Philadelphia: Ideologues Press On to Expand Charters Despite Deepening PA Budget Crisis

The state of Pennsylvania is now more than 100 days beyond its June 30 budget deadline.  Last week the Republican dominated Pennsylvania House of Representatives rejected tax increases proposed by the state’s new Democratic governor, Tom Wolf.  The Philadelphia Inquirer reported, “In a major blow to Gov. Wolf’s agenda, the state House on Wednesday soundly rejected his plan to increase funding for Pennsylvania schools through tax hikes, stirring deeper uncertainty about how or when the state’s 99-day budget impasse would end.  The measure, which sought to raise the personal income tax and impose a new levy on natural gas drilling, was defeated, 127-73.  Republicans were united against it; nine Democrats broke ranks to join them.  The proposal needed 102 votes to pass.”

A privately published research report from Wells Fargo noted that, “The continuing budget impasse for Illinois and Pennsylvania is playing out negatively for education in these states… The timing of state revenues is particularly challenging for education, as K-12 education and higher education have already started the new academic year… Pennsylvania State Auditor Eugene DePasquale noted that the budget stalemate is forcing 17 school districts and two intermediate units to borrow…  Many of the schools are drawing down reserve funds.”

A lawsuit has been filed by plaintiffs across the state declaring that the state’s school funding system fails to meet the “thorough and efficient” and equal protection clauses in Pennsylvania’s state constitution.  The state’s Supreme Court is expected to hear this case early in 2016.

So, what’s the response in Philadelphia, a district that has continued to feel the impact of cuts to state funding under former governor, Tom Corbett, and a district that has in the past three years been forced to close 24 of its public schools and lay off thousands of teachers, counselors, librarians and school nurses?  Superintendent William Hite has proposed a new restructure for the School District of Philadelphia, a plan that will close public schools, open more charter schools, and according to the Inquirer, cost $20 million and affect 5,000 students. Hite and the state-appointed School Reform Commission are bent on extending the school-choice, “portfolio school reform” plan hatched several years ago by consultants from the Boston Consulting Group. “Hite also rejected the notion that the district was giving up on schools that have been deprived of key resources—such as full-time counselors, reading specialists, and other staff—and then labeled failing.  ‘There is no indication that ‘adding those particular positions was going to yield different outcomes,’ Hite said.”

Jerry Jordan of the Philadelphia Federation of Teachers is reported by the Inquirer to have called Hite’s plans, “astounding.” “I just found it absolutely stunning. These schools have been starved of resources; it’s test and punish, and then we’ll use the results to give schools away.”

Michael Tanenbaum, writing for Philly Voice, describes the district’s financial picture, something that was not discussed when Hite presented reform plans: “The cost of the proposed reforms was not stated by the District during its presentation Thursday.  State school funding has been frozen for the past three months amid the stalemate in Harrisburg.  According to the Pennsylvania Auditor General, the School District of Philadelphia has already borrowed $275 million to make up for the missing funds.”

What doesn’t seem to have been factored into Hite’s proposal to expand charters is the information from a report just a year ago by Philadelphia City Controller Alan Butkovitz about the threat posed to the financial viability of Philadelphia’s public schools by Pennsylvania’s flawed formula for funding charter schools. The Inquirer quotes Butkovitz: “(I)t seems reasonably clear that the geometric increase in the district’s budget line for charter schools has intensified its financial crisis.”  According to the Inquirer, Butkovitz’s  “report said the charter schools’ financial burden on the district worsened when the legislature eliminated the state charter-reimbursement program in 2011.  That change has cost the district at least $100 million in state revenue annually…  By state law, the district is required to pay charter schools before most other expenses, but the district has limited ability to control their enrollment… The report said the state formula used to calculate payments for special education students was another factor in charter school surpluses. The charter schools receive a flat rate for special education students, regardless of the type of services students need.  The report said charter schools generally have students with less-severe needs and on average spend 50 percent less on each special-ed student than the district does.”

Then there is the very recent investigation into the real estate scandal in several of Philadelphia’s charter schools.  An investigation last month posted at the joint website of the Philadelphia Inquirer and the Philadelphia News describes charter schools’ issuing bonds with very high interest rates to pay for exorbitantly expensive school buildings.  To cover their interest payments, several charters have sought rapidly to expand their enrollments and the tax dollars they can collect:  “Bonds—school debt sold to investors who are gradually paid back with interest—have become popular among charters because they allow lower borrowing costs than standard commercial loans… But the bonds that charter schools have tapped are still riskier and come with ‘junk’ ratings, carrying high interest rates… Today, an increasing number of charters are spending more of their budgets paying down debt than on actual instruction.”  One school is described as spending one third of its budget to occupy an expensive high-rise.  Michael Masch, the former schools finance chief of the School District of Philadelphia, is reported to be concerned about the consequences for the public school district: “Masch expressed concern that the boom in charter expansion could reach a point of implosion, as the demand to finance new (charter) school buildings is derived mainly by the transfer of students out of traditional district schools. ‘There are no new students coming into the Philadelphia school district and yet we’re building all these new schools. At some point, you’re going to have to start closing schools.’ Masch also said that because charters get guaranteed funding based on the number of students they will enroll, their budgets stayed relatively stable while the district made deep cuts in response to a shortage of state education dollars.”

Helen Gym, a candidate for the Philadelphia City Council, raised concerns about desperately needed support for the children in Philadelphia’s public schools in an op-ed last week in Philadelphia Magazine: “Never mind that just a few weeks ago Hite declared for a second time that charters in Philadelphia had reached a ‘saturation point.’ Never mind that money that is never available to restore basic services (to public schools) like nurses and counselors—or to end class sizes of 70 students per teacher—can somehow be found to expand charters year after year.  And never mind that the charter system itself is rapidly coming apart, with mid-year closures, bankruptcies and bad financing deals rocking an already uneven academic performance landscape. Ninety days into a state budget stalemate, our children attend schools with zero state funding for the current year and without the essential resources they need.  But school choice cheerleaders continue on a reckless tear to create two separate and unsustainable school systems….”