Government Lies, Corruption and Mismanagement

Philadelphia Schools' CEO Paul Vallas is Criticized For the $73 Million Deficit

Members of the School Reform Commission say they feel "betrayed" and "disappointed" by Vallas' handling of a deficit that will force midyear cuts in the school system.

Vallas facing sharp criticism
Three members of the School Reform Commission hound the chief executive over the district's $73 million deficit.
By Susan Snyder, Inquirer Staff Writer


Three of five members of the Philadelphia School Reform Commission yesterday blasted their chief executive officer, Paul Vallas, saying they felt "betrayed" and "disappointed" in his handling of a deficit that will force midyear cuts in the school system.
"I am disappointed with where we are and I lack a sense of confidence and... faith in this management person's ability to move us forward with balanced books," Commissioner James Gallagher said before an auditorium packed with students and citizens, including Mayor Street.

Gallagher's comments followed criticism from Street on Wednesday on the surprise deficit and the Vallas administration's attempts to deal with it.

Gallagher, president of Philadelphia University, called the Vallas team's explanation of how the $73.3 million deficit evolved a "financial charade." The deficit represents about 3.6 percent of the district's $2.04 billion budget.

Commissioners Martin Bednarek and Daniel Whelan also took shots at the Vallas team, along with more than 20 students, parents and citizens who showed up to protest cuts. It was the second day of commission hearings on the deficit.

The commission postponed a decision on Vallas' proposed plan to cut the budget until Wednesday. Commissioners asked for more information, including directing Vallas to create and post a document on the impact of the cuts on the district's Web site over the weekend.

The public also will have a chance to speak again on the budget at the 1 p.m. meeting at district headquarters, 440 N. Broad St.
James Nevels, chairman of the commission, said he expected some of the cuts - which include layoffs, less busing for students, and shaving of consulting contracts - to take effect as soon as next week.
Vallas sat quietly during the criticism, often looking down and jotting notes, and later in an interview said he understood the feelings of disappointment.
"If you're going to take credit when things go right, you've got to be willing to take responsibility when things go wrong. The last three months have not been one of our better moments. We justifiably hurt people's confidence in us in the last three months, and we're going to work hard not to do that again," he said.
The issue, ironically, has become perhaps the biggest embarrassment for Vallas in his 41/2 years in Philadelphia. His area of expertise is public finance. He was budget director for the City of Chicago before running that city's public schools for six years.
Despite the criticism, Nevels said he continues to back Vallas as the district's executive.
"We have a contract with Paul. I believe we should honor that contract. I believe that Paul has great talents that can serve young people and children," Nevels said.
Asked the same question, Street said that the decision was up to the commission, and that as long as a majority want to keep Vallas, he would back that decision.
"They decided to give him a contract. They thought he was worthy of this district. I'm not second-guessing them," Street said.
Three of five members - including the two appointed by Street, Sandra Dungee Glenn and Bednarek - backed a contract extension for Vallas in the summer. Gallagher and Whelan opposed it.
Bednarek declared his displeasure over the budget situation.
"I really feel betrayed. This is a disgrace that this ball was really dropped," he said, drawing hearty applause from the audience, including dozens of students in red shirts from the advocacy-group Youth United for Change.
Street, who again remained for the entirety of the three-hour hearing, said in an interview that he was dismayed with the administration's discussion of the cuts, the impact the cuts would have, and administrators' efforts to gauge public input.
He repeated a suggestion he made during Wednesday's hearing that the commission hold meetings at night and in different sections of the city.
Street, mayoral candidate Michael A. Nutter, and some education advocates also called for the commission to lobby the state for fair funding for Philadelphia schools.
"The school district remains inadequately funded for the task confronting it, and you need to say so," said Michael Churchill, of the Public Interest Law Center of Philadelphia. "... If Philadelphia had the same funding as the average of the top 100 districts in the state, it would have $2,700 more per student, totaling $571 million."
Commissioners also gave other suggestions for items they would like to see cut.
Whelan, who participated in the meeting by phone, took aim at chauffeurs, noting that Vallas has proposed reducing the number.
"I have a question why we have any chauffeurs - why not eliminate them all?" Whelan said.
He also advocated dropping memberships to state and national associations, selling the district's art collection, and killing a program that employs parents as truancy officers, questioning its effectiveness.
Whelan's suggestions showed there will be some strident disagreement among members on cuts.
Bednarek opposed selling the artwork, much of which was donated to the schools over the years.
"I think it would be like raping the schools," he said.
Dungee Glenn suggested the district consider saving a Saturday morning character-education program for disruptive students and further cut funding to the six outside managers running some schools. Vallas proposed a 10 percent cut this year.
Vallas said that it would be unfair to cut more from the managers this year, but that he would propose a 50 percent cut for next year.

Staff writer Susan Snyder can be reached at 215-854-4693 or

CEO Budget Plan
Message from Paul Vallas


The presentation referenced in this document is attached below.
Dear Colleagues, Parents and Students:

As you know, the District has a larger than anticipated deficit of $73 million. This is a manageable problem and we are working diligently to develop a cost reduction plan that will fund last year's deficit, keep this year's budget balanced and lay the foundation for a sound budget next year. Rest assured that our primary goal is to minimize the impact to schools.

For more details on why the deficit is larger than anticipated and proposed recommendations for cost reduction and realignment of the budget, please review the attached presentation. Below is a summary of the presentation:

A brief overview of our accomplishments over the last four years. (Pages 2-3)
167 schools AYP this year, up from 28 schools in 2002
29 high schools made AYP this year, up from 9 high schools in 2002
A summary of the funding challenges that we face. (Page 13)
Per pupil funding among the lowest of urban districts
No additional funding from the City since 2002 other than funding that is obligated by law
Charter school costs with only a portion of the costs reimbursed by the state
Cutbacks in federal earmarks
An explanation of the why the deficit is larger than anticipated. (Page 14)
Increase in charter expenses
Reduction in school salvage
Fewer positions than anticipated were eliminated through attrition
Higher than projected term payout to retirees
The goals for our deficit reduction plan. (Page 15)
Cover the 2006 obligations
Build a surplus in 2007
Lay the foundation for a sound budget in 2008
Minimize the impact to schools
The CEO's proposed budget plan. (Pages 17-22)
Recommended Cost Reduction Initiatives

Administrative Reduction in Force of 20%
Reduction in operations and transportation expenses
Reduction in contracted services
Opportunity for employees with alternative medical coverage to opt-out of District coverage
Phase in expansion of alternative schools
Closure of EMO and CEO Regional Offices

Cost Reduction Initiatives NOT Recommended

Reduction of teachers
Reduction of Art and Music Programs
Reduction of nurses, counselors, psychologists
Reduction of librarians
Reduction of academic coaches
Reduction in local school discretionary spending

This budget plan makes difficult adjustments but I want to reiterate that we have done everything possible to minimize the direct impact to schools. While the cuts do not impact core reforms, it will take additional funding from the city and state to further reduce class size, expand classroom modernization and complete the needed renovations and repairs to our school buildings.

I appreciate your continued focus on our shared mission to achieve academic excellence for all of our students. Thank you for your unwavering commitment and dedication during this time.


Paul G. Vallas

CEO Budget Plan Presentation

Public Interest law online