          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In Re: Petition for Formation of          :
Independent School District Consisting    :
of the Borough of Highspire, Dauphin      :
County, Pennsylvania                      :   No. 242 C.D. 2019
                                          :   Argued: December 12, 2019
Appeal of: Highspire Education            :
Coalition                                 :


BEFORE:      HONORABLE MARY HANNAH LEAVITT, President Judge
             HONORABLE P. KEVIN BROBSON, Judge
             HONORABLE ANNE E. COVEY, Judge


OPINION
BY PRESIDENT JUDGE LEAVITT                                   FILED: March 2, 2020

             The Highspire Education Coalition (Coalition) appeals an order of the
Court of Common Pleas of Dauphin County (trial court) denying its “Petition for
Formation of an Independent School District.” The trial court did so because the
Secretary of Education, Pedro A. Rivera (Secretary), determined that the petition to
transfer students residing in the Borough of Highspire out of the Steelton-Highspire
School District and into the adjacent Middletown Area School District lacked merit
from an educational standpoint. The Secretary so ruled despite finding that the
transferring students would receive a better education in the Middletown School
District. The Coalition contends that the Secretary erred in basing his decision on
financial concerns, not educational merit. For the following reasons, we agree with
the Coalition and reverse and remand the matter to the trial court.
                                        Background
              On August 15, 2014, the Coalition1 petitioned the trial court to establish
an independent school district for the purpose of transferring Highspire students
presently enrolled in the Steelton-Highspire School District to the Middletown Area
School District. Steelton-Highspire has approximately 1,200 students from Steelton
and 276 students from Highspire. Middletown has approximately 2,300 students.
              The Coalition’s petition offered several reasons for the transfer.
Steelton-Highspire students do not show expected educational progress, as measured
annually by the Department of Education, and they underperform on the
Pennsylvania System of School Assessment (PSSA) tests. By contrast, Middletown
students perform above the state’s proficiency level; outperform Pennsylvania
students statewide; and enjoy more extracurricular programs. The Coalition’s
petition also pointed out that the Auditor General found that Steelton-Highspire has
a financial deficit; is non-compliant with teacher certification requirements; and does
not properly qualify its school bus drivers.
              Steelton-Highspire and Middletown both opposed the Coalition’s
transfer petition. Steelton-Highspire denied the allegations, called them conclusions
of law to which no response was required, and stated that the Auditor General’s
report spoke for itself. Middletown’s answer stated that its proficiency in PSSA
testing in reading and math fell slightly below the state average, as did its School
Assessment Test scores.          It furloughed teachers in 2010 because of budget
constraints. Both school districts requested the trial court to deny the petition.
Neither school district’s answer contained new matter.


1
 The Coalition describes itself as “taxable inhabitants of the Borough of Highspire[.]” Coalition
Brief at 5.
                                               2
             The parties stipulated that the Coalition satisfied the initial procedural
requirements for a valid transfer petition. Specifically, the petition was signed by a
majority of the taxable residents of Highspire; described the boundaries of the
territory to be included in the transfer; stated the reason for the transfer; and
identified the school district to which the transfer was proposed. In light of this
record, the trial court then transferred the matter to the Secretary to consider the
merits of the petition from an educational standpoint.
                                 Pre-Adjudication
             The Secretary appointed Deputy Secretary Matthew Stem to render a
pre-adjudication determination on the educational merits of the Coalition’s petition.
The Secretary sent “Educational Impact Projection Questionnaires” to both districts
and engaged PFM Consulting, LLC (PFM), to do a financial and a classroom audit
of both districts. The Department’s legal counsel advised the Coalition that it could
not participate in PFM’s review but that it would be given 30 days to comment on
PFM’s study. Reproduced Record at 1021a (R.R. __).
             On July 18, 2017, PFM issued its report. The report compiled data on
both districts with respect to student services, staffing, student attendance and
graduation rates. It summarized the academic programs at the elementary, middle
school and high school levels, as well as the school achievement and student growth
data. The PFM Report focused on finances and made projections of tax revenue and
state subsidies should the transfer occur. It then summarized “the review team’s
conclusions as to the educational impact of the proposed transfer given the
instructional and financial changes” that would result in each district. PFM Report
at 41; R.R. 1070a. The “review team” concluded that the transfer would negatively




