SUNBURY - As Shamokin Area and Northwestern Academy's parent company negotiate terms regarding the future of the special education program at the juvenile detention facility, the two entities continue to face off in court over hundreds of thousands of dollars in lease rental fees.
NHS Youth Services Inc. petitioned Northumberland County Court on Dec. 29, to enforce a judge's 2008 ruling that lease rental fees be collected by Shamokin Area and paid to the private company, including that which has been held in escrow since May 2010.
That escrow account totaled $700,355.21 as of Tuesday, according to the school district.
Shamokin Area filed a response to the petition Jan. 19, in which it defers to the opinion of Pennsylvania Department of Education (PDE) counsel that the lease rental fees are not applicable to Shamokin Area's contractual relationship with Northwestern Academy.
If a county judge upholds the 2008 ruling that Shamokin Area continue to collect the fees, the matter could find its way to Commonwealth Court.
Late last week, officials of both Shamokin Area and NHS spoke of pending negotiations in which the school district could take over the special education program at Northwestern Academy on July 1. The move would reportedly create job opportunities for potentially furloughed employees of the cash-strapped school district.
The fees
Shamokin Area is required by law to provide education to students remanded to Northwestern Academy, as is any Pennsylvania public school district where, within its bounds, a juvenile detention facility exists.
The tuition, however, is paid for by the students' home school districts, with payments made to the host districts. The home districts are also required to make lease rental payments when "it shall be necessary to provide a separate school or to erect additional school buildings," according to public school code.
NHS, which opened Northwestern Academy in 1998, believes it is entitled to the lease rental fees since it provides the buildings in which academy students are taught.
PDE and the school district see it differently, with state agency attorneys maintaining that since Shamokin Area did not incur capital expenses for the construction of the juvenile detention facility, it should not collect lease rental fees from the home school districts of Northwestern Academy students.
In fact, other school districts feel the same and do not make the lease rental fee payments at all, according to court filings.
Judge Charles Saylor sided with NHS in March 2008 when he ruled that Shamokin Area collect the fees for the company. The school district complied, liquidating and turning over $2,113,951.22 previously held in escrow.
It continued to collect and release the fees to NHS until shortly after May 2010 when it again sought PDE opinion on the legality of the lease rental fees.
Judy Shopp, PDE's chief counsel, held firm the department's position in a letter to the district dated May 17, 2010, and included in court filings: "Notwithstanding Judge Saylor's decision and order, the Department stands by its existing interpretation of Section 1309(a)(1) and its position that school districts with resident students at Northwestern Academy are not obligated to pay Shamokin or Northwestern lease rental payments."
Further action
In its December petition, NHS claims Shamokin Area insisted the company challenge PDE's opinion. However, the petition states state court had previously found that NHS lacked standing to proceed against PDE in a lawsuit in which the company was a party.
NHS, in its filing, said it attempted to "amicably resolve" the issue to maintain a cooperative contractual relationship.
Shamokin Area's January response said NHS had actually assured it would bring action against PDE in 2010 and 2011.
"The Plaintiff has repeatedly misled the Defendant for approximately two years. The Plaintiff has 'sat on' whatever legal rights remain under the contract to the detriment of the Defendant," the district's January court filing states.
NHS seeks that Shamokin Area comply with the 2008 ruling, pay over the latest escrow holdings and continue to collect the fee, along with providing a audit of all tuition payments, including lease payments, received by the school district since April 1, 2008.
Shamokin Area contends that NHS is barred by the doctrine of laches from pursuing relief.
According to a unrelated state Supreme Court ruling, "laches is an equitable doctrine that bars relief when a complaining party is guilty of want of due diligence in failing to promptly institute an action to the prejudice of another."
Directors' opinions
Brian Persing, a member of the Shamokin Area School Board, spoke last week of the negotiations between the school district and NHS regarding special education.
Asked Wednesday if the pending court matter would affect negotiations, Persing said, "I don't think it will. I think it's two different issues."
Persing reiterated PDE's stance laid out by department counsel that Shamokin Area is not obligated to collect lease rental fees for NHS. Fellow board director LaRue Beck agreed.
Charlie Shuey, however, did not. The director said Wednesday that although PDE is the regulating agency which Shamokin Area answers to, the opinion of a court of law carries more weight.
"In my opinion, PDE regulations do not supersede a court order," he said. "As long as Judge Saylor's order remains enforced, I believe we're obligated to comply."
Directors Ed Griffiths and Ron McElwee also said the district should comply with the court order.
Attempts to reach the remaining four directors of the school board were unsuccessful.