Moody’s Warns of Budget Disaster, Mass Exodus from Philly Schools
Moody’s, the debt-rating service, is warning about the dire consequences if the Philadelphia school district budget remains underfunded for the 2014-15 school year, Bloomberg says. Without a fresh infusion of cash— $216 million — students will flee the district for charter schools, and the district’s bond-rating would be downgraded. (The consequence of the latter? Not only would the district have less money, it would have to spend more of its remaining budget on debt service.)
The $2.5 billion plan for the year beginning in July calls for the district serving the nation’s fifth-most populous city to fire 1,000 employees unless it receives $216 million to maintain programs, according to the report. The jurisdiction educates about 205,000 students, according to a board presentation.
“A further deterioration in education services will likely result in additional student flight to charter schools and other alternatives, which could further increase the district’s expense for educational alternatives,” Dan Seymour, a New York-based Moody’s analyst, said in the report.
The Inquirer adds: “Unless the Philadelphia School District raises more than $200 million extra in a hurry, Moody’s Investors Service warned it will cut the district’s bond rating — which is already down at Ba2, junk status, forcing the district to pay extra when it borrows money — because the district’s proposed $2.5 billion budget for the next fiscal year will ‘materially imperil its ability to provide students with an adequate education.'”