The two major Commonwealth funding sources for school districts – Basic Education Funding (BEF) and Special Education Funding (SEF) – is distributed with two major components.  The first is a base allocation received by school districts that typically does not change from year to year.  Part of this question appears related to the fact that both Pennsbury and Morrisville receive base allocations that are greater than they might under various alternative funding scenarios.  Because the State Legislature has repeatedly declined to reduce base allocations for the many districts statewide that are in excess of these alternative calculations, the study assumes that this amount of over $3.0 million for Morrisville will become a permanent part of Pennsbury’s base BEF allocation in a merger.  For a merger to be successful, Pennsbury would have to receive assurances from the State that this would be the case.

The study assumes that the second component – the student-based portion of BEF and SEF – would be recalculated based on Pennsylvania’s funding formula with the students from the two districts combined.  The Commonwealth uses multiple demographic characteristics and other factors to determine a school district’s annual student-weighted allocation, including median household income, the average daily membership (enrollment statistic) adjusted for local demographics, a district’s local tax effort capacity index, and other factors.  PFM re-estimated this portion of the BEF and SEF for a combined district with combined factors and determined that a combined district would receive student-based formula funding approximately equal to what Pennsbury and Morrisville now receive separately.

Finding bus drivers is impacting school districts nation-wide. Regardless of what occurs regarding Morrisville, we continue to actively recruit and train bus drivers.

We are unable to speculate on the potential impact of a merger or tuition agreement on property values; however, property values in the five towns that send students to Pennsbury as well as Morrisville, have risen.

For 2022-23 the District budgeted $156.799 million in current real estate tax revenue based on millage of 178.947. This yields approximately $876,230 in current real estate tax revenue per mill.

The feasibility study found that the merger and tuition scenarios could be implemented with no change to the millage assumptions in Pennsbury’s existing multi-year financial projection, and assumed that the Board would not agree to a merger or a tuition arrangement if they concluded that subsequent developments would lead to tax rates higher than those already projected.

The high school enrollment was over 3400 students in 2000.  We currently have about 2900 students enrolled.

The study identified the differences in reading and math achievements in the two districts.  In response to comments provided by the Feasibility Committee on this subject, the study included extensive supports to help Morrisville students achieve at levels prevailing in Pennsbury.  This assistance would include classroom support specialists and special education teachers at the elementary level, and at the middle school and high school level remediation teachers, ESL teachers, special education teachers and guidance counselors. The study assumes that these supports could be reduced by half after Morrisville students have spent five years in the Pennsbury system.

You can find the spreadsheets developed by PFM here.

Many factors affect local home values, tax rates and the quality of a Pennsbury education. The reason to explore a merger or tuition agreement would be to provide additional enrollment to help mitigate a reduction of staff and/or programs that may accompany the projected long-term decrease in overall Pennsbury enrollment.  In addition, depending on whether (and how much) state aid is made available to support a merger or tuition agreement, it could address Pennsbury’s current projected needs to renovate its high school and stay within projected future millage levels.

Calculating the financial impact of a merger or tuition arrangement requires a focus on the marginal changes in staffing or services.  If Morrisville’s students attend school in Pennsbury, it will not be necessary for Pennsbury to spend the average amount of money per student to educate them. For example, another teacher will not be needed for some classrooms that are still at or below Pennsbury’s target class size after the addition of Morrisville’s students.  The study’s analysis also accounts for new costs, such as busing Morrisville students who previously walked to school.  However, overall, the marginal additional cost per student is much less than the average cost, mostly because the same number of staff is not necessary.

In addition, in all three scenarios, educating students from Morrisville brings additional revenue to Pennsbury.  In the merger scenario, most of the additional revenue would be from property taxes, State aid, as well as State reimbursement for transportation, Social Security, and teacher retirement costs.  In the two tuition scenarios, Pennsbury would receive additional revenue from Morrisville’s tuition payments, as well as State reimbursement for transportation, Social Security, and teacher retirement costs.

Over time, the combined marginal costs and revenues to Pennsbury are less expensive than the baseline scenario if nothing changes.  However, because there are many variables and some figures will change over time, the Board will establish that a merger or tuition arrangement will be financially positive for Pennsbury before taking any action.

As noted in the report, the full principal amount of Morrisville’s outstanding debt will be approximately $8.85 million at the very earliest time that a merger might begin.  Annual debt service payments would be about $805,000 per year until 2038.  Under the School Code, in a merger the combined future district would be responsible for the outstanding debt and debt service of both districts.  It is unlikely that a merger would be acceptable to Pennsbury unless funding for Morrisville’s debt service payments was provided by a non-Pennsbury source such as the State.  The report also includes new Morrisville debt service in the case of a tuition agreement between the two districts.  That debt would be Morrisville’s responsibility alone.

Bankruptcy was addressed on page 5 of the study: school districts in Pennsylvania cannot declare bankruptcy. Given the potential credit impact on all other districts in the State, and the State intercept program for debt service payments, it is assumed that the Commonwealth would not entertain such a filing. Moreover, given that Morrisville has other paths to eliminating its negative fund balance and annual shortfalls prior to a merger, as described above, it is not clear that it would have a strong case for bankruptcy even if it could declare. Finally, well in advance of any contemplation of bankruptcy, the Pennsylvania Department of Education’s practice has been to place a district in the Commonwealth’s oversight program for distressed school districts in order to improve its finances.

