Actually, I'll have to get that information for you. It's information I have back in the office. In the past year and a half, there are two other cities that have now passed us in terms of their enrollment in districts.
All right, thank you. I'll appreciate that information. Chairman Nevels, I would have to take issue with your view as to whether or not it is a friendly or a hostile takeover. Once the legislature passed the bill in Harrisburg, it became, no matter what occurred thereafter, a hostile takeover. The State bared its fangs, said, We're ready to take you over unless you come to an agreement. At various times, when there wasn't all of this sweet talk and honey between the Governor and the Mayor, the Governor made clear at all times that the State is going to take over by a certain specific date, no matter whether the City agreed or not. 118 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS And I think it was the Mayor's feeling that under all the circumstances, since there was to be a hostile takeover, there was going to be a takeover without identifying whether it's hostile or friendly. In his judgment, I think, he decided to accept what seemed inevitable and maybe what he asked for originally, though I'm not sure he maintained that original posture, and he decided to see what he could work out of it, as he saw it, for the benefit of the City. Others may have a different interpretation of the conclusion, but I think the Mayor tried to get as much as he could get for the City of Philadelphia since he knew it was going to be inevitable, but that's a legal question. And I think I can understand your feeling of wanting it to be a partnership, even though all of the votes are on the State's side, and whenever the State wants to, it can enforce a conclusion. I think you were quoted early on that you had not heard of any arrangement about a super- majority. There was talk for a while that on certain actions, there would be a super-majority required that was to guarantee some form of City 119 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS ability to control the situation. I think you were quoted, and I think it was quite accurate, that there was no such thing as a super-majority required for any actions. But in any event, I think the record clear is clear as to who did what in that circumstance. There is this fundamental disagreement. Secondly, I wanted to state that it seems to me that all of the financial problems of the School District, which are being blamed on so-called fiscal mismanagement or lack of acceptance of responsibility, that that is basically not the fact, but the fact is that the reason that the School District has any financial difficulties is because of State action. The State adopted a formula early in the 1990s to pay a certain amount of money per pupil, and then the State arbitrarily had a cap put on that after 190,000 students, that from that point on, every other student that would be added would be at the total expense of the City of Philadelphia, and the State would not share. Had that formula been kept up to date, 120 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS the funds would have been more than adequate to meet this deficit. Secondly, with respect to the charter schools, the State has a funding situation in which the money is taken from the local school district in order to finance what the charter schools claim, and I think, quite properly, it is an inadequate amount of funding, but whatever that funding is, it comes out of the appropriation to the City schools and the School District. I think when Mr. Goldsmith was the financial director, I don't know to what extent the Superintendent would get involved in that phase. The calculation was that the City School District never saved the same amount of money as was being taken out of its budget for the charter schools, and the charter schools, at the same time, were unhappy 'cause they believed they were getting less than the other public schools.
But had those two features not occurred -- the cap arbitrarily being put on the funding of the number of pupils in the Philadelphia public schools and were the charter schools accepted as a responsibility of the State Government -- then 121 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS we would not be in this financial crisis. I raise these issues because I think that Philadelphia is being given a bad name in this situation mand that the responsibility lies wholly -- not partly, but wholly -- on the State; the State that created this fiscal crisis. And now what you're doing in the face of all of the evidence which shows that what is needed is more money for the Philadelphia schools, you're finding techniques of carrying out the Harrisburg plan of cutting the funding for Philadelphia schools because you're cutting services. I have to believe that some of these people that are supposed to be to be laid off were having some impact on the schools. I want to hear, like others who have raised the question as to who they are. It's hard for me to believe that Superintendent Farmbry would have been a participant in a plot to maintain 325 jobs that were of no use in the school system and that were a waste of money. With respect to the Finance Director's statement about finding savings in capital funding, we all know that what the school system needs is a huge infusion of capital funding, that schools are 122 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS much more older than Veterans Stadium, twice as old, three times as old as Veterans Stadium and in total disrepair.
Councilman, I don't mean to interrupt you, but your time was up some time ago, so if you can conclude so that we can get a response.
