By Mike DeNardo

PHILADELPHIA (CBS) — The city controller says the financial crisis at the Philadelphia School District is even worse than the district has indicated.

When it restructured district management last week, hiring Thomas Knudsen as “chief recovery officer” to run the school district for six months (see related story), the School Reform Commission said it had to find a way to cut $61 million from this fiscal year’s budget.

(Philadelphia controller Alan Butkovitz. File photo)

But in a letter to the district, city controller Alan Butkovitz (right) says his annual audit shows the shortfall is bigger than that.

“The district is now saying that they have a $61 million deficit for June 30th,” Butkovitz said today.  “Our office believes that even that is an understatement of the problem — that there’s at least another $18 million that is not available for expenses, so that the true figure is closer to $80 million.”

Butkovitz warns that the district’s efforts to seek more union concessions are among “theoretical,” not concrete, solutions.

He says that unless the district can provide solid strategies, his audit to be released February 10th will conclude there is “substantial doubt” the district will be able to pay its bills at the end of the school year.

The school district, in a statement, said the controller’s letter confirms the difficulties the district faces.  The district says the School Reform Commisson has “the authority and the determination to correct the current course and intends to do so.”

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