Penn Hills placed in financial recovery status
This past week the Pennsylvania secretary of education placed two school districts that were in financial watch status under Act 141 of 2012 into financial recovery, which is a step above watch status. One was the Scranton School District (enrollment over 10,000 students) and the other was the Penn Hills School District in Allegheny County (enrollment over 4,000 students).
A letter from the Penn Hills superintendent to the community states that district officials and state consultants “have not been able to make appreciable gains with regard to debt management.” Based on district documents the aggregate debt service from seven bond issues is expected to be $9.2 million at the end of this current fiscal year (roughly 13 percent of current spending). The total will rise in the next five years to $12 million and stay around $10 million for most of the next decade.
There is more to it than that, however. The declaration of recovery status points out that Penn Hills has met other Act 141 criteria, including a decreasing fund balance, a deficit in three consecutive years and has a delinquent tax collection rate of more than 10 percent.
The troubling part of the superintendent’s letter is where she expressed the opinion that “Penn Hills will not get out of this huge hole without some type of sizable, and renewable nontraditional revenue source and/or some type of debt forgiveness option.” Sounds like a bailout request, maybe from the state, and one that would not increase the property taxes in the district (the current millage rate is 28.6646 mills and has increased each year since 2013-14).
Four other districts in recovery status since 2012 haven’t been granted new taxing power or a debt-forgiveness package. Why would Penn Hills somehow be treated differently?