Well, I'm concluding that I have a very deep concern, and the last general statement of concern is, I think the financing arrangement makes absolutely no sense whatever, to cause Philadelphians to carry this debt burden for 30 years to take care of a deficit that we're told just accumulated relatively recently, that was the information that was given to us at that Friday meeting Friday afternoon. So I'm very concerned. And if there were a need for financing, and I say I see no need, it would seem to me that, you know, the backers and the lawyers that have enjoyed so much business from the City on bond issues over these years, it would seem to me that they not ought to be profiting; they ought to come in and say that the situation is such a crisis that our law firms are going to contribute 123 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS free of charge the bond services. And the banks ought to say, We are very happy to make this loan, we're good corporate citizens, and we're going to demonstrate it. If Philadelphia is in crisis, politically, this is just not the time to settle an important problem. It's nobody's fault; it's just the calendar's fault. Therefore, we're going to share with everybody else in the pain and, we're going to make a contribution to Philadelphia. So if there was there is a need, I think it ought to be one with no cost at all to the citizens of Philadelphia. Thank you.
Councilman Goode, can I just ask one question, 'cause it's really bothering me. Thank you. Mr. Doosey, I did check Exhibit A, and it clearly states that charter school enrollments are lower than anticipated afford and we're saving approximately $14.5 million. 124 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS Where were your anticipated enrollment levels, and why have you lowered those estimates? I'd like you to answer that question. And, at the same time I looked into the budget book that you gave us, and on Page C-2, it would appear that the enrollment is --
-- 4,250 students more for FY '03 than FY '02. I would just like you to clarify that for me, if you will, please.
Certainly, Madam Chairman. The $14 million reduction in the deficit for 2002 is the sole result of fewer students being enrolled in the charter schools than what we had budgeted. The reason for the increase between the Fiscal Year '02 projection, which is the 14 million, and what we are proposing in the budget for next year is a result of increasing student counts over the recent months, and also a prudent assumption that because of the moratorium that was placed on new charter schools recently by the School Reform Commission, that from a budget standpoint, I'm actually forced to make the assumption that charter 125 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS schools will move closer to their permitted enrollment. So the short answer is, actual enrollments this year were lower than budgeted, but in the future years, I have to assume a material step up, because new charters, at least under the current assumptions, would be not be granted the new schools. There are also five new schools coming on line for next year that, while they have received their charters in prior years, they were not in operation.
Thank you. I just had to be clear on that. I just couldn't understand how we were getting 4,000 more students and yet we're cutting the funding by 14.5 million. Councilman Goode, thank you for your patience.
Thank you, Madam President. Mr. Nevels, I want to get back to the discussion of governance and decision-making and your philosophy. Do you believe in the empowerment of principals to manage schools; I mean, hiring, 126 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS firing, setting curriculum, and setting their own budgets? And, furthermore, what is the role of parents and community beyond the Educational Reform Advisory Committee; what powers do they have separate and distinct from principals.
Councilman, as to principals, I refer to them as the "CEOs in buildings," and I firmly believe that they are very, very important. And in my visits throughout the City -- in Eileen Spagnola, at the Kearny School, for example, on Fairmount, we have an excellent principal at Robert Morris School The thing that is common about the truly good schools and improving schools -- and I believe Dr. Farmbry will agree with me on this -- is that principals are hands-on executives. That seems to be common. The second question you had --
Should they have the authority to hire, fire, set their own curriculum, and establish their own budgets?
Ideally, yes. Ideally, yes. Practically, though, I believe that -- 127 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
Under your reform policy, should they have the ability to -- under your vision for reform, should they have the ability to hire, fire, set curriculum, and set budgets?
Thank you. Secondly, what level of vending opportunities will be available for disadvantaged businesses? What is the current DBE participation level, and what is your goal?
We have a DBE participation that has been crafted by our legal counsel, Carl Singley, at Blank Rome. I will get back to you in terms of those levels and the participants.
I'm specifically asking for your vision in terms of what you envision under reform. What level of participation do you envision? What is it now and what do you think it should be?
No, what it should be in the future. What is it now and what do you believe it should be in the future? 128 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
I believe that it should be as substantial as possible. You're talking to an individual who is the Chairman and CEO of the eighth largest investment advisory firm in America, a minority-owned firm. So believe me, I believe that it should be profound and it should be substantive. In terms of a number, I'm not prepared to give you a number because I --
What is your evaluation of the amount of minority participation, of women participation, of disabled participation in the School District now? Is it up to your standards?