                                          3
affect the students remaining in Steelton-Highspire because of its impact upon the
district’s “financial flexibility.” Id. at 48; R.R. 1077a.
               On February 2, 2018, Deputy Secretary Stem issued a pre-adjudication
determination that the proposed transfer of Highspire students lacked educational
merit. His decision referred to documents submitted by all three parties and the PFM
Report. He acknowledged that Middletown produces better academic results than
does Steelton-Highspire, which favored the transfer. However, the Deputy Secretary
found that Steelton-Highspire’s loss of revenue from the transfer would have a
negative impact on the students remaining in Steelton-Highspire, which is on the
Secretary’s financial watch list.
                                          Adjudication
               The Coalition requested an administrative hearing on the Deputy
Secretary’s decision, and the Secretary granted the request.2 He appointed a hearing
officer, who convened a hearing on June 11, 2018. The parties agreed to proceed
with “a joint stipulation with documents referred to in the stipulation copied on a
[compact disc],” which was entered “into the record as a joint exhibit.” Notes of
Testimony, 6/11/2018, at 6 (N.T.__); R.R. 1344a. The stipulation accepted some of
Deputy Secretary Stem’s 257 findings of fact.                 However, it also stated that the
“parties are not stipulating to the accuracy or the relevance of the facts or documents
subject to these stipulations and the parties explicitly reserve the right to object to
facts or documents on these bases.” Stipulation ¶9 at 1; R.R. 59a. On July 25, 2018,
the parties submitted a second stipulation of facts with exhibits, which added two
documents to the evidentiary record.

2
  “Actions taken by a subordinate officer under authority delegated by the agency head may be
appealed to the agency head by filing a petition within 10 days after service of notice of the action.”
1 Pa. Code §35.20.
                                                  4
             Thereafter, the parties submitted briefs with proposed findings of fact
and conclusions of law. The Coalition argued that the PFM Report constituted
inadmissible hearsay because it was prepared by anonymous individuals of unknown
qualifications who did not sign or date the report. The Coalition argued that the
PFM Report was tainted by this lack of transparency and, consequently, was
unreliable and speculative. The Coalition further argued that the report’s financial
analysis was beyond the scope of the Secretary’s “educational merit” review. The
Coalition argued that the educational information in the PFM Report demonstrated
that Middletown achieves an educational outcome for students that is superior to that
achieved by Steelton-Highspire.
             Steelton-Highspire argued that an assessment of the educational merit
of the proposed transfer should not be limited to a consideration of Highspire
students but should also consider the students remaining in its district. It argued that
its educational programs are comparable to Middletown’s notwithstanding its
financial challenges. The reduction in student population would reduce Steelton-
Highspire’s educational responsibility, but the concomitant loss of revenue would
adversely affect its finances. It predicted teacher layoffs and an increase in class
size.
             Middletown argued that the proposed transfer would strain its facilities,
staff and programs. Specifically, the transfer could crowd its elementary school
buildings; could end its Head Start program for lack of space; could increase special
education, technical and transportation costs; and could curtail supplemental
education initiatives at the secondary level. The increase in tax revenue and state
subsidies would not be sufficient to take on 276 students from Highspire.
Middletown also predicted an increase in class size.


                                           5
                On January 16, 2019, the Secretary issued an adjudication that affirmed
Deputy Secretary Stem. It addressed each of the Coalition’s contentions.
                The Secretary first addressed the Coalition’s contention that a study of
finances falls outside the scope of “educational merit.” The Secretary reasoned that
the Public School Code of 1949 (School Code)3 states a preference for financially
stable school districts. Steelton-Highspire is on the Department’s “Financial Watch
Status” list, and the proposed new district would strip Steelton-Highspire of 30% of
its real estate tax revenue and 40% of its earned income tax revenue, for a total of
$1.6 million per year. The school district’s state education subsidy might be reduced
by $2 million per year. The Secretary opined that the School Code requires the
Department to assist school districts confronting financial hardship.
                Second, the Secretary addressed the Coalition’s objection to the
admissibility and quality of the PFM Report. The Secretary found that the Coalition
agreed to enter the PFM Report into the record, subject to its hearsay objection.
Because the Coalition chose not to examine a witness from PFM who was made
available for questioning, the Secretary rejected the Coalition’s objections to the
PFM Report.
                Finally, the Secretary addressed the educational merits of the
Coalition’s proposed transfer. He explained that the factors historically found
relevant to educational merit include elimination of discontinuous boundaries of an
existing district; unifying students in one municipality into the same school district;
and improving student transportation. None of these factors were relevant to the
Coalition’s petition. Nevertheless, the Secretary agreed that the proposed transfer




