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Published in Print: June 10, 1998, as Phila. Budget Passes, Easing Takeover Threat

Phila. Budget Passes, Easing Takeover Threat

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With the threat of a state takeover looming, Philadelphia district leaders have adopted a $1.5 billion 1998-99 budget that ensures--despite earlier forecasts--that city schools will remain open the entire school year.

Just a day before the school board's May 29 vote, predictions for spending had far exceeded available cash, and the members had planned to pass an unbalanced budget for the next school year--one that Superintendent David W. Hornbeck had warned could force the district to close its doors as early as March.

David Hornbeck

But 11th-hour letters of credit issued by two local banks will allow the district to borrow $250 million this summer--enough, officials say, to meet administrative and operating costs through next June.

The adopted budget preserves programs "that give kids the tools to meet higher academic standards," Mr. Hornbeck said last week. "It continues funding for day care, full-day kindergarten, arts, music, athletic programs, and summer school and after-school tutoring." The budget also contains money for professional development, he added.

It was Mr. Hornbeck's earlier warnings that without additional state aid the district would run out of money in the spring that prompted state lawmakers, with support from Gov. Tom Ridge, to pass legislation allowing a state takeover of the 213,000-student district.

But Tim Reeves, a spokesman for the Republican governor, said last week that the adoption by the district of a budget that ensures a full 180-day calendar removed the likelihood of that drastic step.

Spring Showdown

Battles over school funding in Philadelphia have become an annual rite in Pennsylvania, with district leaders demanding more from Harrisburg and state lawmakers claiming the city schools already get more than their share.

In February, Mr. Hornbeck unveiled a proposal asking the state, which underwrites about 60 percent of the system's budget, to make up for a projected $55.2 million shortfall. If the legislature did not come through with the cash, Mr. Hornbeck warned, district officials would have no choice but to shut the system down.

State leaders, noting that roughly $717 million in state aid was already slated for the district next school year, raised the stakes in April with the passage of the bill that would allow the state schools chief, Eugene W. Hickok, to take control of the system.

"Philadelphia has 12 percent of the state's children but gets 18 percent of the state's budget," Stephen E. Drachler, the spokesman for House Majority Leader John M. Perzel, a Philadelphia Republican, said at the time. "Pennsylvania taxpayers have put an enormous amount of money into the Philadelphia school system, and they keep asking for more. Well, the checkbook is closed."

The tug of war is also playing out in state and federal courts: Philadelphia officials have filed two lawsuits charging that the state's system of funding schools is unfair. ("An Annual Rite in Philadelphia: Hornbeck Duels State Over Budget," March 18, 1998.)

Despite the contentious budget battles and ongoing lawsuits, state lawmakers are still trying to determine how much money is enough for Philadelphia schools. The district's former managing director, Irvin R. Davis, has been hired by the state to audit the school budget and look for savings.

Hardly Jubilant

The letters of credit from PNC Bank and First Union National Bank will back the district's tax-revenue-anticipation notes, an annual short-term loan, this summer. That loan will provide enough money to continue school operations at the current level through the upcoming year.

But district leaders say that unless the state makes fundamental changes in the way it finances city schools, the long-term financial prospects for the system will remain dim.

"The funding problems are not going anywhere" until the state--or the courts--remedy the formula, Mr. Hornbeck said. "Having enough money only buys our schools a little more time. Ultimately, there must be a day of reckoning."

Vol. 17, Issue 39, Page 6

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