The economy has encouraged two neighboring school districts in Schuylkill County to consider a merger, according to officials of those districts, Pottsville Area and Saint Clair Area.
“I think Saint Clair Area School District would survive on its own, but it would have to look at every ounce of spending that exists and maybe make some major changes. We’d have to cut to bare bones,” Jason Bendle, principal and acting superintendent at Saint Clair Area, said Monday.
On Feb. 20, the districts, via their websites, unveiled a 177-page feasibility study and asked the public for feedback. Authored by Civic Research Alliance, Mechanicsburg, at a cost of $39,500, the study offered two merging options.
• Option 1: Pottsville Area would take over the operations of Saint Clair Area’s only school building, the Saint Clair Area Elementary/Middle School, and Saint Clair Area School District would cease to exist.
• Option 2: Saint Clair Area would lease its school building to Pottsville Area and pay tuition to have Pottsville Area educate its 590 students.
Ed Fuller, director of the Center for Evaluation and Education Policy Analysis at Penn State University, University Park, said Wednesday he preferred Option 1: “Given the material I examined, the consolidation of the two districts seems like a reasonable move.”
“This is especially true since it does not appear that any of the two communities would be particularly advantaged or disadvantaged by the decision to consolidate. Further, it appears the consolidation could provide some slight educational benefits to students and help to slightly reduce the deficit. The troubling issue is that the consolidation does not appear to be a viable solution to the long-term financial problems of the area in the education arena. This is where the state will need to step in by raising revenue and ensuring that the state provides a greater percentage of the revenue received by districts. But, overall, this seems like a reasonable opportunity for a relatively easy consolidation in which there are far more winners than losers,” Fuller said.
So far, not many residents in the school districts are chiming in. The Pottsville Area website only received 12 comments via email. The Saint Clair Area website received none.
“This will be a multi-million-dollar decision. It’s a historic time for both school districts, and we’d like to get the thoughts of the taxpayers,” Jeffrey S. Zwiebel, Pottsville Area superintendent, said Thursday.
“There might be apathy. People might think we’re going to do what we’re going to do no matter what. But I think a majority of the people in our community, especially parents, think it’s the logical and right thing to do,” Michael Holobetz, president of Saint Clair Area school board, said Thursday.
The public will have an opportunity to tell officials what they think when the districts present the study publicly at 7:30 p.m. March 9 at Pottsville Area’s D.H.H. Lengel Middle School.
Last week, residents and officials said the troubled economy, rising costs of education and the struggle to find revenue to cover costs — including Saint Clair Area’s $13,390,000 debt — might make a merger inevitable. There are concerns about possible tax increases, and some say a merger will erase part of Saint Clair’s identity.
“Those of us who have lived through the loss of our high school now have an opportunity to look back to see what we did lose. The town that loses its school loses its identity. You don’t realize that immediately, but it eventually catches up to you,” William F. Bowler, Saint Clair, said Tuesday.
“The merger seems to me the only rational way to proceed,” Richard Tomko, mayor of the Borough of Saint Clair, who worked as an American government teacher at the former Saint Clair Area High School, said.
Pottsville city Administrator Thomas A. Palamar said he’ll put his faith in the school board of Pottsville Area on the issue: “I did read the proposal. And I really have to give the school districts and the folks that prepared it an ‘attaboy.’ They did a really great job of presenting the information that was very easy to understand. And affording the public an opportunity to participate. I have full faith that Dr. Zwiebel and the school board are taking this really seriously. And when they do their due diligence, they’re going to identify an option that is best for our students.”
The districts
Established in 1933, Pottsville Area School District has a campus on the west side of the city. Its high school was built in 1933, D.H.H. Lengle Middle School opened in 1970 and John S. Clarke Elementary Center in 1982. The district educates students in kindergarten to 12th grade. According to the website for Pennsylvania School Performance Profile, the district had 980 elementary students, 822 middle school students and 1,040 high school students last year.
Saint Clair Area School District originally included a Saint Clair High School, which was built in 1937.
In December 1988, Saint Clair Area school board reported a decline in student enrollment at its high school in 1986 and 1987. Instead of raising taxes to pay teacher salaries, the board decided to close its high school after the 1988-89 school year and transfer its 230 high school students to Pottsville Area on a tuition basis.
In 1990, the Saint Clair Area school board established Saint Clair Area Elementary/Middle School at the former high school building at 227 S. Mill St. It educates children in grades kindergarten through 8th, and had 590 students last year, according to Pennsylvania School Performance Profile.
