A Moody’s report on the Penn Hills School District has raised major concerns about the financial health of the District. A Moody’s analyst was quoted in the June 17th newspaper saying, “They’re going to be in another lack-of-cash situation in September when they pay the 90-day loan. As we start to look out past October it’s more unclear about how that state aid is going to be used and how much of it is available as the year goes on.”
Penn Hills has borrowed against future state aid to meet current funding needs. The District almost defaulted on a loan payment in April and was able to avoid the default through an emergency state advance. And what is worse, the District is trying to borrow an additional $18 million to fund the $90 million dollar budget for 2015-16—spending roughly $17,000 per student. And even with that level of funding, the educational achievement in the middle and high school are woefully bad. The most recent data shows that only about 50 percent of students scored at the proficient level in math and reading. And the score has been declining over the last couple of years.
But back to the financial issues, clearly borrowing to fund current expenses is fraught with problems. One wonders how a budget could get approved containing an $18 million dollar hole. Be that as it may, two key points must be made. Teachers have been asked to take a pay freeze but have refused. Layoffs are not possible for financial reasons under state law so the only way to cut staff (absent substantial declines in enrollment) is to eliminate programs. And that is very hard to do, although some schools are doing it.
Teacher unions and their massive political clout have combined to produce extraordinarily favorable employee rights and privileges for teachers in Pennsylvania. These include the right to strike, something only a handful of states allow and very few ever have. The right to strike has created a horrible imbalance in bargaining power vis-à-vis school boards enabling them to acquire very generous compensation packages, work rules, grievance procedure etc. that for many districts will be ruinous because commitments are made that cannot be met in the future.
But don’t look for any meaningful relief from Harrisburg. The education lobby will not allow it, especially with the current governor in place. Penn Hills taxpayers and education will suffer. But that matters not to the teachers’ union or the educational establishment. They will call for more spending as predictably as the sun will rise in the east tomorrow.
