Finance and Facilities Committee Report: June 13, 2019

by Lynda Rubin

The final 2018-19 Finance and Facilities Committee was held June 13, 2019. Present were  Co-chairs Lee Huang and Letitia Egea-Hinton along with Committee Members Joyce Wilkerson and Wayne Walker. Board members Julia Danzy, Angela McGiver, Maria McColgan and Chris McGinley also attended.  The May 16, 2019 Minutes were approved and will be posted on the website.

Huang noted that the meeting time was moved to an earlier time to accommodate  Drexel President John Fry who would be giving a presentation; that item was listed under “District Presentations” on the agenda, although there was no link to it prior to the meeting.  Huang asked Fry to speak about the work that Drexel University has been doing on the facility under consideration. Fry began his 40-minute presentation by stating that Drexel’s intent is to construct a new building, into which Samuel Powel Elementary and SLA Middle School  (SLAMS) would co-locate, on a site including 3601 Filbert Street, the address of the now demolished University City High School. Drexel is hoping for a September 2020 or January 2021 opening date.

As of this writing, there is no report which can be accessed from the agenda link, but for those who wish to “Download the Agenda .pdf” from the meeting materials page, there are now nine pages (pp. 12- 20) of drawings and renderings of a proposed new building for Powel Elementary and SLAMS to co-locate and a graph which does not explain itself at all, but no narrative to accompany President Fry’s report.  (Note: following these drawings can be found the PowerPoints of the agenda items on Tax Revenue Report update given by Chief Financial Director, Uri Monson, and a School Renovation update by Chief Operating Officer Danielle Floyd.  Look for Finance Committee – Download Agenda)

Fry introduced three Drexel University administrators who are overseeing this project: Donald Moore, VP for Real Estate and Facilities; Lucy Kerman, who worked with Fry years ago at Penn during the creation of Penn Alexander, their first project with the Promise Zone design;  and Brian Keech, Sr. VP for Governmental/Community Relations, who was brought on after Drexel purchased the University City site. Fry said that Drexel has been a “committed university partner” to the District, and he cited the list of schools the University has gotten involved with, although not to the level as with Powel and SLAMS. About five years ago, Drexel was named administrator of a $5 million federal Promise Zone grant of $5 million and chose these five schools as recipients:  McMichael Elementary, West Philadelphia High School, Locke Elementary, Martha Washington Elementary and Belmont Charter. Fry further stated that under the Drexel/District partnership, in addition to other various education services, 101 schools have “hosted” pre-service teachers, (co-op, student teachers and teacher residents) and awarded 50 scholarships to Drexel for District students which he pointed out assists the district, the student teachers themselves and Drexel’s program, especially enabling them to recruit Philadelphia students for their school. Fry stated that Drexel spent $12 million to partner with Wexford Science and Technology LLC to buy the site for $25 million. Wexford is currently constructing Innovational school buildings for their uCity Square project on that site while Drexel would build the Powel/SLAMS building on the same lot. Fry said they believed that the site, which sits inside Drexel’s “boundaries”, could be an area for job growth and simultaneously provide schools for the children of those workers in the future. Fry referred to the 2016 MOU (memorandum of understanding created with the SRC) in which all parties agreed to seek out funding for this project.

Finally, Fry finally told the Board he had come to ask the District to contribute $7 million for the project. Fry stated the building costs would total $39 million but that getting commitments from philanthropists, etc. had been difficult. He did say that Gerry Lenfest had given $15 million just before he died. He also said that Drexel recently sold a parcel of the site back to Wexford in return for Drexel building an academic building for them on another site for $8.5 (or $9) million. With those contributions and the $12 million they paid for the purchase for the site, Drexel had $29 million “in hand”. His numbers were not exact figures, as he was speaking in general terms. Fry then said that Drexel was hoping to get $3 million in tax credits, and although he repeatedly stated he didn’t know whether they were sure to get those credits, he did include that $3 million in the  available funds.

