I inherently believe that it's, frankly, as I said in my remarks, unfair to subsidize partnership schools unless you're able to 99 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS give District schools the same amount of incremental funding. On the second question of what procedures are in place to insure, I'll call it, financial equity across the District, all teaching positions currently are allocated on a purely pro rata basis and that formula is identical at all schools across the District. Also, each school receives on a per child basis a discretionary fund that the principal can utilize as to whether or not to supplement that formula of staffing with an additional librarian, say, or additional educational supplies.
And what you just described will also apply to the new partnership schools as well. Correct?
Councilwoman, as well, I would tell you that the experience that I bring to this Commission comes from my time spent in the Chester-Upland School District, and I can tell you that one of the things that is also of critical 100 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS importance is the accountability in holding to a standard the charters that the public schools and also the universities and nonprofits and private vendors as well. And to that extent, we are certainly looking at School Works types of -- School Works is an individual company that did this in Chester-Upland, we would hope that there would be an opportunity to involve that type of accountability architect in this instance, and then, as well, in terms of the testing and measurement portion, utilizing resources that we have at the School District and any additional resources that we need to call on in terms of that additional accountability.
That is a segue to my second and final question on the notion of the application of the accountability measures. In the fall, members of this council unanimously passed a resolution speaking to what we viewed to be real school reform in core areas like, for example, classroom size, which you spoke to well in your testimony, a student-to-computer ratio similar to our suburban counterparts, access to a school up-to-date library staffed by a certified librarian. 101 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS And then in Dr. Farmbry's testimony you spoke to -- on of your testimony, you spoke to similar types of measure. So my question is are we going to, and it's somewhat redundant but now we're just speaking to real school reform, are we going to hold our private contractors up to the same standard in these tangible real school reform areas.
You're welcome. The Chair recognizes Councilwoman Tasco.
Good morning. Thank you for your testimony, Dr. Farmbry. That was very informative information, and I want to congratulate you on doing a fine job, and I do hope you're back here next year. We appreciate your leadership.
Here we go again. I just have to say that I, too, agree with Jim Kenney. I think we what need to do is to call our 102 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS situation in Philadelphia what it really is. We do not have money. And even with all of the reforms that are, I believe, necessary and have to take place, the bottom line will be that Philadelphia School District will not have the funds needed to run this system. What has happened has been the politics of shifting back and forth from the state to the city and the blaming. All are excuses just not to provide the resources that we need to run the School District. So I would have liked to see, while we appreciate your leadership in being there with the SRC, something like a PICA board which would have been commissioned to oversee the financing of the school as opposed to all this other stuff that's going on, which I do not agree with. But one question I have for Mr. Doosey --
-- in your testimony you stated that we need you help in supporting the Mayor's request for an additional 45 million this year and in future years. 103 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS Will you explain that to me, because you said earlier that the 45 million was just for one year.
Unfortunately, the amounts are identical, but the substance is different. The $45 million for this year is a one-time grant which the Mayor proposed the School District receive last year and which last year I guess as a contingency on the payment of those funds the city requested an exemption from the local debt relief provision in Act 46 so that the one-time payment could have occurred in the 2001 school year. The city did not receive that exemption. Consequently, the funds were not transfer to the School District. What the Mayor has proposed, and it is in the bill in front of you, is that that 45 million from prior years be paid this year for the simple reason that as part of the legislation necessary for the School District issue deficit financing bonds, all the City Solicitor's concerns regarding the impact of that $45 million one-time grant on the city's future and local debt obligations would be addressed. The Mayor looks upon that as clearing the books so to speak. This is the money that was 104 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS promised in prior years, it will be paid in this year. The 45 million for the fiscal year '03 and forward is contingent upon the state also honoring its obligation to provide $75 million additional, increasing to $82 million additional in the fiscal year '05. It's unfortunate that the amounts are both $45 million. So the additional grant that is proposed for fiscal year '02 is monies that were scheduled to be received in 2001 and is distinct and separate from whatever happens in 2003 forward.
