In re Appeal for Formation of Indep. Sch. Dist. Consisting of the Borough of Highspire, Dauphin Cnty.

260 A.3d 925

IN RE: Appeal for FORMATION OF INDEPENDENT SCHOOL DISTRICT CONSISTING OF the BOROUGH OF HIGHSPIRE, DAUPHIN COUNTY, Pennsylvania

Appeal of: Middletown Area School District

In re: Appeal for Formation of Independent School District Consisting of the Borough of Highspire, Dauphin County, Pennsylvania

Appeal of: Steelton-highspire School District

No. 58 MAP 2020

No. 59 MAP 2020

Supreme Court of Pennsylvania.

Argued: March 9, 2021

Decided: October 7, 2021

Joseph Francis Canamucio, Esq., Stuart Lee Knade, Esq., Pennsylvania State Education Association (PSEA), for Amicus Curiae PSEA

Jeffrey D. Litts, Esq., Kegel Kelin Almy & Lord LLP, for Appellant Middletown Area School District

Vincent L. Champion, Esq., Champion Law Office LLC, for Appellee Steelton-Highspire School District

Anthony Lucido, Esq., William D. Powell, Esq., Adam Christopher Zei, Esq., Johnson, Duffie, Stewart & Weidner, P.C., for Appellee Highspire Education Coalition

BAER, C.J., SAYLOR, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE DONOHUE

In this case, a majority of the taxable inhabitants of Highspire Borough (the "Coalition") filed a petition seeking to be established as a school district independent from Steelton-Highspire School District ("SHSD") for the sole purpose of having the new school district be absorbed into the neighboring Middletown Area School District ("MASD"). According to the Public School Code, 24 P.S. §§ 1-101 – 27-2702, the Secretary of Education ("Secretary") evaluates such petitions by considering "the merits of the petition ... from an educational standpoint" (hereinafter sometimes referred to as the educational merits). 24 P.S. § 2-242.1(a). Here, the Secretary issued an opinion and order denying the transfer on the grounds that the academic benefits to be enjoyed by the transferring students did not outweigh the educational detriments imposed upon the students in the SHSD and MASD districts. In particular, the Secretary concluded that the transfer would undermine the financial stability of SHSD and put a strain on class size and facilities at MASD.

On appeal, the Commonwealth Court reversed, taking issue with the Secretary's consideration of finances and holding that the Secretary should have instead narrowly focused on the academic benefits that would be enjoyed by the transferring students. In re Petition for Formation of Indep. Sch. Dist. Consisting of Borough of Highspire , 228 A.3d 584, 595 (Pa. Commw.), appeal granted in part , ––– Pa. ––––, 239 A.3d 19 (2020). SHSD and MASD appealed, asking this Court to reverse. We address the question of whether Section 242.1(a)’s instruction that the Secretary consider the "merits of the petition ... from an educational standpoint" allows for consideration of whether the financial impacts of the transfer affect the quality of education and, relatedly, whether the Secretary may evaluate the resulting quality of education for the students in all of the school districts affected by the transfer (as opposed to just the transferring students). We conclude that in this case, the Secretary properly considered financial impacts and appropriately focused on the quality of education for the students in all of the school districts associated with the proposed transfer. We therefore reverse the order of the Commonwealth Court and remand for further proceedings consistent with this opinion.

Procedural Background

On April 15, 2014, the Coalition filed a petition in the Dauphin County Court of Common Pleas pursuant to Section 242.1 of the Public School Code, seeking (ultimately) for Highspire Borough to be absorbed into MASD. Findings of Fact, 2/2/2018, ¶¶ 1-2. Central to this appeal, Section 242.1 governs transfers of territory from one school district to another. It provides as follows:

§ 2-242.1. Establishment of independent districts for transfer of territory to another school district

(a) A majority of the taxable inhabitants of any contiguous territory in any school district or school districts, as herein established, may present their petition to the court of common pleas of the county in which each contiguous territory, or a greater part thereof, is situated, asking that the territory be established as an independent district for the sole purpose of transfer to an adjacent school district contiguous thereto. Where the territory described in any such petition is to be taken from two or more school districts, such petition shall be signed by a majority of all the taxable inhabitants of the part of each school district which is to be included in such independent district for transfer. Such petitions shall set forth a proper description of the boundaries of the territory to be included in such proposed independent district, and the reasons of the petitioners for requesting such transfer to another school district and the name of the district into which its territory is proposed to be placed.