When I look at it at the present time, I'm pleased with what I see. Have I looked at it in terms of the statistics? I have not.
If you looked at the statistics, I think you would be greatly disappointed -- I hope you'd be greatly 129 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS disappointed.
The School District itself is probably the worst next to the City itself. The private sector is outperforming the public sector, and among the public sector, within the public sector, the School District is absolutely the worst; it's in the single digits, as far as I know.
I will say this, however: During the course of the RFQ process, our legal counsel that I've referred to made sure that we had provision and involvement of women- and minority-owned firms. We have that being the case in terms of the consultants that were hired, and there can be no question as to my commitment in that respect. 130 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
I'm not questioning your commitment; I'm questioning, what is going to be the policy under reform? Part of the reason we have the issues we have in the School District now is 'cause people look at it as just as an opportunity to give away contracts, as opposed to it being about the education of our children. So I think it's something we definitely have to look at; not just in terms of Procurements costs, in terms of cutting costs, but in terms of what have we envision as opportunities for Philadelphia economically and some of its disadvantaged citizens.
Thank you, Madam Chair. I wanted to actually reference some of the statements that Councilman Cohen talked about 131 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS earlier with respects to the formula that was crafted by the State some time ago that put us at a disadvantaged; I think it was called the "ESBE formula" was the term used at the time. My question centers around hopefully a change in statewide educational financing form -- formats in the future, if, in fact, we are in a position to do that after the next Governor's race. Will we be in a position where we can restructure our debt with respects to the $300 million?
Councilman, I believe that will depend upon future interest rates and the ability to refund or restructure without looking at the entire debt structure and debt capacity of the School District. At this point, I can't answer that.
One of the things that we obviously hope is that there will be opportunities to refund and restructure indebtedness or craft covenantal changes that will allow us an opportunity to do some things that would be financially advantageous in the future.
Okay, so best-case 132 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS scenario, there's a possibility that we can get out of the this $300 million borrowing debt and (inaudible) --
One would hope, and it largely depends upon the trend of interest rates, and we never, ever could have imagined that interest rates would fall so low for so long, as we have recently seen. Jim, would you like to --
Yes. Councilman, quite honestly, the current structure that we're anticipating for the $300 million debt, like all general-obligation debt of the School District, would have various call provisions in it, that should additional funding be received at a future point in time, we would be able to call the bonds early and extinguish the debt at that time.
And whether those call provisions are five, ten, fifteen years out, that's part of the negotiation process where we're looking at what the market actually is looking for, but there will be call provisions in the (inaudible). 133 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
Okay, great. Dr. Farmbry, I just wanted to reference your testimony. On , you talked about the SAT-9 results, and although, you know, we've continually heard that generally, our test scores are improving, but in your actual testimony, it seemed somewhat inconsistent. You talk about, let's see, in Grades 5, 8, 11, we increased the math, but Grade 5 declined in reading. Let's see, in '96 to 2001, the scores went up in 3, 4, and 7, and then hit a plateau, and then it continues on with somewhat inconsistent results. First of all, when we do the analysis, what do we determine and how do we determine what we should do as a district to improve on those scores? Do we develop any sense of a pattern that gets us in -- 'cause it seems like there's no pattern in this particular result.
Yes. Actually, when I say that we've been improving, I may be basing it on the baseline of 1996, because there has been improvement if you look at that baseline.
Mm-hmm. 134 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
The pattern that we have been seeing is that in our middle schools and our high schools, those are the areas, or those are the grades, where there seems to be the most slippage or the most plateauing. And I guess it's the whole situation of, you know, you reap the results of what you have focused on. We have not, as a district, strategically focused on middle schools and high schools with the same level of depth that we have at the early grades over the past few years. You know, we intentionally front-loaded, and now we are putting into action plans and strategies to really focus on middle schools and senior high schools 'cause the reality is that those students who have really benefitted from a more rigorous K-through-4 experience are now entering middle schools with a higher level of skills, so we really do have to upgrade teacher professional development in terms of teachers' capacity to deal with a very different type of middle school and high school student, because they are getting a student who is much higher skilled. But for about six years, it was really 135 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS not a real focus on high schools. We have in the past year really beefed up that focus. High school principals have not met as a group by themselves for about two or three years. They are this and are developing strategies and really looking at similarities and differences across sites. So I think it's a strategic way of coming to grips with the reality that this segment of the population really has not been focused on for a while, so we have gotten the results where we have been focusing, but we have not at the middle and high school level.
