Joy Resmovits reports on Huffington Post that Moody’s rating service is happy about the school closures in Philadelphia. She writes;0:
“School Closures: Good For Wall Street? Philadelphia recently voted to close 23 schools, and a Moody’s analyst thinks that the move, which frees up privately-run charter organizations to set up shop, is a good thing financially. Why? The analyst writes that it shows the district is willing to cut costs even when faced with tremendous opposition. “The SRC has introduced deep expenditure cuts over the past 18 months, reducing a fiscal 2012 deficit of $720 million to $20.5 million through a variety of revenue and expenditure measures that included a 16.7% staff reduction and salary and benefit cuts that generated a combined $466 million in savings,” the analyst writes in a report for bond investors.”
“But as a source notes, the closures and cuts don’t mean that these schools are driving the savings — the district says its plan would save $25 million, just a fraction of the $700 million deficit reduction. So why does the market care about closures?”
Here is a link to the Moody’s story.
What is remarkable is that the discussion is purely about cutting costs and privatization. Not a word about the impact of closings on children, education, families, communities.
Our nation is in deep trouble. All the talk about “reform ” is really about cutting costs while pretending it is “for the kids,” “children first.” At least Moody’s makes no pretense about caring about the kids. Their honesty is refreshing, if cynical.
Diane Ravitch's blog 
Look at our current health care system since it went private. That’s the future of education. Profit first, people second. The Carpetbaggers of Education are here.
So let me get this straight — What’s good for Wall Street is not necessarily good for America?
Shocking, just shocking …
Diane,
The key lines in the Moody’s article are:
“Setting aside the effect of the closures on children and their education, the closures are positive from a credit perspective because they indicate that the district and the SRC are intent on reducing expenditures.”
and..
“.. because the district is required to provide funding for district students attending charters schools on a per-pupil basis, a growing portion of its aid revenues have been redirected towards charter schools over the past decade.”
So, it is quite clear that impact on students is a set aside and that the rise of charter schools is known to undermine the remaining public schools.
Arthur
And Bloomberg reports this about Philadelphia school closures:
Closing 12% of Philadelphia Schools Creates Winners: Muni Credit
from Bloomberg
“The nation’s fifth-largest city anticipates saving $24.5 million a year by shutting 29 of its 249 buildings in June. The average building is 64 years old, according to a financial audit. More than 82 percent of students are “economically disadvantaged,” meaning they receive free or reduced-price lunches, school data show.
“It’s very likely” more schools would be closed over the next five years, said Fernando Gallard, a district spokesman, who said he couldn’t estimate how many. “We are wasting money maintaining empty seats and empty space in our buildings,” Gallard said. “There is a better use for that money.” Bond buyers view officials as trying to get a handle on their finances, said John Donaldson, director of fixed income at Radnor, Pennsylvania-based Haverford Trust Co., who manages $750 million in munis.
http://tinyurl.com/cgynj3t
Well, I don’t know why we would expect Moody’s to care about the students, any more than we would expect a stapler to care about poetry. It’s a credit rating agency, it is what it is and it does what it does. And I also wouldn’t give Moody’s credit for being honest, given its mixed track record. See, e.g., the CDO and RMBS bubbles of the late 2000s.
But as for the situation in Philly, I have some really basic questions for those in the know.
1. Are Philadelphia’s charter schools not-for-profits or for-profits?
2. What happens to teachers and staff at schools that are closed? Do they go into a pool akin to NYC’s absent teacher reserve? Do they transfer to full-time positions at other schools? And does Philadelphia/Pennsylania use a last-in-first-out hiring seniority system for layoffs?
3. Are the teachers and staff at Philadelphia’s charter schools unionized?
4. Are the pay, benefits, and retirement plans of charter school teachers on par with what public school teachers have?
Here are some answers:
1. Some are profit, some are non-profit. Charter management companies are moving in big time and they are for profit.
2. It is absolute chaos right now. One week teachers at schools that are being abandoned are told one thing, the next week they are told something else. This article about principals shows how bad things are getting:
http://thenotebook.org/blog/135765/district-sends-out-list-principal-vacancies
3. No, there are no unionized charters in Philadelphia.
4. The pay in the charters is on a par with the public schools so they can be competitive in attracting teachers. Some charters are under investigation for not putting money into the public school retirement fund.
However, the length of the school day in charters is much longer. At KIPP schools they have a very long day and are required to be on call for parents in the evening. They are also required to attend two staff development meetings a month on Saturday mornings.
The next contract proposal for public schools starting September 1st is a 13% wage cut and large increase in what employees must pay for benefits. It will also remove requirements of preparation time and class size limits. The charter schools will be sure to follow.
Thanks.
Check the credit ratings on charter muni bonds.
The many muni bonds that fund charters need to have sustainable increases in students in order to be credit worthy. That is the engine, and I think that is what is behind the cheering.
If Philly or Chicago closes dozens of traditional schools, the empty buildings will be available for charters in a much quicker fashion than co-location allows.
More children will be forced to go to charters — taking their per-pupil expenditures with them — and fueling the repayments on those muni bonds.
So Moody’s, S&P, Fitch’s credit ratings on those bonds can be more optimistic.
I taught in Philadelphia not so many years ago. I was hearing awful stories about how poorly the charter wchools were run. That is not to say that the public schools did not have their own problems. They were due, I feel, to poverty, wimpiness on the part of administers, the lack of colleciality between management and teachers, to name a few.
It is fairly obvious that this is not about saving money, only moving it around, so that public funds are siphoned to corporate schools, test makers and ceo’s.
Judy
The current year budget crisis and “inefficient use of schools” in Philadelphia appears to be the result of state policies and a shortfall in state and federal revenue. The State’s decision to provide full funding to charters through the school district budgets emptied the schools (30% of the students are now in charters) creating the “overcapacity”. Then the state underfunded the schools by $219 million, creating a shortfall in the operating budget for 2012-13. The “solution” is to have the State appointed board do something a locally elected board could never do: vote to close 23 neighborhood schools and re-assign those students to another school. Will those closed schools become charters? Only if someone is ready to shell out some money. According to Bloomberg’s account of the closures, the average age of the buildings slated for closing is 64 years…. and a 64 year old building is likely to be energy inefficient, loaded with asbestos and lead paint, lacking the infrastructure needed to provide up to date instruction, and lacking the configuration to provide programs for handicapped students. I would also wager that they have a long list of deferred maintenance issues… but all evidence indicates this IS a state-manufactured crisis that will give the legislators cover to continue slashing budgets, avoiding spending on buildings in the poorest parts of the city that need repairs, all the while saving taxpayers money at the expense of future generations.