Wednesday, February 20, 2008

How to Grade the RSD's Homework: Part 2

I've been eagerly anticipating the first RSD budget in two years. It's due today.

Check out this post for background context and part 1.

Part 2: Budget Arithmetic

Can we trust the budget math?

The biggest reason Paul Vallas was shown the door in Philadelphia was the surprise budget deficit he ran over the course of his last year and a half at the helm of the schools. Money from emergency deficit bonds floated at the beginning of the Vallas administration ran out, and cracks in the School District's books began to surface.

In February of 2006, Mr. Vallas announced surprise mid-year cuts to the '05-'06 operating budget. Philadelphia schools were instructed to cut their discretionary budget by 30 percent to account for an unanticipated shortfall due to high utility costs and delayed funding streams. Principals and parents criticized the district and Mr. Vallas for the cuts and began to become anxious about what the future might hold:


"We're afraid that once the district starts taking away programs, we won't see them back again next year," said Karen Lash, president of the Home and School Association at the Forrest Elementary School.

In April of 2006, Mr. Vallas prepared a budget for the '06-'07 fiscal year in the wake of the annual City Council budget hearings. The mid-year cuts to school discretionary budgets were extended.

"Certainly, I don't like that we have to reduce the amount of discretionary spending to local schools, but we submit balanced budgets. That's what we do," Vallas said at a budget briefing yesterday afternoon.


(Discretionary monies are used by principals to fund extracurricular activities, overtime, teacher aides, etc.)

Aissia Richardson, president of the Home and School Association at Samuel Powell School, said the overall impact on her school is devastating. The school's budget is being slashed by $190,000, or 25 percent, which might cause the school to get rid of two teachers.

"In the past two years, we have gone from cutting the fat to cutting the meat, to starvation to outright cannibalism," she said.

Nonetheless, Mr. Vallas was able to quiet concerns and a balanced budget was passed.

In August of 2006, Mr. Vallas was given a three year contract extension by the Philadelphia School Reform Commission. He was lauded for perceived reforms and had successfully managed to get through the small political maelstrom of the Winter and Spring relating to the cuts in discretionary spending.

Soon after, however, Mr. Vallas was again feeling the heat. The budget proposed and approved the previous Spring turned out to not be balanced after all. In November of 2006, Vallas announced a surprise $73.3 million shortfall.

"Last April, I was told we were on solid financial ground," said commissioner Martin G. Bednarek. "Now, five months later, we're looking at this deficit...

"As a member of the School reform Commission, I feel really betrayed."

This time, Vallas couldn't smooth things over as easily. The School Reform Commission hearing was well attended by angry parents and students.

Jalita Lyde, a junior at Mastbaum in Frankford, said she began the school year taking Spanish, but the school lost its Spanish teacher last month.

"Put yourself in my shoes," Lyde said. "I'm taking Spanish II and making good grades. All of a sudden, I come to school one day and find out that my Spanish teacher is leaving for good. Now I have no class, no idea when I'll get my Spanish credit, and a whole new schedule."

Lyde was one of 50 or more high-school students with the activist group Youth United for Change.

SRC chairman Nevels said the commission would not agree immediately to the proposed cuts Vallas outlined on Wednesday.

Instead, Nevels said, the SRC would again spend much of its time at its next meeting... hearing more from parents and others concerned about the proposed cuts.

As teachers, parents, and students became actively involved in questioning Mr. Vallas' handling of the budget, the members of the School Reform Commission were unwilling to rubber-stamp Vallas' new round of cuts. Political pressure from the grassroots base helped to erode support amongst a School Reform Commission that was clearly growing uncomfortable with the extension they'd given to Vallas the previous Summer.

In December testimony in front of City Council, City Controller Alan Butkovitz blasted school district finances, revealing audit discoveries related to no-bid contracts and the improper expense account controversy. (See part 1)

"...the district has done little, if anything to establish the necessary internal accounting practices and safeguards that would insure that the School District spends within its means."

