COUNCIL OF THE CITY OF PHILADELPHIA CONTINUED PUBLIC HEARING COMMITTEE OF THE WHOLE - - - Room 401, City Hall Philadelphia, Pennsylvania March 20, 2002 10:00 a.m. - - - BILL 020031 - An Ordinance amending Section 19-1301 of the Philadelphia Code... BILL 020032 - An Ordinance amending Chapter 19-1800 of the Philadelphia Code... BILL 020033 - An Ordinance amending Section 19-1801 of the Philadelphia Code... BILL 020034 - An Ordinance amending Chapter 19-800 of the Philadelphia Code... BILL 020040 - An Ordinance authorizing transfers in appropriations for Fiscal Year 2002 from the Grants Revenue Fund, the Director of Finance... PRESENT: COUNCIL PRESIDENT ANNA C. VERNA COUNCILWOMAN JANNIE BLACKWELL COUNCILWOMAN BLONDELL REYNOLDS BROWN COUNCILMAN DARRELL L. CLARKE COUNCILMAN DAVID COHEN COUNCILMAN FRANK J. DI CICCO COUNCILMAN WILSON W. GOODE, JR. COUNCILMAN JAMES F. KENNEY COUNCILWOMAN JOAN L. KRAJEWSKI COUNCILMAN W. THACHER LONGSTRETH COUNCILMAN RICHARD T. MARIANO COUNCILWOMAN DONNA REED MILLER COUNCILMAN MICHAEL A. NUTTER COUNCILMAN BRIAN J. O'NEILL COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO COUNCILWOMAN MARIAN B. TASCO VINCENT VARALLO ASSOCIATES, INC. (215) 561-2220 338 WITNESS PAGE DEBRA KAHN, Secretary of Education ............ 339 JIM DOOSEY, Chief Financial Officer, School District of Phila. .............. 361 RICHARD FEDER, Chief Deputy City Solicitor .... 367 ROB DUBOW, Budget Director .................... 373 GEORGE BURRELL, Secretary of External Affairs . 406 339 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET
Good morning, everyone. This is the continued public hearing of the Committee of the Whole regarding Bill Nos. 020031, 0230032, 020033, 020034, and 020040. I believe our first witness is Debra Kahn. (Witness comes forward.)
Good morning, President Verna and Members of City Council. I am Debra Kahn, Secretary of Education for the City of Philadelphia. I'm testifying on behalf of the Administration of Mayor John F. Street in support of the five tax authorization and appropriations ordinances that were just read into the record that were submitted by the Administration related to the School District. Also here today are Rob Dubow, City Budget Director, and Chief Deputy City Solicitor Richard Feder so that they can answer any legal or financial impact questions that you might have about any of these measures that are under consideration by you. Two of these ordinances essentially request continuation of current tax authorizations, 340 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET so I think that I will focus most of my testimony on the transfer ordinance and the increase in the property tax millage ordinances for the School District. And I'd like to explain these measures in the context of Mayor Street's agreement with Governor Schweiker for the State/City partnership to govern Philadelphia's public schools. I had fully expected to be able to be here this morning in present you today with a written version of those partnership terms, as you have asked. Unfortunately, however, I am not able to do that right now. I think that most of you know that the Governor for the past couple of weeks had been out of the country. And Secretary Zogby was also away at the end of last week. But I also know that we have been circulating drafts with the Governor's negotiating team and the City Administration for several months now. And especially for the past several weeks, we have impressed upon the Governor's team the importance, really, of getting this document completed and especially in light of these hearings which we consider to be so critical to implementing the financial terms of the partnership agreement. 341 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET I had understood in the course of this exchange that we're really down to the wording on just a few items, but for whatever the reason is, I'm really just simply not in a position to be able to give you a written version of that document today. But I don't want, at the same time, to be in the position to be able to let form get in the way of substance. So I do want to turn our attention to what our Administration knows is the content of that agreement. The key terms actually have already been reported publicly in the media and in various conversations, including in this Council Chamber, most recently I think when I testified here on January 30th. And on December 21st when the Governor in the Mayor announced their partnership agreement, they did, in fact, hit on many of the highlights of that agreement. But for the purposes of this hearing, what I would like to be able to do is summarize some of those terms in then focus on the financial agreement which, of course, is the most relevant part in terms of the measures under consideration. The new governing body that was established by State Law originally, not by this 342 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET partnership agreement, but by State Law, the School Reform Commission, of course, has been seated for eight weeks now. And the membership does reflect the terms of the agreement, meaning that the Governor had three appointments to that Commission in the Mayor had two appointments. We have also agreed in the course of our discussions that -- in this would be subject to having a change in the authorizing legislation -- but that the terms of those members would be different if we can get the change in the legislation so that the Governor's appointees would have five-year terms and the Mayor's appointees four-year terms.
We also -- and there had been some discussion about this in the past -- had agreed that a qualified majority, in the course of the operations in the way the School Reform Commission conducts its business -- that a qualified majority of four votes would be needed allowing for provisions to prevent impasse in deliberations would be needed to take specified and very significant actions by the School Reform Commission. And those actions would include the appointment and the 343 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET dismissal of the Chief Executive Officer and the General Counsel, the authorization to incur debt, and the adoption and the amendment of bylaws themselves. The agreement also, in short, as everyone will recall certainly the issue of consultants that would be brought in to assist the School District and the School Reform Commission in their work and management consultants was a big topic of the negotiations. And the agreement ensured that it would be the full Commission rather than the interim Chair alone who would consider any options for engaging Edison Schools or any other central office consultant. Now, I'm not suggesting that the Commission or the interim chair at the time for that 30-day period, James Nevels, would have taken any of those actions on their own. Just this was a reflection of what the law permitted. It would have permitted the interim Chair to do that. And our agreement was that, in fact, there would have to be the full seating of the Commission before any action like that could be taken. The Governor and the Mayor also agreed 344 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET and acknowledged publicly that while they differed on the role that Edison Schools should fill at the School District, they stood together and said but ultimately it would be up to the School Reform Commission to decide exactly what that role would be. You're also aware that the Commission has, in fact, launched a competitive selection process and established a timetable that calls for decisions on making these consultant decisions within the next, as I understand it, week or so. The agreement also recognizes the important role that the professional management of the District, specifically in the form of the Chief Executive Officer, must have in supervising and evaluating the performance of any consultants who are chosen by the Commission. Of course, we have a situation today where there is not a permanent Chief Executive Officer in place but, nevertheless, the agreement looks to the day when that position will, in fact, be filled. A portion of the agreement also pertains to the educational program. And really what it does is it supplements and it modifies aspects of the 345 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET Governor's October 31st proposal, which I know received some discussion here yesterday. And it also references a number of the activities and programs underway at the School District which Dr. Farmbry had outlined and discussed with you yesterday. The Governor and the Mayor agreed that despite whatever changes might occur at the School District, the key features of the current education program, including full-day kindergarten, reduce class sizes in Grades K to 2, in extended day in your instructional services would be preserved. They also agreed that new educational initiatives would be supported with priorities in spending amounts determined by the School Reform Commission each year through its regular budget approval process. With large numbers of District and Charter schools already in existence and with the prospect of new types of school models to be created like these partnership schools that have received so much discussion, the parties also agreed that it would be wise to establish an independent assessment and reporting center that could monitor and report 346 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET on the performance of all publicly funded schools in the City.
