Arlene Ackerman is being bought out of her multiyear contract with a combination of public and private funds and will be replaced in the interim by her deputy superintendent, according to a district statement.
"This decision, as difficult as it was for Dr. Ackerman, is consistent with her history, as well as recognition that for the district to best move forward, it must do so with new leadership," said Robert Archie Jr., chairman of the city-state commission that oversees the schools.
Mayor Michael Nutter said he supported the commission's decision to cut loose Ackerman but declined to say why. He also acknowledged making "a couple calls" to solicit donations in order to minimize taxpayer liability for the buyout, noting Ackerman was contractually entitled to about $1.5 million.
"Whatever you might think of that particular number ... (the money) had been earned and owed," Nutter said at a news conference.
Ackerman's tenure collapsed over the past few months as the district faced a colossal hole in its $2.8 billion budget, disputes with the teachers union and criticism of everything from her salary to her management style.
With the situation becoming increasingly untenable, Ackerman faced it head-on Thursday in a speech to district principals. She publicly challenged school board members to "sentence me ... or set me free" in what many saw as an unannounced farewell speech.
She entered the room to Sade's song "Is It A Crime?" - which became the theme of her remarks. She also read Maya Angelou's poem "Still I Rise": "You may shoot me with your words, you may cut me with your eyes, you may kill me with your hatefulness, but still, like air, I rise."
Ackerman then referred to the past year as "full of lots of challenge and controversy for me" and said her crime was to put children first.
"Is it a crime to stand up for children instead of stooping down into the political sandbox and selling our children for a politician's campaign victory?" she said.
Ackerman had caused grief for Nutter this summer when, after he reneged on a no-new-taxes pledge specifically to raise money for a jeopardized kindergarten program, she found the necessary funds without immediately telling him.
Nutter then forced the district to give city and state officials unprecedented access to its financial information.
An educator for 43 years, Ackerman previously served as superintendent in San Francisco and Washington, D.C. She came to Philadelphia, the nation's eighth-largest district, in 2008.
She is credited with continuing the district's rise in test scores - a streak now at nine years - as well as lowering class sizes in primary grades, creating a parent-outreach program and launching an initiative to transform chronically failing schools through staff overhauls or conversion to charter schools.
But critics called her "Queen Arlene," saying she was polarizing, autocratic and overpaid; her $348,000 salary was twice what Nutter makes. The district's $664 million budget gap this year - due in part to massive reductions in state and federal aid - led to thousands of pink slips and program cuts.
She drew criticism for a no-bid contract for school surveillance cameras, for her bungled handling of racial violence at a high school and for a high-profile dispute with a teacher who questioned Ackerman's decision to turn a district school into a charter.
She also fought with the teachers union after trying to protect certain staff from layoffs.
Union president Jerry Jordan, who had previously called for Ackerman to step down, said Philadelphia needs a leader who is more willing to listen to teachers and employees.
"Many times there was a sense of intimidation and/or retaliation for people voicing their concerns," Jordan said.
Ackerman's departure, which comes two weeks before classes begin for 203,000 traditional and charter school students, had been under negotiation for several weeks, Nutter said. The sticking point was her contract, which was recently extended from 2013 to 2014.
The district's statement said Ackerman would put the money she is owed for that year toward her signature school overhaul program, which suffered cuts due to a loss in state aid.
But she will be compensated for the other years through $500,000 in district funds and $405,000 in anonymous private donations, the district said. The school commission is slated to approve the deal on Wednesday.
Ackerman has been unavailable for comment since the announcement, but in a letter posted Monday night on the district's website, she says, "I take great pride and satisfaction in knowing that I am leaving the District better than I found it for thousands of young people."