Principals of Merging

Upon visiting the newly merged Central Valley School District-hailed as the first voluntary merger of independent school districts in the Commonwealth in anyone’s memory-the PA Secretary of Education noted last September that "No one really talks about the wastefulness behind the scenes in schools…Where there’s waste is having seven or eight different people doing payroll in a county when it could be done by one."

Note that the Secretary made the same point at a hearing of the Senate Education Committee a month earlier (a hearing at which the Allegheny Institute testified). So it would be interesting to hear how the Secretary would react to the news this morning that Central Valley High School will have not one, but two, principals: one to handle academic programs and one to handle student programs. The superintendent of the district said that "they do not want to feel, nor do I want to see, a pecking order…they are both principals."

So which principal has the ultimate authority at the district? It won’t be clear until a problem arises. But it is easy to see why merging governmental units is very difficult, especially with powerful public sector unions will resist consolidation and would strongly resist changes that would downsize the workforce. Sounds like a compromise meant to satisfy competing interests. But it certainly is a far cry from the talking points of merger proponents that claim consolidation will go a long way to wiping out duplicative functions (two police chiefs, two fire chiefs, two auditors, etc.). The teachers and administrators in the merged district that did go as a result of the merger took buyouts to leave. Imagine what an organizational chart of larger merged entities would look like.

District Confronts Declining Enrollment

If demographic projections come to pass, the Keystone Oaks School District (based in the South Hills and comprising the communities of Castle Shannon, Dormont, and Greentree) will lose 17% of its current enrollment (2,231) in ten years. Those projections are a bit sunnier than the Department of Education’s numbers (a 20% loss in 10 years) but not by much. Since its early 1970s high point of an enrollment of 5,459 in nine school buildings, a fall to 1,881 by 2018 would represent a 65% loss over the last thirty years.

In comparison to other districts that loss is likely worse than some, better than others.

Now armed with the numbers, the school district will have to address what to do with its five current buildings (three elementary schools, one in each community, a middle school and a high school) almost as if it were the Base Realignment Commission. The consultants and architects for the district present no less than 17 recommendations for what to do with the buildings and how to distribute the student population. Everything from school closings (the district has reduced the number of buildings from 9 to 5 over the last three decades) to classroom additions and more specialization (K-4 or K-5) are on the table. The board now has to set a timeline on what they want to do (the board president noted that "The board wants to take our time on this") all the time realizing that 80% of the district’s residents do not have children in the school system.

Another Merger Hurdle: Teacher Unions

Here’s another possible roadblock to school district consolidation as proposed by the Governor (taking 500 districts down to 100), legislators (some versions go down to 70 districts) or just the concept in general (a mandatory merger plan or one that guides voluntary combinations): how do teacher unions react? Much of the motivation by the strongest proponents is that the "back office" functions of principals, secretaries, nurses, librarians, etc. could see efficiencies through economies of scale.

But what if five districts are put together into a new district and the teaching staff has to be assembled: what rules the day? Is it seniority or classroom achievement? Smart money says it will be the former. That’s what happened when the districts of Monaca and Center joined together and jobs were cut. According to a newspaper article last April "Center cut four elementary positions…due to seniority, however, three of those teachers are bumping less senior teachers at the secondary level."

And what about pay levels? Would the lowest salaried district pull the consolidated districts down to that level or would salaries rise to meet the higher pay levels? If experience from other mergers, specifically City-County mergers like Louisville-Jefferson County, is any guide, the personnel costs will get more expensive.

It is safe to say that, in contrast to the massive number of school consolidations that took place in PA and the U.S. in the 1950s and 1960s, the power and presence of teacher unions has significantly changed the balance of power.

Recent Years Show Mixed Record on School District Consolidation

Friday the Allegheny Institute participated in a hearing on school district mergers and consolidations to examine whether PA should downsize the total district count of 500 to something smaller and if such a downsizing would save money without affecting academic performance. The administration likes the number 100, but offered no real explanation as to why that number was selected. The bulk of the work on this matter would fall to an appointed commission to weigh the costs and benefits and determine a course of action.

A good place to start is to look at what other states with independent school districts (defined by the Census as districts with independently elected officials and not subordinate to some other governing body) have done with district counts in recent years, 1992-2002. Of the 45 states with independent districts, 9 saw an increase in the number of districts, 12 made no change in the time frame, and 24 reduced the number of districts, with four of those states (NE, MT, MA, and OR) making reductions that amounted in the neighborhood of 30% or so.

Naturally, questions arise: why did some states increase the district count? How did they do it? In states with reductions, were they voluntary, mandatory, or both? What did the changes do for non-instructional personnel counts and costs? Was there any effect on school performance or other aspects of education, such as travel, community pride, or advanced programs?

Lumping in Pensions

Obviously content with the progress in merging the City of Pittsburgh and Allegheny County, the Chief Executive (along with other county officials) convened a panel on local pensions yesterday that examined what should be done with the 3,100-plus plans that dot the Commonwealth. "Should there be a statewide municipal pension fund?" was one question the Executive asked.

The answer is "it depends". If the plan is to absolve local governments completely of there liabilities, it is unlikely to happen. Philadelphia alone accounts for nearly $4 billion in unfunded liabilities, the lion’s share of the total local unfunded liability. If there is a voluntary movement to the existing PA Municipal Retirement System where there would be management of investments but local governments still make contributions, it would be possible but it would be a gradual process.

But it is not true that consolidation would allow municipalities to withstand market downturns or pressure from parties interested in increasing benefits as the Executive seemed to imply. Consider that the state’s two statewide pension plans-SERS for state workers and PSERS for teachers-have been hammered by the downturn. And since these huge plans cover so many workers the impact of rate spikes are much more widespread. We already know that both systems are set for big jumps in the employer contribution rate due to promises made by the Legislature in the early part of the decade. School districts could see a tripling of their rates. One school official noted "even though we know we are coming up to a cliff, nobody’s been willing to address that cliff ahead of time".

Strength in numbers? Maybe, maybe not.