This is the school district’s first major step in dealing with the financial crises that came to a tipping point last January when district officials realized they would run out of cash by summer 2012. At that time, they brought in a chief recovery officer to focus on helping the district make it through the fiscal year and asked Boston Consulting Group (BCG) to “come in with the same very crucial and specific goals — to get us out of that financial hole, to be able to survive it and be able to move forward to the next,” said Fernando Gallard, chief of communications for the district. “That’s most of the work BCG did, and it was very successful at that. We were able to come out of that fiscal cliff. The district is now in operation, has a five-year financial plan and is moving forward.”

One of the top recommendations from BCG: to get the district’s utilization rate to 85 percent. The District took this as verification that they needed to develop a list and figure out the best way of closing schools to increase the utilization rate in the district. “In some cases, we are maintaining half to less than half occupancy in our buildings and wasting dollars on empty space,” Gallard said. “We are calculating that we have approximately 53,000 empty seats in open buildings, and we want to start consolidating the students so we can have a better use of our resources, which means we can provide better resources to our students.”

The Philadelphia Coalition Advocating for Public Schools (PCAPS), a group that includes the city’s teacher’s union, opposes the plan to shut down schools and even published an alternative in December to some of the recommendations revealed in the BCG report released in spring 2012. Their plan asks for more per-pupil funding; expansions of staffs, programs and support services; and a halt to school closures and charter expansion.

These requests, however, are not a part of the district’s initial Action Plan 1.0. The plan has two main goals: to improve academic outcomes and ensure the district’s financial viability.
One thing that both sides do agree on is that more state funding is necessary after Governor Tom Corbett cut the District’s budget by $200 million. This year, the district borrowed $300 million, and officials predict a deficit of $1 billion by the 2017-2018 school year unless critical steps are taken now.

Closing 37 schools is just the first step. “The district is still in a very fragile financial situation. We must make some very substantial changes to the way we run the district to stay afloat, have enough cash to finish the year and find ways to improve the education of the students, which is our main focus,” Gallard said. “Our concern is that people will think that, once we close the schools, we’re fine, but there’s more to be done. We’ll be talking to our labor partners soon and having very difficult conversations regarding what needs to be done to move forward and survive as a district financially.”

So, what does this mean for the construction industry? “It means that there are some lean years ahead, but once we come out of this, we will continue to invest in our schools. However, it’s going to take two to three very difficult years,” Gallard said.
The school buildings listed for closure include 22 elementary schools, four middle schools and 11 high schools. The school locations are in almost every part of the city, especially North Central, West and Northwest Philadelphia, and include ones with long histories in the community such as Strawberry Mansion, Germantown and University City high schools.

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