Report outlines possible cuts, savings for Scranton School District

Scranton, Pennsylvania Sarah Hofius Hall The Times Tribune August 30, 2017 Economic Development

The Scranton School District should consider eliminating home economics and shop classes, require secondary teachers to teach another period each day and find ways to reduce staffing levels, a report suggests.

As the district faces a deficit expected to reach $40 million by the end of the year and a teachers contract that expires at the end of the month, officials are reviewing a draft of the analysis prepared by a Philadelphia financial firm.

“We need to get together and see where we can save,” said board President Bob Sheridan, who said he was just beginning to read the report. “We need to go by their suggestions and the Department of Education suggestions.”

The state put the district on “financial watch” status in June, meaning state officials will have greater oversight of district finances. The step is the first in a series that could eventually lead to a takeover by a state receiver.

Working with the city, the district is using a $30,000 grant from the U.S. Department of Housing and Urban Development’s National Resource Network for the analysis. The Pennsylvania Department of Education is providing a $10,000 match to the federal dollars. The department secured the firm PFM, which has reviewed finances of districts across the state.

Preliminary findings and suggestions from the draft report, distributed to school directors last week, include:

The financial situation is “dire.” Projected annual deficits threaten educational quality and put pressure on the district’s ability to make payroll and pay bills. Vendors may eventually stop serving the district if invoices are not paid in a timely manner. Beginning in 2018, the district’s annual debt service payment is set to grow by more than $10 million, compared to this year.

“The district’s strategy of using long-term borrowing to fill annual shortfalls will soon become too costly to continue if it remains possible at all, and will merely push a larger and larger problem into the future,” the report states.

The district may need to reduce staffing through retirements, attrition or restructuring academic programs. However, the district cannot entirely eliminate its deficit through reductions to academic programs without harming academic performance. Scranton must ensure it can provide a strong academic program with fewer employees.

Those options include: teachers at the secondary level teaching an additional class each day, instead of a duty period; eliminating underutilized programs like home economics and shop classes; and offering certain programs at only one high school or online.

The district should also adopt a reference-based reimbursement health care plan, which teachers rejected earlier this year. The self-insured district claims it could save $4.8 million a year. Under a plan the district pitched earlier this year from Performance Health, Scranton would use a repricing strategy that pays 120 percent of the Medicare rate without affecting coverage. Teachers had many concerns about the pricing structure.

The report also suggests the district look at increasing deductibles, eliminating spousal coverage and eliminating payments to employees who opt out of health insurance coverage.

The final version of the report is expected to include potential ways to close the financial gap, and another report will attach costs to those options.