Fry stated that he had been consulting with Superintendent Hite throughout the process, that Dr. Hite is in favor of the process and the financials, and that it was Dr. Hite who suggested that he come before the Board for the request.

Before taking questions from the Board, Huang recognized the presence of City Finance Director Rob Dubow who did not address the Board.

Although questions from the Board members were cogent, they did indicate that the Board had limited knowledge about this project, agreed upon in 2016 under the SRC.The actual MOU was not provided at this meeting. We have requested a copy, but it is doubtful we will get it before the vote on the 27th.

President Wilkerson asked  how much the building itself would cost and how big it would be. Don Moore replied that constructing the building itself would be $30-31 million of the total $39 million. McGiver asked whether there were studies about student growth in neighborhood areas that would identify how the demographic needs could change 10-15 years down the line, as Penn-Alexander is now experiencing. Lucy Kerman said that despite having a waiting list, only half of Powel’s students come from the catchment area, so Powel would have the ability to increase its neighborhood students, unlike Penn-Alexander, whose total enrollment is from the catchment area. She also said this move would allow Powel to increase by one class per grade (currently there are 2 classes per grade). Kerman indicated that included in the MOU is a clause that Drexel would fund a staff person to be at the school full-time to oversee university/school connections and that other Drexel staff were expected to be involved in the “innovation” ideas at the school as well. Leticia Egea-Hinton asked about community engagement, the degree to which that was done, and what they learned from the Penn-Alexander project. Kerman identified organizations they had talked with, then said that a strong leader is essential to the success of any school. She also said that the 2016 MOU actually states that  Drexel administrators would participate in the hiring of the principal. Danzy asked what will happen to SLAMS if Drexel is not able to raise the money. Chief Operating Officer Danielle Floyd noted that SLAMS is currently at the 3600 Market St. Science Center and that the District has reached out to negotiate terms for SLAMS to remain there should that be necessary. Floyd stated that SLAMS has already made location moves and hopes this will be the last.

Wilkerson voiced the same concerns as McIver and stated that Penn-Alexander “didn’t play out the way we thought it would” in that although it initially included more African-American students and economic diversity, it has now “flipped completely”. Wilkerson recounted that Penn had given mortgages to all of their staff, not just faculty, to facilitate diversity in student body demographics. She said no one had anticipated that the investments in new and renovated housing prompted by the new school, would actually push out long-term neighborhood residents who could not afford the higher property tax rates assigned to the area. Those factors led to the creation of  “a more privileged student body” at the school. Kerman pointed out that the Penn-Alexander catchment area had not had an affordable housing development partner as this area does. Powel School currently enrolls homeless children served by People’s Emergency Center (PEC), and PEC has been building affordable homes in the area. She stated that the work of PEC, “with sufficient planning”, should be able to offset the pricing out of current neighborhood residents. McGinley said the District would have to be the manager of limiting outside catchment enrollments to keep the school with the diversity of the District. McGinley asked whether the Board was being asked for a total of $7 million or actually more. Fry did not give a definitive answer. Fry also said that he was in talks with a “private foundation”.  These questions and others from Board members demonstrated that this Board has not been adequately “read in” to this project.

Chairperson Huang asked for clarification of Action Item 42 that Drexel is asking to be passed. Chief Financial Officer Uri Monson replied that this would come from the operating budget.

