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City Finance Director At Center of the Fiscal Storm
Within the past two weeks, Philadelphia City Council passed a $3.4 billion budget containing a major property tax overhaul, and Standard & Poor’s, the credit rating agency, upgraded the city’s long-term outlook to A-, its highest rating since the 1970s. Mayor Michael Nutter has cited both actions as proof that the city’s financial house is back in order.
But Rob Dubow, who has been at the center of these developments as the city’s finance director, isn’t pausing to relish these successes. He can’t, not with the School District of Philadelphia facing a $304 million shortfall, its most serious funding crisis in more than a decade of turbulence, leadership changes and cutbacks.
In a recent interview at his office overlooking City Hall, the 54-year-old Dubow — who has been the mayor’s right-hand man on all things fiscal for the past six and a half years — made it clear that the city can only do so much. Given that the state actually runs the Philadelphia school district, Dubow said he and Nutter have been spending a lot of time in Harrisburg trying to find a way to avert the district’s doomsday response, which has already included pink slips to 3,859 employees and cutting all non-core classes and extracurricular activities.
If Dubow sees a way out of the mess, he’s not saying. He can’t, he said, promise a satisfying ending to the standoff.
“This has to be solved in a way that is structural,” said Dubow, with the district getting “what it is looking for” in the form of a long-term solution rather than a short-term fix that will lead to the same problems each year. Dubow said that a compromise between the three main actors — the state, the city and the teacher’s union — “really needs to happen over the course of the next couple of weeks.”
Dubow is no stranger to municipal finance. He has served as the city’s budget director under Mayor Ed Rendell and later followed him to Harrisburg, where he spent a year as Pennsylvania’s chief financial officer. During an interview, he gives the impression that he’s far more comfortable pouring over numbers in his office than standing in front of a camera or microphone.
Those in the know describe him as competent, even-keeled and unflappable. He’s also been described as a numerical straight shooter who, for better or worse, leaves the politics to others.
The Manhattan native came to Philadelphia in 1977 to attend the University of Pennsylvania, first earning a bachelor’s degree and later completing an MBA at the Wharton School. He expressed zero interest in ever running for office himself, and said he plans to stay at the mayor’s side until Nutter’s term ends in January of 2016.
Dubow’s large desk is covered by a mountain of papers that surely has seen an avalanche or two. A nearby bookshelf holds bound copies of the city budgets for every year Nutter has been in office. A Yankees hat sits near a radio on the top shelf — an homage to the city of his birth. An image of his great grandparents, Aron and Manie Srebnik, flashes on his computer monitor, serving, he said, as a reminder of the Eastern European world from which his ancestors came.
Dubow and his wife, Judge Alice Beck Dubow, live in the Andorra section of the city and have two adult children who live in New York. The couple belongs to Congregation Or Ami, a Reform synagogue in Lafayette Hill. Dubow had little exposure to Judaism growing up, he said, but he’s gotten more connected as he’s grown older.
Dubow said he spends most of his waking hours on city business — on average, 13 hours a day.
“It’s a great job. It allows me to do stuff that directly impacts my community. You get to immediately see the impact of what you are doing,” Dubow said, adding: “The mayor is great to work with.”
Back in 2007, Nutter was swept into office by voters who hoped he’d purge the “pay-to-play” culture many associated with the John Street administration — if not necessarily with Street himself — and also take Philadelphia to the next level as a great American city. Many observers credit Nutter with accomplishing the latter, but not the former.
Some of Nutter’s initial plans were put on hold in his first year in office when Wall Street imploded and the economy went into free fall. Soon, the conversation shifted to which city services had to be cut and by how much.
As recently as 2009, the city was facing a $2.4 billion deficit over six years. Now, due to a combination of cutting 1,200 city jobs, increasing fees and adding to the sales tax, Philadelphia is entering the next five years with a projected surplus of more than $90 million, according to Dubow.
But that money, he said, can’t be touched to help with the school district crisis.
“Our challenge is that under state law, any amount we give to the school district we have to give each year going forward,” he explained in an email after the interview. “So, for example, a $20 million contribution in FY14 would become a $100 million cost in our FY14-FY18 Five-Year Plan and completely erase our fund balance.”
He credited the new school superintendent, William Hite, with coming up with a responsible five-year plan that requires the city to contribute $60 million in additional funds annually. It also asks for the state — which slashed district funding by more than $100 million in 2011 — to increase its contribution by $120 million. The state provides 36 percent of the district’s budget. The plan also asks for the equivalent of $120 million from concessions in benefits from the teachers’ union.
The city, said Dubow, has pledged roughly $73 million for next year, but $45 million of those dollars would come from a new cigarette tax passed by City Council that must be approved by the state legislature.
The ball, Dubow reiterated, is mostly in Harrisburg’s court.
Republican Gov. Tom Corbett is reportedly working to craft a deal. Dubow acknowledged that Nutter and Corbett have been meeting frequently but he wouldn’t divulge many details.
Dubow did say there’s talk of extending the 1 percent increase in the Philadelphia sales tax that was added in 2009 and is set to expire at the end of next year.
“We are optimistic that a solution will be put in place,” Dubow said. “No one should be willing to let” the school cuts happen.