Thank you. One last question -- I'm speaking before my minutes are up. You referenced the Ferguson School and its achievement in terms of its attendance.
In terms of test scores, is it reflected that the test scores have dramatically improved as the attendance has improved?
Yes, yes. At the Ferguson School, the test scores and the attendance have 136 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS improved. When several of us had made reference to principal leadership and principal commitment to not only maintaining a safe environment but also moving beyond safety, 'cause some people will say, you know, it's not safe enough in here for me to do anything. This is a principal who has last looked at her building not only in terms what has to be in place to really make it a safe environment, but then how are we also going to keep focusing on the instructional agenda that we have. So Ferguson has a dynamic principal who really does have a very strong community support base and parental involvement, so she is really making strides at that site.
Yeah, I'm familiar with it 'cause it's in my district and that's why I asked that question. She's a good principal.
I do need to talk to you about an issue around the periphery of the school at some point.
I was just handed a list of questions by my trusty staff, but I 137 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS understand that I have to wait for the next round.
Excuse me, Councilman, you have to wait for the next round.
Thank you. Dr. Farmbry, since we're on this topic, how can a high school -- if children are being better prepared to go into high school, middle and high -- and, in fact, there was a teacher at Parkway that recommended to me about four years ago that there should be just a whole section that just deals with high schools because she thought that was really being missed under the cluster system and some other reason -- I can't remember all of the details now, so I'm really glad to hear that the School District is focusing in on middle and high schools. But one of the things that a couple schools in my district has done is cut out magnet programs, cut out star classes -- I call 'em "star," you know, I know that they're the advanced and I don't know what they call 'em now. What do they call those?
We have lots of 138 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS designations and we are looking at what does a designation really mean? And if you're going to say that you're in a star class, what makes that class more rigorous than an already-rigorous academic agenda? So that if are star, you truly are getting something significantly different. We are trying to limit the number of designations that there are to perhaps just having AP and honors, as many of our suburban districts just have those two classifications above the regular academic program. The other issue around "star," "rapid," any other designation is one of consistency across the City, is the course content of a star class at one school as rigorous as a star class at another school, and that in some settings, students are getting point differentials on their cumulative averages, so we also want to look at what's happening in terms of grade point averages. If you're at a school where there is a different weight assigned to a class by virtue of its rigor. So we have -- that's our next area of exploration. With the high school principals we have been meeting, it's really looking at our range 139 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS of courses, trying to narrow the designations, and making sure that they are equally rigorous across the City.
Okay. Because I would think that lack of a star class or honors or AP program, some children don't want to go to the magnet school, they may just want to go to a comprehensive high school, but then if they get there and, you know, it's maybe -- well, if all of the courses, if all of the classes are rigorous, you know, that hopefully focuses their attention and it will keep 'em there, but if they want just a little bit more and it's not available in that school, I would think that that's a problem. And you know that I know that at Martin Luther King, you know, one of the teachers there has really, really, been upset that all of those star classes and whatnot have been taken out of Martin Luther King, and I just had never really understood the reason why.
Thank you. 140 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
Mr. Nevels, you speak about cutting 325 positions and without impacting on classroom instruction and classroom functioning. Could you give us a rundown of where these 325 positions come from. And instead of reduction, would you agree also that every school across the City in the classrooms, every teacher is in need of resources? And that we have, for instance, at my children's school, there hasn't been a steady music teacher, and we have an itinerant actually language professor. Would you agree that probably this -- that it is desirable to stabilize programatically classroom instruction and add monies for that -- for those type of functions at the local school level?
So instead of reduction, instead of getting rid of $25 million, because we do have a need in terms of it, why if these positions are totally not needed and they are redundant -- and I would like to know how many of those positions that are in the 325 are redundant 141 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS spelled out, which ones have some other function -- why then don't we direct the $25 million to the local schools in order to secure smaller classes and other of the reforms that we -- educational, instructional reforms that we actually need?
Councilman, first thing: We will give you the details of where those reductions in staff will be made, and we'll get that you as soon as we possibly can.