APPS is concerned that Drexel University and other local universities, including Penn and Temple, are partnering with the School District for more than educational training, research and academic supports.These schools have grown to become major corporate players by increasing their purchasing of property, partnering with other corporate and non-profit entities, in where and how the City’s planning development will occur. While APPS believes in using our city’s resources, including our universities, much of this is done without public disclosure or engagement until the deals are close to completion. The buying and selling of land, especially in residential neighborhoods, and in determining which schools will be updated and expand, and which schools will not, affects our children and the community at large. Universities with non-profit tax structures, including Drexel,  have resisted the paying of PILOTS (Payments in Lieu of Taxes), taxes necessary to support public schools and other city services in ways that will best meet our needs. They seem to want to control how, where and for what they will make their contributions to city schools that also places their own interests first. APPS is further concerned that, as often happens in development, obtaining the financing is more difficult than initially thought. Because Drexel would like to start construction this summer, it is concerning that Drexel is, at the last minute, coming hat in hand to the Board for sizable funds to keep the project on track. In reply to a question by Egea-Hinton about what Drexel has learned from Penn-Alexander, VP Lucy Kerman said that picking strong leaders is key, followed by a mention that Drexel will have some or all control over hiring the principal as outlined in the MOU. Are we now ceding oversight and even directional controls of our schools to outside entities, even universities?

Financial Report

Chief Financial Officer Uri Monson presented information  on TRANS (Tax and Revenue Anticipation Notes) using a powerpoint presentation (included in Meeting Materials link above). A Tax and Revenue Anticipation Note (TRAN) is a short-term note sold by a municipal (City) issuer as interim financing in anticipation of tax and other revenue. To allow for regular cash flow throughout the year, the District will have to borrow TRANS that will have to be repaid in the same fiscal year. Monson stated that revenues fluctuate throughout the year but that expenditures are a constant with payroll and charter payments. The projected year-end fund balance for fiscal year 2019 is $206.8 million. ($206 million represents less than four weeks operating costs for the District.) President Wilkerson asked about the terminology of the $30 million surplus. Uri Monson contends that the money is not actually a surplus in common definition but is actually Fund Balance Increases.

Overview of 2018-19 Facilities Renovations

Chief Operating Officer Danielle Floyd gave an update on the year’s Lead Paint Stabilization and Paint Repair to address loose, peeling and flaking paint assumed to contain lead. Forty-eight schools were assessed; 11 schools are completed and 15 final reports have been issued. During the summer 2019, 13 elementary schools have been scheduled for stabilization and another 104 for assessments this summer in order to comply with a new City Ordinance. (A map on page 12 of  the PowerPoint presentation linked above shows the status of specific schools). During the 2018-19 school year, the District responded to 293 reported concerns–135 mold/HVAC, 47 asbestos and 111 other IEQ/IAQ (no definition was given for these acronyms). The District completed water testing at 45 schools for 1200 water outlets, per City ordinance. 86% were below the action level (not defined); 173 outlets were taken out of use for above action levels. This summer 90 hydration systems will be installed. To date, 882 hydration stations have been installed per this initiative.

Action Items

Of the 88 Action Items on the June 27 Board meeting agenda,  60 Items are of concern to the Finance and Facilities Committee.  Three should be noted at this time:

  • Item 2: Authorization to Levy and Access Taxes,a yearly duty of the School Board  – This is a yearly task that the Board votes on each June for the following school year.
  • Item 40: Declaration of Unused and Unnecessary Land & Buildings: Sale of 4030 Brown Street,  Belmont Elementary Charter to Belmont Futures (a non-profit set up by the Belmont Charter Board with overlapping board members, specifically to buy the building).  APPS members have testified and spoken against selling anything to an entity with ties to Belmont School Network CEO Michael Karp.  First, Belmont Elementary has not made sufficient progress in school achievement. Second, Belmont Elementary was only recommended in 2017 for a 5 year renewal With Conditions. Michael Karp refused to sign that contract in defiance of the District’s right to have oversight of charter schools as per the Charter Law. After two years of refusal, the District has fast-tracked Belmont’s renewal, without revealing any possible conditions to the public until after the Board’s vote, so that Karp’s newly formed non-profit can buy the Belmont property.  Are the Drexel and Belmont Items related? Drexel is the administrator of a federal fund; one of the schools it chose as a beneficiary is Belmont Charter. Why would the Board of Education and the Hite administration accede to the wishes of a major real estate developer to buy a public building? As Dr. McGinley has pointed out to fellow Board members, Belmont is a catchment area school. It should also be noted that Michael Karp and Drexel President John Fry are both major donors to the Philadelphia School Partnership (PSP); Fry is a former PSP board member.

