In the present economic downturn, many states have decreased their spending, particularly in the area of public health. That's why it's gratifying to see City Council, the Department of Public Welfare and the General Assembly working together to bring more dollars into the state so we can actually improve care for the Uninsured and Medicaid eligible population in Philadelphia.

Quick Fact! Just because a person has Medical Assistance Health Coverage, that doesn't mean they can find a doctor! Most doctors around here refuse to accept Medical Assistance, that's why the Federally Qualified Health Centers and the City's Health Centers are so important.

Council took the first step yesterday to move a plan that will move millions more dollars into our hospitals and health centers. PUP is especially excited because the Department of Health believes that these new funds should enable them to bring wait times at City Health Centers down to less than 30 days and improve health care by implementing electronic records throughout all city facilities (including jails and youth centers).

More details in the jump!

We recored the first It's Our Money podcast and it is now posted on our site. I thought YPP readers might be interested because it features Helen Gym, a frequent commenter on YPP. Helen is joined by Wayne Harris, who is the budget director for the School District of Philadelphia.

You can listen to the podcast by clicking here. You can also subscribe to the feed through iTunes or any other podcasting software.

Today, City Council is expected to hear testimony from the School District of Philadelphia, which controls $2.3 billion of public money for the public schools, almost 40% of which ($889 million) is financed by the City.

When legislative costing out study pegs the underfunding of Philadelphia schools at a billion dollars a year, it’s not surprising to see a grim outlook for school finances. A state-sponsored “multiple provider model” (including charters, alternative education schools, and privatized schools run by Education Management Organizations and non-profits) has dramatically increased the burden on schools, particularly around management fees, gaps in charter reimbursements, and a transportation policy that forces the School District to assume all bussing and transpass payments for private and parochial schools as well as public schools.

The hardest thing to understand about the public schools and why $2.3 billion isn’t enough, is the size of the District:
• 281 different schools
• 167,000+ students – the next largest district, Pittsburgh, has less than 30,000 students
• 62 high schools
• 61 charter schools, the second largest “district” in the state
• 25,000 employees – 10,000 of whom are teachers
• 35,000 kids in K-6 on buses, and 55,000 kids in grades 7-12 using transpasses
• 86,000 free lunches served daily
• 70+ languages spoken in the District
• Average age of buildings – 70 years old

And the District continues to grow in expenses. The District’s Five Year Plan projects growth in expenses at $700 million, almost 30%. The problem is that enrollment is expected to “decline” by 10,000 some students over the next five years as well. In this situation, the District is contemplating difficult decisions around closing and consolidations of schools (four are underway in West Philadelphia alone), reduced services, across the board pay freezes, and other options.

From today's Inky:

New School CEO Arlene Ackerman kicks off her first day with her 20-member blue ribbon panel, whose main job will be "to listen to parents, teachers and other district participants."

The transition-team effort will cost $75,000 to $100,000, which was negotiated when she was hired, Ackerman said. Each panel member will be offered a $1,000-a-day honorarium for the work, which is likely to span four days, she said.

As a parent I am flattered to be valued at so much, $20,000 a day? Usually I'm happy to give my thoughts for free.

To put $20,000 in perspective, a parent who testified at the District's budget hearing noted that her school was trying to choose whether to buy a librarian or a special ed teacher for $18,000 -- that would be less than one day of this panel to serve 250 kids for a year.

Amid all the post-election analysis, here’s a pitch about tonight’s budget hearing at the School District of Philadelphia.

Tomorrow is the final opportunity for the public to testify about the mayor's proposed operating budget. If you'd like to tell City Council how you think our money should be spent, this is your chance!

The hearing is scheduled to begin at 2:30pm. There will be a break at 4:30pm and then testimony will resume at 5:30pm. Right now, the hearing is scheduled to last until 7:00pm but it may run later depending on how many people come to testify.

I've been told that the afternoon slots are all filled, but there is still space in the evening. To get your name on the list, e-mail Sharon Ortiz at sharon.c.ortiz@phila.gov or call 215-686-3407.

If you can't make it to the hearing, be sure to speak your piece in our "Testify!" thread on It's Our Money

i. We'll make sure that City Council gets a copy.

Dave Davies last week expressed his doubts about Mayor Nutter's plan to not only save the pensions by issuing a bond, but to also give the City a cool 50 million dollars per week.

I really don't entirely get how issuing the bond even works, but I would think this is not good news:

Feb. 22 (Bloomberg) -- California, Florida schools and the owner of John F. Kennedy International Airport joined a growing list of municipal borrowers exiting the U.S. auction-rate bond market as record failures push taxpayer costs higher.

Thousands of auctions run by banks to set rates on the debt failed this month as investors shunned the securities and bankers refused to submit bids, sending interest costs to 10 percent or higher on some bonds. Auctions covering as much as $26 billion of bonds a day failed to attract enough buyers since Feb. 13, according to Bank of America Corp.

