Daily Austerity Watch: The Philadelphia Story

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By Douglas A. McIntyre Updated Published
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Anyone wondering whether the economic recovery is taking hold might want to take a look at yesterday’s announcement of massive layoffs from the Philadelphia School District.

Faced with a mammoth $629 million budget deficit, officials announced plans to slash 4,000 jobs, including 1,200 teachers unless the District gets more aid from the city, state or federal governments which doesn’t appear likely in the current economic environment.   Philadelphia’s situation, sadly, is not unique.

The Center for Budget and Policy Priorities (CBPP)  estimates that at least 21 states are proposing cuts in public school aid as they look to balance their own budgets in the wake of declining support from the federal government.  For instance, Mississippi, Gov. Haley Barbour, who recently decided against running for president,  will fail to meet the state’s statutory obligation for school funding for the fourth year in a row.  New York Gov.  Andrew Cuomo is proposing  a $1.5 billion, or 7.3 percent, cut to state education aid.
‘This cut would delay, for the third year in a row, implementation of a court order to provide additional education funding to under-resourced school districts,” CBPP says.  “It would also come on top of a substantial education aid reduction in the current fiscal year.”

Philadelphia is facing a $292 million cut in state aid under the proposed budget by Pennsylvania Gov. Tom Corbett (R).   As the the Philadelphia Inquirer noted, there is little chance that the money will be restored given that Republicans are solidly im control of the Legislature.   Corbett was elected on a pledge not to increase taxes or fees and even though some argue that he should levvy some sort of tax or fee on the state’s booming natural gas business in the Marcellus Shale region.

Unfortunately, education is not a problem that can be solved with money alone.   There are countless examples of states pouring millions of dollars into school district with little to show taxpayers for their investments.  Though it’s easy to lay the blame on teachers for this situation, the reality is more complicated.

Schools are being asked to cope with a host of societal problems, such as drugs, single parent households and unemployment, that they were not a generation or two ago.  Nearly 8 million children lack health insurance and one-in-four is at risk of hunger, according to the National Education Association.  Teachers, though, need a fiscal realty check.

Districts waste boatloads of money rewarding teachers who receive masters degrees even though there is little evidence that indicates that the advanced degrees makes them any better at their jobs.    The evidence is not there that shows that raising teacher pay boosts student achievement either. Teachers also need to realize that their generous benefits, such as free or reduced price health care, are no longer affordable.

Finally, districts need to quit taking the attitude that cutting one penny from their budgets will create calamitous results such as the loss of the high school football team.   It is not clear how much gamesmanship is going on in Philadelphia, but politics can get pretty dicey in the City of Brotherly Love.  For instance,  controversial Schools Superintendent Arlene Ackerkman decided earlier this year to defer a $100,000 retention bonus after the media  made a fuss about it.

Sadly, these types of fiscal shenanigans are not uncommon in the education world.  Real reform is desperately needed.   Billions are being sent down a fiscal black hole under the current way of doing business.   Our nation’s children deserve better.

–Jonathan Berr

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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