The nuts and bolts of a school district merger

Jul 21, 2023

SAYRE/ATHENS, PA — The Athens and Sayre Area School Districts are conducting a feasibility study regarding a proposal for the merger of the two school districts.

Pennsylvania’s school districts have remained relatively static for decades. In the 1960’s, the number of districts was reduced from 2,277 to 699. This trend continued in the 1970’s, reducing the number of districts to 505. In the 1989 to 1990 school year, five districts were consolidated as a result of a federal desegregation lawsuit, further reducing the districts to 501. Since the 1960’s, there has only been one voluntary district merger in Pennsylvania — the merger of Center Area and Monaca school districts of Beaver County into The Central Valley School District from 2009 to 2011.

Procedurally, the process of merging is relatively straightforward under the Pennsylvania School Code. The Board of Directors of any two or more school districts must adopt by majority vote a resolution for merger which substantially outlines the areas to be combined. The districts file an Application for Approval with the Pennsylvania Secretary of Education, which would be placed on the agenda of the State Board of Education. When the Application is approved, the State Board of Education directs the Secretary of Education to issue a certificate, creating the new merged district. Once merged, all property, indebtedness, and obligations of the former districts are inherited by the new district.

This process is more involved in practice. The Pennsylvania school boards have a duty of due diligence during this process. The Pennsylvania School Board Association (PSBA) indicates that due diligence demands a serious discussion about the potential for merger, followed by formal study, and then implementation of the merger.

The Pennsylvania Economy League (PEL) identified a series of actions that are essential to undertaking the due-diligence process for merger, and developed a “checklist” of sorts for districts to follow. This checklist is broken down into three areas: deliberation, identifying potential partners, and finding allies.

Under the checklist, any district considering merger should perform a self-assessment, including current and future (out to five years): enrollment, population demographics, and revenues and expenditures. The purpose of these “deliberations” is to provide insight into which areas are of greatest concern when considering merger.

The checklist suggests that the district should identify its “potential partners” to the merger, considering geographic location, district policies and procedures, enrollment and course offerings, facility capacity, and ability to create a common sense of community. The purpose of this step is to identify the mutual benefits provided by the merger. Without mutual benefits, there is no incentive to go through with a voluntary merger.

The checklist also suggests that the district should “find allies” to create a cohesive message for the merger, beginning with the administration and including local leaders and politicians. This step is essential to creating the local and political will to follow through on the merger.

The feasibility of school merger and consolidation in Pennsylvania has been considered by the Commonwealth’s legislature as well.

Under Pennsylvania House Resolution No. 910, the Independent Fiscal Office was directed to assist the Pennsylvania Joint State Government Commission in analyzing the fiscal aspect of school district reorganization. The report noted that proponents of consolidation expect it to result in reduced expenses due to diminished administrative costs, more favorable student/personnel and student/classroom ratios, and economics of scale. The report studied where the success of the Central Valley merger diverged from other attempted mergers and discussed a slew of issues to be addressed before mergers can successfully occur. The report implied that each merger needs to be taken on a case-by-case basis with a comprehensive and realistic study and assessment of the viability of merger.

The report offers a set of recommendations to the General Assembly, the Pennsylvania Department of Education, and those school districts that may be considering reorganization. The recommendations, based on the report findings, are intended to facilitate various consolidation efforts in the Commonwealth and make them more successful.

The full 290-page report may be found on the website of the Joint State Government Commission at jsg.legis.state.pa.us, under “Publications” for 2017, entitled “School Districts in Pennsylvania: Ways to Work Together — July, 2017”.

As noted in the Morning Times on July 5, 2023, the school boards for the Sayre and Athens Area School Districts unanimously voted to approve a Merger Feasibility Study. The purpose of the study is to collect unbiased facts and data that will provide clear insight into the potential and possibility for a school merger. The study — conducted in partnership with Alloy5 Architecture, McClure Company, PFM, and Eckert Seamans Attorneys at Law — costs a total of $135,000 split between the districts.

Alloy5 Architecture, McClure Company, PFM, and Eckert Seamans will separately focus on facilities, sustainability and energy, finances, and legal issues, respectively. This study team introduced themselves and their plan before the two school boards in early Dec. 2022.

