An education deal, now City Council must raise funds

In a City Hall ceremony packed with dignitaries, Mayor Nutter and Philadelphia School District officials signed an "education accountability" agreement Thursday that gives the city more say in how the district conducts business.

"This agreement represents a new beginning and a new way of working together," said school Superintendent Arlene Ackerman. "I'm thrilled to be a part of this."

The mayor demanded the accord last weekend as a condition of the city finding as much as $110 million to help the schools fill an enormous budget gap.

He also demanded that district officials detail how they would spend any additional city and state dollars - they provided that information on Thursday as well.

The signing came a day before what could be a critical Council hearing on three tax proposals to raise money for the schools - two from the mayor and one from Majority Whip Darrell L. Clarke.

The mayor is pushing his two-cents per ounce sugary drinks tax to raise $80 million a year. He also has proposed a 10 percent property tax hike that would raise $95 million.

Council raised property taxes 10 percent last year, and there appears to be little support to do so again. Nutter also proposed a soda tax last year, but the measure met fierce industry and union opposition and never came up for a vote.

Nutter will have to battle the lobbying and public relations might of the beverage industry once again. The face of the industry here, Harold Honickman, has been identified as the city's richest man and is one of its most generous philanthropists.

On Thursday, Honickman was working the floor of Council Chambers, reminding members that the soda tax would add $1.35 to the average $1.21 2-liter bottle of soda.

Honickman, owner of Canada Dry Delaware Valley Bottling Company in Pennsauken, provides 19 percent of the sweet drinks in the city, with Coke and Pepsi dividing up the rest. Honickman predicted that sales would come to a halt as buyers go outside the city, and Nutter would see only a fraction of the money he expects from the tax.

"There physically won't be product sold in the city," Honickman said.

Clarke's proposal would increase property taxes by about 3.5 percent, raising $37 million in revenue. He said that gets the city to $50 million - $6 million by increasing the hourly rate on parking meters in Center City and University City, plus another $7 million from reserves.

The district's budget gap is $629 million.

"My position is that the school district needs money," Clarke said. "You can't make that level of cuts and not have an impact on your ability to function."

Ackerman is scheduled to testify at Friday's hearing. Many on Council have been critical of the district's financial stewardship, and her appearance could be crucial in swaying skeptical members.

"I think the questions and issues raised with Dr. Ackerman (today) will have some bearing with where people might go," said Majority Leader Marian B. Tasco. "We do have to ask her some tough questions and she has to answer them."

Council members have complained that the district did not sufficiently trim its budget before threatening to cut programs like full-day kindergarten and transportation for students. They also blanched at providing more funding because the district, which is state-controlled, doesn't answer to Council.

Thursday's developments appear to address some of those issues, but Nutter acknowledged that "there's no expectation on either side that just having the agreement itself will guarantee funding."

Ackerman also angered the mayor on June 4 when she announced that she would preserve full-day kindergarten by shifting some of the $246 million in federal Title I money the district receives. Nutter and some Council members noted that the shift would create new holes in the district budget.

Prior to the news conference Thursday, Ackerman met in City Hall for two hours with six Council members to talk about the cuts they proposed to other Title I funded programs.

"I'm not going to call it comfort," Councilman Curtis Jones Jr. said after the meeting. "But it is comforting that we are beginning to have the real dialogue to get down to the real numbers."

The agreement also requires the district to do five-year financial planning as part of its budget process. The framework of each five-year plan would be discussed with the city and state, the two largest funders of the schools.

City controller Alan Butkovitz, who has called for his office to have auditing power over the schools, said the agreement was "a good start," but a five-year plan would be toothless without an oversight agency to approve it. He also said that the agreement does not provide any standards by which to judge a five-year plan.

"You can submit anything and call it a plan," he said.

Council adjourned its regular meeting on Thursday - normally a minor event, but one that gave some signal to how the members will proceed.

Next week's Council meeting was supposed to be the last before the summer recess. Although an extra meeting had been scheduled for June 23, Council was considering a maneuver to recess Thursday's meeting and then come back into session following Friday's hearing on the tax proposals.

That would have allowed Council to give a first reading to any of the tax proposals - and the city's overall budget - and then pass them on June 16. By adjorning Thursday's meeting, the earliest Council could pass a tax proposal or the city budget is June 23.

If Council doesn't pass a budget by June 30, the city won't be able to spend any money. Council President Anna C. Verna said Thursday that Council may need another meeting on June 30 to resolve all the budget issues.

She also said she thought the soda tax had a better chance of passage that property tax hike.

"I think there's some who are really uncertain on how they'll vote," Verna said. "I think, whatever it is, it's going to be close."

The extra time puts less pressure on the mayor and his supporters on Council to get the soda tax through committee today.

But waiting any longer could present a problem for Nutter's strategy, which holds that if the city finds money for the schools, the state would be more likely to restore funding.

The state budget deadline also is June 30, but officials in Harrisburg have said they anticipate passing a budget early.

State education Secretary Ron Tomalis, who attended Thursday's ceremony and was a signatory to the accountability agreement, also said the accord did not guarantee more state funding.

"We have a very steep hurdle before us in our budget in Harrisburg," he said.

Contact staff writer Troy Graham at 215-854-2730, tgraham@phillynews.com, or @troyjgraham on Twitter.