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<p>PLAINS TWP. &#8212; Wilkes-Barre Area School District&#8217;s financial woes are worse than the district itself estimated, according to a new report. Without substantial changes, the district could be more than $70 million in the hole by 2020-21 &#8212; more than double the district&#8217;s own projection of $29.4 million.</p><p>Board Member Ned Evans cited the dire news as one reason he plans to make a motion at the April 11 monthly meeting to consolidate all three high schools into a new one.</p><p>The PFM Group, a firm hired by the state to help financially stressed districts, presented their findings during an informational meeting Tuesday night.</p><p>Prior to that session, the board held a brief special meeting for two votes &#8212; one to seek Requests For Proposals from companies that offer to handle substitute teacher staffing, and one to hire J&amp;J Auction Services to auction off any unusable items in Coughlin High School.</p><p>Evans read a short statement promising to make a motion at the April meeting for complete consolidation, a move he has supported ever since the district started talking about how to handle three aging high schools. The board has approved a plan to consolidate grades 9-12 at Meyers and Coughlin high schools into a new school to be built on the Coughlin site, while leaving GAR as a 7-12 school.</p><p>The projected cost of the project &#8212; as high as $100 million &#8212; was one reason the board sought an outside review of finances. An internal review projected the district would go from having a $6 million surplus at the start of this year to being $29 million in the red in five years.</p><p>But that projection had made several assumptions &#8212; including no pay increase after the current teacher contract expires &#8212; that critics deemed unrealistic. The review by PFM projected multiple factors not included in the district numbers. Along with about $1 million a year increase in salaries and benefits, it assumed health care costs increasing 6 percent per year and other expenses rising at 2 percent per year.</p><p>When all the numbers were crunched, the report projected the $70 million hole in five years, and that assumed no new borrowing.</p><p>PFM also figured the annual increase in debt service if the district borrowed $100 million or $150 million. In the former case, the report projects money needed annually to pay off debt would rise from the current $2.9 million to 6.2 million in 2020-21. In the latter scenario, it rises to $8.9 million.</p><p>Those numbers, in turn push the 2020-21 projected red ink even higher. If the district borrows $100 million, the report projects in five years the district would be $77.6 million in the hole; if it borrows $150 million, the hole deepens to $85.5 million.</p><p>A path to solvency &#8220;will require tax increases as well as cuts,&#8221; PFM Managing Director Dean Kaplan said. &#8220;You can&#8217;t do it with one or the other.&#8221;</p><p>While the report did not drill into the numbers &#8212; Kaplan stressed it was &#8220;high overview&#8221; of district finances &#8212; it did offer a broad estimate of the tax increases needed to close the projected gap.</p><p>For starters, property taxes would have to jump 23.6 percent next year. After that, taxes would rise from between 3 percent to 3.9 percent each year.</p><p>To help put Wilkes-Barre Area&#8217;s spending and staffing in perspective, PFM compared various statistics to similar-sized districts and to local districts. For the most part, Wilkes-Barre Area fared favorably:</p><p>&#8226; Total spending and instructional spending were slightly lower than similar-sized districts but slightly higher than regional districts. Support service spending was slightly lower than similar-sized districts but in line with regional districts.</p><p>&#8226; The professional staffing ratio is &#8220;in line with other districts, but Wilkes-Barre Area&#8217;s average teacher salary relative to years of experience is generally higher than average salaries in regional peer districts.&#8221; Put another way, pay is higher despite having less a concentration of staff with masters degrees or doctorates.</p><p>&#8226; The district&#8217;s annual debt payments are nearly the lowest among both similar-sized districts and regional districts. The current debt service will be completely paid by 2022.</p><p>State law limits the total debt a district can incur, but for Wilkes-Barre Area the low current debt leaves a lot of room. Currently, the district could borrow nearly $198 million, though the business office has determined voter approval would be needed for anything over $100 million.</p><p>The report gives some option for increasing revenue without a major tax hike &#8212; getting more nonprofit entities like King&#8217;s College and Wilkes University to make &#8220;payments in lieu of taxes,&#8221; for example.</p><p>But Kaplan conceded that, with more than three-quarters of the budget going toward salaries and benefits, &#8220;there aren&#8217;t a lot of levers you can pull.&#8221;</p><p>The report also notes the board&#8217;s decision to take action on the three high school creates an opportunity to fix a problem: Inconsistent grade configurations. The current set up &#8220;is driven by the available buildings, rather than academic priorities.&#8221;</p><p>Drue Miles, a subcontractor hired to review the academic aspects of the district, noted Wilkes-Barre Area students attend schools configured with grades K-6, K-8, 7-12 and 9-12.</p><p>Miles said research suggests student perform better when a district has a consistent set up, and recommended two school types: K-8 and 9-12. He also suggested the district create &#8220;Small Learning Communities&#8221; in high school, in which students are grouped into one of several &#8220;schools within a school,&#8221; each focused on a theme such as science or the arts.</p><p>And he suggested the district revisit block scheduling, in which students have fewer but longer class periods a day, and typically finish a class in half a year instead of the whole school year.</p><p>Kaplan said the next step is to determine configuration of the schools, consider SLCs and block-scheduling, and have the business office determine costs for those changes.</p><p>After the meeting, Evans said his proposal would make sense and save money. Along with consolidating grades 9-12 into one school, most seventh- and eighth-grade students would go to the GAR Memorial High School building, with those still at the Solomon/Plains Memorial Building staying where they are. The rest of the buildings would be K-6.</p><p>Board Member Shawn Walker said the business office is already working on a &#8220;pathway to solvency&#8221; as recommended in the report, and that the next step will hinge on what that report says the district has to do to avoid the projected red ink.</p><style>
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<div class="neCaption">PFM Group Managing Director Dean Kaplan David Sallack speaks at a Wilkes-Barre Area School Board informational meeting on Tuesday evening. PFM Group did a review of the district&#8217;s finances, saying the district is in worse shape than originally thought. </div></div><div class="metaInfo"><photo0>https://www.timesleader.com/wp-content/uploads/2016/03/web1_TTL033016wbafinancing1.jpg</photo0><caption0>PFM Group Managing Director Dean Kaplan David Sallack speaks at a Wilkes-Barre Area School Board informational meeting on Tuesday evening. PFM Group did a review of the district&#8217;s finances, saying the district is in worse shape than originally thought. </caption0><photoCredit0></photoCredit0></div><div class="neFile"><img class="neImage" src="https://www.timesleader.com/wp-content/uploads/2016/03/web1_TTL033016wbafinancing2.jpg">
<div class="neCaption">Dean Kaplan speaks at the Wilkes-Barre Area School Board informational meeting. 3/29/2016 Aimee Dilger|Times Leader </div></div><div class="metaInfo"><photo1>https://www.timesleader.com/wp-content/uploads/2016/03/web1_TTL033016wbafinancing2.jpg</photo1><caption1>Dean Kaplan speaks at the Wilkes-Barre Area School Board informational meeting. 3/29/2016 Aimee Dilger|Times Leader </caption1><photoCredit1></photoCredit1></div></div>
<div class="metaInfo"><subheadMeta>Firm says district finances much worse off than thought</subheadMeta></div><div class="metaInfo"><bylineMeta><p>By Mark Guydish</p><p>mguydish@www.timesleader.com</p></bylineMeta></div><div class="metaInfo"><shirttailMeta><p>Reach Mark Guydish at 570-991-6112 or on Twitter @TLMarkGuydish</p></shirttailMeta></div>

W-B Area unveils state review of district finances