School Reform Commission Approves Lump Sum Budget for Fiscal Year 2019

Philadelphia – Today, the School Reform Commission (SRC) approved a resolution adopting the $3.15 billion Lump Sum Budget for the School District of Philadelphia for Fiscal Year 2019 (FY19).  After years of financial challenges the School District of Philadelphia under Mayor Kenney’s school funding proposal will see balanced budgets through 2023 instead of a $900 million combined deficit.

“There are no easy shortcuts in urban education; change and progress take time. Schools and students are making progress but that progress must reach every student and every school. The budget proposed by Mayor Kenney allows us to build on our achievements and expand progress,” said Dr. William R. Hite, Superintendent.  “Under Mayor Kenney’s proposed funding plan we can expand our early literacy work, make significant capital improvements, increase high school academic program offerings across the city, and keep schools safe and welcoming places for children. If we don’t solidify our funding now we risk losing all we have accomplished and could go back to budget cuts, large-scale school closings and the laying off of teachers, counselors, nurses and support staff.”

Mayor Kenney’s budget would allow the School District to:

• Reduce class sizes by eliminating all 1st / 2nd grade split classrooms
• Expand our early literacy effort to 4th and 5th grade
• Modernize more than 150 classrooms in 11 schools to help improve literacy in PreK -3rd grade
• Increase supports for credit recovery and grade enhancement for high school students
• Increase financial support for our lowest performing schools
• Help English language learners with 30 additional ESOL teachers
• Support more students who need special education assistance with 10 additional special education emotional support programs and seven vocational special education teachers
• Provide arts / music funds to increase the number of music teachers and fund art and music supplies

“Our goal every year is to propose a budget and spending plan which strives for structural balance, while determining investments designed to achieve the mission of achieving equity in educational opportunity for all children,” said Uri Monson, Chief Financial Officer for the School District.  “The City’s proposed new funding plan provides resources to accelerate and further expand progress while ensuring fiscal stability for years to come.”

This is the fourth consecutive year the School District will end with a positive fund balance, projected to be $135 million at the end of FY18.   During Monson’s presentation to the SRC he focused on many of the financial accomplishments achieved by the School District over the last few years including:

Positive Fund Balance

• Currently projected to end FY18 with a $135 million positive fund balance
• Our fourth consecutive year with a year-end positive fund balance

State Reimbursement Adjustments

• In July 2017, the State passed a statutory change that stopped the loss of more than $250 million over 5 years in state reimbursement revenues, starting in FY19.

Improved Bond Rating

• In October, Moody’s upgraded the Pennsylvania School District Enhancement Programs to A2 from Baa1 and revised the outlook to stable from negative. Fitch also revised the District’s outlook to stable from negative.

Refunding Savings

• In November 2016, the District completed a bond refunding which will result in over $100 million in projected present value debt service savings over the next 20 years.

Extending the Cigarette Tax

• Due to an amendment to the Fiscal Code contained in Act 85, the City cigarette tax will no longer sunset in FY19 and the District will receive at least $58 million annually.

New Rideshare Funding

• In FY17, the State implemented a Ridesharing program effective through December 2019, in which the District will receive a portion of revenues. In FY18, the Ridesharing revenues are projected to be approximately $2.6 million.

The local Home Rule Charter mandates the Lump Sum Budget with the intention of better communicating revenue needs to the Mayor and City Council during the budget process.  All budget documents and information regarding upcoming budget hearings will be posted on the District’s website at www.philasd.org/budget.

The passage of the Lump Sum Budget marks the start of a multi-stage budget process. In late April, the District will publicly release a “budget in brief” – a more detailed document showing how expenses will be allocated within the District’s operations. There will be SRC budget hearings on April 19. The SRC and District representatives will also testify on the budget before City Council on May 9 with the SRC scheduled to vote May 24 on a final budget.