Florida's Palm Beach County Schools converted $116 million of the securities into fixed-rate debt this week, while the
Rates in the more than $300 billion auction market, where local governments, hospitals, museums, student-loan agencies and closed-end mutual funds borrow, are determined through a bidding process every seven, 28 or 35 days. Auctions fail when there aren't enough buyers. That's left bondholders who wanted to sell stuck with the securities and taxpayers or other backers of the debt such as fund holders with higher interest costs.

And, there is this nugget:

Today, 386 auctions of publicly offered bonds resulted in 258 failures, or 67 percent, according to data compiled by Bloomberg from four auction agents, Deutsche Bank AG, Bank of New York Mellon Corp., Wilmington Trust Corp. and Wells Fargo & Co. The firms are responsible for receiving orders from broker- dealers and determining the winning rate. They also perform some administrative services for the borrower.

About two-thirds of auctions have failed per day since Feb. 15, according to data compiled by Bank of America and Bloomberg.

I don't entirely get it. I do know that our bond rating generally sucks. And cities and institutions (like Children's Hospital, for example) are trying to get themselves out of the bond market.

So, if so many places are having trouble actually issuing bonds, and the costs are becoming out of hand, it seems a little crazy that we are relying on a bond issue not only to fix the pension problem, but to flood our coffers, as well.

What am I missing here?

Update: First, as I mentioned in the comments, I don't know that the Bloomberg article necessarily matters, because it is talking about a specific type of bond that the City will not likely use.
S&P Gains 2001-2007: S&P Gains, or losses, from 2001-2007.However, courtesy of DailyKos, the chart below displays the danger of assuming that borrowing money, and then putting it into the stock market, will provide us with a yearly bounty that we can simply expect.

What the chart shows is that if you invested 10k in the S&P in 2001, as of 2007, not even accounting for inflation, you will still have less money than what you started with. Long term, stocks are still likely a good bet. But, can we really expect to not only have this to fix the pension problem, but provide us with money every single year? Seems crazy to me.

Or, to put it another way, if this is so magical, why wouldn't we just issue bond after bond?

If YoungPhillyPolitics was like New Kids on the Block, then Ben Waxman would be our little Joey McIntyre. And, just like Joey, Ben is striking out on his own with a solo career.

I am proud to announce that Ben Waxman is now writing for a new Daily News/WHYY blog called "It's Our Money," that will track City Council and the Mayor through this year's budget process. The new blog will also try to keep up with budget hearings and various constituencies and causes seeking funding in the city's $3 billion + budget.

You can check out one of Ben's first posts here.

It's pretty cool that the DN/WHYY will continue to provide the detailed political coverage that the Next Mayor started. And while these "professional" blogs can't hold a candle to YPP when it comes to snark and unbiased opinions, they do ok. Congrats Ben!

[Meanwhile, take a look at Joe McIntyre's first solo vid below.]

I had been thinking about Michael Nutter's first budget address for the past 24 hours and feeling fine... until I got an email from Brett Mandel this morning with the subject line, "Tax Reformers...This Budget's For You!" I thought we might be in trouble after all, but another review of the Mayor's address, and it seems like we're gonna be ok. That said, there are two things Mayor Nutter has proposed which could become very big problems:

1. He sets aside a specific amount of money for city contract negotiations with unions--no more--while relying on a bond to deal with city pension obligations.
2. He proposes cuts to the net income portion of the Business Privilege tax.

The problem with the first point is we don't really know if a bond can work. As the Inky reports today:

"It is a creative solution, and that's a good thing, but there are lots more questions that need to be answered before we know if it'll work, when it'll work," said Uri Monson, executive director of the Pennsylvania Intergovernmental Cooperation Authority, which oversees the city's budget.

We also don't know what the city employee unions are going to be asking for just yet, and without the knowledge, it seems a bit inflexible to name a dollar figure now. Remember, the city is the largest employer, and any drastic change to the livelihood of its employees can have a big impact on our entire region's economy. The problem with the second point--and Jennifer and Dan pointed this out last week--is it is hard to support cuts to the net income tax without knowing how it currently impacts businesses in real numbers. I am sure the Mayor knows of course--since he is privy to data from the department of Revenue that would indicate how the tax is affecting different kinds of businesses--but we, the public, do not.

In the spirit of Mayor Nutter's "new day, new way" approach to open records and transparency in government, Jennifer wrote a letter to the Department of Revenue requesting this data. After all, there is growing evidence that for the very largest corporations, despite a real or perceived high business tax burden here, other factors like proximity to roads, train stations, cultural events, restaurants, etc. have been more important factors in making decisions about business relocation. And, perception often trumps reality when in comes to the free-market, and Nutter sent a pretty strong message that will change the perception of Philadelphia when he said this at a Chamber of Commerce luncheon:

"The doors at City Hall are now open," he said, in a silent nod to the strained relationship prevalent during the Street administration. "You will always have a friend at City Hall."

