Penn Hills School District has $1 million in borrowed money set aside to help cover spring bills.

It’s part of a $1.3 million no-interest transitional loan through the state Department of Education for districts in financial recovery.

The remaining $300,000 will be used for education, transportation and operational audits, public relations, professional development and other recovery-related efforts, according to a report by state-appointed recovery officer Dan Matsook.

He requested a $3.3 million loan from the state, but only a little more than one-third was approved for the upcoming school year.

The 10-year loan’s additional revenue was not accounted for in the 2019-20 budget.

It will be in a special account and can only be drawn from with Matsook’s approval.

“I want to thank (PDE),” school board President Erin Vecchio said. “They should be doing it, considering they signed off on all the buildings.”

The district is more than $172 million in debt largely due to the construction of the high school and elementary school.

The state put Penn Hills in financial recovery status in January and appointed Matsook in February to help turn things around.

District officials approved a financial recovery plan June 29. State Department of Education officials did the same in mid-July.

It’s available for review on the district’s website, phsd.k12.pa.us.

Matsook gave a progress report at this month’s school board meeting. It showed 15 out of 73 initiatives completed, and 20 in progress.

“I think that we’ve gotten off to a good start when you take a look at the number of initiatives that have either been completed or in progress,” said Matsook. “There’s no way to measure the return on investment at this time.”

Initiatives completed include a garbage contract, approval of supplemental and athletic positions, a new time management system, updated event rates and staff furloughs.

Initiatives in progress include curbing staff absenteeism, busing reimbursement, early retirement incentives, middle school climate change programs and audits for transportation and buildings and grounds.

School directors recently approved the audits, to be done by consultants from the Pennsylvania Association of School Business Officials at a cost of $5,000 each. The audits are expected to be done within the next few months.

There have been preliminary talks with firms and financial advisers to address the $172 million debt.

Matsook said traditional bond refinancing may not be available to Penn Hills due to its bad credit rating and financial status.

“We probably have the worst credit rating that a school district could ever get,” Matsook said. “We’re looking to be innovative in ways to get around that rating … We’re going to think outside the box in how we’re going to address this.”

Opportunity missed

One initiative that was in the approved recovery plan was raising real estate taxes.

The school board was to raise taxes by more than 6%, but opted not to do that for the 2019-20 school year because of a last-minute reprieve in the form of $3.3 million in state money.

“It was planned on relative to all of our projections on the pace of our recovery,” Matsook said about the tax hike. “We have to redo all those projections and find a way to make up that difference going into the 2020-21 year.”

Matsook said he’ll file amendments to the plan with the state in January.

The nixed increase would have charged homeowners about $144 more a year for a property assessed at $75,000.

The current tax rate is 28.6646 mills, already among the highest in the region.

The state funds also allowed the district to recall 10 furloughed teachers to reduce class sizes and restore other student services.

Public relations

District officials have been in talks with several public relations firms and plan to hire one in September.

The plan is to regularly push positive Penn Hills stories through social media and other outlets.

“Everything is going good, so we want to promote it,” Vecchio said. “It will show the positive things that we’ve done in the last two years.”

Matsook said showcasing the district’s successes may entice cyber/charter school families to come back to the district.

“If they left because they truly wanted choice, we understand that,” said Matsook. “If they left because they think Penn Hills is broken, we want to assure them, and invite them and encourage them to come back because that is absolutely not the case.”

About 800 students within the district are enrolled in cyber/charter schools.

Administrators already reached out to some of those families.

“We’re hoping that the personal touch is going to make a difference,” Matsook said.

The public relations position was eliminated as part of 2018-19 budget cuts.

Positivity

District officials remain optimistic about the recovery plan and where the district’s headed.

“We’re moving forward because we’re doing everything we’re supposed to be doing,” Vecchio said. “We’re in a really good place. We’re looking to restructure the debt now, so that will help us, too. Everything is going as planned.”

Matsook and Superintendent Nancy Hines met with the district’s more than 400 staffers on Tuesday.

“They need to be mindful that they represent the district, and they are a part of the efforts to bring back our students,” Matsook said. “They are ambassadors not only inside their classrooms, but in the community. That was a key thing in welcoming (them) back. They help control the narrative, and I made that clear.”

Linton Middle School’s future

One of the initiatives that has not been addressed, but was listed in Matsook’s report, is the potential closing of Linton Middle School.

Former high school associate principal Sandra Baker was named Linton’s new principal. The move was among several personnel changes designed to improve the culture at the fifth through eighth-grade facility at 250 Aster St.

Matsook said a feasibility study needs done to determine pros and cons of closing the school, and does not anticipate any action on the initiative until January.

Vecchio believes Linton closure talks will be a non-issue if more cyber/charter students return to the district.

“We have to watch and see our enrollment,” she said. “Our grades are coming up (and) our fights are coming down.”

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