Phila. schools facing big budget shortfall

Philadelphia School District officials are staring down a gap of $430 million or more in next year's budget, and the deficit could surpass the half-billion mark under worst-case scenarios, according to officials briefed on the district's finances.

In October, the district's chief financial officer, Michael Masch, warned the public that the 2011-12 budget could be grim, with $234 million in stimulus money drying up without funds to replace it.

Additional costs for staffing, health benefits and charter schools have made the situation worse, according to one of the sources briefed on the looming crisis. Each district department head may be asked to come up with reduction proposals of 12 percent, 24 percent, and 36 percent, according to another source.

The $430 million is more than 13 percent of the 2010-11 $3.2 billion budget. The gap could grow with additional state cuts and maximum enrollment at charter schools.

Mayor Nutter and School Superintendent Arlene Ackerman said in a hastily arranged conference call Tuesday night that they did not know the amount the district would need to make up in next year's budget. Ackerman called any figures other than the stimulus money "purely speculative."

"I don't feel comfortable actually discussing this with the press, beyond the $234 million, as we are internally trying to look at a variety of scenarios," Ackerman said. "I really think it's unfair to report on budget exercises that may or may not be going on here."

Nutter and Ackerman called the news conference after The Inquirer began asking questions about the budget.

"We don't want to spend a lot of time speculating," the mayor said, acknowledging that the district, "like every other governmental entity, has some budget challenges."

Referring to his budget proposal and that of Gov.-elect Tom Corbett, Nutter added: "There are a series of unknowns that won't be resolved or get additional clarity for weeks." Both budgets are expected in early March.

For two years, the district has relied on federal stimulus money and hefty aid packages from Harrisburg to balance its budget. Of the current $3.2 billion spending plan, $1.68 billion - 55 percent - comes from state aid.

An additional $234 million came from nonrecurring federal stimulus money that expires this year.