A responsibility to share the burden

WHY ARE Philadelphia's public schools in a financial crisis? With former superintendent Arlene Ackerman gone and the school district's budget problems worse than ever, some people appear to be looking for a new scapegoat and think they've found one in Michael Masch, former School District of Philadelphia chief financial officer.

That certainly appears to be the view of city Controller Alan Butkovitz, who just last week told the Inquirer: ". . . Masch was put at the schools for the very purpose of providing independent financial control and to make sure the school district stayed within their spending limits. He failed."

But wait a minute. Philadelphia's schools ended 2009, Masch's first year as CFO, with a $28 million surplus. They ended 2010 with another $28 million surplus and ended 2011 with a $31 million surplus. And two weeks ago the district announced that it expects to end the current 2012 fiscal year with a balanced budget.

So how can it be that Masch failed to keep spending under control if every year since he came to the school district, the district has had a balanced budget — better than balanced, in fact.

Well, what about revenue estimates? Didn't Masch get those wrong? Didn't he regularly predict that the district would get more money from the state and the city than it eventually did? Well, yes he did, because Masch followed the same policy the school district has adhered to for decades — he put local revenue estimates in the school district budget consistent with the mayor's city budget proposal for the coming year, and state estimates consistent with the governor's state budget proposal.

Guess what? That's exactly the same policy that the district is following this year, in the budget it just made public for 2012-13. Pedro Ramos, School Reform Commission chair, strenuously defended this policy two weeks ago on the floor of City Council. He said the district had no choice but to follow the lead of the governor and the mayor in constructing the school district's revenue estimates.

As soon as the actual level of funding was settled each year, Masch immediately implemented plans to adjust school district spending to match the final authorized levels of funding. That's why the district was able to generate surpluses in 2009, 2010 and 2011.

But didn't the school district have a $629 million deficit this year? How did Masch let that happen?

The thing is, it didn't happen, because Masch warned everybody and got them to take action. In May 2010, October 2010, January 2011 and March 2011, Masch repeatedly warned at open meetings of the SRC that in 2012 the district was in danger of winding up with a deficit of as much as $629 million or more, unless corrective actions were taken.

That deficit never happened precisely because corrective actions were taken. In April, the school district acknowledged that all but $26 million of its $721 million 2012 budget gap has been eliminated, primarily through tough and painful spending cuts (about $474 million), plus additional city funding ($54 million), some short-term borrowing ($57 million), some debt restructuring ($79 million), and use of the district's FY11 $31 million surplus.

Masch was the primary architect of the district's gap-closing plan. If that plan had not been created and put in place, the school district would be bankrupt today. Instead, the district is now within striking distance of a balanced 2011-12 budget.

So why did the school district have such a big budget gap this year? The primary reason is funding — a massive, one-time, year-over-year 15 percent reduction in funding, the likes of which the school district has never before seen. In all, the district lost $137 million in federal stimulus funds, $203 million in state operating funds and $99 million in state grant funds — $439 million in all.

The district also faced over $100 million in mandatory cost increases this year for wages and salaries, health benefits, contributions to the state pension system, and utilities; plus over $40 million in state-mandated increases in payments to charter schools, and over $50 million for unemployment benefits and other payouts for the 4,000 school district employees who lost their jobs since June 2011 through layoff or retirement in order to close the budget gap.

So let's face it. There's no bad guy to blame for all of this. The economy tanked. Tax revenues went way down. Now we have a choice. Do we cut more and more — cut pay, cut benefits, cut art, cut music, cut everything our kids need and deserve, close lots of schools and over-crowd the ones that are left? Or do we agree that our kids deserve better than that, and provide our schools with enough money to operate effectively?

If Harrisburg is really our partner, then let's end the scapegoating and the blame game. Let's agree that we have to share responsibility, just like we did back in 2001 when the School Reform Commission was first created — the city provided more school funding back then, and so did the state.

We were in it together. It needs to be the same way today. In City Council, we should insist that we will give the schools more funding only if it's matched by the state. We will never get ahead if they take a dollar out every time we put one in. We need burden sharing, not burden shifting.