The junk-rated Philadelphia School District has established a leadership team as it exercises local control for the first time in more than 16 years.
The city’s newly established nine-member Board of Education elected a president and vice president Monday during its first public meeting since the state-dominated School Reform Commission expired on June 30 following a 16-year run. Former SRC chair Joyce Wilkerson was tapped as president with Wayne Walker, an expert in corporate restructuring and turnaround management, picked for vice president.
“While there are many things our Board of Education can and must do, we can’t pretend that this new governance structure alone can fix the problems our schools face,” said Wilkerson in a statement. “The Board alone cannot fix the school funding crisis that Philadelphia and schools across the Commonwealth face.”
The SRC adopted a lump sum $3.2 billion budget for the 2019 fiscal year in May that factors in promises of additional city aid. Mayor Jim Kenney pledged in his March 1 budget address to send nearly $1 billion of new revenue to the district to cover a looming $900 million deficit projected for 2023.
“Tonight’s School Board meeting established a strong foundation for the work ahead,” said Kenney in a statement.
District officials have credited increased financial support from City Hall and improved bond ratings for enabling an annual capital spending boost to $250 million from $200 million and a planned $25 million increase for debt service. Moody's Investors Service upgraded the district's underlying bond rating one notch to still junk-level Ba2 last September citing improved reserves. Fitch Ratings revised the outlook on its BB-minus underlying rating to stable from negative in October 2016.
“This new chapter for Philadelphia’s public education system is exciting,” said Walker in a statement. ”We, as Philadelphians, now have control over the governance of our schools and what we do together will determine our success for tomorrow.”
The district sold $252.9 million of bonds in May to address capital needs, which came in 12 to 20 times oversubscribed, according to traders. The deal was backed by the Pennsylvania State Aid Intercept Program and received enhanced ratings of A2 by Moody’s and A-plus by Fitch.
The city government's new responsibility for its school district has weighed against its credit. S&P Global Ratings downgraded Philadelphia’s GO debt one notch to A from A-plus citing spending challenges for the school district and pension obligations. Philadelphia is rated A2 by Moody’s and A-minus by Fitch.