A long climb back for Penn Hills

A long climb back for Penn Hills

The Penn Hills School District received its fiscal recovery plan yesterday.  The district was placed in Act 141 financial recovery status in February.  A substantial property tax increase and a “worst-case scenario” of 55 furloughs of the district’s 487 current positions are real possibilities.

The plan comes with this tall order: “The Penn Hills School District must change how it does business, how it compensates its workforce, how it educates its children, and how it charges its taxpayers to do so. The District must adjust what it spends to match its current and potential revenue. Academically, the District must build upon the things it does well in order to improve student achievement across the board. The Penn Hills School District must change the narrative that feeds a negative public perception about the school district.”

Much of the problem is related to the construction of new school buildings, which district officials expected would lead to “students [returning] from charter and parochial schools once construction was completed.  That did not happen.”  In fact, from 2008-09 to 2018-19 in-house enrollment fell 32 percent while charter school enrollment increased 73 percent.  Penn Hills’ outstanding bond principal is higher than the peer group of other county districts the plan utilizes.  There is to be renewed emphasis on leasing available space in the facilities while at the same time rates for “events, leases and rentals” are to be increased.

The plan notes that while construction was ongoing, Penn Hills’ millage rates remained unchanged.  Millage was 24.81 from 2008-09 to 2012-13, adjusted downward for the county’s reassessment, and was then followed by five consecutive increases, including the last three years with increases greater than the annual Act 1 index.  Currently the district ranks just above the county median for the local effort capacity index, which measures the taxing ability of a school district.

The plan also notes that if taxes were increased in the school construction years up to the index, then there would have been an additional $17 million raised.  That’s assuming homeowners and commercial property owners would have sat still for year-over-year increases.  As we have recommended, increases to existing taxes should be subject to approval by taxpayers in a referendum. Act 1 puts a property tax increase on the ballot only if the state does not grant exceptions and the increase exceeds the annual index.  What would have district voters preferred had they been given a say at the outset of construction?

Even if the initiatives proposed by the recovery coordinator are adopted what are projected to be annual operating deficits through 2023-24 would still end up that way but with two years (2020-21 and 2021-22) ending with a surplus.  That means “additional measures need to be explored” somewhere down the road.