The agreement authorizes the School Reform Commission to approve the strategy for determining what the appropriate improvement interventions would be for particular schools, what kind of curriculum. And, again, this is a modification to what the Governor's plan said to determine which schools might be candidates for partnership schools and other types of improvement interventions. In finally, the agreement required that any community partners in school providers that would be selected would be through an open, fair, in merit-based process. And it was our belief that that process should include opportunities, certainly, for parent and public input and participation. Now, the ordinances that are under consideration today, of course, tie directly to the financial section of the partnership agreement. You are certainly aware that the Governor has requested an unprecedented $75 million in State funds for our School District for the coming Fiscal Year '03 above 347 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET all current appropriations in funding in the 1 percent increase in the basic education funding that was proposed for all of the 501 school districts at the Commonwealth. At the time of the agreement, of course, we did not know, neither Governor or we knew, what the percentage across-the-board increase would be at the that time. But it was clear that the 75 million was intended to be over and above whatever that across-the-board increase would be. And the additional State support is intended to continue with incremental increases, and this was outlined in the Governor's plan, growing to actually $82 million in Fiscal Year '06 and to be continued thereafter. In exchange for this additional support, the Mayor agreed to ask City Council to increase its annual support to the School District by $45 million beginning in Fiscal Year '03. Of this amount, it was estimated that $25 million would be allocated to pay the debt service on a $300 million deficit funding bond to be issued by the School District with all proceeds provided to the School District in the current year. 71 property tax mills from the City to the District and the corresponding decrease for the City that would be equivalent to the $25 million that's intended to cover the cost of the debt service, the remaining $20 million to be provided in the regular recurring support to the School District as contained in the Mayor's budget proposal and five-year plan. The Mayor also again pledged to be able to provide the one-time grant of $45 million to the School District in the current year. And you will recall that this was money pledge for an earlier commitment that came in two parts. First, in May of 2000, $20 million to satisfy the temporary budget agreement that we had with Governor Ridge at the time in May of 2000. In then later that year, an additional $25 million in order to settle the PFT contract negotiations to provide one-time bonuses for that purpose was $25 million. And that, of course, was announced when the contract negotiations were concluded in October. And Bill 020040 is that transfer ordinance. Consistent with the concerns that have 349 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET been expressed previously and with previous actions the City has requested that the Pennsylvania General Assembly exempt these one-time funds from the Act 46 recapture provisions and that was, in fact, part of our agreement so that the Governor would be supporting that exemption. And with that exemption, the City would be able to provide the full $45 million now which the School District is counting on -- and I believe you heard that testimony from yesterday from Mr. Doosey -- without mixing that payment up with any future obligations. Legislative language has been submitted to the Governor's Office to provide the exemption to Act 46 and to authorize the School District to undertake deficit financing as part of that same vehicle. And we have requested action on that for next week.
The School Reform Commission, I think, has testified that this timing is really critical in order for the Commission to be able to initiate the bond sale in time to receive cash that it needs to complete the current school year and open for the next year. In anticipation of the General 350 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET Assembly's action, we are asking that this Committee could approve these measures following the conclusion of these hearings and give them First Reading at your regular Session tomorrow, with final approval to be scheduled for April 4. This would put the City in a very strong position to say to the Commonwealth that we have taken significant steps to uphold the local funding part and responsibility of the school agreement. If the General Assembly fails to act, Council could approve these measures with the Mayor's assurance that the funds would not be transferred to the School District without the proper legislative protection. And you will recall last year when Council approved the $45 million transfer ordinance, in fact, the Mayor did veto it because we did not get the legislative protection that he had promised you that he would seek. Contingency provision is already built into the millage transfer ordinance to protect against possible double counting of that so that our obligation going forward would not be anymore than the $45 million, although as I understand it -- and again, Mr. Feder can explain this to you in detail -- might require some technical change 351 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET depending upon how the final language in the General Assembly's adoption might actually read. Mayor Street said in his Budget Address in January, and I certainly repeat today, that the arrangement that I've described with the Governor certainly doesn't resolve every academic and financial concern of the School District. And most important, as has certainly been pointed out, it does not provide the long-term financial stability that's needed. And it is our belief and continues to be our belief that it will come only through State-wide reform of public school funding. Efficiencies are certainly something that every governing body of the School District and every other organization need to be attuned to, and certainly the School Reform Commission has indicated to you that it will do its part in that. But it has long been our belief that we can't cut our way out of this problem. And I remind, certainly, this City Council that the problem and the analysis that was done by the School District last year is really not an overspending problem in the School District. A recent study issued actually by the Commonwealth by Standard & Poor's last fall had indicated that when 352 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET you account for the demographics of our student population and the cost of living in our School District and in our region, Philadelphia is actually spending percent below the State-wide average in 6 our School District. So it's not real an 7 overspending problem, and we really need to come to 8 terms with this reform on a State-wide basis. 9 But if we can hold all the parts of this 10 agreement together, the partnership will give the 11 City an ongoing say in the policies of the School 12 District. It will protect the City treasury by 13 capping our financial commitment at the $45 million. 14 And most importantly, it will give children in 15 families the certainty that they deserve for 16 uninterrupted school years along with the chance for 17 better schools by providing the School Reform 18 Commission with some real breathing room to 19 implement improvements. 20 On Monday, City Finance Director Janice 21 Davis in I and SRT Chair Jim Nevels and Mr. Doosey 22 went to Harrisburg and we testified before the House 23 Appropriations Committee that's considering the 24 Governor's request for the special funding for our schools.
This was an opportunity, actually, for us, 353 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET for the City, to set the record straight about the extent of our financial support for public education and the considerable demands on our budget. The City of Philadelphia support for public schools is, in my experience, continuously misunderstood and misrepresented and, in fact, undervalued by the Commonwealth because our situations and our tax situations are different than other jurisdictions in the Commonwealth. And, in fact, I do have here copies of the testimony that we presented that I'd be happy to share with you. And it is clear through the course of that hearing that the General Assembly, as we do, wants improved financial and educational performance from our School District and that in return for that State support, they certainly want greater financial support from the City. We know, and throughout the course of the budget hearings, that the City will feel the squeeze of this additional funding that the Mayor has proposed, but we also know that it is the right and the essential thing to do. I believe that that covers the main points of what I wanted to testify to. 354 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET
Thank you. You indicated that we can have a copy of the testimony?
