As Penn Hills School District looks for ways out of its budget crisis, a state-appointed school finance expert on Monday released a plan that would cut dozens of jobs and hike property tax rates that already sit among the highest in Allegheny County.
The school board is considering a plan to cut as many as 55 positions and raise property taxes by 6.7% as the financially struggling district attempts to climb out of more than $170 million in debt.
The measures are part of a financial recovery plan and a proposed budget that the board reviewed at a meeting Monday. The budget has a projected shortfall of of $8.1 million
The tax increase would raise the district’s millage rate to 30.58 mills from the current 28.66 mills.
The majority of the layoffs would affect the district’s teachers, school officials said. The faculty total for this year is 244.
According to the plan submitted to the school board, as many as 26 classroom teachers and another nine specialists, including counselors and social workers, would be cut through layoffs and attrition.
Those layoffs would save the district an estimated $3.3 million, officials said.
The plan also recommended cutting another 24 to 30 support staffers, who now number 93, which save the district another $569,000.
“When you look at the big picture, it actually shows that we’ve had this for too long,” board President Erin Vecchio said by phone, referring to declining enrollment that she suggested has long warranted personnel cuts.
The furloughs are scheduled to take effect late next month, she said.
Penn Hills has struggled financially since at least the mid-2000s, when it operated at multimillion-dollar losses that were exacerbated by declining enrollment and poor budgeting.
A grand jury report released in February detailed how the board ignored a consultant’s recommendation to renovate and consolidate school building to save money, instead moving to build two new school buildings. The board hired a local architect with political ties who lacked a school design background.
The board repeatedly allowed the firm, Architectural Innovations of Ross, to widen the scale and scope of the projects even as cost overruns plunged the district into deeper financial distress. Add-ons included top-of-the-line flourishes seldom seen in new schools, such as chandeliers, floor tiles imported from Italy and a costlier roof made to look like a bird from above.
“The decision to build rather than renovate, the hiring of an inexperienced architect, and the continuous approval of unnecessary expenditures all contributed to the financial disaster the district is now facing,” the report says.
Although the grand jury admonished the school board and former district officials in the sternly worded report, it stopped short of recommending criminal charges. Jurors instead proposed a series of legislative changes, which Democratic state Rep. Anthony DeLuca pitched in a bill package last month.
But even as the extent of the challenges had begun to crystalize, the board reneged on another consultant’s fiscal 2015 budget recommendations that would have made the district solvent. The board dismissed a proposed tax increase and teacher cuts as “too extreme,” the report said.
Those events set the stage for the district’s current financial woes, which the grand jury report said would likely precipitate further tax hikes and sink properties values.
Those challenges loom over the plan released on Monday.
The plan, overseen by a financial recovery officer for the district that was appointed by the state Department of Education, began taking shape in February. That was around the time an Allegheny County grand jury released a searing report highlighting the “financial disaster” the district faces, citing “reckless” financial decisions involving two extravagant school construction projects.
The financial recovery officer, Daniel Matsook, who once served as assistant superintendent of the Penn Hills School District, is working with a special advisory committee including district officials and residents.
He originally intended to submit the plan to the state education department late last month but requested an extension.
“The reality of financial recovery plans includes the implementation of cost-saving strategies,” Mr. Matsook said in a letter to Penn Hills residents earlier this year. The plan, he added, “will ensure that our students will not be deprived of a high-quality education experience, and we will protect the integrity and effectiveness of our programming.”
Officials noted that the district’s enrollment has declined significantly over the last 10 years. The overall enrollment was nearly 5,000 students in 2008-09 and now stands at 3,360 students. Even with the decrease in teaching staff, the recovery plan said that the overall student to teacher ratio would increase to 13:1 from the current 11:1.
The plan released Monday details a road map that would seek to "rein in" overspending practices to pass a balanced budget for next school year. In ensuing years, the district must find a plan to replenish the fund balance.
The district must first address the money problems this year.
In addition to the $8.1 million shortfall, the district is applying for a tax anticipation loan for $10 million to cover payroll and other unpaid bills. The district would need to pay back that loan in September, which would create cash flow issues.
The district must solve those challenges in the next five months, “hence, the urgency for immediate action,” the recovery plan said.
A public meeting on the plan is scheduled for June 3 at the high school auditorium.
The plan is based on the district’s $90 million proposed budget for the 2019-20 school year that includes the tax increase. The board also voted at its May 20 meeting to make the proposed budget public.
In a district with one of the highest property tax rates in the county and where property values are declining, such an increase was rejected by Mrs. Vecchio, who suggested that other board members share her dissatisfaction.
“There is no way in the world that we can tax ourselves out of this mess,” she said of the district’s financial crisis. Referring to the tax increase, she added, “I won’t vote for it.”
The board is expected to vote on the proposed budget, as well as the recovery plan, at its regular meeting on June 24. Both documents are expected to appear on the district website by Tuesday.
Matt McKinney: mmckinney@post-gazette.com. Jake Flannick contributed to this report.
First Published: May 21, 2019, 1:43 p.m.