That takes us to February of 2007, when that same budget deficit was revealed to actually be $140 million. Michael Nutter, who was just elected Mayor of Philadelphia by the largest margin in city history, demanded accountability:

"The school district is clearly spinning out of control," former City Councilman Nutter said. "It is time for answers, not excuses, and for public disclosure, not duck and cover."


While Mr. Vallas promised to find a way to balance the budget, long-time Vallas opponents on the School Reform Commission were finding new allies. His ouster became inevitable.

By April, Vallas was in New Orleans interviewing for his next job.

Philly schools were still scrambling to cover the deficit at the start of this school year, as Mr. Vallas basked in hopeful media coverage here in New Orleans.

Cuts were made to support programs involving desegregation and high school drop-outs. The massively unpopular teacher leveling program was brought back. Under "leveling," teachers are reassigned after the start of a school year to make up for enrollment disparities between schools. Alternative-schools for the district's most discipline-challenged students also lost funding.

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With the budget upcoming, let's double-check Mr. Vallas' math.
When I was in school, I didn't get credit for a correct answer if I couldn't show my work.
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So far, no good.

Today's Times-Picayune confirms Mr. Vallas' numbers are worth watching:

The Recovery School District's first detailed operating budget -- due to go before the state Board of Elementary and Secondary Education today -- relies on $15 million in revenue that the district has yet to collect from the Orleans Parish School Board and the city.

With the budget exactly balanced -- it lists $261 million in both revenue and expenditures -- a failure to collect all or part of that money would mean significant cuts.

Recovery District chief Paul Vallas said the district will scale back its summer school program and stop filling teacher vacancies at the end of March, as well as make other cuts, as yet unspecified, if the money doesn't come through.


Read the whole thing article. It is history repeating itself.

Council members and school officials have discussed a city contribution to extended-day and summer programs, but the council never found the money and has no obligation to finance schools.

"The city has never given money to any school system," said City Councilwoman Cynthia Hedge-Morrell. "This was just a one-time revenue to help them with their summer school and after-school program if the money was available. The money wasn't available."

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The district will get about $2.3 million less than it anticipated through the state's per-pupil financing system because of lower-than-expected enrollment. Recent figures put enrollment at about 12,630 students; the operating budget originally anticipated about 13,200 students.

Vallas said that amount will be made up partly by additional money the district will get for identifying hundreds of special education students in the past few months. The number of special education students with completed paperwork now totals more than 1,400.

Vallas played down the inclusion of revenue he does not have in hand in the budget, saying: "I don't think we need to play hardball yet."

He added that the district has other anticipated revenue sources that it did not include in the budget.

The loss of the $15 million in revenue from the city and the School Board would not affect "cash flow" issues for the Recovery District -- a recent problem -- because the district would address the shortfall through the teacher hiring freeze and smaller summer school, Vallas said.

The average teacher-student ratio would probably go from 19:1 to 22:1 or 23:1 as a result of a hiring freeze, Vallas said.

When asked whether the hiring freeze would fully cover the $10 million if the money does not come through, Vallas said other cuts would have to be made as well, possibly including "jettisoning a number of important contracts" and terminating the extended school day program early in the year.

"We will not spend more money than we are taking in," he said. "I don't think we have a revenue problem here. They know they have to pay us, that this is the kids' money."

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This is Philadelphia all over again.


"We will not spend more money than we are taking in."

You already are.
You just presented a balanced budget that relies on revenue that you don't have.


You claim that you anticipate other revenue sources that you don't include in the budget.

What are they?
Why aren't they included in the budget?
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Stay tuned for Part 3.

2 comments:

jeffrey said...

Thanks for this. I immediately came to this site for context after reading that T-P front pager.

Did Vallas write a book about his time in Philly? Is he writing one now? If so, can he and Ed Blakely get a package deal with the same publisher?

E said...

thanks jeffrey.

it would be so nice to get some extra magnifying glasses on what mr. vallas is doing over there... this is an extremely elaborate public relations campaign...