I do have that. And I also have in addition -- a couple of weeks ago, there is a special select committee in the House of the General Assembly that is looking into the State-wide school reform proposals and they came to Philadelphia a couple of week ago for a hearing and we testified there, along with other members who had been invited representing different community organizations, and I have that testimony as well which I'm happy to share with you.
Thank you. We would appreciate a copy of that. Ms. Kahn, in your testimony, you are asking for immediate approval so that we could have First Reading of the bills tomorrow. Are you referring to all of the bills before us, or is it just $45 million transfer?
Referring to all of the tax authorizations and the transfer ordinance as well.
All of the bills that are before us today, you are asking for 355 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET us to approve them and report them out tomorrow for First Reading?
We're saying that we believe that this would put us in the strongest possible position in terms of the General Assembly to say that the City has acted to fulfill its commitment, recognizing that there are protections built into each of those ordinances.
Thank you, Madam President. Good morning, Secretary Kahn. For the record, do you believe that most of the reforms that may be instituted by the Reform Commission will mirror actions already proposed by the School District?
I'm sorry, I only heard the first part. Do I believe they will --
Do you believe that reforms that will be instituted by the Reform Commission mirror actions already proposed by the School District?
I think that the Commission 356 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET is faced with, as I think they described yesterday, a very complicated set of circumstances. On the one hand, they do have the Governor's plan that had been presented on October 31st. They also have the whole range of initiatives, 264 schools and District initiates that, again, Dr. Farmbry outlined yesterday in addition to the District's Empowerment Improvement Plan, which I believe that Councilwoman Miller had asked about. So I think that what they will be about is sorting through all of that and figuring out what the right --
My question is, what they come up eventually. It seemed to be the spirit of Dr. Farmbry's testimony that what they will come up with are actually reforms that the School District would have done anyway.
Do you think that the majority of what they will come up with would have been done by the School District anyway?
I don't think that I can give odds on that necessarily. I think there will a blend. I think that they will see and have already 357 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET seen that a number of the initiatives underway by the District are certainly initiatives that are worth preserving and expanding, so I do think that a lot of what the District has been doing will continue to be done, those initiatives that have been proven to really produce results.
Let me ask the question a different way then. Do you believe that the School Reform Commission is necessary for academic reforms or just for financial purposes?
I think that, first of all, there needs to be a governing body, certainly, for the School District. And the School Reform Commission is by law the governing body. I think that their ability to succeed will be limited by many of the same constraints that the Philadelphia School Board had. And some of those constraints certainly have to do -- a large part of those constraints have to do with the unstable situation we have that is mostly caused by insufficient funding.
So you believe the major purpose for it is financial versus academic?
I believe that it is the 358 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET financial condition of the School District that got us to this arrangement, yes.
Do you believe that principals should have to power to hire, fire, set their own curriculum and budgets?
I believe that principals need the authority to be able to really manage their schools. I think that it also --
Should they be hire, fire, set their own curriculum and budgets?
I think that -- and I have to qualify it. I think for the most part, I do think so. But I think that it has to be measured against the performance of the school.
I think it means that in schools where student performance has been meeting expectations and meeting goals that, certainly, those principals have been in a position to demonstrate that they have in effect earned and they merit the kind of flexibility that they have. I also think that there have to be overall standards. We've talked a lot about the kind of curriculum.
So you don't believe 359 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET that all principals should be hire, fire, set their own curriculum and budgets?
But you don't believe that all principals should be able to?
I think that it has to be a system that is tied to performance.
So a system of accountability would not be set up where all principals are managing their own schools?
A system of accountability would not be set up so that all principals are responsible for their own schools?
I think a system of accountability could be set up where it is presumed that principals will have lot of authority for managing their schools, but I also think that there have to be overall consistent standards and components to our schools.
Lastly, the bills before us, 020031 to 020033, don't require the 360 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET $45 million be used in any specific way, do they? It's been proposed that $25 million go for debt financing in million be an ongoing 5 grant, but the $45 million as the legislation is 6 written now does not require the $45 million be used 7 in any specific way, does it? 8
I do not believe that there 9 is any specification in the language of the bill. 10
Thank you. 13 Ms. Kahn, why does the Administration 14 believe it can borrow $295 million for blight bonds 15 for $20 million debt service payments while it will 16 cost $25 million per year for the proposed 17 $300 million in deficit bonds for the School 18 District? 19
I might ask some of the 20 financial people to speak to that. That was an estimate that was done at the time. I really don't know whether -- and since it is the School District will be doing the borrowing, they may have looked into this --
Is there 361 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET someone who could respond to that? Good morning. Please identify yourself for the record.
Good morning. I am Jim Doosey, Chief Financial Officer for the School District of Philadelphia. Could you restate the question for me, please?
Certainly. My question was, why does the Administration believe it can borrow $295 million for blight bonds for $20 million in debt service payments while it will cost $25 million per year for the proposed $300 million in deficit bonds for the School District?
The $300 million number that has been reported was the product of the yield table at the point in time when the negotiations began. The City's proposed obligation is not to fund debt service on $300 million in bonds. It is to provide $25 million annually for whatever face amount of bonds that that would be able to procure in the market. As rates move up, it is entirely possible --
We understand 362 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET that. That's not the question. Councilman Nutter, did you want to be recognized for a point of order?
Yes, Madam Chair. Thank you. Mr. Doosey, I have written here in my notes from yesterday, and I believe I asked you this question or the panel that you were participating in yesterday -- we can get the notes of testimony -- the $45 million going forward, not to be confused with the $45 million in FY '02, I laid out yesterday in questions that it was my understanding that that $45 million was being split such that $25 million which is the millage transfer shift was going to the debt service on a $300 million bond and that $20 million was going directly from the City to the School District and that made up the $45 million. And I believe and my recollection from yesterday is the testimony was, "Yes, that is correct." Now I'm hearing something different today.
No, sir. Your understanding of my testimony yesterday is correct.
Well, what did you say just now? I thought I heard you say a few 363 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET minutes ago that the $25 million is not dedicated specifically for debt service on a $300 million bond offer. What did you say a few minutes ago?
No, sir. Let me clarify my statement. The $25 million through the millage transfer would go directly to debt service on the bond issue.
Well, what did you say a few minutes ago? Do you recall what your statement was? Because the whole reason for the point of order was that I thought you say that it was not specifically dedicated to the debt service, that it was just a $25 million millage shift.