Okay? Then the other part -- because you're eliminating, you see? And in a system that, you say, is ailing because of the lack of resources, we're cutting $25 million instead of redirecting $25 million to the classrooms, so I don't know how we can in one point say that we're ailing because we don't have enough money for instructional activity, but we're going to cut $25 million. I could see getting rid of positions that are not necessary, but that $25 million could be put to instructional use. 142 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
Councilman, I don't disagree with you in that respect, but with all due respect to you, I must tell you that if you have an ongoing deficit, you eventually, as a business -- and this business is no exception --
Well, I understand we have an ongoing deficit and we plan to borrow our way out of it, but you are talking to me about not impacting on instructional classroom activity, and it seems that if you don't redirect that money, because obviously, if you're getting rid of redundant positions at 21st and the Parkway -- and Goldsmith and I spoke at length about some of those positions at times in which principals and teachers were taken from the classroom and put in the Parkway. If we are getting rid of them because they are not needed, they're redundant, they're deadwood, they don't serve a purpose in terms of the educational process, fine. But we do need $25 million to then be redirected and taking those individuals that could go back to the classroom to inject them into those classrooms and those areas at the local school level, where they are needed. 143 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS Because I understand about this structural deficit, and we're not dealing with a structural deficit; that's the whole point. We are not dealing with a structural deficit because we're not look to go get out of it. The train of the structural deficit, like you said, we will borrow $300 million. I just want to know, what is the rationale, the instructional rationale, in the term "reform"? Because to me, reform means instructional reform. To me, if we're dealing with schools, reform means changing what happens inside the locked doors of a classroom, and I can't see why we cannot redirect that money towards that.
Councilman, first, those funds can be redirected, but you have to have an ongoing business, an ongoing district that is operational. Let me tell you what my vision of reform is. Reform, in my opinion, is a host of choices of great education in charter schools, in traditional improved public schools, and community partnerships. My vision is not what currently exists, in which individuals are not -- are testing below 144 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS basic. What we have now is totally unacceptable, particularly among our lower-performing students. And the consequence of that is, we are utilizing triage and going to those children first and putting into place as many opportunities to buoy them up as we possibly can. We are not serving those folks, and there is no denying that that's what this reform is all about.
Dr. Nevels, I don't think anyone is saying that the status quo --
You're asking what reform was, and that's what I'm saying, because the status quo among those children is not acceptable.
No one is saying that, no one is saying that the status quo is acceptable. I just don't see --
But, Councilman, with due respect, you asked me about reform, about what the educational reform meant --
But what I don't see is where the resources are going to come, because 145 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS everybody can talk about "my vision for public schools is great education"; that's a rhetorical statement. Unless I support my vision of public schools as great education with teachers who have been trained very specially and specifically, classrooms that don't have more than or kids, 9 computers and books, and so on down the line, then 10 that doesn't tell me, see? That's supporting that 11 great education statement. 12 But I'll -- I'm running out of time, and 13 I just want you to think about my next question. 14 What role, if any -- what role, if any -- 15 is Edison corporate structure going to play in the 16 management implementation of any plan, structural 17 plan, structural plan, that you come up with in 18 terms of how you're going to divide the public 19 school system? 20 And if not Edison, is there any other 21 company of the same sort of viewpoint, privatizing, 22 Beacon, whatever other company, is going to play in the management of the public school system of Philadelphia? And whether any of these positions that 146 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS have been labeled "redundant" by Mr. Doosey and yourself are going to be filled with personnel from any of these corporate structures. Is my time up, Madam Chair?
Thank you, Councilman Ortiz. I have a couple questions. First, I do want to say that I think the graduation rate for twilight school is great, 90 percent, that's really great, particularly since so many of the children that end up in twilight school are at-risk children. I guess the difference is, they just want to be there, they chose to go to twilight school rather than day school, and it's working for them.
Yes. These are students who have actively chosen to go to school from 3 to 6, either because it fits in better with their schedule by virtue of any other kinds of responsibilities they may have during the day, or 147 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS because by virtue of the twilight schools being smaller, there are, I guess, less distractions.
So some students who have gotten to the maturity of being able to say, "I could do this if only I weren't around my friends," or "if only I were in a smaller, more contained setting." These are the student who go to twilight school and who do well.
I was really surprised at the graduation statistics. I think that's great.
