The Philadelphia School District is about to face significant new scrutiny, with City Council President Kenyatta Johnson asking for a sweeping performance audit of the school system’s management and operations.
City Controller Christy Brady has agreed to the request, which came via a letter in recent weeks signed by all 17 Council members, Johnson’s office told The Inquirer. The comprehensive review will go beyond the audit Brady’s office performs annually, delving into areas such as staffing and outside contractors.
Council laid out no deadline for the audit but made clear it is expecting the results in time for next budget season, which will begin in the new year and ramp up in the spring.
The district, one of the largest in the United States, has a $4.6 billion budget, which funds education for 113,000 students in 213 district schools and 65,000 in 81 charters. About $2 billion of that money comes directly from the city.
“While the SDP is subject to regular financial statement audits that examine the accuracy of financial reporting and compliance with applicable accounting standards, this request seeks a performance audit focused on evaluating the efficiency, effectiveness, and management of financial and operational practices, including budgeting decisions, resource allocation, internal controls, and long-term fiscal planning,” Johnson said in a statement Thursday.
The news comes during a period of heightened tensions between Council and the district, spurred by members’ frustration over the school board’s move to close 17 schools and a separate $300 million structural deficit that took Council by surprise.
Last week, at a news conference where several members “begged” the district to come to the table to negotiate over school closings, Councilmember Curtis Jones Jr. said Council has “tools in our tool belt that we will use” if the board does not change its mind about some building closures.
Jones has sponsored legislation to hold hearings on creating an independent financial authority, like the Pennsylvania Intergovernmental Cooperation Authority, to oversee the district’s finances.
Council sources told The Inquirer that there is no indication that the district has conducted malfeasance, but that given the billions that flow to the district from city coffers, Philadelphia officials want a closer accounting of how the money is being spent.
After the board voted to begin the closure process in April, multiple members of the public also called for increased financial scrutiny of the district.
Reginald Streater, the school board president, said in a statement Thursday that the board and district will work with the controller’s office “to continue strengthening our financial processes and procedures.”
Streater said the audit squares with the board’s approach to governance.
“Good governance is not about assuming we have all the answers; it is about asking the right questions, using evidence to guide decisions and being willing to improve. We look forward to understanding the proposed scope of the audit and ensuring that the examination is constructive and focused on helping the district work well for students, families and educators,” Streater said.
Superintendent Tony B. Watlington Sr. stressed the district’s academic strides, history of audits with no material weaknesses, and moves to solidify its credit rating.
Frustration over a budget deficit and school closings
Johnson, in his statement, said that the audit will reassure Council that “resources are being managed effectively and operations are functioning efficiently by the SDP,” and that he believes its findings will help inform priorities for next fiscal year’s budget.
This year’s budget season was chaotic.
After Mayor Cherelle L. Parker introduced her initial budget, Watlington ordered $225 million in cuts, including some school cuts, with 300-plus teachers, counselors, and climate staff slated to lose their positions.
The problem, Watlington underscored in remarks in March, was “not because we’re not good stewards of the dollars, but because of historic underfunding.” (The district achieved its highest credit rating ever under Watlington, who has said he wants to be the superintendent to retire the system’s structural financial issues permanently.)
Philadelphia’s school system cannot raise its own revenue but instead depends on the city and state to bankroll it, unlike every other district in Pennsylvania.
City Hall seemed shocked at the news of the deficit and job cuts, despite the fact that Watlington had warned officials in 2025 that a budget gap was coming. The school district spent $300 million in reserves that year to avoid layoffs and program cuts as federal COVID-19 funds dried up.
After Watlington said he would be forced to make the school cuts, Parker then upped her proposed 20-cent-per-trip rideshare tax to a $1-per-trip levy. That frustrated a Council already catching heat from city residents anguished over plans to close schools.
In April, several Council members took the dramatic step of repeatedly disrupting the school board’s vote in an attempt to get it to reconsider the closures of a handful of schools, including Lankenau and Robeson High Schools and Overbrook Elementary.
The school board proceeded anyway — Council approves school board members, who are appointed by the mayor, and the city’s budget, but had no formal authority over the closures.
The rideshare tax ultimately died.
Eventually, Parker, Watlington, Council, and the school board worked out a deal to save the 300 jobs, with the city promising $216 million over five years from yet-unspecified sources.
But it quickly became clear that some Council members remained frustrated with the school system and were looking for a way forward.
Councilmember Isaiah Thomas has said he will not vote to reconfirm any school board member who voted for the closings; he and others have also said they believe it is time to rethink the school board’s governance structure.
The city, as a primary funder of the district, needs a clearer picture of what is going on, they say.
“Given the SDP’s current budget challenges, requests for additional public revenue, and recent proposals involving school closures and operational reductions, City Council believes a comprehensive performance and management review is warranted to ensure transparency, accountability, and informed public decision-making,” Johnson said in the statement. “The City of Philadelphia has a responsibility to ensure that all available revenues, expenditures, obligations, and funding strategies have been thoroughly reviewed before significant decisions affecting students, families, educators, neighborhoods, and public assets are implemented.”
What will the special audit examine?
Brady, in a statement, said the audit will “ensure resources are being managed effectively, operations are functioning efficiently and students are receiving the support they deserve. We’ve been encouraged by the SDP administration’s response to our previous audits and the steps it has taken to implement our recommendations. We expect this audit will continue that collaborative approach and continue to produce positive results for the benefit of students, educators and taxpayers.”
Council has asked Brady to go deep, from probing into the current structural deficit and the projections used to get there to the status of Philadelphia Parking Authority revenues, both expected and received.
Brady will also look at the district’s use of reserves and its administrative costs, and she will explore “the effectiveness and efficiency of administrative and operational expenditures, including central office functions, non-instructional spending and other costs not directly tied to classroom instruction.”
She will look into how the district’s budgeting methods and long-term planning square with industry best practices, and examine contract management and consultant utilization to try to find areas “for improved accountability, transparency, and cost efficiency.”
Brady is also charged with a deep dive into the financial effects of forthcoming school closings, and the potential ramifications of the closings on surrounding neighborhoods.
