Is There a Catch in Receiver Plan?

The Duquesne School District is about to move into the next step of school district financial recovery under state law as the Secretary of Education has just asked the County Common Pleas Court to appoint the person who has been acting as chief recovery officer to become a receiver under Act 141 as the Duquesne School Board opted to reject the plan to send the remaining students of the District (all of elementary age) to neighboring districts. That request has been made on a voluntary basis (several have already said they won’t) so there is a possibility that a state mandate would come to pass.

The court does not have to take the person nominated by the Secretary to be the receiver; it can name its own or ask for an alternate. Whoever becomes the receiver essentially becomes the school board, except the receiver cannot levy or raise taxes. The receiver has the power to implement the recovery plan, communicate with the state on a quarterly basis, make sure employees of the district are following the plan, tell the school board to raise taxes, and go to court to get a directive to get employees to comply with the recovery plan.

The act says that receivership is to terminate three years after the receiver is appointed unless the state petitions the court for an extension. Even after receivership is terminated the district remains in oversight from the state for a five year period, most likely to ensure that the district does not slip back into distress.

Is State Ready to Shutter District?

A handful of years since the voluntary merger of two Beaver County school districts lowered Pennsylvania’s school district count from 501 to 500, the state appears poised to use its power to close down the Duquesne School District and bring the count to 499.

All that is left of the District is an elementary school-middle and high school students have been attending neighboring districts. We documented the academic and financial condition of the District in late 2011 and showed that proficiency was not getting better in upper grades and had fallen in lower grades. Spending per student approached $20,000, most of it coming from Federal and state sources. That piece was predicated on work done by the Institute in 2003.

Last year the District came under a new law, Act 141, which functions as a way to resuscitate distressed schools, much like Act 47. The recovery officer for the District (Duquesne operated under a control board for much of its recent history) made it known that the economics of keeping an elementary school open won’t work, nor would a charter school, so it looks like either a voluntary or mandatory transfer of elementary students.

At the conclusion of that 2011 Brief we offered the following: "one would hope the board, the administration, and the staff would care enough about their obligation to the kids and taxpayers to support drastic remedial steps, including closing the school". Here we are now, though the push to close the school is not coming from any of those parties

Pittsburgh: Exit Act 47, Enter Act 141?

As City officials prepare to make their case to the state that they have progressed to the point where they can shed Act 47 distressed status, just up the road at Pittsburgh Public Schools’ headquarters they are asking whether the District is in such financially bad shape that it will be "bankrupt" in three years. One board member asked "By 2015, are we broke, out of business?" to which a consultant replied, "correct".

That’s a bit strong. Districts cannot go bankrupt in Pennsylvania as they are not permitted to file by the state (only municipalities can). But there are new provisions in state law under Act 141 that prescribe how the state, through the Department of Education, is to deal with school districts facing financial distress. We wrote about the legislation before it was singed into law this past June.

Act 141 applies to all districts in the state except for Philadelphia. A district can fall into either "moderate" or "severe" distress and for a district deemed as such (the law says there cannot be more than nine at one time) the state will appoint a Chief Recovery Officer who will write a recovery plan. The plan has to be approved by the district’s board, and there are procedures for what happens if approval is delayed. There are a variety of tools for getting a district back to sound financial footing from reopening of budgets, examining contracts, exploring charter schools, and other options. Exit from financial recovery depends on the progress of the district and the determination of the Secretary.

Is Pittsburgh headed here? Who knows? There might be other options on the table, but as the Superintendent noted "We believe there’s a way forward. It may not be something we thought of before. It may not be something that comes to the mind readily. It may not be something that’s easy to arrive at."