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Published in Print: October 21, 1998, as Financial Analysis Paints Bleak Picture for Philadelphia

Financial Analysis Paints Bleak Picture for Philadelphia

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An analysis of financial operations in the Philadelphia public schools commissioned by state lawmakers warns that the district is on a "hazardous course" that could lead to a takeover.

Irvin R. Davis

In 1996, the school board agreed to a four-year teachers' contract that board members knew they could not afford, Irvin R. Davis, the district's former managing director, writes in his report. The analysis for the state House of Representatives, released Oct. 5, is the latest salvo in a long-running battle between officials in Philadelphia and Harrisburg over funding for the nation's fifth-largest district.

The district spends too much to pay for teacher preparation time and administrative staff, Mr. Davis maintains in the report. And he concludes that the teacher contract, not scheduled to be renewed until August 2000, will push the district deep into debt.

"Without accounting for it," Mr. Davis writes, "the district assumed it would find the revenue to cover the final years' increased costs of the teachers' contract."

Big Deficit Projected

Teacher preparation time, mandated in educators' contracts, cost more than $112 million in the 1998-99 fiscal year, the report says, enough money to pay for more than 1,800 teaching positions.

Administrative staffing is also expensive. The district has reduced the number of administrative employees by 15 percent since 1994 in a pledge to commit more money to instruction. But rising salaries and other costs--such as teacher-recruitment efforts--have caused administrative costs to rise 28.3 percent over five years, according to the report.

Funding for instruction, it says, increased by only 18.1 percent.

The district's projected $55.2 million deficit in its $1.5 billion budget for 1998-99 could be avoided by reallocating resources and eliminating some appropriations, Mr. Davis argues. Even though a small surplus could be generated this school year, financing the teacher contract would still leave a deficit of $358.3 million in 2000-01, he projects.

The report shows "an obvious need to get finances in order," said state Rep. Dwight Evans, the ranking Democrat on the House appropriations committee and a mayoral candidate this year in Philadelphia.

But school leaders in Philadelphia say the report fails to put the numbers in context.

Though the deficit is real and imposing, "we believe it is a revenue problem, not an expenditure problem," said Clarence D. Armbrister, the district's managing director. Superintendent David W. Hornbeck and other Philadelphia officials have long maintained that Pennsylvania does not provide adequate funding to meet the needs of its largest district.

Mr. Armbrister described the teacher contract as "reasonable." He said the district has already identified 40 percent of the funding needed to pay for the services called for in it.

A second state report on the district's finances is expected to be completed in January.

Vol. 18, Issue 8, Page 5

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