And am I correct to believe that it would be a $45 million request, not necessarily tied to this $45 million request? I'm asking you is this $45 million request going to be required from the city of Philadelphia moving forward, even though it's not tied to Act 46.
No. The grant amount will not be required in future years. What will be required in future years would be the same amount of money, but only if the state steps up for their 75. 105 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS
Councilwoman, what I think we are saying is this: The combined initial money, 75 million from the state and 45 million from the city in some way, shape or form is going to be needed on an annual basis. And even that will not balance the School District budget, but it will help to reduce the size of the deficit until and unless there is from the city or the Commonwealth some other way to substitute for those funds. The only other alternative is for us to cut the spending to match the currently available funding, and the position of the School Reform Commission is that we don't see any way to do that that is not unacceptably injurious to the educational mission of the School District. So there is -- you know, for both the Commonwealth and the city, the appropriation decisions have to get made every year. Now, the specifics on part of this money, as Mr. Doosey notes, is a shift of millage that that's being proposed from -- so some of the real estate tax that now goes to the city would go over to the school District and direct grants from 106 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS the city general funds would be reduced by the same amount. But the decisions still have to be made year after year by the city government, the state government, what level of support is going to be provided to the School District. And, yes, we do need this increased level of support from the city and from the Commonwealth. And as a number of your colleagues have noted, even that doesn't balance the budget, but it is a -- not a trivial. It is a significant reduction in the gap that we now have between revenue and spending.
Thank you. So the request will be moving forward. Let me just ask one other question -- I want to make a statement. I think it's very important that we have a plan. We need to know what the plan is for keeping the School District solvent, to provide the necessary education for the children. And until we have a plan, we're going to act in a haphazard way. And I think as the Reform Commission you have a responsibility to do the right paper, to really put down and state what it is, what is needed and who is responsible for providing it, so that 107 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS everybody's operating from the same page. I think that is sorely need. If we don't have a plan to get ourselves out of this fiscal crisis, every year it's going to be band-aid after band-aid. And I agree with Councilman Kenney this is a band-aid, it's not the way to run a business.
Thank you for that comment. I would like to mention to you that a very important document was prepared in May of last year, a work out plan between the city and the School District. The commission is going to be reviewing that document that sets forth a financial road map plan in terms of addressing certain of these problems. It does not address the ongoing systematic provision of revenue that is needed, but it does provide a way of operation. That is a very good piece of work and on our agenda in terms of review and possible revision and adoption. So that is in the making.
But I think it's very important that you lay out how we're going to handle the fiscal crisis. I mean, that's got to be a part of it. Anything else is not worthwhile.
Thank you. I have 108 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS other questions. I'll come back.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. Good morning to the School Reform Commission. This has been described as a partnership arrangement. It really confuses me that this partnership was created without the finances really locked down. If this were a hostile takeover, could you describe how the state of Pennsylvania was planning to run this School District? Could you describe what it was going to look like if there was a hostile takeover?
In the case of a hostile takeover, Councilman Rizzo, I believe that what would have happened is you would have had a host of PDE officials in the building in the Parkway and in the field administering this School District. That is not the case.
Where was the funding going to come from to do all this 300 million, the 45 million, the 75 million? Why was this done 109 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS before -- why did we even do this before the money was guaranteed from Harrisburg or the money guaranteed from here? It seems to me that there's a terrible amount of loose ends. We're talking about a need of a plan. It doesn't seem like there was a plan even before the School Reform Commission was started. I mean, you have announced $25 million in savings. Well, we didn't need a School Reform Commission to tell us that. You listen to the union, you read the letters to the editor, you knew how fat the Parkway was. So I'm just confused on how the state would plan to run our schools without our support here, without the additional finances. They planned to come and take it over and then that didn't occur and then we now call it something cute, a partnership. Where was all these commitments prior to your arrival here as chairman of the School Reform Commission?
