Penn Hills school officials say misunderstanding led to 'no confidence' letter

Miscommunication and misunderstandings led Penn Hills School District officials to try and oust their state-appointed recovery officer Daniel Matsook, according to both parties involved.

“Had I been here when they wrote the letter, we probably would have worked it all out and there wouldn’t have been a letter,” Matsook said. “It could have been avoided. I think they know it could have been avoided … Had we had a chance to sit and talk face-to-face we probably could have avoided all this.”

The document in question was dated Sept. 9 and sent to the state Department of Education with the heading “Letter of No Confidence.”

The school board alleges Matsook attempted to “employ or appoint people, entities or other businesses of his own choosing without notice, input or consultation with the Penn Hills school board.”

The letter said his actions “create the appearance of impropriety and place in question the motives (of Matsook).”

Board President Erin Vecchio said it was submitted out of frustration surrounding a contract with the law firm Weiss Burkardt Kramer LLC and financial advisers Public Financial Management.

“The purpose of the letter was to show the incompetence, and that we’re not getting the right answers from the person you sent us,” Vecchio said. “He’s hiring people to do the work I thought he was put here to do. I wanted someone to answer these questions, and he didn’t answer them.”

She said Matsook violated school code by not bringing Weiss’ proposal of special counsel services for the recovery plan at $165 per hour to a school board committee prior to approval. Questions about who would pay PFM’s $90,000 fee for bond restructuring support and advising also went unanswered until recently.

“Penn Hills was not paying for it,” Vecchio said of the potential deals. She noted the board wants to see proposals from more than one legal firm for special counsel services before taking a vote.

The letter also alleges Matsook “misrepresented” that the hiring of those people or entities were “required to be hired at the direction of the Pennsylvania Department of Education under the guise of the recovery program without any input by the school board.”

Matsook said he was away from the district for a couple weeks, and that’s when the questions came about and the letter was submitted.

He also admitted not going through a school board committee prior to signing an agreement with Weiss, but did submit information to the board for approval at its next voting meeting. Matsook noted his signature did not bind the district in this matter.

“The bottom line is, it was forwarded to the board for their approval,” Matsook said. “I do not have the power of board approval. There are some things the district should not be paying for. I agree with Erin wholeheartedly on that.”

He said the state would pay for Weiss’ fees through a transitional loan available to distressed school districts, and PDE would foot the bill for PFM as well.

School board members had a finance committee meeting Monday night and addressed both issues. A response from the state to the district’s letter has yet to be received.

“While we are still awaiting official guidance from PDE regarding our expressed concerns, we continue to work collaboratively and in the best interest of the Penn Hills School District,” Vecchio said in a prepared statement.

PFM was to advise the district on refinancing more than $100 million in bonds, which could end up saving the district about $17 million. The district received 12 proposals from five firms.

“This can be a game-changing decision if they make the right decision,” Matsook said.

Penn Hills is more than $172 million in debt largely due to the construction of a high school and elementary school.

Vecchio said PFM’s guidance should not be necessary due to the expertise of Matsook and Michael Lamb, a technical adviser appointed by the state Department of Education to help the district sort out its finances.

Matsook said PDE has used PFM to assist other distressed school districts, of which Penn Hills is the worst.

“We’re more unique,” he said. “You need (an independent financial advisor) now because (the district’s) financial outlook is the worst it’s ever been, and it may be worse than any other distressed district. That’s why we’re different, that’s why we need (PFM’s) expertise.”

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.