School budget has pluses, but fiscal woes are on the horizon

The most dramatic thing about next year's budget for the Philadelphia School District is that there is no drama.  No proposed tax increases.  No painful cuts. No shouting. No protests.

All was relatively calm when the School Reform Commission approved the $2.9 billion budget last week.

The district even added 76 new teaching positions, plus counselors and bilingual aides for students who are learning English. Those investments should help Superintendent William Hite meet his goal of improving academic performance in the schools.

What wrong with this happy picture? According to the district's own five-year plan, next year will be the last the district runs in the black. After that, and for the next four years, the deficit will grow and grow until – under one gloomy scenario — it tops out at $905 million in 2022.

The district's problem is a simple one: Its revenue is expected to grow at any average of just under 2 percent a year going forward, while its expenses are expected to rise at an average of 4 percent a year. In the diplomatic language of the budget document, this creates a "structural imbalance."

Much of the increase in spending is driven by factors beyond the district's control: increased district contributions to the teachers pension fund; the increased cost for employee health plans and a rise in the cost of charter schools, due mostly to projected increases in enrollment.

As its own budget document acknowledges "the district finds itself one year closer to the fiscal cliff."

We have to question the wisdom of increasing the district budget by more than 6 percent when it is clear deficits are on the horizon. Wouldn't it be wiser to scale back spending to create a surplus that could be used to lessen future deficits?

Granted, that's not an easy question to ask.  We applaud the progress the district has made under Hite and want it to continue. His goals of higher graduation rates and an increase in the number of students performing at grade level are not only admirable, but attainable.

But, when you know you are headed to a cliff, it's better to apply the brakes to spending than hit the accelerator.

Can anything else be done to these predicted deficits? Yes.

The state could get serious about revising the 1987 charter law so that it is tailored to today's realities – and include a subsidy to districts for charter costs.  Republicans who control the Legislature are on record as strong supporters of charter schools, but they are mute when it comes to paying for them.

The Legislature could see the light and increase the state's share of funding education, as Gov. Wolf has proposed in the past.

The Legislature could also agree – finally, at last – to do something about pension costs that provides immediate financial relief to school districts. (Philadelphia is not alone in reeling at the doubling and quadrupling of increases in pension contributions needed to offset a huge long-term deficit in the state-run teachers' retirement fund.)

Mayor Kenney and City Council could step forward with more city money for the schools, most likely raised through tax increases.

The chances of the first three coming to pass range from slim to none. The last item – more local financial aid – is doable, but not without the usual political hysterics.

Given these sad realities, we believe it is wiser for the district to hope for the best, but prepare for the worst.