Mr. Nevels, I have a couple of questions regarding the reduction of overtime, and could you explain to me what SVP-supported overtime is? I'm looking for my paper here. Reduction of overtime versus pre-SRC. now SVP approval on exception basis only.
That is made reference to by my colleague Jim Doosey. Prior to this time, overtime could be approved by line managers. What has happened now is a request for overtime has to be 148 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS approved by a senior vice-presidential level.
Okay. How does that impact the everyday school day? Sports, does that mean coaches -- I mean, what does it mean exactly in terms of school-related activities?
I think in terms of school-related activities, for example, if there was a member of the clerical staff that is outside of the collective-bargaining agreement, that that individual would have to have approval of an overtime decision at a principal or a higher level.
Because maybe a couple years ago, I was talking to a principal regarding school councils, and they said that it was pretty difficult to find staff, teaching staff, or people that were interested in working with school councils because they couldn't get overtime in order to do some of the things that they had to do. I guess the reason I want to know the answer is because I don't want the lack of overtime, the lack of someone's ability to get overtime impact their ability to work on some of the extra things that we need. I mean, even if we get -- and that would be -- I don't know under your reform plan 149 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS whether you'll still have school councils, but --
But those are important parts, I think they're important parts of school management, so that's why I was wondering about this overtime.
And would that come out of the school's budget or just the overall budget?
It would come out of the overall budget. I mean, let's look at it that way.
Okay, all right. I'll come back to -- I had some questions about the reductions also, but Councilman Ortiz asked that, and I'll probably just wait until he does his follow-up. Also I'd like to know, when we talk about allowing children options with charter schools and whatever, has there been a report yet on charter 150 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS school performance here in Pennsylvania, and specifically Philadelphia? I don't think I've ever read anything that talks about the overall performance. I mean for years, people have said they haven't been around long enough. And do you know if there's been a report?
Whenever charter schools are up for renewal, we do an evaluation of their scores. We use the -- we look at their SAT-9 scores, we look at the District SAT-9 scores. The SRC did, at its last meeting, announce that there would be a process put in place to do a deeper analysis of the charter school progress. The issue that we had been facing, as senior staff in the District, is that we have 264 schools under the umbrella, you know, our traditional umbrella that we feel is really testing the capacity of everyone to keep up with in terms of analyzing progress and suggesting reforms. So we do need probably additional resources to take on the charter schools, 'cause it does then compound everyone's already-heavy load. So it's a need that's there to really do a rigorous 151 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS evaluation of scores of charter schools, of resources and so forth at charters schools, but right now, it's a process that no current staff has been able to do by virtue of looking out on 264 schools.
I actually thought the State did the review of the charter schools; that's not true? I thought the State evaluated the charter schools.
The State does an evaluation, but then we also, at the time of renewal, look at our data in-house as well.
Thank you, Madam Chair. Chairman Nevels, in response to an earlier question, you made mention of a document that had been developed last May. And you referred to it, I believe, in general terms as a "financial road map and a plan." Can you provide to us, through the Chair, a copy of that document? 152 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
Certainly, and that's referenced as the "School Workout Plan."
Okay. Mr. Doosey, I took down a comment that you made earlier that is a part of your testimony where you said that this was either actually -- or "an attempt to return to fiscal sanity." And I took that down and then I wrote in parentheses next to it. Based on what's in front of us, though, it would leave one with the impression that this, for the moment, is just a continuation of fiscal insanity. We have a plan that gets us through, I believe, two fiscal years; is that correct?
It's actually a little bit of the -- cash flows are being finalized; it's actually three and a half, but it's still a relatively short period, yes.
Well, let me ask this question: Do you have another, other than the numbers that are listed in your testimony, a Five-Year Plan at the moment?
I'm in the process, and they'll be completed tomorrow, five-year cash flows, 153 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS but as far as a formal Five-Year Plan, where I can say to you that at the end of five years, there is not a deficit? No, I do not.
Okay. And is that because in your testimony on -- the pages aren't numbered, but I think 3 or 4, you say that after listing a whole list of -- after listing a series of changes or anticipated funding, your testimony says, "With all of these changes, we anticipate ending 2003 with a deficit of $56 million, not enough to balance the budget but a material and necessary additional step. For 2004, of the $300 million the District borrowed, only 115 million will remain." What did I not see here was, what, if any, is the projected deficit for FY '04?
