Philly City Controller Doubts School District’s Finances

City Controller Alan Butkovitz still has doubts over the School District of Philadelphia's financial viability, as it tries to battle with a projected deficit of at least $61 million while facing a funding gap of $269 million for the fiscal year 2012/2013.

Butkovitz wrote to Thomas E. Knudsen, the district's new chief recovery officer, to voice his concerns, writes Martha Woodall at the Philadelphia Inquirer.

He said:

"To date, school district information we have obtained and analyzed provides substantial doubt among my professional audit staff, and strongly indicates a troubled organization."

Butkovitz highlighted Feather Houstoun's remarks at a recent commission meeting. Houstoun is head of the Philadelphia School Reform Commission's finance committee, and she said:

Without intervention, "the school district was going to have such a pile-up of a cash deficit that we're basically not going to be able to pay people in July for work they did in June."

Butkovitz said that Houstoun's comment "certainly suggests that even school district management has substantial doubt about the ability of the district to continue as a going concern."

Butkovitz is there to include warnings and outline concerns in his role as the independent auditor of the district's annual comprehensive financial report.

District spokesman Fernando Gallard said:

"We can fully assure that the school district is in no danger of failing to meet its debt service and payroll obligations in the foreseeable future as a result of the actions we have already implemented and intend to implement."

Earlier in the year officials hired Knudsen to in an attempt to stem Pennsylvania's financial crisis.

Knudsen will function both as superintendent and chief financial officer.

Knudsen said he shared the SRC's "sense of urgency and alarm."

While there's less than six months left in the school year, Butkovitz has estimated that the district would have to cut $400,000 per day to erase the projected deficit of $61 million and try and cope with higher-than-expected charter school enrollment.

02 6, 2012
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