Philly schools are projecting a $407 million deficit: school board roundup

As public discussions about the Philadelphia School District’s 2024-25 budget begin, officials are warning: With federal stimulus funds drying up against a backdrop of decades of underfunding, the system projects a $407 million deficit in its $4.5 billion spending plan.

The “buckle up” moment came Thursday, as Superintendent Tony B. Watlington Sr. gave the school board an initial public briefing on next year’s financials.

“We’re going to lose some significant federal dollars and go off a funding cliff if we don’t procure more resources from the state and city,” Watlington said.

Unlike every other school board in Pennsylvania, Philadelphia’s cannot raise its own revenue and is dependent largely on state and city dollars to operate. Officials warned of a structural deficit in 2021, but were saved by federal pandemic relief money that bought time.

Now, however, that money is going away, and Watlington and chief financial officer Michael Herbstman say they do not want to cut the teachers, school administrators and other student-facing workers whose jobs were made possible with the stimulus money.

That federal funding has not bought extras, Watlington and Herbstman said, but necessities.

A Commonwealth Court judge this year said that Pennsylvania’s funding structure is unconstitutional; according to a Penn State University professor’s analysis, Philadelphia receives $1.6 billion less in funding than it needs to adequately educate 200,000 students in traditional public and charter schools.

The district’s projected $407 million deficit for the coming school year would balloon to $702 million by 2027-28, Herbstman said, if just normal increases in city and state funding are forthcoming.

Though its officials plan to knock on doors in Harrisburg and at City Hall for more funds, the district cut costs where possible, they said — not filling some vacant central office jobs, conducting non-personnel budget reviews, spending down its surplus, and seeking private and foundation funding.

“This is not big government just asking to give us more money,” Watlington said. “We still intend to tighten our belt.”

Still, to avoid significant school-based cuts, the district will need $137 million in additional funds from the city and state in fiscal 2025, a sum that will rise to $548 million by 2028, Herbstman said.

Without more money from the city and state, the district would have to spend down its fund balance quickly, putting it in a deeper hole in the future, “or make some deeper reductions,” Herbstman said. Neither he nor Watlington would give more details about what those reductions could look like.

The district will be making big asks, Watlington said, but it has shown that “we’re being good stewards of the public’s tax dollars.” The school system has its highest credit rating in 50 years, and showed progress on many academic fronts, including increased graduation rates, lower dropout rates and higher student attendance.

Watlington and Herbstman are making their budget pitch several months early this year, a move they said was necessary to get significant public and elected official feedback as they build out the specifics of the budget.

December is board reorganization month, and the board reelected Reginald Streater president and Mallory Fix-Lopez vice president, but both weathered challenges to hold onto their positions.

Cecelia Thompson and Lisa Salley squared off against Streater and Fix-Lopez, respectively, in a move that exposed divisions on the board.

Salley nominated Thompson, whom she said would create an “all-inclusive board” that leverages all board members’ expertise, not some, and operates transparently. Salley said Thompson would “stop the secret meetings and engage the entire board.”

“We need leadership and likability, not just likability,” Salley said of Thompson.

Thompson spoke up for Salley, whom she called a “change agent” with vast leadership experience and a deep knowledge of Philadelphia.

Streater and Fix-Lopez both won, 6-2, with Thompson and Salley endorsing each other and themselves. The reelected president and vice president earned plaudits from other board members for their leadership over the past year.

The meeting was a lovefest for Kevin Bethel, the district’s chief of school safety, who has been named by Mayor-elect Cherelle Parker as police commissioner.

From Watlington to Mama Gail Clouden — a community member and longtime schools advocate who told Bethel: “I love you and I believe the ancestors sent you. You have done more in your short time here than many have done in years” — Bethel was applauded roundly.

Bethel, a Southwest Philadelphia native who graduated from Bartram High, said he would continue to work in service of children. His time in the district, marked by reshaping the school police force into a school safety force focused more on mentorship than arresting children, was meaningful, Bethel said.

“I don’t think I would be going back into policing if it wasn’t for the people in this room,” he said.