As was the case with Detroit, the district’s full debt is even worse than what is known because retiree health and pension obligations have not been disclosed. That is about to change, though, because of new accounting rules that require them to be made public.Even after the June staff cuts, the district had an estimated $304 million deficit for the coming year—at a time when it is already paying nearly that amount, $280 million, to service its existing debt each year.
Borrowing to plug the gap could make the problem even worse in the long run. The Times notes that Mayor Nutter has worked hard to bring the city’s credit rating up over the past few years; unless Philadelphia can turn its financial situation around quickly, he may leave behind an even larger mess for his successors to clean up.[Closed school image courtesy of Shutterstock]