PHILADELPHIA – The refusal of union officials to help trim runaway labor costs in Philadelphia schools has not only resulted in student program cuts and enrollment declines, it could now cost the district its credit rating.

Moody’s Investor Service Analyst Michael D’Arcy issued a report to clients Thursday warning that the district can’t afford to cut any more student programs without risking the loss of more students and its investors, Philly.com reports.

“Moody’s will cut its Ba2 credit rating for the Philadelphia School District’s $3.4 billion debt unless state and city funding officials, the school district’s own financial managers, the teachers’ union, and parents who are thinking about leaving the public schools all cooperate to end the spiral of overspending and program cuts,” the news site reports.

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D’Arcy wrote the district’s borrowing this year, along with a special state budget deal last summer, “provided the district with an opportunity to stabilize operations and restore reserves, but the district’s ability to achieve these goals is unclear,” Philly.com reports.

Essentially, the district must achieve “successful cost containment without impairing the district’s ability to deliver core services,” D’Arcy wrote, according to Philly.com.

Hopefully the Philadelphia Federation of Teachers can read the writing on the wall.

The teachers union is really the only factor in this equation that hasn’t done much to help alleviate the district’s current budget problems. The PFT’s labor contract is also rife with millions in unnecessary spending that can and should be cut without directly impacting students.

Here a few examples of expenses EAGnews discovered the district paid out as part of its collective bargaining agreement in the 2010-11 school year:

$14.4 million for “cost of living” pay raises

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$2.6 million in district contributions toward the PFT Legal Services Fund, which provides free personal legal services for district employees.

$165 million in free or low-cost health insurance for employees.

$66 million for district contributions to the PFT Health and Welfare Fund.

$7.1 million for a Wage Continuation Plan.

$25 million for substitutes, an expense tied to overly generous leave provisions.

$579,457 for tuition reimbursement for teachers.

All of those expenses and others could be reduced or eliminated to save the district substantial cash without directly impacting student services. The only problem is the Philadelphia Federation of Teachers must agree to the cost saving measures through collective bargaining with the district, and PFT leaders have thus far resisted any significant concessions.

In recent years district officials have laid off hundreds of employees, cut student programs and looked for cost savings anywhere they can outside of the PFT collective bargaining agreement.

D’Arcy is making it clear the district can’t afford to do that anymore, and the PFT must step up or risk collapsing the district’s finances under the weight of its absurdly expensive teachers contract.