3
    Act of March 10, 1949, P.L. 30, as amended, 24 P.S. §§1-101 - 27-2702.
                                                6
would provide a better education for the Highspire students, which is an appropriate
factor in considering its educational merit.
               However, the Secretary also found that the transfer of Highspire
students to Middletown would have an adverse financial impact upon Steelton-
Highspire, which was already on the Department’s financial watch list. This adverse
financial impact to Steelton-Highspire outweighed the educational benefit to
Highspire students. Further, the PFM Report noted that Middletown’s elementary
schools were close to capacity. The Secretary agreed that the addition of Highspire
students could lead to an increase in class size at Middletown. This also weighed
against the educational merit of the transfer petition.
               The Secretary concluded that the educational merits of the petition for
the transferring Highspire students did not outweigh the potential for detriment to
the students remaining in the Steelton-Highspire district. The Secretary denied the
Coalition’s challenge to the determination of Deputy Secretary Stem. Based on the
Secretary’s adjudication that the petition lacked educational merit, the trial court
denied the Coalition’s petition.
                                            Appeal
               The Coalition appealed the trial court’s order, raising three issues.4
First, it argues that the Secretary erred in focusing upon the financial condition of
Steelton-Highspire in assessing the educational merit of the Coalition’s petition.


4
  Because the trial court’s role in evaluating “educational merit” is purely ministerial, we review
the Secretary’s denial of the petition pursuant to Section 704 of the Administrative Agency Law,
2 Pa. C.S. §704, governing Commonwealth agency actions. Section 704 restricts our review to
determining whether constitutional rights have been violated, whether the adjudication is in
accordance with the law, whether the proceedings relating to practice and procedure before an
agency were violated and whether the necessary findings of fact are supported by substantial
evidence. Id.
                                                7
Second, it contends that the Secretary erred in considering the PFM Report. Third,
it asserts that the evidence of record supports the conclusion that the petition has
educational merit.
                                            Analysis
                 We begin with the relevant law governing transfer petitions. Section
242.1 of the School Code authorizes the “[e]stablishment of independent districts
for transfer of territory to another district.” 24 P.S. §2–242.1.5 Subsection (a) sets
forth the procedures for transfer and states as follows:

                 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 by the Superintendent of Public

5
    Section 242.1 of the School Code was added by the Act of June 23, 1965, P.L. 139.
                                                 8
               Instruction[6] and the petition shall 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.

24 P.S. §2-242.1(a) (emphasis added). In sum, the trial court determines whether a
petition meets the procedural requirements of Section 242.1(a) of the School Code.
Id. If the requirements are met, the trial court transfers the matter to the Secretary
to rule on the educational merits. If the Secretary determines the transfer lacks
educational merit, the trial court must deny the petition.7
               Section 242.1(a) of the School Code requires the Secretary to “pass[]
upon” the “merits of the petition … from an educational standpoint.” 24 P.S. §2-
242.1(a).     The School Code does not define “merits ... from an educational
standpoint,” and so the phrase must be given its ordinary meaning. In re Petition for

6
  The Superintendent of Public Instruction is now the Secretary. See Act of July 23, 1969, P.L.
181, Sections 1 and 2 of the Administrative Code of 1929, 71 P.S. §§1037, 1038.
7
  If the Secretary determines the petition has educational merit, the trial court will order the
establishment of an independent school district, prorate Commonwealth subsidies payable to the
school districts at issue, and forward the matter to the State Board of Education for its review. 24
P.S. §2-242.1(a) and (b).
                                                 9
Formation of Independent School District, 17 A.3d 977, 985 n.10 (Pa. Cmwlth.
2011) (Riegelsville II).8 With respect to the Secretary’s power to deny a transfer,
this Court has explained as follows:

              [W]hen the Secretary exercises his [or her] discretion to
              determine whether a proposed transfer has “merit from an
              educational standpoint,” he [or she] must be guided by the policy
              choices made by the legislature in the [School Code] and not by
              his [or her] own personal sense of what constitutes good
              education policy.