Pottsville Area serves six municipalities — the City of Pottsville, the boroughs of Mechanicsville, Mount Carbon, Port Carbon and Palo Alto, and Norwegian Township — a combined population of 21,000 over 12 square miles.
Saint Clair Area serves six municipalities — the boroughs of Saint Clair, Middleport and New Philadelphia and the townships of Blythe, New Castle and East Norwegian — a combined population of 7,000 over 48 square miles.
“The districts are adjacent. Each district has similar levels of wealth in terms of family income and property values. Hence, the tax base is comparable; no advantage would be observed for either district in a merger,” according to the study.
“We’ve been in merger discussions for approximately a year now,” Bendle said.
Catalyst
“These discussions began with talks about curriculum,” Zwiebel said.
That was in October 2013, when Saint Clair Area Superintendent Kendy K. Hinkel resigned to become superintendent at Pine Grove Area, and the Saint Clair Area school board decided not to hire a full-time replacement, according to Zwiebel.
The talks started with James A. Gilmartin, an acting superintendent at Saint Clair Area. Gilmartin resigned in January 2014 for medical reasons. Since then, Bendle has been filling in.
Budget woes spurred the merger talks, Bendle said.
“We have increased costs and flat funding,” he said.
“What really got us into the situation were expenses that we can’t control,” Holobetz said.
“You have increased costs with charter schools. You have increased costs with special ed. And school districts across the state are flat-funded in both regular ed and special ed for the past six years. And these are all contributing factors to our annual budget, and that has become more difficult to balance in the past few years,” Bendle said.
“In all the districts, we’ve received reduced funding from the state over the last several years,” Zwiebel said.
The revenue data is available on the state Department of Education’s website.
In the 2002-03 school year, Saint Clair Area had $6,420,044 in total revenue, which included $2,919,765 in total local revenue, $3,342,747 in total state revenue and $157,530 in revenue from federal sources. Saint Clair Area’s expenditures were $6,476,982.
A decade later, in the 2012-13 school year, Saint Clair Area had $9,448,420 in total revenue, which included $4,722,252 in total local revenue, $4,428,837 in total state revenue and $297,330 in revenue from federal sources. Saint Clair Area’s expenditures were $10,690,503.
“The district experienced deficits in 2011-12 and 2012-13 after three years of surpluses and is expected to have deficits for 2013-14 as well as into the future,” according to the feasibility study. “The deficit is projected to grow from $167,732 in 2014-15 to $3.2 million in 2018-19.”
Because of the lack of funding, Saint Clair Area raised its real estate tax millage from 26.05 to 32.35 mills for the 2014-15 school year. And the school board furloughed 12 professional staff in order to balance its budget and implemented other cost-cutting measures.
“We started this year with approximately a $1 million dollar deficit, and we expected to finish with about $300,00 deficit for this year,” Holobetz said at the June 2014 meeting of the Saint Clair Area school board.
“Last year, we furloughed approximately 25 percent of our staff,” Bendle said.
In the 2002-03 school year, Pottsville Area had $24,544,540 in total revenue, which included $11,345,430 in total local revenue, $12,312,033 in state revenue and $887,076 from federal sources. That school year, Pottsville Area’s total expenditures were $25,693,758, according to the PDE website.
A decade later, in the 2012-13 school year, Pottsville Area had $35,035,905 in total revenue, which included $16,041,546 in total local revenue, $17,583,452 in state revenue, $1,162,133 from federal sources and $248,711 from other sources. That year, Pottsville Area had $36,719,070 in expenditures, according to the PDE website.
“Revenues in the Pottsville Area School District exceeded expenditures in the school years ending 2008-09, 2010-11 and 2011-12. In school years 2011-12 and 2012-13, the district experienced significant deficits. The district has also budgeted a deficit in 2014-15,” according to the feasibility study.
Expenditures will increase by more than 50 percent in the next five years because of projected increased costs of instruction and support services and personnel services and employee benefits, according to the study.
Since the state has no formula in place to calculate subsidy, there’s no way to tell if revenues will increase in a merged district, Zwiebel said.
According to the study, “No significant impact is anticipated for the overall revenue of a merged district. Expenditures will be the more difficult component to anticipate.”
Debt
If Pottsville Area merges with Saint Clair Area, it will have to shoulder Saint Clair Area’s debt.
“I think there’s a misconception out there that our debt is the reason we’re considering a merger. Our debt is a controlled expense. It’s just like your mortgage, where you plan on assuming that debt by getting your payments in a range that you can afford,” Holobetz said.
“The debt has not been a problem at this point and, honestly, the debt can be refinanced to a manageable rate,” Bendle said.