A merger or tuition agreement could potentially help mitigate a reduction of staff and/or programs that may accompany the long-term decrease in overall Pennsbury enrollment. The Feasibility Study and public discussion process has provided initial information to help the School Board explore a variety of issues in more depth, including the need for state funding as described above.  

The  District has contacted the PDE to determine their involvement with  financial and/or logistical support.

No. The Pennsylvania Public School Code does not expressly authorize a referendum regarding a potential merger or tuition agreement, nor does any other authority at present. As a result, the issue of a potential merger and/or tuition agreement cannot be subject to a referendum.

Section 308 of the Public School Code controls regarding the newly constituted  Board of Directors. That section states that when two or more school districts are  combined, the directors serving at the time from each school district shall “be directors of  the newly formed school district” . . . “until the end of their respective terms.” After the merger is complete and until the first municipal election thereafter, if a vacancy arises on the newly formed Board, it is not filled. Subsequently, at the “first municipal election” following the date of the merger, and at each municipal action thereafter, “three directors  shall be elected at large for six-year terms.” The term for each director elected in this manner begins on the first Monday of December following their election. As of the first municipal election following a merger, any vacancies which then arise due to resignation,  etc., must be filled by the Board of Directors within thirty (30) days, or the public can petition the Court of Common Pleas to fill the vacancy without any approval or involvement by the Board of Directors.  

Boards of Directors from each school district may  alternatively “choose to develop a plan to divide the new school district into three or nine  regions.” When developing this plan, the Public School Code requires that “the population  of each region . . . be nearly as equal as possible and shall be compatible with the  boundaries of election districts.” Any plan must provide that three school directors are elected at each municipal election. The proposed plan is submitted to the Court of Common Pleas for approval. If approved, the regional boundaries are certified to the County Board of Elections.  

The study does not assume that Pennsbury cuts staff in the merger scenario. The study found that there is capacity in Pennsbury to absorb a portion of Morrisville students in existing classes, and therefore in a merger, Pennsbury would need to hire fewer teachers, administrators, custodians, and other personnel than the current staffing levels in Morrisville.

The study assumes that borrowing occurs to renovate the high school and accomplish the other priorities outlined in the first phase of Pennsbury’s capital improvement plan, which includes approximately $200  million in new construction. Capital projects are also supported by General Fund transfers from the PILOT  payment. Given the size and extent of the first phase, as well as the impact of the merger, by 2028-29, Pennsbury would benefit from a new facilities evaluation, with borrowing needs to be re-evaluated at that time. In the medium term, the study identified and the model funded Morrisville’s building roofs as the primary capital focus. Longer-term needs for Morrisville would require a more in-depth facilities study.

The Enrollment chapter outlines the study’s assumption regarding the return of charter school enrollment to pre-pandemic levels and the future alignment of trends in Morrisville with those in Pennsbury. Based on enrollment reports provided by Pennsbury, the District is already showing fewer students enrolled in charter schools than the numbers reported at the height of the pandemic. 

Charter school tuition payments are based on enrollment and the Commonwealth’s tuition rate calculation.  Adding Morrisville’s ADM to Pennsbury changes the calculation of tuition rates, leading to additional savings for Pennsbury. 

Workers’ compensation costs are based on the trend in claims for the prior three years. The estimates reflect this structure and phase in workers’ compensation costs over time for any transferred Morrisville employees.

The assumption for the sale price is based on conservatism and PFM’s professional experience in other districts with surplus property, which often yield negligible proceeds. Property maintenance costs may be continued longer than the timeframe contemplated by the study. However, the utility costs required to keep the buildings mothballed would be substantially lower than the current operating costs.

The study assumes that Pennsbury hires an additional maintenance position, shifting costs from contracted services to personnel.

The study included $300,000 in central office services to cover costs such as general insurance for  Morrisville properties in a merger. There may be opportunities for economies of scale.  

The study included $300,000 in central office services to cover Morrisville's modest communications costs and similar existing expenditures in a merger. There are likely opportunities for some of Morrisville’s services to be covered by Pennsbury’s existing communications office. 

Vehicle fuel, maintenance, and insurance costs are included under the 510 roll-up of the model. The merger scenario includes capital funding that is expected to be used in part to address food preparation at  Grandview. There may also be a small food service fund balance available for this purpose.

Student supplies and books for Morrisville’s students are included under the supplies roll-up of the model,  and technology costs for Morrisville’s students are included under the technology supplies roll-up of the model. 

Morrisville’s debt is not re-financed in the study. It is assumed by Pennsbury as provided by state law covering school mergers. The study includes debt service expenditures in the amount needed to address improvements at the Grandview Elementary School in a merger. 

Row 27 shows the sum total of State reimbursements for Social Security and PSERS payments, which  reference rows 77 and 78 in the detailed section in the rows below the summary. Although the sum totals  are similar, the calculations show the sum of the retirement reimbursement revenue ($23.1 million) rather  than the sum of Basic and Special education subsidies ($23.9 million).