State Board of Education Topic Summary s13

STATE BOARD OF EDUCATION – TOPIC SUMMARY Topic: Union-Baker/Umatilla-Morrow ESD Merger Date: June 24, 2010 Staff/Office: Ed Dennis/Jan McComb, ODE Action Requested: Informational Only Adoption Later Adoption Adoption/Consent Agenda

ISSUE BEFORE THE BOARD: Whether to approve proposed merger of Union-Baker ESD with Umatilla- Morrow ESD.

BACKGROUND: Education Service Districts (ESDs) exist to assist school districts and the Department of Education in achieving Oregon’s educational goals by providing equitable, high quality, cost-effective and locally responsive educational services to area students. The regional ESDs and assigned component school districts jointly develop the local service plan outlining the services provided to school districts. Each ESD is governed by its own board. ESD missions, number, governance structure, and boundaries are set in state law. There are 20 ESDs, although the legislature has entertained bills that reduce that number.

In March, the board heard a proposal to split the Union-Baker ESD and merge it into the Umatilla-Morrow ESD (Union County) and Malheur ESD (Baker County) along county lines. During the public hearings process, residents of Malheur expressed concern regarding the merger, citing the increase in their permanent tax rate for their area, which would be especially problematic as the school district was proposing a school bond this year. Based on the testimony, the proposal to the board was withdrawn.

The new proposal has Umatilla-Morrow ESD absorbing all of the Union-Baker ESD area. Hearings were held in the affected ESDs in early June (hearings officer report attached). The board’s approval in June will enable the ESDs to divide the area into new zones and meet a July deadline of the county clerk’s in order for a November 2010 vote to install new board members. The new district would come into existence May 31, 2011.

Voluntary Merger Requirements  ESD boards mutually consent to the merger via a majority vote of each board.1  The resolution to merge is presented to the State Board of Education who reviews the petition.  Within 15 days of that board meeting, the state board notifies the ESD boards with the date/place of a public hearing on the matter (must be within the affected ESDs’ territory). The state board also provides notice of the hearing and conducts the hearing (a hearings officer, board member or department staff person may conduct the public hearings).  At the hearing, the effect of the proposed merger on the districts involved is discussed.  Within 15 days of the hearing, the hearings officer produces a written analysis and recommendation on the proposal.  The state board hears the report at its next regularly scheduled meeting and considers the feasibility of the merger. Fiscal and programmatic impact of the proposed merger must be considered when determining feasibility.  Following the hearings, if the state board determines that the proposed merger is feasible, the board must order the proposed merger based on the proposals contained in the petitions.  Following the issuance of an order by the State Board of Education to join two or more ESDs together, the chairperson from the board of the most populous merging ESD must call a meeting of newly formed joint board, which must include all members of the boards of all merging ESDs. The joint board shall divide the newly formed ESD into at least seven, but no more than eleven zones.

POLICY ISSUES:  Is the proposed merger feasible?

1 Another method, not used in this case, is if the component school districts petition the ESD to merge. 1 STAFF RECOMMENDATION: Order the merger of Umatilla-Morrow and Union-Baker Education Service District.

2 BEFORE THE OREGON DEPARTMENT OF EDUCATION

PROPOSED MERGER OF UMATILLA-MORROW AND UNION-BAKER EDUCATION SERVICE DISTRICTS

HEARING OFFICER’S REPORT

ORS 334.720 requires the State Board of Education to conduct a hearing in each of the affected education service district’s territory to discuss the effect of the proposed district. At its May meeting the State Board delegated to department staff the responsibility for conducting the hearings and submitting this report. On June 8, 2010, Cindy Hunt, Superintendent’s Office, conducted a public hearing in Pendleton which is within the Umatilla-Morrow Education Service District and in Island City which is in the Union Baker Education Service District. Public comment on the proposed merger was submitted at each of hearings. Notice of hearing was published in a timely manner and as required by state law. The hearing was held at the Department’s offices in Salem, Oregon before Cindy Hunt, Hearing Officer.