I understood his answer to be that he wasn't talking just about borrowing $300 million. That whatever the $25 million would fund is what they were anticipating borrowing. The difference from yesterday to today is, I understood yesterday being $300 million; now what I'm hearing today is it may be actually more than $300 million, whatever $25 million will carry.
Which is actually 364 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET similar to the discussion we actually had about NTI, which is it's not so much determined how much you're going to borrow because you're setting figure, the borrowing amount is a function of how much you have to dedicated to debt service; is that what you're saying?
Okay. So it's not necessarily a set $300 million figure. It is $25 million dedicated to debt service to fund whatever $25 million will allow you to borrow over 30 years; that's the testimony today?
Would you at least put on the record that that was not made yesterday as we've had this discussion about $25 million, $300 million borrowing, those two figures have been linked together. What you're saying here today is it's $25 million for whatever $25 million will support in debt service?
Thank you very 365 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET much. I'd like to ask you this hypothetical. The $45 million transfer is approved for FY '02. It is now July the 15th and the State has not passed its budget. If and when will the Administration pay the $45 million to the District, will the District go to the debt market before the City's payment is made and the State funding secured?
Okay, let me see if I can recall all the parts of that. I think you said the $45 million for '02, correct?
Yes. As I said, it's a hypothetical. We're now in July and the State has not passed its budget. If and when will the Administration pay the $45 million to the District?
Well, the $45 million for '02 is, again, as you know, a previous obligation, but we certainly brought it to the table again in the context of this discussion.
The exemption that we have requested does not necessarily need to be part of 366 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET the State's passage of the budget. That could be a separate action. So as soon as the General Assembly provides that exemption and City Council would act to approve the transfer ordinances, those funds could in fact and should and we would like them to be turned over to the School District as soon as possible, really not being related to the future obligation so that we can clear the decks on that previous commitment.
Several years ago when Council passed a bill for senior citizens of low income, has the Administration considered what impact the senior citizen low income special tax provisions might have on the proposed transfer of millage from the City to School District? I note that under Chapter 19-2900 of the Philadelphia Code, eligible low-income senior citizens are protected from any increase in real estate taxes whether due to an increase in assessments or an increase in real estate tax rates. Under Bill No. 020031, the rate of the real estate tax imposed under Section 19-1301 of the Code, the City portion of the real estate taxes would decrease. However, under Bill No. 020033, the 367 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET rate of the tax imposed under section 19-1801 of the Code, the School District portion of the real estate taxes would increase. My question is whether low income senior citizens whose real estate taxes have been frozen would be exempt from the increase in the tax rate imposed under Bill No. 020033, would those senior citizens be given the benefit of the tax decrease granted under Bill No. 020031 but then be exempted from the rate increase imposed under Bill No. 12 020033? In if eligible, low-income senior citizens would be exempt from the tax increase rate under Bill No. 020033, what is the estimated revenue impact, if any, of such an exemption? I think there's somebody from the Law Department here and there is also somebody from the Budget Department here. Could they explain that or can they answer that question?
Good morning, Council President Verna. Richard Feder from the Law Department, Chief Deputy City Solicitor for Legislation. I understand the question. We have not 368 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET looked into that. I will look into it. In I think I can speak for Mr. Dubow that he will also look into the revenue estimate for that. I don't know if the low-income exemption would be triggered by what you just suggested. I'd have to look at the Code language. I understand the question. I'll have to look at it.
That would be wonderful, since we're being asked to report these out of committee today. I'd appreciate it. Thank you. The Chair recognizes Councilman Kenney.
Thank you very much, Madam Chair. I had a same set of questions yesterday with Mr. Nevels and the SRC relative to the deficit financing strategy. I'd really would like to have Mr. Dubow at the table too, if possible, because this is basically the same questions but to the City's position on this particular strategy. 369 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET What I'd really like to know is what the strategy is if we do borrow the $300 million to deficit finance, what's the strategy over the next two years to deal with the long-term permanent funding problems at the District. What's our strategy in dealing with the legislature? What have we done so far with the legislature? And from Mr. Dubow's point of view, what does borrowing this type of money and spending potentially $750 million over 30 years for a two-year window, how he feels that is from a fiscally prudent standpoint relative to the City's current budget condition?
I will respond to that first and then let Mr. Dubow come in. I think, Councilman, the concerns that you and others had expressed yesterday about the deficit finance proposal I think are shared by everyone and I don't think that there's one person who's involved in the situation who would say that this is the preferred way of going about paying for the School District of Philadelphia's obligations. But having said that, it is in our view also vital that the School District have at least some window of financial stability to enable the governing body to address 370 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET the organizational and the educational concerns and deficiencies on the part of the district as best they can within the constraints that they will continue to have. So that's why, certainly, this proposal is before us.
What I raised yesterday with the SRC was that in 1991-92 when the City was facing a similar situation financial crisis, there was in place as a result of the negotiations the borrowing that was done was done through PIKA. The ability to pay back that loan was done through a increase in taxes through the sales tax. None of those situations are in place as we speak. But we're being asked to, as Mr. Nevels said yesterday, to be royal optimists, I guess, that somehow once we borrow that money, once we mortgage the City's future, that without those items being in place before we borrow, we're expected to rely on the fact that they will in place for 2004 when, again, the train is approaching the wall again.
As I said previously, I really don't think that there's any solution here other than to have State-wide reform of school funding, which is a situation that is not just 371 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET relevant to Philadelphia. It is increasing relevant to the vast majority of school districts. And I think we're seeing this in the legislative activity that is occurring and generated from across the Commonwealth. So that's really the result. It's not a situation where we believe that we can cut our way out of this. If there were to be some radical situation where somehow -- and I don't think this is something any of us would really want -- where the enrollment of the District would shrink to a point where maybe available resources would do it. But if you have the right kind of school funding formula that is tied to enrollment, then that really wouldn't make your case either. So we really need to have a different way of being able to reach our goals.