Washington Township Independent School District v. Pennsylvania State Board of
Education, 153 A.3d 1177, 1184 (Pa. Cmwlth. 2017) (quoting Riegelsville II, 17
A.3d at 991). This “manifest restriction” on the Secretary’s discretion is “necessary
lest the statute violate the proscription against delegating legislative power to an
administrative agency.” Id. at 1184 (quoting Riegelsville II, 17 A.3d at 988-89).
With this legal framework in mind, we consider the Coalition’s first issue on appeal.
              The Coalition argues that the Secretary erred in focusing upon the
finances of Steelton-Highspire. The Coalition contends the Secretary should have
considered only the educational impact on students. In support, the Coalition cites
Riegelsville I and II. Steelton-Highspire and Middletown respond that Riegelsville
I and II actually support the Secretary’s adjudication.
              Riegelsville I, 962 A.2d 24, involved a petition to transfer 60 students
living in the Borough of Riegelsville from the Easton Area School District to the
Palisades School District. The Secretary found the proposal lacked educational
merit, and the trial court denied the transfer. Because the Secretary made his
determination without findings of fact or conclusions of law, this Court concluded

8
 For consistency with the parties’ briefs, In re Petition for Formation of Independent School
District, 962 A.2d 24 (Pa. Cmwlth. 2008), will be referred to as Riegelsville I.
                                             10
that the Secretary’s determination was an invalid adjudication under the
Administrative Agency Law. We vacated the trial court’s decision and directed a
remand to the Secretary to conduct a formal administrative hearing on whether the
petition had educational merit.
               Upon remand, the trial court conducted an evidentiary hearing on the
question of educational merit and transferred that record to the Secretary to make
findings of fact and conclusions of law. Again, the Secretary held the petition lacked
educational merit, and the petitioners appealed. In Riegelsville II, 17 A.3d 977, we
concluded that the trial court lacked jurisdiction to conduct an evidentiary hearing
on behalf of the Secretary.          Accordingly, we vacated the Secretary’s second
adjudication. 9
               In Riegelsville II, the Secretary concluded “that so long as the two
districts affected by a proposed transfer are in ‘general parity’ there can be no
transfer.” 17 A.3d at 989-90. We held that the Secretary erred in using “his own
personal sense of what constitutes good education policy” and the public interest.
Id. at 991. To be constitutional, Section 242.1 cannot delegate legislative power to
a public official. In fact, the phrase “merits … from an educational standpoint” was
challenged in In re Weaverland Independent School District, 106 A.2d 812, 814 (Pa.
1954), as both vague and an impermissible delegation of legislative power.
Acknowledging that a statute must prescribe “with reasonable clarity the limits of
power delegated,” our Supreme Court held that the phrase “educational merit” did
not confer unlimited power upon the Secretary because Section 242.1 was concerned
with “school considerations.” Id.


9
 We noted that the parties could “stipulate to make the trial court’s record the record before the
Secretary on remand.” Riegelsville II, 17 A.3d at 991.
                                               11
              The Coalition argues that Riegelsville I stands for the proposition that
the Secretary’s evaluation should focus on whether the proposed transfer will
“advance the public education of the affected students[.]” Riegelsville I, 962 A.2d
at 28. The Coalition also argues that Riegelsville II implicitly rejected the principle
that the financial consequences of a transfer are relevant to “educational merit.” It
points out that once the transfer is approved by the Secretary, it is the trial court that
orders the establishment of an independent school district and determines “the
amount, if any, of the indebtedness and obligations of the school district, from whose
territory such independent district is taken, that [the independent school] 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.” Section 242.1(a)
of the School Code, 24 P.S. §2-242.1(a). The Coalition argues that the School Code
separates the educational merits of a proposed transfer from its financial effects.
              Steelton-Highspire and Middletown disagree. They acknowledge that
in Riegelsville II, 17 A.3d at 985, this Court criticized the Secretary for addressing
the petition “strictly in terms of its potential financial consequences.” Here, they
contend, the Secretary did not limit his analysis to financial considerations. They
also argue that the School Code requires the Department of Education to assist
school districts in dealing with financial distress. See Sections 601-A10 to 695-A11
of the School Code, 24 P.S. §§6-601-A - 6-695-A (addressing “School District
Financial Recovery”). They argue that a school district’s financial condition is an
appropriate factor in evaluating whether a transfer petition has merit from an
“educational standpoint.”


