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The Philadelphia Board of Education has adopted a preliminary $4.6 billion budget for the school district in the upcoming fiscal year — but financial pressures on city schools are intensifying.
The budget approved unanimously by the board Thursday is roughly the same size as this year’s budget. But the district is staring down a growing annual deficit that is slated to reach $466 million in 2027 and $774 million in 2030.
The district will adjust the preliminary budget as state lawmakers and city officials finalize their own budgets this summer. The district is planning to use 40% of its “rainy day” fund to cover a $306 million budget deficit, which officials say is the result of decades of unconstitutional underfunding by the state.
“We’ll get through this year just fine,” Superintendent Tony Watlington told reporters earlier on Thursday. But he added that going forward, if state and local lawmakers don’t increase funding for Philadelphia’s public schools, cuts will have to be made.
“If we did not use the fund balance, quite simply we would have to make people and program cuts,” Watlington said.
Watlington is adamant that the district is making incremental but sustained progress under his leadership, and that he’s been a “good steward” of state and city funding. He says that’s a crucial message for state lawmakers as they draft Pennsylvania’s budget, and amid a federal government intent on eradicating what it calls waste, fraud, and abuse. That focus by the Trump administration has led to — among other things — the gutting of the federal Office for Civil Rights in Philadelphia.
Philadelphia is the only school district in the state that cannot raise its own revenue, meaning 99% of its operating budget is in the hands of state and city officials.
During the COVID pandemic, the district used federal relief funds to plug prior budget holes, allowing it to accrue some money in its reserve fund. Because those COVID dollars expired at the end of 2024, the district is now dipping into that reserve fund to support the same programs and continue progress on Watlington’s ambitious five-year strategic plan.
Importantly, the preliminary budget does not account for labor union contract negotiations, or the district’s ongoing facilities planning process that will likely result in school closures and infrastructure changes. It also doesn’t factor in an estimated $50 million the district would get if Gov. Josh Shapiro’s proposed reforms to the way cyber charter schools are funded.
The majority of district spending goes towards employee salary and benefits. The district is negotiating a new contract with the Philadelphia Federation of Teachers — the union’s current contract expires in August 2025. It will also negotiate new contracts with several other unions over the next two years. Mayor Cherelle Parker, who enjoys the support of many labor unions in the city, has indicated she would like to see the district increase teacher salaries in the near future.
The district would receive some $160 million more funding from the state this year under Shapiro’s budget proposal. But even in that scenario, when the loss of federal COVID relief funding is also accounted for, the district’s overall revenue would rise just 1%, while spending on items like charter school payments is outpacing that.
As the Trump administration looks to dismantle the U.S. Department of Education and reshape the federal government’s K-12 priorities, Watlington said there’s corresponding uncertainty about the district’s federal funding. The district receives some $500 million annually from the federal government that supports students with disabilities, English learners, prekindergarten programs, reimbursements for student meals, and other programs.
Overall, Watlington said the district is heading in a positive direction but that progress is precarious.
Among the encouraging signs Watlington highlighted: District enrollment is up by 1,800 students, the number of students attending school regularly has increased, third graders are improving their reading and math scores, the graduation rate is up, and the number of students dropping out is down by 1,400.
Board members Joyce Wilkerson and Wanda Novalés said the looming deficits and uncertainty at the federal level are “stomach turning” and will demand increased advocacy from district and board leadership.
“I think it’s time for us to make some noise, for our babies and our students,” board Vice President Sarah-Ashley Andrews said. “These may be scary times, but it’s not the time to back down.”
The board must adopt a final budget by May.
The board also approved a $26.8M “donation” to the district from Mastery charter schools that represents an estimated value of building improvements that Mastery intends to pay for.
These building upgrades will take place between April 2025 and December 2026.
Because Mastery charters occupy district-owned buildings, improvements to these buildings will together be considered a donation — an unusual arrangement, as one public speaker said.
Board President Reginald Streater said the vote to approve the donation is not a “signal” about any future board decisions regarding those building improvements.
Construction and renovation projects at charter schools must be voted on by the board.
Carly Sitrin is the bureau chief for Chalkbeat Philadelphia. Contact Carly at csitrin@chalkbeat.org.
