SRC to borrow $500 million by issuing short-term notes

Posted: July 04, 2012

The Philadelphia School Reform Commission on Monday approved $500 million in short-term borrowing to deal with seasonal cash-flow issues, but said the move would not help the district bridge a spending gap of more than $218 million.

Instead, the SRC authorized the issuance and sale of the short-term notes in anticipation of receiving state and local tax revenue. Christine C. Ward, executive director of the Office of Special Finance, said the district had used such short-term financing in 25 of the last 27 years to provide cash while awaiting scheduled payments the district will not begin receiving until late August.

"The bottom line is this does not help . . . the funding gap in any way," SRC Chairman Pedro Ramos said.

Under the terms of the borrowing, the district will repay the money by next summer.

After the meeting, Ramos said that now that the state and city budgets had been passed, district officials were trying to determine the magnitude of the shortfall and options for bridging it.

The $27.65 billion spending plan Gov. Corbett signed late Saturday night maintains existing support, but contains no extra money for city schools. And the budget City Council passed last week contained less than half the $94 million in new funds the district had been counting on. The district will receive only $40 million in new city revenue.

The $2.5 billion budget the SRC passed in May banked on $94 million from the city but still called for borrowing at least $218 million to make ends meet through June 20, 2013.

"We have known all along that we have to manage through the continued financial crisis one step at a time," Ramos said.

"We've been talking in the last few weeks in sort of broad strokes about it, but given that both have passed, we really need to produce more precise projections about where we are, and do that in a public way."

In other action Monday, the commission took actions that could bring in a little extra money.

The SRC OK'd drafting an agreement to allow Do No Harm, the NBCUniversal TV series starring Phylicia Rashad, to film in portions of the district's administration building at 440 N. Broad St.

Some scenes for the show's pilot were shot in the building in the spring and caused no disruption. Jeffrey Cardwell, senior vice president for facilities operations, said much of the filming would be on the largely unused fifth floor.

With the SRC approval, district administrators will begin negotiating terms of an agreement with Open 4 Business Productions L.L.C., a subsidiary of NBCUniversal, to use parts of the building from Monday through mid-February.

The commission also agreed to allow KIPP Philadelphia Charter School to rent space in the former FitzSimons Junior High School for a year for its high school program for $288,000 starting Aug. 1.

Marc Mannella, chief executive officer of KIPP Philadelphia, said the charter's high school had outgrown space it had been renting on Vine Street.

The SRC also approved a three-year lease that would allow KIPP West Philadelphia Preparatory Charter School to continue using space in the former John P. Turner Middle School for $321,850. The agreement includes two one-year renewal options. KIPP has been leasing space at Turner since the charter school opened in 2009.

Ramos, who was on a KIPP advisory board before he was appointed to the SRC, abstained from both KIPP votes.


Contact Martha Woodall

at 215-854-2789 or martha.woodall@phillynews.com.

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