So the borrowing of $300 million which gives us a two-year window, what urgency does that provide for any elected official to solve this problem in a confined space of time? My experience with politics and with the legislative process is that when people are given the opportunity to delay, they will do in fact that, they will delay. When there is an urgency, a 372 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET crisis, something that needs to be addressed immediately because the circumstances dictate it, they are generally then addressed. And I'll give you -- the corollary is that the City's fiscal condition in '91 to '92 was basically entering bankruptcy, if not bankrupt. All elected officials, both in Harrisburg and in Philadelphia, the outgoing Mayor and incoming Mayor, the outgoing Council and incoming Council, and the legislative caucuses in Harrisburg on both sides of the aisle acted in a responsible way because they had no other choice. Now, I raised this yesterday in I'll raise it again. I don't want to see in June an announcement made that the schools will not open in September. But it would seem to me that looking at past history and the way in which this process works that if the schools were announced that they would be closed in September, there would be an urgency, a major urgency, a political price to pay for those who did not fix that problem. And the concern that I have is that while the $300 million may, in fact, get both political and legislative peace for two years perhaps, we're going to be in that much more debt in 2004 than we are now with still no 373 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET resolution to the problem. The urgency and the potential of having people complain to you that their kids aren't going to school in September is more likely to get a legislator or a councilmember or a mayor or a governor animated than kind of patching this sinking boat with a $300 million patch. And although it is a difficult thing to face, perhaps that's the only way it really gets resolved. Because we may be in this situation in 2004, but we'll in this situation with $300 million in additional debt. Why would we want to do that and why we would want to put ourselves in that position? And, Mr. Dubow, you may want to add something to this because of your responsibilities as far as the City's budget is concerned. We're basically borrowing ourselves to death here.
Rob Dubow, City Budget Director. We're committing to $45 million a year. We're not doing the borrowing. I just want to make that part clear.
It's like saying, well, because -- it's all the same money. We're increasing the millage and transferring it. It's a 374 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET net sum gain for the average taxpayer, but it's still their money.
I agree. I just wanted to make that technical clarification. It clearly puts and did put in doing this year's plan an extra strain on making the numbers work. It means that everything is tighter. It means also that we have less flexibility going forward in making our plans work.
I would just add that, certainly, over the course of my lifetime with the School District, we have had these recurring and annual crisis and they've come in different forms. The last time there was a statement that schools wouldn't open or schools would shut down, one of the things we got was Act 46 in response to that. So some would say that that was the solution and that was how elected officials acted to solve the problem. We came very close again this past spring. I mean, we had the School District and a $1.7 billion organization had less than a million dollars in the bank and they were a couple of days away from payroll. That's crisis.
But we settled a 375 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET contract and committed $25 million in additional City money without any contact or consultation with the Council. From that perspective, I mean, it's wonderful we avoided a teacher strike, but at the same time we spent more money, committed more money in no one even had the courtesy of asking us whether we would appropriate it. That's not a good example of -- it's not a good example to give as to why we're in the situation. We didn't make that deal. That deal was made unilaterally. That deal was made without consultation of the Council, and it was committing money that we weren't even asked to appropriate yet. And we still haven't appropriated the money yet for it. So if we're all in this together, we're all in this together. But it seems like people make unilateral decisions and then put us in the same boat to solve the problem. The point of the matter is, is that this problem is not going to get solved in Harrisburg in the next two years based on this deficit financing scheme. I don't believe it from my experience of 23 years in dealing with both City government in State 24 government, this problem don't get solved with 25 deficit financing over the next two years and we're 376 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET back here again in the same situation with the same controversy and the same critical situation, $300 million more in debt without a solution. What's our strategy in dealing with the Legislature in getting 75 million?
I would just say that there are, obviously, no guarantees, but I think that this problem --
Excuse me. The one thing that's guaranteed is we will be paying the debt service for 30 years on this $300 million. That's the only thing in this whole hearing that's guaranteed.
This problem will not on a State-wide basis get involved necessarily because it's Philadelphia's problem. It will, I believe, get solved because it is a problem that is in the majority of the 501 school districts in the Commonwealth.
Pretty substantial State Representatives in this City who represent districts in this City who would have to deal with the issue of school closing in September. They're not going to have to deal with it now because we're 377 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET going to patchwork this until 2004. They may have to deal with it then, but if they have to deal with it now, I think it's a much bigger situation for them facing constituents whose kids will not go to school in September as opposed to us taking this, I think, very, very shortsighted approach to borrowing this amount of money to get us some breathing room 9 when we can confront this now. Now, you weren't here, I don't believe, when the press conference was held a few years ago with Mayor Rendell in then Council President Street about this strategy of not cutting school programs, of keeping this train on the track and eventually this train was going to hit the wall. Well, it's about feet from the wall now in what we're being 17 asking to do is build a two-mile-long track for 18 $750 million so it don't hit the wall anytime soon. 19 Well, that's what I thought the strategy was. Now 20 we get to the end of the strategy and we're going change it. And we're going to change it at a much greater expense to the taxpayer of Philadelphia than we were on the prior strategy. And I just don't understand why we're shifting gears at this point. Do you know why? 378 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET
Well, I can say again, I think that we had hit the wall. In we now have --
No, when you hit the wall id when you announce schools are not opening in September, that's the wall.
And again, I said the last time that was done, as part of that strategy, what we got was Act 46. And now Act 46 has been implemented.
Well, they're stuck with Act 46, too, you know. It's not just us stuck with Act 46; they're stuck with Act 46.
You know, just let me from personal standpoint, I think that -- and I think we all feel this. The 214,000 children in our system, sure, they are Pennsylvania's children and we appreciate that the Governor -- both governors, Governor Ridge and Governor Schweiker -- had reached out and in their way tried to take responsibility for them. But they're our kids, too. And we know them and we see them. And I have a difficult time really, you know, talking about that whole analogy and kids on a train and crashing into walls.
It wasn't my 379 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET analogy. It was Mayor Rendell's analogy two or three years ago.
And I understand that. But we all, you know, as parents know, you need some stability. In this has come to the wall. It has come very close. Again, I think the situation we had just this spring had us there. And this was the result of that.
Not the contract. Just this past spring when we entered into and then the summer when Mayor Street and Governor Ridge entered into the MOU. We were there.
I was probably on my way down. 380 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET
Well, I had said that I had fully expected to be able to share that with the Councilmembers this morning, but I couldn't do it. And we have had ongoing discussions throughout several months with the Governor's representatives, and I really think that it is now in their court. We spoke to them most recently Monday evening.
What's the legislative strategy for the $75 million? What's being done to garner the votes necessary for the 75 million? Because the information that I get from personal contact with staff and representatives throughout the state is that that is an extremely, as you know, difficult for them to do in that the Governor's budget asking for a 1 percent increase for their districts in a $75 million for Philadelphia. What strategy are we employing to garner those votes? And where are we right now in that effort?
Well, I think everybody who is involved in this have a different role to play. I think that the role that we played when we went to Harrisburg on Monday to testify for the House Appropriations Committee was to really help provide 381 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET the information and the facts about what Philadelphia really does to support public schools. The fact is, on the record, it has been misrepresented and undervalued and under-appreciated, and we felt that it was very important to go there and to try to set the record straight. In terms of what the Governor is doing and his team, because this is part of his budget proposal, too, I don't know that the serious really intense budget discussions have begun, and that will have to happen and that will be their role.