10
   Added by the Act of July 12, 2012, P.L. 1142.
11
   Added by the Act of November 6, 2017, P.L. 1142.
                                            12
             The statutory scheme for review of a transfer petition involves work by
the trial court, the Secretary and the State Board of Education (State Board). The
trial court first determines whether the petition meets the procedural prerequisites.
If so, the petition is transferred to the Secretary to consider its “educational merit.”
If the petition has educational merit, the petition returns to the trial court to decide
the precise apportionment of the state education subsidy and the school debt. The
trial court then provides this information to the State Board. The State Board does
the final review, in which it addresses “whether the assignment of the newly-created
independent school district to the receiving district would violate the adopted Board
standards or express statutory standards that govern the organization of school
districts.” Washington Township, 153 A.3d at 1187. This Court has explained the
State Board’s work as follows:

             [T]he Secretary is to evaluate only the educational merit of the
             petition to create an independent school district for transfer
             purposes. Under Section 293.1 of the School Code, and based
             on the standards set forth above, the Board is reviewing not the
             petition filed and approved by the Secretary and the common
             pleas court, but an application for assignment of the newly-
             created independent school district to the designated receiving
             school district, as set forth in the common pleas court’s decree.
             It must look at the proposed amendment to the organizational
             plan and determine whether the assignment of the newly-created
             independent school district to the receiving district would violate
             the adopted Board standards or express statutory standards that
             govern the organization of school districts. If allowing the
             assignment would not violate these standards, then the Board
             should approve the amendment “and direct the Council ... to
             make the necessary changes [to] the county plan.” Section 293.1
             of the School Code. If approval of the application would be
             contrary to these standards, then the Board should deny the
             application.


                                          13
Id. at 1187-88 (emphasis omitted).
               In Weaverland, 106 A.2d at 814, our Supreme Court held that the
phrase “merits … from an educational standpoint” was not unconstitutionally vague
and, thus, the words should be given their “ordinary meaning.” Webster’s Third
New International Dictionary defines “educational” as follows:

               1. of, relating to, or concerned with education or the field of
               education. 2. Serving to further education.

WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 723 (2002). In turn, it defines
“education” as follows:

               1. The act or process of educating or being educated as: a: obs,
               the act or process of rearing up or bringing up … b: the act or
               process of providing knowledge, skill, competence, or desirable
               qualities of behavior or character or of being so provided esp. by
               a formal course of study, instruction, or training….

Id. at 723. This definition of “education,” includes four discrete and numbered
definitions with sub-headings.            All refer to “course of study,” “learning,”
“instruction,” and “training.” Id. The noun “merit” is defined as a “praiseworthy
quality” or “worth or excellence in quality or performance.” Id. at 1414 (emphasis
added).
               Here, the Secretary based his decision upon Steelton-Highspire’s
financial condition.12 This is beyond the “school considerations” that the Supreme
Court held to be the essence of “educational merit” in Weaverland, 106 A.2d at 814.

12
   The legislature has directed the Department of Education to establish an early warning system
to identify school districts with financial difficulties. Section 611-A(a) of the School Code, 24
P.S. §6-611-A(a). The Department provides technical assistance to remedy the financial problems,
Section 611-A(b) of the School Code, 24 P.S. §6-611-A(b), and ensures “the delivery of effective
educational services to all students enrolled in a school district in financial recovery status [or]
receivership….” Section 622-A of the School Code, 24 P.S. §6-622-A.
                                                14
Nor does a school district’s financial condition meet the ordinary understanding of
“educational,” which focuses on instruction, course of study and learning.
              Steelton-Highspire and Middletown argue that the Secretary must
consider the financial health of the two districts affected by a transfer. They also
argue that the Secretary did not infringe upon the trial court’s obligation to
“determine the amount, if any, of the indebtedness and obligations” of Steelton-
Highspire to be assumed by Middletown or the proration of “the State subsidies
payable between or among the losing district or districts and the receiving district.”
Section 242.1(a) of the School Code, 24 P.S. §2-242.1(a). We disagree.
              In Riegelsville II, the Secretary rejected the transfer because the quality
of education the transferred students would receive in the new school was not
markedly better than what they already received. Here, the Secretary expressly
found, as fact, that the transferring Highspire students will have access to a higher
quality education at Middletown. The Secretary’s understanding of “educational
merit” shifts with each transfer petition. The Secretary’s decision on the Coalition’s
petition effectively nullifies the possibility of any transfer of students from a school
district in financial peril unless agreed to by that district.
              Steelton-Highspire has a long history of running structural deficits and
is in financial watch status.13 The Secretary explained as follows:

              I cannot ignore that if granted, this Petition would punch a
              material hole in Steelton-Highspire’s budget on account of a loss
              of revenue. There was no evidence of easy ways in which
              Steelton-Highspire would be able to save money as the result of



13
  Highspire students make up 17% of the Steelton-Highspire population, but Highspire taxpayers
provide 34% of its tax base. The transfer could reduce the school district’s taxable revenue by
approximately $2 million and its state subsidy by approximately $1.6 million.
                                              15
             the transfer of these students without cutting education programs
             to the students that remain.

