When Dropout Nation last turned its eyes to the City of Brotherly Love, it had just fired it superintendent, Arlene Ackerman, after a tenure wracked with enmity from nearly everyone in the city (especially over her rather sweet pay packages). Since then, the district’s condition hasn’t gotten much better. Faced with a deficit of at least $61 million (and based on the remaining deficit that the district plans to solve, as much as $98 million), the state-controlled school reform commission has hired a former local utility chief executive, Tom Knudsen, to serve as its “Chief Recovery Officer” and replace acting superintendent Leroy Nunery II as the district’s top boss. Knudsen will spend the next six months addressing the current shortfall, along with challenging the district’s long-term woes.

In hiring a turnaround artist, Philadelphia is taking a well-paved path. Nine years ago, St. Louis hired the turnaround firm Alvarez & Marsal to fix its longstanding financial woes; by 2007, it still ended up being taken over by Missouri state officials.  Other districts, most-notably Detroit, have largely failed in wrangling with their fiscal woes and found themselves under some sort of state takeover. But unlike those districts, Philadelphia is already under control of Pennsylvania’s state government. More importantly, this isn’t the latest overhaul. In the 11 years since the state took over Philadelphia, the district has gone through an array of overhauls, including the hand-off of school operations to outfits such as Edison Schools, and even the hard work of reformers such as Paul Vallas (who began Chicago’s successful school reform effort and has just finished up a successful stint overseeing the revamp of New Orleans’ school system).

But Philly remains a fiscal mess. Back in 2000-2001, the district faced a $216 million deficit in its $1.7 billion budget; the district projects that it will face $269 million in shortfalls during its 2012-2013 fiscal year, even with revenues likely to have increased by two-thirds in the past 13 years.This isn’t surprising. Shuffling superintendents in and out of leadership isn’t a school reform strategy; contracting out school operations also doesn’t work when there is no underlying plan for overhauling how the district does business. The fact that the district currently has no plans to revamp its central bureaucracy or address inefficiencies in operations outside of whatever changes Knudsen plans to make, also points to the reality that state education departments — especially Pennsylvania’s — are just ill-equipped to handle school or district takeovers.

It also doesn’t help that the district also has little wiggle room with which to maneuver. Eighty-three percent of Philly’s costs are either tied to its contract with the American Federation of Teachers local or state laws governing the district’s management of teacher and school performance. These restrictions make it difficult for the city to overhaul its overly burdensome traditional teacher compensation structure — or develop alternatives that are more cost-effective (and, at the same time, reward the district’s good-to-great teachers).

The inability of Philly to get a handle on its fiscal woes reflects the reality that the traditional district structure it embraces no longer works. Given that the district remains a giant dropout factory — with a mere 65 percent of the city’s Class of 2010 were promoted from 8th grade to 12th grade versus 74 percent of students from the graduating class nine years ago — it no longer makes sense for the state to continue a central bureaucracy that can neither improve finances nor student achievement. While handing control of the district to Philadelphia Mayor Michael Nutter could be a step to take, the fact that the city government is struggling to get control of its own fiscal and operational house (along with the reality that Philly still doesn’t have a handle on its quality of life and crime woes) means moving the district from one failing overlord to another.

So it is time for the district to embrace the Hollywood Model of Education and essentially move away from traditional district management. Pennsylvania can easily start by embracing the approach taken by Louisiana and its so-far successful reform effort in New Orleans, handing over control of traditional schools to an array of Parent Power groups, community organizations, and charter school operators. Allowing families and churches to launch their own schools through a DIY model — which is possible thanks to the advent of online and blended learning — would also be a smart step.

Either way, the status quo in Philly can no longer continue — and taxpayers and families shouldn’t have to stand for it.