The projected deficits for FY '04 move upwards from $56 million, and that is part and parcel of the cash flows that are now being finalized and that we'll have available tomorrow.
I'm sorry? 154 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
Implicitly, with deficit positions at the end of each fiscal year in the near term, you will be using the $300 million proposed long-term debt --
Right. So what's number at the end of FY '04, including the use of the deficit financing $300 million?
Including the use of the deficit financing and the current numbers that I have, if you'll give me a moment, I'll pull them. It is.... For Fiscal Year '04, is your question? Let me restate -- make sure I understand. You're looking to understand how much of the 300 million 155 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS remains or how much is the annual operating deficit for Fiscal Year '04?
For Fiscal Year '04, the current annual operating deficit is projected to be 94 million, which would mean that of the 300 million that is borrowed, approximately $20 million would remain. However, they're very preliminary numbers.
I thought the operating deficit number was 96 million?
All right. And so 156 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS what's the FY '05?
See, you technically end -- based on your numbers now, you technically end FY '04 with a $21 million surplus.
In FY '05, the negative trend continues because of the acceleration of the uncontrollable costs, and due to preliminary numbers, the operating deficit would be 123 million.
110 in a deficit position for Fiscal Year '04, because the $300 million funds no longer exist, so you'll be back in a structural deficit position. 157 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
Hold on for a second. You had $115 million left over from the 300 in FY '04, and you had a $94 million operating deficit, correct?
All right. I thought that left us with a $21 million surplus.
Okay. For FY '05, there is a -- it's projected, on preliminary numbers, to have a $123 million deficit.
Which would leave you in a structural deficit position, round numbers, $100 million.
Okay, all right. I'm 158 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS just checking; I'm not saying that I'm any better at math than you are but...
Well, we will not get into a comparison of high school or collegiate records at this point. I have my job, I've been able to maintain it for sometime, and I'm going to rest on that record and not get into an examination of math skills from high school. The chairman said earlier that if asked to advise a client with regard to this proposal, that he would feel comfortable making the recommendation that there was a significant and, I think in this particular case, credible caveat, which is, there's been a lot of discussion about a comparison between the City's deficit financing from the early '90s and the road map that we took to get to both balanced budget and now surpluses. But we were able to demonstrate, both on paper and reality, that within about a four-year period of time, there actually would be a balanced budget, and there was a plan that would result in that. It was clear, it was known, it was 159 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS understood. Your testimony here today is, We do not have that particular component and that at the moment, there is no plan that shows that. Is that correct?
That is correct, and specifically because the School District does not have the ability to raise taxes on its own, whereas the City does.
Now, I understand that. I think we did not raise taxes at that time; there was an increase in the sales tax. So what is the plan?
The plan, quite frankly, is to -- since the SRC has been in place for less than 90 days, the plan will be developed over the next 12-month period.
Let me ask this question. The current payment schedule or the current proposal is -- this is my recollection. At the tail-end of the summer of 2000, to fund a $25 million gap in the contract that was negotiated with the teachers, the Mayor offered $25 million to help solve that particular problem. 160 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS I believe in the winter, early February, of 2001, the Mayor made commitment to the Governor at that time for $20 million to help with the School District's current financial situation. Council actually approved those dollars and, for a variety of reasons, the bill was vetoed. We're now back with a new $45 million, which is really the old $45 million for this current fiscal year -- we are now in 2002 -- plus $300 million deficit financing to be funded by a $25 million shift in millage from City real estate to School District real estate, and an ongoing commitment of $20 million direct to the District. That is the 45 million ongoing commitment; is that correct?
Tell me what has 161 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS happened, from your perspective, over the past two years, if not all of the previous years, when it was crystal-clear that the School District has been experiencing fiscal distress for many years. Tell me what you think is going to happen different in the next months that has not happened in the last 8 27. 9
With all due respect, I 10 cannot comment as far as a perspective previous to 11 the present period because I was not in my position 12 at that point in time and was not a part of the negotiation.
Well, I understand that, but you're in your present position now. So what I want to know is, what do you think is going do happen differently now that has not happened in the past that's going to resolve this particular situation?