Councilman, on November 21st, there was a handshake agreement between two CEO's. Optimally, I would love to have had in place, and I think we all would have, the financing mechanisms and everything required. 110 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS In fact, what had to happen was those two individuals had to go back to the deliberative legislative bodies involved and seek that permission. I think that that is precisely what we're doing now. Optimally, I cannot disagree with you. It would have been great to have everything locked down and in place. That is not the case, and I believe that it is appropriate to address that question to the executive branches, respectively.
Well, you accepted this volunteer job with those questions not answered.
I'm also insane. I'm certifiably insane. I'm dysfunctionally operating here.
Sure did. And I think we all did, and the answer to that was that it was going to be worked out. And I took that in good faith.
Because the train's heading -- you know, I hate to keep using this 111 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS analogy, but the train is heading to the wall and these guys are all going to do what we need them to do because the train is full of kids. Is that basically the philosophy of how we go forward here, that it's like a hostage situation?
I would not characterize it as a hostage situation. I would characterize it as a situation where two dedicated public servants met, came to an agreement and will now do everything they can to cajole, implore and get the assistance of the deliberative bodies that they report to in order to get the funding for these children.
Beside 325 jobs -- and I don't believe those jobs have yet been identified; is that correct?
They have been identified. Well, somebody over there is shaking their head no, so you better look over there.
Okay, in the process 112 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS of being identified. Beside people and salaries...
And let me back up on that in terms of that issue. Let me explain what the process was that was used to identify the cuts. Each department head was given a number and asked to come back with identified positions. Certain of those have come back and have identified positions, not all of them, and we are going to certainly assist those that haven't in doing so.
Beside that, could you point to, just give us a sampling of the three top big ticket items that we're going to be able to save some money. Let's look at the transportation operation. I don't even know how many buses we have, but I see in the morning six kids on a bus that holds 40 people. I hear about some of the frills that we have at the School District. Can you point to three things that are going to go to save substantial money?
I think I can handle that. I think rather than three specific items, it's easier to discuss functional areas. 113 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS
I'd like you to be real specific. I'd like you to tell me about three things that are going to go to save million, 5 million, 15 million, 16 million, whatever the -- 6 three specific things. I would like to hear that. 7
We have eliminated vacant 8 positions equal to $5 million already. We will 9 continue to do that where positions are now being 10 filled on an exception basis only. We have cancelled $15 million worth of capital projects because they are unnecessary and will continue to look at capital projects on a case-by-case basis which is a change to procedure in the District. We also have transferred to the city of Philadelphia fleet management and risk management services, which, while the savings have not yet been identified, it is our belief that the city, quite frankly, handles these functions more efficiently than the School District. And we will continue to look at each of these functions one at a time to try and squeeze out as much as we can without harming the educational delivery to the schools.
Councilman, sorry -- 114 3/19/02 - FY '03 PHILADELPHIA BUDGET HEARINGS
-- your time has been up. I want you to get a response to your question, so you'll have to wait till the next go around.
I think he partly responded, so you'll have to ask again. Thank you. I think we're already for the second go around. - - - 115 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS (Proceedings now being stenographically recorded by Josephine Cardillo, Registered Professional Reporter.)
Councilman Clarke is next, and then after Councilman Clarke -- oh, I'm sorry, Councilman Goode?
Your light did not go on until after many of the other Councilmembers. Councilman Goode, would you --
Councilman Goode, just a moment. Would you mind if Councilman Cohen went before you?
Thank you, Madam President. I think it ought to be checked, 'cause the light was on here, the green light.
It's on here, sir, but there other people before you. 116 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
Oh, no, I'm not complaining about that; I was complaining about the beginning of a second round before the first round was completed.
Thank you, Madam President. First, in the many years that I've heard superintendents' statements, I do want to agree completely with Councilwoman Tasco and Councilman Ortiz. I thought the Superintendent's statement was probably the finest, clearest statement I've heard delivered by a superintendent of schools, and I want to thank you for that. It probably reinforced my believe that there is no need for the --
First let me ask you a question, Superintendent. I noticed in your 117 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS statement that you said we're the second largest public school district; what two cities come in? If we're the fifth largest city, why aren't we the fifth largest public school district?