Representatives of the following entities were present at the Pendleton hearing:  Baker School District  Umatilla-Morrow Education Service District Board  Umatilla-Morrow Education Service District

Representatives of the following were entities present at the Island City hearing:  Baker All Prep Academy Charter School  Baker School District  Cove School District  Elgin School District  Imbler School District  La Grande School District  Pine Eagle School District  Umatilla-Morrow Education Service District Board  Umatilla-Morrow Education Service District  Union-Baker Education Service District  Union School District  The Observer Newspaper

Under state law the state board is required to determine whether the proposed merger is feasible. To determine this, the state board must consider fiscal and programmatic impact of the proposed merger. As the hearings officer I am required to prepare an analysis and report of the hearing that focuses on the feasibility of the merger.

Summary of testimony from hearings:

The staff and board members present at the hearings were in generally in favor of the proposed merger. More specifically, testimony was received that all of the Union County Superintendents were in favor of the merger which according to the testimony does not happen often on any topic.

Others testified that merger may be one of the only options for the Union-Baker Education Service District. The district has significant debt relating to PERS obligations which is unsustainable. 3 Additionally the district owes the department payments due to alternative education overpayments. Both of these debts would be addressed and remedied under the merger plan. Staff testified that the proposed plan for the merged district was fiscally sustainable.

One school district expressed concerns about receiving services due to the large geographic area of the new district. Staff testified that the proposed district would be able to provide services throughout the new territory as there would be offices in many of the counties. Interstate 84 also provides a corridor through the middle of the district. Additionally, staff has explored the possibility of contracting for services with Grant Education Service District for those school districts that would be geographically closer to that district.

Many school districts in both education service districts already receive regional services and technology services from the Umatilla-Morrow Education Service District. The school districts reported being pleased with their relationship with the district and the level services. Although the districts acknowledged that services would be determined through a meeting of the superintendents in the merged district, the districts also had confidence in the level of services moving forward based on the existing relationships. The LaGrande School District testified that the district expected to save money if the merger were to move forward primarily due to receiving an increased level of services.

The Baker School District currently receives “pass-through” moneys from the Union-Baker Education Service District. The school district uses these moneys to provide special education and related services to students. The district testified that these services are being provided in a financially efficient manner and at a high level of quality and, based on this, the method and manner of delivering these services should continue regardless of the merger. One staff member was still in favor of the merger but would like to see the “pass-through” moneys continue at the option of the school district. Both the school district and education service district reported that they had met to discuss this issue and plans for serving students receiving special education after the merger.

Analysis and Conclusions:

As part of my analysis I reviewed the documents submitted to the state board, testimony received at the hearing and state law relating to mergers of education service districts. ORS 334.720(2) directs: If, after the hearings, the State Board of Education determines that the proposal is feasible, the board shall order the proposed merger of the districts based on the proposal.

Webster’s Dictionary defines “feasible” as “capable of being done or carried out.” The merger is both fiscally and programmatically feasible. The plan submitted by the education service districts is sound and generally supported by the component school districts. Component districts, schools, staff and students will be better served by the merged district.

Based on the testimony received at the hearing and a review of the documents submitted to the state board, I am recommending that the state board order the merger of the Umatilla-Morrow and Union- Baker Education Service Districts.

Respectfully submitted this 14th day of June, 2010

Cindy Hunt Hearing Officer Office of Superintendent of Public Instruction 4 Oregon Department of Education

5 BEFORE THE STATE BOARD OF EDUCATION

In the Matter of the Merger of the Umatilla-Morrow Education Service District and FINAL ORDER Union-Baker Education Service District

The State Board of Education finds that the merger proposal submitted by the Umatilla-Morrow and Union-Baker Education Service Districts is feasible.

Pursuant to ORS 334.720, the Umatilla-Morrow Education Service District and Union-Baker Education Service District are ordered to merge. The new education service district shall come into existence effective May 31, 2011.

______Duncan Wyse Chairperson, State Board of Education

Date of Service: ______

NOTICE: You are entitled to judicial review of this order. Judicial review may be obtained by filing a petition for review within 60 days from the service of this order. Judicial review is pursuant to the provisions or ORS 183.484 to the Marion County Circuit Court.