Philadelphia borrows $50 million for schools. Image: Shutterstock
Philadelphia’s public school setting is seeing a record drop in student enrollment. They are leaving, in unprecedented numbers, to attend charter schools. What that means is that the district’s numbers are rapidly shifting, leaving them with a financial crisis.
However, they have committed to borrowing over $50 million from the federal government to cover the shortfall. Had they not been able to secure the loan, the district may have been forced to delay schools opening on Sept. 9 as planned. That would have left parents struggling to get their children into schools outside the district.
Since getting the money, the district has been able to rehire about 1,000 laid off teachers, assistant principals, hallway monitors and other staff.
Moody’s says this is good for their credit. Image: Shutterstock
In 2008 only 16 percent of students were attending a charter school. In the 2013-2014 school year, more than one third will be. That’s about 62,000 students. There are only 198,000 pupils in the entire district. They now have 84 charter schools.
Moody’s CEO described Mayor Michael Nutter’s pledge to borrow $50 million to help its schools as “an unusual and significant action.” “It is extremely rare for a U.S. local government to borrow to provide financial relief for another local government, even if they are coterminous,” the credit rating agency continued.
However, they say that the loan may actually increase the district’s credit rating. The only thing which could hurt their credit is if they don’t repay on time or it is prolonged.