“Saint Clair Area’s outstanding debt includes $7,999,000 principal amount of its Series of 2011 General Obligation Bonds, $3,495,000 principal amount of its Series of 2012 General Obligation Bonds and $1,035,000 principal amount of its Series of 2014 General Obligation Notes,” according to the study.
As of this week, Saint Clair Area’s debt was up to $13,390,000, according to Jessica Hickernell, information specialist with the state Department of Education.
Projects which built up Saint Clair Area’s debt include the school’s $8.8 million expansion project in 2012. It included the addition of six classrooms, two special education rooms, a music room, a large instruction room, a second elevator and a series of improvements to the existing elementary/middle school. The parking lot was expanded and the playground was moved from outside on ground level to the roof.
Saint Clair Area was hoping to get more than $400,000 in state reimbursement from the state’s Planning and Construction Workbook program to help finance that project, Bendle said.
“We haven’t received any. So we’ve been responsible for our entire debt service,” Bendle said.
Pottsville Area is prepared to shoulder that debt, if a merger occurs, Zwiebel said Thursday.
“If the PlanCon money is released, it will help us to pay the debt and provide some relief,” Zwiebel said.
“A merger by itself does not reduce debt or change current employee salaries and benefits. Any changes in revenue and expenditures will be determined by the new board of the merged district,” according to the study.
Option 1
“The first, and best, option supported by this analysis is the merger of Pottsville Area and Saint Clair Area school districts. A merged district in 2013/2014 would have included twelve municipalities with 2,432 students attending four school buildings, which is an average sized district in Pennsylvania,” according to the study.
“I think it would be beneficial academically and beneficial to the taxpayers in the long run. There’s strength in unity,” Tomko said.
Val Davis, a councilwoman for the Borough of Saint Clair, said she’s not in favor of the merger but believes it’s inevitable.
“We want to know if our taxes are going to increase. That’s the big concern of all the people in town,” she said.
“If we go to Pottsville, we’re going to pay top dollar in taxes. Our taxes will go up a lot,” Fred Bodnar, Saint Clair, said Tuesday.
“I think they’ll be going up anyway. And if Saint Clair Area could maintain its district, it would have to raise the taxes anyway. Right now, we’re paying 32.35,” Davis said.
With a merger, the millage rate could be leveled, and a rate of 33.028 mills could be established for a combined district, according to the study.
School district mergers don’t occur overnight. Zwiebel estimated the process could take up to two years. By the time it’s approved by the state, Zwiebel said Saint Clair Area might raise its taxes again, and Saint Clair’s millage might be close, or equal, to that of Pottsville Area.
Option 2
“I can tell you that the Saint Clair Area school board has no interest in Option 2,” Bendle said.
With Option 2, Saint Clair Area’s elementary and middle school students would become Pottsville Area students. The Saint Clair Area school board would continue to exist, but only to manage the tax money used to educate those students. And the Saint Clair Area school building would, somehow, be managed by Pottsville Area.
“In reality, most consequences of adopting Option 2 fall upon the Saint Clair Area School District. The district would have no students and its primary purpose is collecting taxes to pay tuition for its students to attend other school districts,” according to the study.
“The school would need to be leased to Pottsville Area or made available in some formal arrangement,” according to the study.
“Saint Clair would remain the owner of the building and it would lease it to Pottsville Area,” Bendle said.
“I don’t see any benefit to Option 2 at all,” Tomko said.
Other views
This week, Davis encouraged members of the Saint Clair Community and Historical Society, 24 N. Nicholas St., to read the study.
“I don’t think bigger is necessarily better. Anytime something gets bigger, you wind up with items that aren’t necessarily needed. What’s that one line they had in there? Initially they’ll need more administrators?” Bowler said.
“A merger, at least in the short term, will place additional efforts upon administrators,” according to page 60 of the study.
“It is not the number of administrators that is the first priority; it is putting together the best administrative team for the merged district. There is no one correct approach,” according to page 6 of the study.
“They should put a petition out there and have the people sign it. It shouldn’t go to Pottsville Area. Why should we? We’re going to give up all this income we have coming in from all these malls?” Bodnar said.
After the public presentation March 9, the solicitors of the school districts may author a resolution for the school boards to vote on. If both boards approve it, the matter will be put into the hands of the state Department of Education and the state Board of Education, Zwiebel said.
Meanwhile, officials from both districts are trying to figure how to pay for the study. The state Department of Education has agreed to pay for half of it, according to Stephen C. Curran, business manager for the Pottsville Area.
“Both school boards will discuss and ultimately decide how the other half of the expense is allocated,” Curran said Feb. 19.
The districts were still working to find funding this week, Curran said.