Secretary Adjudication at 35; R.R. 2812a. The Secretary presumed that the loss of
revenue to Steelton-Highspire, due to the reduction in tax revenue and state
subsidies, would reduce the educational opportunity to students remaining in
Steelton-Highspire. The Secretary also presumed that the reduction in student
enrollment would not create cost saving benefits to Steelton-Highspire. Notably,
there are no specific findings to support those presumptions.
             The Secretary found that both school districts offer a comparable range
of academic courses and programs. Both districts accommodate students of various
abilities and interests. Both districts have supported parental involvement and an
infrastructure to support students. The Secretary explained:

             My sole role in this matter is to pass upon the educational merits
             of the Petition. Looking at the clear educational policy choices
             made by the legislature in the School Code, it is clear that the
             Petition would offend these choices by leaving the remainder of
             [Steelton-Highspire] financially undermined. The legislature
             clearly intended to foster the creation of financially stable school
             districts for educational policy reasons. While by some relevant
             measures [Middletown] produces better academic results, the
             educational merits of the Petition as a whole do not outweigh the
             clear educational demerits of the Petition.

Secretary Adjudication at 36; R.R. 2813a (emphasis in original).
             The Secretary refused Highspire students the opportunity for better
“academic results” on financial grounds. The Coalition explains that the Secretary’s
adjudication has created a “financial paradox” because Steelton-Highspire is
“projected to continue to experience a persistent structural deficit with or without the
transfer[.]” Secretary Adjudication, Finding of Fact No. 98; R.R. 2794a (emphasis

                                          16
added). Stated otherwise, the educational opportunity denied Highsphire students
will not solve the district’s financial challenges.         The Secretary justifies this
outcome, declaiming that “educational” is different from “academic.” Perhaps this
is so, particularly given the extracurricular opportunities available to students in both
school districts. However, we disagree that “educational” is broad enough to
encompass “financial” and reject this conclusion of the Sectretary.
              The Secretary found that the transfer has educational merit for
Highspire students, and this was based on objective and historical data. However,
the Secretary found this educational merit was outweighed by PFM’s financial
projections, which are conjectural. In any case, once educational merit is found, it
is the trial court that must “determine the amount, if any, of the indebtedness and
obligations of the school district, from whose territory such independent district is
taken, that [the independent school] 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.” Section 242.1(a) of the School Code, 24 P.S. §2-242.1(a).
This information is then provided to the State Board for its review.
              It makes little sense for the Secretary to speculate on the debt of the school
districts and the proration of State subsidies when it is the trial court that must make
specific findings on those amounts and then furnish the totals to the State Board for its
review. Categorically, the financial concerns that informed the Secretary’s decisions
are not part of his review of whether a transfer petition has merit from an educational
standpoint.
                                       Conclusion
              For all the above reasons, the Secretary erred in finding the educational
merits of the transfer to be outweighed by PFM’s adverse financial projections,


                                            17
which are conjectural and beyond the scope of the Secretary’s “educational merits”
review. Accordingly, the order of the trial court is reversed and the matter is
remanded to the trial court for it to enter a decree establishing an independent school
district pursuant to Section 242.1 of the School Code, 24 P.S. §2-242.1.14


                                         _____________________________________
                                         MARY HANNAH LEAVITT, President Judge




14
   Because we reverse on the basis of the Coalition’s first issue, we need not address the remaining
issues.
                                                18
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

In Re: Petition for Formation of            :
Independent School District Consisting      :
of the Borough of Highspire, Dauphin        :
County, Pennsylvania                        :     No. 242 C.D. 2019
                                            :
Appeal of: Highspire Education              :
Coalition                                   :


                                       ORDER


              AND NOW, this 2nd day of March, 2020, the order of the Court of
Common Pleas of Dauphin County (trial court), dated January 31, 2019, is hereby
REVERSED, and the matter is REMANDED to the trial court in accordance with the
instructions set forth in the attached opinion.
              Jurisdiction relinquished.


                                      _____________________________________
                                      MARY HANNAH LEAVITT, President Judge