Alloy5 Architecture is an architecture firm based in Bethlehem, Pennsylvania. Randy Galiotto, a principal at the firm and registered architect in Pennsylvania, is heading their efforts in the merger feasibility study. He has been designing public school facilities and doing similar studies for over 20 years.

“My firm has an extensive amount of knowledge doing facility assessments and assessing buildings and the parts and pieces that you don’t see everyday, whether its roofs or masonry, mechanical systems, gym floors, you name it,” Galiotto stated in the Dec. 6, 2022 presentation to the Athens Area School Board. “And we have a lot of experience doing district wide planning, and helping districts not only establish goals but meet those goals through facility planning.”

McClure Company is a fully integrated mechanical construction, engineering, maintenance and energy service organization, headquartered in Harrisburg with locations throughout Pennsylvania. Mark Gallick, a native of the Northern Tier, is an account executive with McClure responsible for working with Healthcare and Higher Education customers throughout Pennsylvania. He has many years of experience working on school facilities and studies.

Public Financial Management (PFM) is a national financial planning organization, with Pennsylvanian branches in Harrisburg, Malvern, and Philadelphia. Dean Kaplan, a managing director and head of PFM’s K-12 schools practice, works on financial and operational school issues and is also working on the study.

PFM works exclusively with public sector agencies, like school districts, municipalities and authorities, and non-profit organizations.

“In this particular case, we’ve been working largely with the Commonwealth on mergers and tuition arrangements and boundary studies across the state for a few years,” explained Kaplan regarding PFM’s credentials during the Dec. 6 meeting. “We also work extensively with districts on fiscal planning, and obviously that’s a big part of the merger study, to understand how the two districts’ budgets work and how they might or might not mesh.”

PFM was involved in the merger feasibility study for Pennsbury and Morrisville school districts in Bucks County, Pa.

Eckert Seamans is a mid-Atlantic law firm with offices stretching from Massachusetts to Virginia. It provides legal counsel to a variety of areas, including education. Morgan M. Madden, a Towanda native, is an attorney with Eckert Seamans based out of their Harrisburg office.

A team of four attorneys from Eckert Seamans with experience in municipality law, education law, and labor and employment law will be providing their legal expertise for the study.

The full Merger Feasibility Study by the study team will provide insight into the impact of a possible school district merger on the region, educational programs, enrollment, governance, finance, personnel contracts, building capacities, building evaluations, and propose options of merger to the districts.

According to the study team, the Regional Overview section of the study will focus on the demographic and census issues in order for those reviewing the study to understand the two districts. It will provide readers with familiarity with the two school districts — their similarities, their differences, and what the communities look like. This will also help understand how state subsidies will apply in the finance section of the study.

The study team will analyze the Educational Program, focusing on the comparable curricula, how to structure course offerings and programs, how many credits are needed for graduation, and other factors. They plan to consult with an outside former superintendent, in conjunction with the two school districts’ superintendents, to ensure the strength of the educational programs.

Enrollment analysis is necessary to determine how many children will be educated, what facilities will be needed to house them, and the costs associated with enrollment.

Governance will be analyzed to comply with rules and laws, including the transition rules to be followed during merger. There are options for what is merged and the method of merger which need to be studied before any decisions may be made with due diligence.

One of the biggest parts of the study is Finance. It analyzes in part the benefit or detriment of merging school districts. This analysis is prospective in nature, predicting the effect in the future based on past and current information and trends. Specific areas of study include how funding is effected and how the millage rates and taxes in the school districts would change.

Merging would also have an effect on personnel, and therefore the study will focus on Personnel Contracts. The study team will investigate comparable salary schedules and contracts, what kind of benefits employees get in the two districts, and what the head-count of personnel would be should the schools merge.

For the Facility Capacities and Building Evaluations, the study team will inspect all current school buildings. Based on gathered data regarding utilization, enrollment trends, and curricular goals, they will develop options with associated planning and implementation plans for appropriate space utilization. As part of these evaluations, the team will also investigate transportation such as from school buses to determine capacity and utilization.

After the above investigations, evaluations, and analyses, the study team will propose options to the school boards for the possible merger, listing pros and cons of each one.

The Merger Feasibility Study is still underway. No decision has been made concerning the merging of the two school districts. The study is just a way to gather information, facts, and data to determine whether a merger is beneficial to the students and taxpayers of both communities.

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