Penn Hills schools receive OK to borrow $18M
Judge allows loan to cover deficit; tax rate may rise 1 mill
A judge on Wednesday granted the cash-strapped Penn Hills School District permission to borrow up to $18 million to pay its day-to-day expenses.
Officials have said the loan is needed to cover a projected $9 million shortfall for the 2014-15 school year and an expected $10 million deficit for 2015-16. The loan repayment could increase the district’s property tax rate by 1 mill.
Allegheny County Common Pleas Judge Michael A. Della Vecchia approved the petition in motions court. The petition said that the district did not foresee the shortfall and that it would be detrimental to public education to make up the deficit by curtailing services.
Nancy Hines, acting superintendent of the 3,900-student school district, said she was not immediately prepared to answer questions after the hearing. Neither she nor district solicitor Craig Alexander could be reached later Wednesday.
The ruling follows months of financial and personnel turmoil in the district.
In late January, then-superintendent Thomas Washington was relieved of his duties as part of a separation agreement that paid him through April. Longtime director of business Richard Liberto was placed on paid leave March 24, a day after Moody’s Investors Service announced it had downgraded the district’s bond rating.
School officials have not commented publicly on the reasons for their departures.
During a school board meeting April 6, Ms. Hines revealed the budget shortfall and the fact that the state had made a $3.1 million debt service payment on the district’s behalf that will be deducted from its future subsidies. She also said at that meeting that the district was reviewing the operations of its finance office.
According to the petition filed by Mr. Alexander, the district will increase its millage to the maximum allowed by law for the 2015-16 school year.
The note or bond would mature in 10 years and would not cause the district to exceed its debt limits.