Just as an aside, and this is my final comment. You guys really missed a great opportunity a couple weeks ago. We had almost 90 legislators in from around the State, rural Republicans, people from the suburbs and their families in a very social and relaxed atmosphere, opportunity for three days of great face time and personal relationship building. And no one, no one, from the Administration was there. No one. And to me, you can do all the deals you want to do with the Governor, you can make all the arrangements and Memorandums of Understanding 382 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET and deals and agreements, but the people who vote on that money and who need to have their minds turned about this City and about the School District were here in our City for three days and not one person on that second floor or associated with that second floor had the courtesy to show up and even say hello. So opportunities lost. Opportunities should be taken to kind of change that. I guess it wasn't important enough.
I can't speak for others. It was the first year that I had actually had missed that event. I simply had an obligation and was unable to be there.
And I can tell you, it was mentioned by a number of people, including people in leadership that it was shocking that no 18 one was there. Thank you, Madam President.
You're welcome. The Chair recognizes Councilman Ortiz.
Thank you, Madam Chair. I really don't have much because I think 383 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET the decisive educational policy is no longer in the hands of the Mayor. I think it's now in the hands of Reform Commission. So in essence, I believe that the one role that Ms. Kahn had here, because I believe that we can influence policy at this point, is bringing forth the agreement that was supposed to have been written. And I know Councilman Nutter spent a long time in the last hearing when Ms. Kahn was here asking Ms. Kahn when that agreement would be available to us so that we could peruse it. Not that we were going to have any influence in changing it, obviously. But at least we would have some knowledge of what bridge we were crossing. And we would know the guidelines of and the instructions that were set out to cross that bridge. And we were given assurances that the agreement would be given to us within two weeks, then it became a month. Now it's more than a month, now it's much longer than that, and we get testimony in which there's rhetorical description of what is supposed to be in the agreement, but we don't get the agreement. And this Council is being asked not to approve a plan that goes to resolving the problem we have in public education, but as the Commission said yesterday, 384 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET approving a Band-Aid process, buying us time. I think Marian Tasco said yesterday, the buying of time over time has cost us and is making more expensive the final solution to public school stability. And so I don't have really any question because I think we need to go for the answers to the legislature and to Mr. Nevels and the other members of the Commission. Right now, Madam Chair, until we see in agreement, we have no directions of how we're going to cross that bridge or what it all means to us. I mean, we have more or less some parameters that we can deduct from testimony that's been given to us, but I'd like us to have a plan in front of us, I'd like us to have an agreement in front of us before we vote on any of this. So, Ms. Kahn, until you get an agreement and that agreement is in front of us, I really don't have any question. Councilman Goode asked questions about the authority principals should have and so on. Well, that's public policy that's going to be resolved really by the Commission. The Mayor's Office has transferred or our authority has been 385 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET taken by the State. And I think it's the State from now on who we have to continuously question. So, to me, Ms. Kahn has no answers and she doesn't bring any solutions. So I give my time up to those individuals who -- I think it's, at this point, a waste of time.
Thank you. The Chair recognizes Councilwoman Miller.
Thank you, Madam Chair. Good morning, Ms. Kahn. I'm still somewhat confused or just not really very clear on the role parents and the public will play. Could you explain on of your testimony when you're talking about the agreement, in the last sentence that begins with "Finally, the agreement requires..."?
Well, when we discussed this issue, we thought that -- and again, this is somewhat in contrast to the plan that the Governor had presented in October where I believe it listed -- it had a set number of schools for partnership schools and it had listed as an example 386 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET certain organizations as an example of who could be community partners in managing those schools. And our position, first of all, was that it ought to be an open and competitive and merit-based process so that whoever maybe had raised their hand at a certain point in time that others be given the opportunity to be involved in our schools in whatever way they thought they could. So that was the first part of it. Implicit in that was the thinking, and this is discussion that we've had certainly throughout these many months, is that parents and students and other community members would certainly want to have their points of view heard in any of these kinds of changes in terms of school management. And so we thought that it was really important that there could be vehicles and mechanisms created to enable that input to, in the first instance, be given before any real decisions are made and then on an ongoing basis to make sure that parents and students and others continue to have a voice in school operations.
But this, to me, kind of says that the voice would be prior to the 387 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET selection of the community partners and school providers. But you're saying this would be prior to, would be a part of the selection process?
We were really addressing the selection process there. But I think -- and I would say on a ongoing basis, I think that there are certainly needs to be vehicles and I think that Commission Member Sandra Glenn outlined yesterday some of the current thinking. And I know that they want to continue to share that and refine that with community members as well as have the opportunity to discuss it among themselves.
But during the selection process -- because also in your testimony you talk about the SRC's role to approve improvement intervention strategies for particular schools. So parents will be able to see that or the public will be able to do that prior to a provider being selected for a particular school? When will the public be able to see these improvement intervention strategies?
What we meant, first of all, by that part of the discussion was that -- and, again, if you take it back to the Governor's plan or 388 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET proposal where it was stated that partnership schools, for example, should be in the 60 lowest performing school, where curriculum changes should occur in other places, you know, where different things should happen in different types of schools. As we engage in our discussions with the Governor's team, we pointed out certain things such as, you know, you have to -- first of all, how do you define low-performing schools. Are they schools that have been flat at a relative performance level for a while or don't you have to look at schools to see if, in fact, they've been improving. They may not be on an absolute basis where you want them to be, but have they been improving and what are the ingredients in there and why would you just take a particular school that's actually been going up and say, "We're going to get rid of the entire curriculum and just retrain all the teachers and do everything different"? Our point was that you really needed to be aware of what was going on in certain schools and that maybe the slicing and the segmenting had to be a little finer than what was initially presented. So it was our thought that the School Reform 389 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET Commission in concert with, certainly, the educational management of the District should be taking a look at all of the schools in trying to identify what the particular needs were of particular schools. So it was in contrast to saying, yes, that is exactly what would be happening in all the schools. That, in fact, they would take a more thorough review, and that's what we meant by identifying what were the right improvements that should go into particular groupings of schools.
Has the Governor's plan been adapted or is it the same as it was in October? Have there been any changes or additions or deletions?
Again, that was a plan that the Governor produced pursuant to the terms of the Memorandum of Understanding between the Mayor and the Governor. And that's what we asked for. We said, "What would the State do? What would your ideas be? " I mean, I don't -- I can't speak to whether they've actually made changes in that document or not. But it was sort of the start-off point that we used to have our negotiations. 390 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET
Right. I thought that perhaps after the Mayor and the Governor had some discussions maybe some things were added, maybe something was taken out. You don't know whether any of that happened?
Not on a content basis so much. It was really about saying that, you know, we think that there may be some merit in these ideas but that ultimately it should really be up to the School Reform Commission to take these actions and make these decisions.
