Squeezing some answers from the School District
June 6, 2011By Dave Davies
"You shoulda planned ahead!"
That's what Rocky Balboa would say when he had to squeeze a couple hundred from some poor sap who owed Rocky's loan shark boss. For a partial payment he would let the guy go without breaking his knees, but jab his black-gloved finger in the guy's face and say it once more: "You shoulda planned ahead!"
That line has come back to me lately as I watch the Philadelphia School District in something like a blind panic because it's facing a budget gap of $629 million, roughly one-fifth of its budget.
It's asking for money from city taxpayers who've already been banged with sales and property tax increases.
And, like Rocky, I have to ask – how did you not see this coming?
You knew exactly when the federal stimulus money would disappear. You knew the state government would be facing a horrific budget problem, and would not likely replace the stimulus money it had been using for basic education funding.
And most folks expected to see a Republican governor and legislature after the 2010 election.
So why didn't you start making deeper cuts earlier, or come to the city and the unions a whole lot sooner and ask for help?
I'm not the only person around town asking this question. People who follow city finances know that when the city drove it's financial bus off a cliff in 1990, state legislation forever changed the city's budgeting practices.
In addition to adopting an annual budget, the city now has to prepare a five-year financial plan, estimating their expenses and revenues five years down the road.
It's an inexact science, but it's better to make a reasonable guess about future economic trends, property tax receipts, revenue from other governments, etc. than to not think about it at all.
Every year, the city has to publish its assumptions about revenue and expected expenses, and they're reviewed by an independent body – the Pennsylvania Intergovernmental Cooperation Authority, known to policy geeks as PICA.
In her testimony to City Council on the school district's financial woes, Helen Gym of Parents United for Public Education (who also writes for our content partner, The Public School Notebook) argued that the School District should also come under PICA's review.
I find it particularly interesting that the School District's chief financial officer, Mike Masch, spent many years as the city's budget director in the 1990's, when he had to prepare those five year plans. Surely he understands their value.
So last Friday I got Masch on the phone and asked him the Rocky question. Shouldn't you have planned ahead?
I've known Mike Masch for nearly 30 years, and I knew he'd have a persuasive response. He's wicked smart, and I'm certain has never lost an argument to anybody.
He said the District has been saying publicly for more than a year there would be a huge budget problem in the coming fiscal year, and was planning to manage it. As of January, it appeared to be something like a $300 million problem, and officials thought they could manage that without cutting critical programs for kids and families.
But state cuts were far earlier and deeper than they could have expected, and the budget gap grew to terrifying proportions.
When I asked Masch if the District would benefit from the discipline of a five-year planning process, he didn't exactly say no. But he did say that since most of the School District's revenue comes from state and city governments they don't control, it's kind of hard to put hard numbers together.
"If we make the assumption that there are no guaranteed increases in funding, then we would have a five year plan with no revenue growth and constant growth in spending," Masch told me, "and it would be a plan in which we propose spending cuts every year, and those cuts would be deeper and deeper as the years went on."
He was on a roll.
"Anything other than that would require us to make assumptions about what elected officials who operate independently of us are going to do," he added, "and given elections cycles, in some cases we wouldn't even know who those officials were going to be."
Fair point, but all kinds of government officials have to make financial assumptions about events outside their control. And I believe an independent set of eyes on the District's finances could only help.
If the city does come up with a tax hike or some other revenue boost for the schools, a requirement for long-term fiscal planning and an independent review of the district's finances should be part of the deal.
Don't make us send Rocky over.
UPDATE: I wrote this piece late Sunday. Since then, Mayor Nutter wrote the school district demanding all kinds of information and seeking longer-term planning from the district. You can find a PDF of Nutter's letter here.
I also recommend this piece by Phil Goldsmith in today's Daily News.