Philadelphia’s public school system is scraping the bottom of the barrel just to keep going. Only weeks before the beginning of the school year, the city has been forced to borrow $50 million to open the schools on schedule, and many critical programs will be put on hold. Worse, this comes after Philadelphia closed about a tenth of its schools and laid off thousands of employees in an attempt to get its finances in line. The financial situation has become so bad that some schools have resorted to begging parents for tuition money.
To nobody’s surprise, the district’s problems are being exacerbated by a ballooning pension burden. The New York Times reports:
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]