PSP identifies as a non-profit that funds schools. In reality it has been a major political force for charter expansion and union-busting. APPS has strongly advised the Board to vote against the sale of this catchment area school building for no reason other than to satisfy the wishes of Michael Karp.  As McGinley noted at an Action meeting, neighborhood schools should remain part of the School District. APPS continues to oppose this Item.

  • Item 42: Lease with Drexel university or its affiliates for Building for the Co-Location of Powell Elementary School and Science Leadership Academy – Middle School (SLAMS)(described above). This is in reference the presentation made by Drexel President John Fry above. There are many questions of concern about the arrangement between Drexel and the District for staffing and running these schools as well as funding, including “Drexel University or its affiliates”  in the title. APPS is concerned that the Board members appear to be too uninformed about this project to make a decision at this time. Board members asked incisive questions regarding the effect on the students and the neighborhood, both now and in the future. APPS is very concerned that Drexel is now, at the last minute, requesting $7 million (or $10 million) of funding that Drexel was supposed to obtain from non-District sources. This Board needs to step back, familiarize themselves with the specifics of what they are actually agreeing to, discuss it with the community, and decide whether this deal benefits the people of the District or Drexel and its “affiliates”.

Public Speakers

Councilwoman Helen Gym thanked the Board members for their work in making the examination and repair of buildings a priority. She pointed out that since the Board does not raise its own taxes, it remains difficult to adopt long-term priorities. Since City Council does provide the funding along with the State, and since this City Council is very education oriented, she suggested that the Board and City Council sit down to have a conversation about how to proceed. Gym also noted that as elected officials, City Council does pay attention to the public will. Gym stated that she does not trust the polls that say many residents don’t see the District as important and saveable. The District needs to make a “bold step” in getting the public to see that the Board is committed to making necessary changes and improvements. She advised the Board to begin thinking of such a bold step and again invited the Board to engage with City Council members to make plans for how we can engage public sentiment for the good of the District.

APPS co-founder Lisa Haver spoke against Item 40: Sale of 4030 Brown St. to an entity created by developer Michael Karp and Belmont Charter Network. She noted that for many reasons, Karp should never have been given control of any public school, in part because he has no education background, and has in fact been a high-level realtor. She pointed out Karp’s intransigence in working with the District, including his refusal to sign the contract for the past two years over the addition of “conditions”. Lisa thanked Dr. McGinley for emphasizing that the schools belong to the community. She pointed out that while building sales are financial decisions, they are, more importantly, community cohesion decisions and that no one asked or informed the local community of their thoughts on the matter.

APPS member Lynda Rubin spoke about the need to post District meeting agendas and descriptions of the items to be discussed and voted on sooner and make them easier to find on the website in order to actually encourage greater public participation on these matters. Lynda also spoke against the selling of 4030 Brown St. to Belmont Charter Network and, more importantly not selling off the School District’s buildings too quickly and without long-term thought.

Leah Clouden spoke about how she and her mother, Mama Gail, along with Pastor Darien Thomas enlisted support for setting aside a room at Penrose Elementary School last September, which was done in conjunction with 440 support and named The Peace Cafe. The Peace Cafe was a place where they met with parents regularly, put in clothes washing machines and fed both students and families. Horace Cloudon spoke about the District’s history of renting expensive sites for some schools, in this case a gym for SLAMS, when nearby underutilized schools could be used. He said that expensive rentals like this do not help the School District’s budget. Parents and community residents spoke about the need for allocating an increased amount for school facilities’ repairs. Another parent spoke about the problem when some schools are over-enrolled and others are half-empty and encouraged the District to engage parents and community in resolving the issues. Another speaker raised the need for more playgrounds attached to the schools.