Central Valley School District: Archetype for County-wide School Consolidation?

As the consolidation of school districts has been placed on the political menu of Fayette County, Pennsylvania, an examination of one of the examples held up as an archetype of what taxpayers should hope to expect in savings from a county-wide, administrative school consolidation is in order.

The merger between the Center Area School District and the Monaca School District created the Central Valley School District in Monaca, Pennsylvania.  While the merger was done in stages, the 2010-2011 school year is the first to see the completion of the merger in full.

The impetus for the merger derived from a study completed by Education Management Group of Harrisburg, Pennsylvania, which claimed that merger would result in a five-point decrease in the Center Area tax rate.  (See "Center-Monaca merger timeline," Pittsburgh Post-Gazette, Sept. 24, 2007: "Education Management Group projects $1.5 million in annual savings and says Center Area's 50.2-mill real estate tax rate could be lowered to Monaca's 45-mill rate.  Additionally the study emphasized savings of at least $1.5 million dollars from the pre-merger budgetary expenses of the separate districts.")

Another reason the people of Fayette County should be interested in studying the Central Valley merger is that the same entity that produced the study for the Center and Monaca districts -- Education Management Group -- has been tapped by an advisory board named by state Rep. Tim Mahoney (D-PA-51st) to conduct a $68,000 study on (county-wide) school consolidation in Fayette County.

Pre-merger, Center and Monaca districts were told the Central Valley merger would save at least $1.5 million and the millage rates would see a five-point decline, from 50 mills to 45 mills.  Did the merger bring savings?

In order to see if the promised savings materialized in the Central Valley School District, one must first examine numbers from a pre-merger budget period (for Center Area and Monaca) and then compare and contrast those with a budget in the post-merger period.  Then, one must examine millage rates to see whether those rates decreased.

From ("Monaca-Center Area merger would make history," Tribune-Review, Dec. 27, 2007)," we learn that the combined budget for the Center and Monaca districts was $28.9 million.  This is probably for the 2007-2008 school year, as the story dates from the end of 2007.

Here is the latest budget (2010-2011 -- first full year of merger) from the Central Valley School District's webpage:

http://www.centralvalleysd.org/CVSD_Budget.swf.

Note how in the combined district the expenditures -- on salaries, benefits, administration/business office -- account for exactly two-thirds of budgetary expenses ($21,046,667/$31,309,519 = 67.22%).  Note, too, that -- in absolute dollars --  spending has increased.  Where once the school districts' separate budgets totaled $28.9 million, the merged (2010-2011) Central Valley School District now spends over $31.3 million.  The difference is approximately $2.4 million.  Over three years, the rate of growth, in absolute dollars, has been 2.70%, annually.  The 2010-2011 deficit in Central Valley is $1,180,416.

Put simply, the school is spending more than it takes in, and that is in a budget which includes $351,000 in “stimulus” monies.

Unaccounted for in the nearly 70 percent figure for Central Valley are utilities, maintenance, textbooks, transportation, and debt service.  Adding these essentials to the ledger pushes costs even higher(26,642,185/31,309,519 = 85.10%).

To reiterate, the school districts involved in the Central Valley merger were told they would save $1.5 million and the millage rates would see a five-point decline, from 50 mills to 45 mills. 

Did the merger bring savings in a combined budget and tax millage?

The news on the tax rate is mixed.  A July 2009, Tribune-Review  article, relates that "the road to a merger was a bumpy one. Both school boards clashed frequently on the logistics. The tax rate, for instance, will be 46.5 mills, lower than Center's and higher than Monaca's."  However, a mercantile tax was added to the tax mix.

The news on the expenditure side of the ledger is unambiguous. 

Overall, post-merger expenditures, in absolute terms, have increased from $28.9 million to $31.3 million.

Originally, Rep. Mahoney (D-51st) claimed that savings of 25-30 percent could be realized in his proposed school consolidation. 