I am hopeful that the difference is that there is a commitment now on the part of the Commonwealth to actively be a party to solving the problem long-term. And I frankly think, and I stated this in my comments, that it is only with the help of the Commonwealth and the City 162 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS acting together that the problem can be addressed at all.
Well, tell me this: What would the City and State have to do to eliminate the structural deficits and to fund the schools adequately?
The City and the State -- well, it's the -- what will be necessary at some point in time is additional revenue, will be a change to the funding process statewide, which would address the formulaic problem with the basic educational subsidy, as it is currently implemented by the Pennsylvania Department of Education, and may also require a review of charter school funding.
You said you need a change in the formula; I asked you, what would that change have to be?
It would obviously be a change to generate revenue that is sufficient to eliminate future deficits after -- 163 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS
I'm asking you in a more specific and direct fashion: What, from your perspective would have to change in the elements of a funding formula to get to reform and adequate funding for this school district and for the other 500 school districts in the Commonwealth?
Let me -- if I could address that. Councilman, this has been a public- policy issue discussed in a host of jurisdictions, not the least of which, Wisconsin, New Jersey, and otherwise and in others. One of the things that one can do is to look at a particular dedicated revenue source; there have been those throughout the country. However, in terms of trying to determine, for example, where a tax will be levied, that becomes incredibly complex, as it has an effect on the different parties involved. Now, one thing that we do know for sure is that when the calculation, the formula 164 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS calculation, was revised by the Commonwealth, there was a direct measurable impact. I know I remember, for example, in Chester Upland, that created a real systemic problem. So in terms of when you ask the particular -- what the particulars are of a formula, we could certainly explore those with you, but at the current time right now, we don't have a specific notion. Now, there have been a number of different things placed out there that could be -- I mean, a corporate franchise tax, any number of things, but we can't endorse that without knowing the big picture from a macro-economic point of view of how it impacts businesses and how it impacts others. So we're prepared to work over the next three years to engage in that discussion, and Dan Whelan and I have engaged in that discussion as members of Greater Philadelphia First, who have made a proposal as well in terms of how that funding proposal and formula might be structured.
I guess the primary purpose of my question was to try to move along 165 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS those items from a discussion stage to -- if there's ever going to be a change, then someone's going to have to think about what that change should be, propose it, and start working on it, at least as a fundamental basis or vehicle, to having a change happen. So, I mean, I'm sure that the discussion is a good one and it's a necessary one, but at some point in time, something concrete and realistic has to be put forward, and I was trying to understand, from the District's perspective, or now the SRC's perspective, empowered by the State to do certain things, a partnership having been discussed, the individuals involved have put their names and reputations on the line, and it seems to me that at some point in time, someone should actually listen to what you have to say, at least take it as valid information, and put a plan or proposal out there that says, We think that this can work, not only for us, but for everyone else. And it will either get saluted, it will get shot, or somewhere in the middle, it will either get massaged and turned into something. Short of that, I don't see at the moment 166 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS how we get from where we are to any level of fiscal stability if we do not have even an idea of what gets us that final component that you, Mr. Chairman, pointed out so appropriately, that we can't show a five-year balance sheet with legitimate fiscal stability. We cannot do it. And if you just say, Well, and we hope that it will happen, I mean, people have been hoping for a whole long time. It has not happened. And I'm just trying to understand what's going to make it happen, especially in the context of, We're relieving the pressure to some extent by putting forth this particular plan.
Councilman, I believe we have to face the reality of what the Commission is currently confronted with, and specifically, we are looking at making some changes and organizational changes. And we are acting without a CEO, and we are acting, frankly, as five operators of a business, five managers of a business. I can assure you that with the likes of Sandra Glenn, the financial expertise of Michael Masch, a modest amount of financial acumen that I 167 3/19/02 - FY '03 PHILADELPHIA SCHOOL BUDGET HEARINGS have, along with Jim Doosey and Dan Whelan and Jim Gallagher, that once we have a CEO in place, we will reach a consensus on this. And we will take a show on the road and do this in a very systemic way, going to business constituencies and stating what we need to have happen over the next several years, going to the legislature, coming to this body. And in fact, I'm going to invite you to accompany me on the rounds that we make to galvanize the opinion that is necessary in the communities and elsewhere so that we can move this forward.
Mr. Chairman, that could only get you in more trouble, so --