Article brought to you by: Catholic Online (www.catholic.org)

Cash-strapped Philadelphia schools forced to borrow $300 million

By Catholic Online (NEWS CONSORTIUM)
November 9th, 2012
Catholic Online (www.catholic.org)

Philadelphia schools needs to pay teachers, buy books, keep the heat on, and in doing so had to borrow some money - to the tune of $300 million. The Philadelphia School Reform Commission has tendered its request to officials. Chairman Pedro Ramos made it clear that the SRC's had no other choices and that the state of its finances constituted "dire circumstances" for the district.

LOS ANGELES, CA (Catholic Online) - "I couldn't be more unhappy that we're in a situation where it's necessary to do a borrowing for the purposes of merely paying our bills," Ramos said.

The commission unanimously authorized at a special meeting that bailing out the schools comes with a hefty price tag, specifically an additional $22 million in debt service annually for 20 years, beginning in 2014.

It's the second time in 10 years the district has had to borrow money to keep schools open. Officials say the school system's credit card is maxed out. The last deficit financing occurred in a decade ago, in 2002.

"Some people think the solution is that we can just keep borrowing, and we really can't," Ramos said.

Since the school district is considered nonrecurring revenue, this bond sale puts the district hundreds of millions in the hole for the 2013-14 school year a mere short three months into the current school term.

Clearly, the lesson to be learned here is that the district's current spending is not sustainable and that the bond sale is a large and very expensive quick fix, buying the district very little time.

"Extremely difficult" choices are approaching quickly, SRC member Wendell Pritchett says, and "we're going to have to make them. We don't have any choice."

The commission will soon be confronted with a momentous decision; deciding how many and which of the district's 200-plus schools should be closed.

Officials have said they must shed roughly 40 schools at the end of this year to save money and "right-size" operations in a district that has lost tens of thousands of students to charter schools in the last decade.

Superintendent William R. Hite Jr. declared this week that staff would make public their school closing recommendations in the next few weeks, but possibly not until the first week in December.

Officials say in official terms, the bond sale was successful - well received in the market, with more than 50 investors placing initial orders, Christina Ward, deputy chief financial officer says.

Article brought to you by: Catholic Online (www.catholic.org)