So later we can ask the School Reform Commission if there's been any additions, deletions, et cetera, to the plan. But it sounds like -- and maybe this is a question for later when the School Reform Commission comes back up -- that each school, each distressed school or school on the distressed list will have an improvement plan, there will be an improvement plan per school. Or will that happen once the EMO is brought on?
Well, you're right, the Commission will have to speak to this. I will just say to clarify, schools already have school 391 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET improvement plans. Whether that process will continue or it will be modified -- and I think you might recall that was written into the Empowerment Plan as well as the grade or attention be placed on school improvement plans. But I think the Commission will have to talk about how they're approaching deciding what those interventions and improvement strategies should be.
Thank you. It's still fuzzy. All these changes ar fuzzy, and they sometimes, to me, overlap. For example, if you read that an EMO is going to do central office or six EMOs, I don't have a clue what they're going to be doing. Community partnership schools, other school providers. Maybe at some point we need to see the structure on paper or a draft or a proposal or someone's thoughts, it doesn't have to be written in stone, so that we can follow and visualize what might actually happen and how the whole system may look in the next three months or by the time you get a CEO here. Because right now, it's not real clear. It may be clear to people that's working on it all the time, but for other people it is not clear and it is not clear for the public. So thank you. And 392 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET I will ask the SRC later. Council President, at this time I want to introduce guests of mine here in the audience. March is Citizenship Month, and we have eight members of the Boy Scout Troop No. 398.
Please stand so we can recognize you. (Applause.)
And these young men are from New Covenant Church, in that's at the 7800 block of Germantown Avenue. And most of them are public school or charter school students. Their scoutmaster is Ron Francis. And we have a parent with them, Linda Davis. And their coordinator Mony Thomas. So we just want to welcome them.
We welcome you. Thank you for coming. (Applause.)
Ms. Kahn, can you provide any further details concerning what you refer to as, "Provisions to prevent impasse," if there are only three votes on the School Reform Commission to take an action that requires a 393 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET qualified majority of four votes?
The impasse provisions I cannot share with you. Again, I can tell you that there are drafts that we have exchanged, but I can't tell you what exactly would be the result that we would -- that the Governor's team and our team would ultimately agree on. That's one of the issues --
So you really have no further details that you can share with us on that issue?
You're asking Council to approve the $45 million transfer ordinance with the assurance that the Mayor will not actually transfer any funds to the School District unless the General Assembly acts to make it clear that the maintenance of funding provisions of Act 46 will not apply to this $45 million payment. Can you or someone from the Law Department advise us with certainty that Act 46 in its current form would not apply to the mere appropriation of funds by Council even if the Mayor does not actually transfer the funds?
I'm going to ask Mr. Feder to 394 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET do that. He might have gone to research the other question.
Well, we'll wait. We'll wait until he comes back. However, I do have another question. Are you stating in your testimony that the $25 million of the City's ongoing commitment will be used to pay for a $300 million deficit funding bond issued by the District? What happens when the District consumes the funds? In if at the end of the day the State does not have school tax reform, what happens to the District?
Well, that is the larger question that we have been discussing. We would hope that over the course of the next three years or so that in fact that action would be taken by the General Assembly. If not, all of us who bear a responsibility for this will be in the same situation. We maybe have a situation where we have an improved organization to point to. We may have a situation where we continue to have improved student performance to point to.
Or we may not. 395 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET And we would still owe all that money plus probably have to pay additional taxes in order to make certain that we go forward.
I do believe, though, that if we don't achieve the stability that this will provide, there is a much greater likelihood that we will not have those results.
Madam Chair, there was no stability that we're achieving. We're going across and we're not solving anything. That's the whole problem here. And we have no assurances from anywhere, at the State House or the gubernatorial place, that we have a solution in the foreseeable future. I'm tired of going through this year after year about public education that we never get to the end gain. And it's about time that we stop that. It's no longer viable. It's no longer acceptable that we continue to put our kids, teachers, parents through this process year after year. You're not seeking stability. You're seeking a way to get over until the next crisis. This is not stability we're talking about. This is 396 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET not solution we're talking about. I'm really angry about it because we're not really realistically looking at how we challenge this problem that we have. We talk around it. We talk around it. We go around it. Yesterday I was with 300 parents at 3 o'clock, and they're in a panic. I talked to principals. They don't know what's going on. Our kids deserve better. I'm tired. There is no agreement in front of us. Everybody speaks about this agreement with the Mayor and the Governor. And six months afterwards, we haven't seen it. What is so difficult? Because it is not a solution. The agreement does not provide a plan to resolve the funding crisis of the educational system that we have. We give away our authority to the State House, to the Governor; we retain no control. This legislature has no say whatsoever except to say, "Yes, we're going to mortgage our future," but there's no solution in sight. And it's about time, I think, that we said "No, we will not mortgage our 397 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET future until we see a plan that brings a solution." And this is the time. This is the time. Just because people are running for Governor should not paralyze us to not work towards that, or to force that solution to happen. In fact, it should be the opportunity to make that solution happen, just when they're running for Governor, just when the legislature is running for election. We should commit. We should push. We should force. Let's stop talking about bridging over from this September to next September, and then next September be talking here. I'm tired of that. I've been talking about that since Connie Clayton. We're not talking about stability. We approve this, there is no stability in the system. No one is stable. 325 people are getting fired; they don't know who they are. We're not even assured that they're getting fired so that Edison positions can be opened. We cannot be reassured that that's not going to happen. We can get no 22 answers about who's going to be the privatizing company. We can't get any answers about partnerships that's supposed to work for nothing; there's no money for that. We're not talking 398 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET stability. We're not talking education. We're not talking instruction. Let's stop the charade. We're talking about a political deal that we have to ratify for political purposes, not educational. That's it. But don't talk stability because we're not stability. Thank you, Madam Chair.
You're welcome. Ms. Kahn, I know that you've asked us to report these bills out today, however, I believe that Mr. Doosey had indicated that actually the School District will not be going out for the bond issue until May the 15th. Am I correct, Mr. Doosey? I think that was said and we wrote ot down and that's why I wanted to question you on that. When would you go out for the bond issue?
It would be for receipt of funds by May the 15th, so the approval to permit deficit financing needs to be in place by March 30th to allow the period from April 1st to May 15th to contact the underwriters and actually place the issue. I would need receipt of funds by May 15th.
That would 399 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET have to be approved by the State, not us.
That is correct. It's my understanding that bill will come out next week.
To clarify, the legislation had been submitted to the Governor's Office and approved that that would authorize the School District to initiate the deficit borrowing and also that same vehicle providing the exemption for Act 46 for the original $45 million. We have requested that the General Assembly --
I actually do not have that. I would have to check the different people who were in on the drafting, the Commission's attorney and others. I can look into that.