In ("Mahoney meets with H-S editorial board," Herald-Standard, 03/23/2009),  Mahoney touted his hypothetical savings:

"We have the opportunity to change our course and we have to cross lines," Mahoney said. "We spend $250 million a year on education in this county and it's time to overhaul the system. There is so much waste we could absorb."

Mahoney said he believes that homeowners could save 25 to 30 percent on their property tax bills if his bill were to become law and get implemented.

Mahoney said he would like to do a two-month, state-funded study after the state budget is adopted later this year that he could use as a selling point to get the county commissioners to put it on a referendum. He said he is looking at consolidation for purposes of transportation contracts, and reducing administration and operation costs.

http://www.heraldstandard.com/site/news.cfm?newsid=20284711&BRD=2280&PAG=461&dept_id=480247&rfi=6

However, upon closer inspection, that claim appears wildly optimistic.

Mathematically, how could Rep. Mahoney claim 30 percent savings, when salaries, benefits, retirement, and administrative costs account for nearly 70 percent of school expenditures in most districts (67.22% in Central Valley, for example)?  If one does the math, it doesn't add up. 

[For example, 100% (Budget) minus 70% (Salaries, Benefits, Administration costs) minus 30% (Proposed Savings = 0%] 

Absent cuts in salaries, benefits, staff, or facilities, no monies would be left over for any other line item in the school budget. 

Rep. Mahoney has pared back his savings estimate to 15-20 percent  from his earlier 25-30 percent estimate, yet in light of the 85.1% that the merged Central Valley spends on essentials, even this lowered estimate seems to overestimate possible savings from school consolidation, if any.  Additionally all the "savings" being proffered by Rep. Mahoney are hypothetical and unsubstantiated, as the contract for his very own study has just been awarded to Education Management Group, the group whose study came back pro-merger in the Central Valley case.

Moreover, Rep. Mahoney suggests paying school directors in the consolidated district.  How much to be paid  is left unsaid, but any amount paid to directors would necessarily subtract from the touted, hypothetical savings in reductions of administrative staff, if any savings are to be had.

In the whirlwind push for school consolidation in Fayette County, a 2007 study commissioned by the state legislature seemingly has been neglected.

The study --  Study of the Cost-Effectiveness of Consolidation Pennsylvania School Districts --  demonstrates, with some exceptions, that per capita savings can be had up to a certain school district population.  Over a district population of 2,999, however, per capita spending tends to increase.   (See Appendix A of the study.)  According to the study, consolidation for consolidation's sake is not the answer.  In fact the study shows that only in certain cases (between certain levels of student population) are savings to be had.  Bigger is not necessarily better.  In fact, as demonstrated by the study cited above, per capita costs increase in districts populated by 2,999 students or more.

Lastly, the push for a one-size-fits-all uniform curriculum is a clear and present danger to liberty-minded parents and students. 

A lack of educational opportunity and healthy competition may result from the creation of a monolithic, county-wide school system with a uniform curriculum.  

One district.  One alternative school.  One vocational-technical school. One curriculum.  Instead of a relatively decentralized model with local say that citizens have now, the single district would be controlled by seven (possibly paid, as Rep. Mahoney suggests) school directors. 

Instead of nine-member local school boards representing citizen interests, only one of the seven directors would represent a segment of the county in a county-wide school district.  Power and control in the hands of one individual instead of nine.  Think about it.

While the private sector has experienced a flattening of organizations and mass decentralization, school consolidation in Fayette County would agglomerate power, centralize decision-making, and bureaucratize the delivery of education. 

Some actually try to argue that nepotism would be less likely in the more highly centralized education model.  But that strains credulity.

From whence comes healthy competition for educational improvement, if there is only one district?  Viable educational opportunities in private schooling may well be squelched as the political power of a centralized, county-wide school district grows due merely to its massive size.

Is mass centralization of power into the hands of the Fayette County political class really the path to educational excellence?

Caveat Emptor.