That's not to say that business taxes do not matter--and I think we all agree that our business tax structure seems uneven at best. But without a public release of the data, it's hard to know how serious of a problem this is, without relying solely on anecdotal information. Despite these potential problems, you have to give credit to Nutter for proposing a budget which:

• expands single-stream recycling
• gives $3 million to city health centers
• $4 million a year to CCP to expand its reach

That said, it is a humble budget, which makes sense for a first budget from a new Mayor. However, I have to express some concern that the entire Jobs and Economic development portion of the Mayor's speech really includes only 3 ideas: arts & culture expansion, tax cuts, and dealing with unions. For a city whose real wages have been on the decline every single year since 1969, and that has yet to produce a real economic sustainability plan for the future--as opposed to piece-meal economic development deals, often at the discretion on Council members--we could do better. However, as Nutter himself said:

We don’t walk into this process under the assumption that we have a monopoly on ideas, but we believe the proposals set forth here today will put us on a course for a safer, cleaner, greener city, where our children are protected and educated, where government performs its tasks in an open, honest and efficient manner and where performance is measured, improvements are made and services are delivered.

And until we see the line-item budget, that sounds good enough for now.

From Jeff Gammage’s excellent article on whether the Chester stadium deal is yet another snake oil sale for a town that's suffered way too many broken promises:

The prospective team owners, leading a St. Louis group in the contest to secure MLS's 16th team, predict a huge financial impact:

More than 2,600 temporary construction jobs and 800 permanent full-time jobs. About $19 million in annual tax revenue. An estimated $670 million in personal earnings and $335 million in taxes over time.

Those are giant numbers to a city where half the households get by on less than $25,000 a year.

And they leave sports economists shaking their heads. Whether it's Kansas City or Charlotte, Chicago or Chester, they say, the argument is always the same, and so is the result.

"Plopping down a stadium," said Temple University assistant dean Michael Leeds, coauthor of The Economics of Sports, "does nothing for a city."

It’s hard to put my finger on what rankles me most about the Chester stadium deal.

Well, Mayor Nutter seems to be settling into City Hall well. And our new council members have been thoroughly briefed and readied for governance (check out this story here). Councilwoman Tasco is our new majority leader and Councilman Clarke is the new majority whip.

Yea! It's a new day!

Now we have to wait a couple more weeks for Mayor Nutter's first budget before things can really get going. In the meantime, I'd hope Council could take care of some house-keeping matters, and pass a few bills on lingering issues from the Street administration.

So, off the top of my head...ready, set go:

• City health centers--Street promised money for more staff so that there could be extended hours. But he didn't do anything about it,. While the new Mayor is getting next year's budget ready, can Council spend the health center money from last year? (this is a Philly for Change concern too.)
  
  
• Housing units for people in emergency shelter. Again, Street promised this, money should be there, can Council help spend it? (another PFC issue.)
  
  
• Recycling. Let's go. Single-stream. I believe Councilwoman Blondelle Reynolds-Brown already put together a bill, or at least some info on using Recycle Bank so that the city could make money off recycling. This is such a no-brainer, and it's embarrassing and annoying that we can't all recycle at home, or in public places. If Council can pass that a bill that makes us money or at least comes close to breaking even on expanded recycling programs, I'd imagine Mayor Nutter would be ok with signing a bill even before the budget address. (Don't forget Christine Knapp from PennFuture's great recycling 411 post here.

All three could be possibly be done without waiting for a new budget, create jobs, address pressing needs, and contribute to the city's sustainability. Other housekeeping matters you think Council should address?

[oh one more, we have not written about this much, but the DRPA and PATCO have been talking a lot about building a light-rail line on the waterfront with new service in NJ as well. Big deal, really smart, great for the city.

While Council is waiting for a budget, maybe they could set up a hearing on this?

It'd be great to get more info--especially the economic development benefits. Hearings are mostly cost-free and a hearing on this matter would help jazz up the Guv, the state and federal congressional delegations, and local civic and business leaders--all of whom need to be bought in it's really gonna happen. Any volunteers on Council?]

On November 24th, Rep. Payton and I recorded our second edition of The Legislator and The Agitator. You can download the episode in four individual tracks here.

01-The House Democrats Bonus Scandal

(14:57)

Introduction to the November 24th, 2007 show.

Discussion of the House Democrats recent firing of major staffers around large bonuses given to legislative staff.

We'll move into the issue of Reform and Rep. Payton's freshman class of Harrisburg Legislators.

02-Costing out - will the state ever pay for schools?

(16:07)

Good Schools Pennsylvania convinced the state to do a costing out study on what it would actually cost to pay for students around the state so we can do a better job of realistically discussing how much money we need to pay for schools. It started a big conversation on YoungPhillyPolitics.com.

Tony and Brady discuss the great amount of political maneuvering around this information as well as the lack of the real initiative to find the cash. Will it happen? Can it?

Also, Brady tells about the time that he fought back against a really big bully.

It makes sense in context.

Click "Read More" for the next two tracks!