The Gold Standard | From stimulus to deficit

While former Gov. Ed Rendell chose to focus the penultimate days of his administration haggling the National Football League for postponing the Eagles-Vikings game due to Blizzard 2010, calling the United States a “nation of wussies,” Philadelphians seem to be missing some of the larger issues that plague the city.

Case in point: The School District of Philadelphia faces a pending budget deficit of $430 million. And by looking into the figures, it becomes clear that Philadelphia has itself to blame for the financial problems.

The budget crisis staring the local school system directly in the face is not a result of a sudden, unforeseen shortfall. In fact, there are sound arguments to be made that this pending deficit was driven by the same federal stimulus package of 2009 that so many felt was crucial to the nation’s economic well-being.

Over 50 percent of the projected $430 million-plus deficit — with worst-case scenarios pushing that figure to over half a billion — comes directly from the stimulus package passed in February 2009 by President Barack Obama, according to The Philadelphia Inquirer. The stimulus package allocated $234 million in educational stipends to the district over a two-year period.

But that two-year period has come to an end, and recent estimations show that the funds were drastically mismanaged.

Instead of the stimulus funds being used to cover new projects — the building of schools or modernization of classrooms — the funds were instead used to cover “recurring costs.” These include teacher and administrative salaries, annual maintenance costs for school buildings and other items that need to be paid for annually.

Simply put, instead of spending the $234 million on one-time purchases that would otherwise not be affordable, Superintendant Arlene Ackerman managed an effort that saw every last penny spent on these recurring costs. Amazingly, no one foresaw the inevitable end result: when the stimulus fund that paid for such expenditures disappeared, so too would the payment plan for recurring costs.

And the result of Ackerman’s decision accounts for a majority of this projected deficit. The district can’t say they weren’t warned. State Senate Majority Leader Dominic Pileggi said in the Inquirer that “we told school districts during the 2010-11 budget process that they should not use the federal stimulus funds to cover recurring costs.” Apparently, that advice fell on deaf ears.

The result could be devastating. Gov. Tom Corbett (R-Pa.) has begun the implementation of a plan in which the state would oversee the district’s financial obligations by bringing the entire district under the control of the state agency that handles state and city finances within Pennsylvania.

The problem, however, is that a school district cannot be managed like a Fortune 500 company. As detailed in the acclaimed documentary Waiting for Superman, school districts suffer from a system of convoluted and structural dilemmas — powerful teacher unions, overreliance on charter schools and inefficient accountability practices.

The $430-million deficit, likewise, comes from a variety of sources that cannot be solved with one legislative swoop from Harrisburg. The hole that the stimulus fund cloaked for two years is wholly a local issue, spurred by irresponsible local decisions. The district should be left to debate and decide how to balance a budget without the state’s intervention.

Mayor Michael Nutter agrees with this sentiment, telling the Inquirer that the state might advocate “onetime solutions that don’t address long-term fiscal challenges.” Unfortunately, the mayor’s statement is hypocritical. There is no one to blame for the district’s budget deficit other than the district itself and that responsibility starts and ends with Nutter.

His realization of the pending budget crisis has come much too late, and the repercussions of it will soon be ubiquitous amongst Philadelphia-area schoolchildren and their parents. Harrisburg is parading in to solve the problem, and it won’t be pretty.

Brian Goldman is a College junior from Queens, N.Y. He loves everything about Penn besides the Eagles and Phillies. His e-mail address is goldman@theDP.com. The Gold Standard appears every Monday.

Please note All comments are eligible for publication in The Daily Pennsylvanian.