Point of order. The Chair recognizes Councilman Rizzo.
Secretary Kahn, I would assume you anticipated the response you were going to get from Members of Council coming here empty handed.
I did. And I have to tell 400 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET you, again, I take the position I agree with you. I think that we should have it. It is time. And I suggest that you contact Secretary Zogby and ask him where --
No, no, don't pass the buck. You're coming down here. You're the Secretary of Education. You should contact Zogby -- you shouldn't have even showed your face here today not being prepared. Don't pass the buck to Secretary Zogby. Because if you were doing what you're supposed to do, you wouldn't show up here and insult this Council. Would you, if you were sitting in that chair vote on those bills based on the information that a Secretary of Education representing the Administration sitting in that table? Please answer that question.
I repeat. I agree with you that it is time to have this document produced. And everything that I have shared with you as to what its content is, is accurate. So it is a matter of having the form, which I do believe the Members of Council and public are entitled to receive.
You must have one great memory to be able to come down here and 401 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET remember everything that was discussed in a meeting. You must have the greatest retention. You're telling me you're doing all of this today, this conversation from memory? There's nothing in writing that you could have brought here to provide this Council?
Actually, I didn't say that. What I don't have is something that I could hold up and represent as being agreed to by the members of the Governor's team and our team. I also testified that there have been different drafts. So I'm not doing it all memory.
Well, that's a disgrace that you would come here and then blame Secretary Zogby for not doing -- you should have demanded. The Mayor should have demanded. He's sending you or on a kamikaze mission to the Council not prepared. That amazes me that you would come here like this. So let's talk time lines. How quickly can you have the documents? You want us jump through hoops. We're going to ask you to jump through hoops. How quickly can you have a document in front of us? 402 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET
We spoke with the Governor's Office as recently as --I believe the last time was o'clock more or less Monday evening. I don't know 5 whether any communication has occurred since I've 6 been here today. We were expecting to receive 7 something from them yesterday, which did not come. 8 And we will pick up on the issue again when I leave here today.
Well, I would think -- personally, I think this whole process should be put on hold until we have the information. This is too -- it occurs too frequently that you put this Council -- when I say you, the Administration -- in a position. It's getting to be old. It's getting to be an insult. And, again, you shouldn't have even showed up here today, in my opinion. Thank you, Madam Chair.
You're welcome. The Chair recognizes Councilman Nutter.
Thank you, Madam Chair. Ms. Kahn, I just need to go through a 403 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET couple items. You were here back on Wednesday, January 30th at a Rules Committee hearing about a couple bills, and the topic of this agreement between the Mayor in the Governor came up. At that time, you indicated that you thought you might have an agreement in document form somewhere in a week to a month. Do you recall that?
And then I wrote to you last week about that because I wanted to at least wait for the outer time frame which was the month which would have been around about the end of February, beginning of March. We were in budget hearings by then and I got slightly distracted. But I wrote to you with a copy of those pages of the testimony saying that you said you thought it might take a week or month, it was actually at that point 40 days, and that we had not received anything. We talked, I think, the next day and you said that you would address that issue next week. I think I asked you "You'll have an agreement with you?" And I think you just pretty much gave the same response that you would address that issue next week, which is naturally today. I guess I was left with the 404 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET impression that there was actually going to be a document out of your response. You were very firm in coming back with that. Today, I took down the number of the things that you said when asked earlier, way before my questioning now, and you gave two responses. One, the document is not ready. Two was related to the Governor and the Educational Secretary. So the Governor was out of the country for some period of time and that the Education Secretary was either out of the state or possibly out of the country as well. Now, when was the Governor out of the country?
He was away towards the end of last week, last two or three days. 405 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET
And are you saying now that had those situations, which were relatively recent, if those had not occurred that you'd have a document now?
I think what I also said was that over the course of the past several weeks, probably even the past month, we impressed upon them what we consider to be the importance of honoring that commitment and also the importance of this event right here in terms of implementing the entire agreement and certainly bringing all the pieces together on the financial agreement. And we tried repeatedly to produce the result.
What do you mean you don't know? What actually is the problem? Why is it not possible to produce an agreement?
Again, from our point of view, as we have exchanged and discussed this over 406 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET the course of several months, I believe that we had gotten some questions about language down to just a very small number of items.
Without going into the particulars on those, again, I will say that what I described to you is the content of what we had agreed to. But we're waiting, again, for a communication from them.
Why can't you go into the particulars? You're not negotiating. You've already negotiated. You announced an agreement back on the 21st. And I understand that the parties or maybe attorneys are involved or doing what they're doing. But what are the outstanding issues? What is unresolved?
Councilman Nutter, George Burrell, Secretary of External Affairs from the Administration. I think that the Secretary has fully described our efforts to try to finalize the document. I do not believe that there is any significant difference between us and the State over what are the provisions that we have agreed to. But 407 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET it is impossible for us to tell you why the State has not signed a document or we've been unable to get to the point where we can sign a document. And I will speculate that they are struggling with some legal issues in questions in interpretations of law on their side as relates to the whole general environment that we are working in. But we are unable to say --
There are a number of litigations that are going, some of which Council is a member of. There's federal litigation that's still going on. And I think they're evaluating the role, how they can cast a document consistent with other events that are going on that don't relate specifically to the terms and agreements that we've agreed to.
What do any of those litigation matters have to do with anything that was agreed to back on December 21, 2001?
I would refer you, sir, to the State for that. I cannot speak to the State's mindset. 408 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET
I understand that. But you must know what their issues are.
I won't speculate as to what their issues are. I do not believe there are issues outside the boundaries of our agreement -- I do not believe that there are differences of opinion within the boundaries of our agreement. I believe there are other factors that they are evaluating with respect to signing the agreement, and I can't speak to those.
I do not believe that there are any unresolved issues on our side within the boundaries of the agreement that we reached with the State on December 21st, or whenever that date was.
Are there any differences of opinion by the State on City issues?
Well, you know, let me say it this way. Until you ultimately, Councilman, sign a document, there's always the potential to be differences of opinion, but I do not believe there are meaningful differences of opinion between us and 409 3/20/02 - CONTINUED FY '03 SCHOOL BUDGET the State on the substance of our agreement. We are confident in that and we are proceeding consistent with that view.
Is there one document at this point? Has the City -- I'm left with the impression from the earlier testimony, the City has sent a document to the State and you are waiting for them to sign off on it. Is that the situation?
And from your perspective, that document is complete and encompasses everything that the City believes that was agreed to back on December 21st?
Can you submit that document to the President so that we can understand what the agreement is?