To Help Philadelphia Schools, Gov. Corbett Wants Feds to Forgive Debt

Gov. Corbett's administration is attempting to get new funding for Philly schools by convincing the federal government to let the state off the hook for a $108 million debt, according to city, state and federal sources.
June 21, 2013

By Sean Collins Walsh

Gov. Corbett's administration is attempting to get new funding for Philly schools by convincing the federal government to let the state off the hook for a $108 million debt, according to city, state and federal sources.

All parties involved cautioned that the plan is far from a sure thing, as the federal Department of Health and Human Services, which is owed the money, has not indicated whether it will go along. An HHS spokesman did not respond to a request for comment.

In a statement yesterday, Corbett gave the strongest indication yet that funding the Philadelphia School District, which will lay off about 3,800 employees without a cash infusion, is a priority.

"As governor, I am committed to finding a long-term solution for the Philadelphia School District that is focused on students and is fiscally responsible for taxpayers," the statement said. "Over the past several weeks, many viable ideas and solutions have been suggested."

At Corbett's request, Philly U.S. Rep. Bob Brady and other local members of Congress are asking HHS to forgive the state for a $108 million debt resulting from past overpayments to Pennsylvania counties in a federal foster-care program, according to sources with direct knowledge of the talks who only agreed to speak anonymously because the deal is up in the air.

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Corbett has talked with legislative leaders in Harrisburg about reappropriating a large part of that money, if it comes through, to fund Philly schools.

"He's apparently operating in good faith to divert these funds to city of Philadelphia schools if he ever gets the money," a federal source said.

Sources said the plan is to use the HHS savings to plug the school's deficit until next year, when the city's temporary sales-tax increase is set to expire. At that point, some are hoping to make the 1 percentage-point increase permanent and dedicate its revenue to the school district.

The School Reform Commission has requested $120 million from the state, $60 million from the city and $133 million in concessions from the district's unions.

The SRC says its structural funding problems will be solved if the requests are met -- a factor that appeals to Republicans in Harrisburg who complain about Philly coming to budget talks every year with open hands.

The city appears to be moving closer to meeting its request: Mayor Nutter has pledged to collect $28 million more in school-dedicated taxes, and the city is awaiting enabling legislation from the state on a cigarette tax to generate $45 million next year.

The teachers-union contract will be renegotiated in August.

The overpayment error was made during the tenure of Govs. Tom Ridge and Ed Rendell. State and federal officials have been negotiating over the debt for years.

Obstacles to the deal include HHS' willingness to let the money go, the legality of transferring it to Philly schools and whether Corbett or others would want to attach strings to new funding.

A state source said the Corbett administration is looking at multiple ways to come up with significant funding for Philly schools in case the HHS plan falls through.

(c)2013 Philadelphia Daily News

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