Pottsville School Board Officials Invoked “Fiduciary Duty” Cutting Teachers, Raising Taxes

School board members at Pottsville Area School District faced a lose-lose situation last week.

People knew they were going to raise property tax rates. And people also knew they were going to cut teacher jobs from the school.

As advertised, that’s exactly what they did.

In separate votes at its June 2020 regular board meeting – held via the Zoom platform and streamed live on Facebook – the board took the following key actions:

• Voted to cut 6 “temporary and professional employees” (essentially, teachers)
• Voted to cut 7 “non-professional employees”
• Voted to raise property taxes 3.8% (from 41.9383 to 43.5319 mills)

That’s basically the triple whammy of things a school board member never wants to do. And Pottsville voted to do all 3 on the same night. They did, however, find a way to hold off on cutting some sports programs, so no 4th whammy.

But again, what got done wasn’t pretty. However, Pottsville Area’s school board president, Bud Quandel, said they had no choice. It was their — and he said it so much, it’s still ringing in our head — “fiduciary duty” to make the cuts and raise taxes.

Pottsville Area School District Cuts Teachers, Raise Taxes for 2020-2021

In a slide presentation given to the public during the meeting, Quandel said the board held a fiduciary duty to do what’s in the best interest of the public. He literally said “fiduciary duty” or “fiduciary” and “duty” or “duties” at least 11 times in a matter of several minutes.

You can tell he knew the board had no choice. And the decisions made last week weren’t popular. But again … “fiduciary duty” and all that.

“Without being financially sound, we can not function. We can not heal,” Quandel said. “We can’t have all the extra curricular activities that we all want and we know are necessary to build education and to build character for our students.”

Explaining the Cuts

So, why is Pottsville cutting all these jobs and raising taxes at the same time?

During his presentation, Quandel took aim at the past. Specifically, he called out a certain former school board member who Quandel says is partly responsible for the financial state of the school district. Quandel accused former school board member Scott Thomas – who hosts a popular weekly live show on Facebook answering questions from frustrated Pottsville Area taxpayers and members of the public about the goings-on at the school district – of spreading misinformation.

“This board did not cause what we’re dealing with,” Quandel insists.

Instead, Quandel says previous boards’ decisions not to raise taxes between 2005-2017 in the face of rising expenses directly led to a massive drop in a general fund balance – losing more than $16 million in a decade.

“I don’t want to dwell on the past but history is instructive. Without learning from that, we got nowhere,” he said. “It’s either got to be sufficient revenue or reduce expenditures to meet the increasing cost. There was where the mistake was. We couldn’t do anything about the costs being incurred but we could have responded to them intelligently by adding one or cutting the other.”

Outside of questionable spending decisions during the last decade, Quandel detailed 5 reasons why costs are up, revenues are down, and why Pottsville Area school directors of the past weren’t doing their “fiduciary duty” in raising taxes or cutting expenses.

5 Reasons Pottsville Area School District Has No Money

Here are 5 reasons Quandel says the school district is going broke (images below come from a financial presentation the school board made public at its June meeting):

Pottsville Spent More Than it Brought In

Quite simply, the Pottsville Area School District spent more money than it brought in between 2012 and 2017, according to numbers shared at the last board meeting.

You can’t spend money you don’t have, basically. But that’s what Pottsville Area did for years. And the school had no idea if the expenses it approved were covered by revenue coming in. We eventually learned that it wasn’t as the school blew through its robust $16 million surplus and eventually started operating in the red.

That changed, finally, in 2018, when the school revenue barely eclipsed the spending by about $126,000. But that barely makes up for the millions it overspent in the previous 6 years.

Quandel says the spending was about $9 million over the revenue in 2015 and 2016.

“And still, no tax increases occurred,” he emphasized. “Or no expenditure cuts occurred. There’s a story behind this and I think it’s important everybody understand this.”

Declining Enrollment at Pottsville Area School District

Kids are leaving in droves. And if enrollment is down, why do you need all those teachers?

It sounds harsh, but it’s hard to argue for more teachers or the same amount of teachers if there are less students.

And it’s not just a few less students. The drop is significant.

Pottsville Area School District enrollment dropped by 459 students from 2010-2019. In 2010, it was 3,031 and in 2019 enrollment dipped to just 2,572. That’s a 15% decline in a decade.

“We have no reason to believe that trend is going to change and it’s going to continue. We have an obligation to prepare for that,” Quandel says. “Our enrollment has been declining and it’s a driver of a lot of this stuff.”

Salaries and Benefits vs. Other Costs

When analyzing costs to run Pottsville Area School District, board members say they’re spending 74% of their money on salaries and benefits. And just 26% goes to other costs to get the school through the year.

“Obviously, a lot of the major cuts have to be proportionate to that,” Quandel says.

PSERS (Public School Employees Retirement System)

Quandel also says the rapid rate increase in pension costs really strapped Pottsville Area School District. And again, he says previous boards should have addressed these changes with either cuts, new revenue streams, or higher taxes.

“None of our employees created this,” he says. “The state did.”

The PSERS rate (the amount of money per dollar spent on payroll) jumped from 4.76% in 2008 to 34.29% currently. In 2018, Pottsville Area says it contributed more than $5.3 million to PSERS. And in 2010, that figure was just under $775,000.

Quandel says, “The district’s mistake is they didn’t offset this.”

Gillingham Charter School and Cyber Charter Schools

Everyone with allegiance to Pottsville Area School District loves to point at least one blaming finger at Gillingham Charter School. But with limited enrollment at that school, it’s more likely cyber charter schools play a significant role in the exodus from the traditional public school setting.

And no school in Schuylkill County loses more revenue to charter schools than Pottsville:

According to numbers presented at last week’s meeting, Pottsville Area spent about $2.5 million on charter schools in 2019. That means, instead of collecting any per-student state funding, the money followed the student to their charter school, be it Gillingham or some other learning platform.

Pottsville Area says it’s sent more than $14 million to cyber charters and Gillingham since 2008. And according to more numbers provided at the last board meeting, it far exceeds any other Schuylkill County school district in that money “spent” or never collected.

Quandel says previous school boards should have seen these costs rising over the years. It’s close to or more than $1.5 million in revenue it never had annually since 2012.

“Preparations were not made in advance for loss of students to Gillingham,” he says. “These costs are mounting.”

Quandel says previous school boards should have considered raising property taxes at some point between 2005-2012 to address these annual losses.

“You’ve got to offset those costs somehow,” he says. “That’s where the $16 million (the approximate loss in school funds in the last decade) went to, unfortunately.”

Costs Necessary, Plan Going Forward Questionable

We’re not sure how many people not directly related to a teacher or person who likely will lose their job at the school district actually believe it’s this current board’s make-up that’s responsible for the financial disaster right now.

More than half the board was just put into office after the November 2019 election. This board got put in the unfortunate position to have to make these decisions to cut teachers, staff, and more, as well as raise property taxes.

What the public does continue to question is the validity and details of the agreement reached late last year that would install thousands of solar panels on the roofs of schools in the district.

For Quandel’s administration, they seem to be banking on this idea working as they expect and thus, Pottsville would be able to rebuild the surplus it spent over the years.

These cuts this year seem to be necessary.

Pottsville Area School District 2020-2021 Budget

Take a look at the proposed 2020-2021 spending plan at Pottsville Area School District: