Facing a financial crisis of previously unimagined proportions - it must cut $61 million by June and isn't sure how to get there - the Philadelphia School District's governing body on Thursday tore its leadership structure and named a "chief recovery officer" to get the battered organization through the next six months.
In plainer, starker terms than it had ever used before, the School Reform Commission laid out the district's financial woes to the public in a meeting Thursday night.
Commissioner Feather Houstoun, who chairs the district's finance committee, said the situation was much worse than people realized.
"We're basically going to limp through May and June. We'll cover payroll. We'll cover debt service because we absolutely have to," Houstoun said. Without intervention, "we're going to have such a pile up of cash deficit that we're basically not going to be able to pay people in July for work they did in June. If we haven't fixed this and have a credible plan for next year and the next year, we may not even be able to go to credit markets."
The SRC named Thomas Knudsen to a new title of chief recovery officer - he will function both as superintendent and chief financial officer. Knudsen, who previously led a turnaround at the Philadelphia Gas Works, will work on a $150,000, six-month contract.
Knudsen said he shared the SRC's "sense of urgency and alarm."
"This is a severe circumstance, to say the least," he said at a news conference after his appointment was announced.
Penny Nixon, formerly associate superintendent for academics, becomes chief academic officer. She will report directly to the SRC.
Leroy Nunery, the former acting superintendent, and Michael Masch, former chief financial officer, are both staying on as special advisers, but will take pay cuts.
Nunery will report directly to the SRC and focus on examining how business and services are delivered to schools - essentially heading an effort to decentralize some of the district's operations. Masch will report to Knudsen and continue to work on financial matters.
How did the district get in such straits? Hundreds of millions in federal stimulus dollars went away, but officials knew that was going to happen. Big chunks were stripped away with cuts in state funding, but it was clear that a Republican governor was not going to help Philadelphia the way previous administrations had.