The court shall hold hearing thereon, of which hearing the school district or districts out of whose territory such proposed independent district is to be taken and the school district into which the territory is proposed to be assigned, shall each have ten days notice. In all cases where an independent district is proposed for transfer from one school district to another, the merits of the petition for its creation, from an educational standpoint, shall be passed upon the Superintendent of Public Instruction^[1] and the petitionshall not be granted by the court unless approved by him . The court of common pleas shall secure the reaction from the Superintendent of Public Instruction upon receipt of the petition properly filed.

The court, in its decree establishing such independent district for transfer purposes, shall also determine the amount, if any, of the indebtedness and obligations of the school district, from whose territory such independent district is taken, that said district shall assume and pay, and, a statement prorating the State subsidies payable between or among the losing district or districts and the receiving district.

In all cases where such proceedings result in the creation and transfer, by decree of the court, of an independent district, the cost and office fees shall be paid by the petitioners or, otherwise, by the receiving district. Such independent districts created under the provisions of this act shall not become an operating school district but will be created for transfer of territory only.

(b) In the case of independent districts established hereafter, the court of common pleas shall notify the county board of school directors regarding receipt of petition for such establishment and shall direct said board to prepare a statement of acceptance or rejection of the proposed placement of the district in the designated administrative unit of the county plan; such statement to be transmitted to the court and to the State Board of Education.

^[1] Now Secretary of Education; see 71 P.S. §§ 1037, 1038.

24 P.S. § 2-242.1 (emphasis added).

In its petition, the Coalition set forth various reasons for seeking transfer, emphasizing that it would be in the best educational interest of present and future school-age children in Highspire. Petition, 8/25/2014, ¶ 8.a. Specifically, the Coalition asserted, inter alia, the following:

• SHSD had routinely failed to achieve progress as assessed by the Department of Education (the "Department"), whereas [MASD] had regularly achieved said progress,

• SHSD students typically underperform on Pennsylvania School assessment tests and SAT exams, while [MASD] students outperform their peers throughout the Commonwealth.

• MASD offers a more diverse array of extracurricular activities.

• Due to severe budget constraints, in recent years, [SHSD] has reduced teacher staffing and education programs.

• Significant noncompliance by [SHSD] with relevant requirements as found by the Pennsylvania Auditor General in its February 2014 Performance Audit Report, including:

• Possible teacher certification deficiencies;

• School bus driver qualification deficiencies; and

• Serious financial challenges, including a $2,680,400 general fund deficit that prompted the Auditor General to state: "If the District's financial situation continues to deteriorate, it is possible that the Pennsylvania Department of Education may declare it to be in financial recovery status."

Id . ¶ 8.

Both SHSD and MASD (collectively, the "Districts") opposed the petition, filing responses denying the allegations in the petition and asserting generally that it was legally insufficient. SHSD Response in Opposition to Petition, 9/8/2014, ¶¶ 4, 6; MASD Response in Opposition to Petition, 9/23/2014, ¶ 4.

The trial court determined that the petition complied with the preliminary requirements of section 242.1 of the Public School Code and forwarded it to the Department for a determination of the educational merits of the petition for the independent district's creation. Trial Court Order, 10/15/2014, at 1-2. This task was assigned to Deputy Secretary Matthew Stem for a pre-adjudication determination. Id .

In rendering his determination, Deputy Secretary Stem collected educational impact projection questionnaires from SHSD and MASD. Findings of Fact, 2/2/2018, ¶¶ 3-6. Both SHSD and MASD advanced reasons for opposing the transfer. MASD "strongly believe[d]" that the transfer "would adversely impact its student class size, special education service delivery model, and overall academic achievement, particularly at the elementary level." MASD Questionnaire, 2/13/2015, at 27. MASD expressed concern that the proposed transfer "would strain existing facilities, staff and programs[,]" that some of the district's programs "would need to be curtailed or eliminated so resources could be reallocated to meet the basic needs of the[ ] new students[,]" and that the "scenario would not benefit existing [MASD] students[.]" Id . at 60. SHSD also opposed the transfer, stating that it would negatively impact the quality of...