Pennsylvania says 2 school districts financially distressed

Wed Dec 12, 2012 6:56pm EST

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Dec 12 (Reuters) - Pennsylvania declared two school districts financially distressed on Wednesday, appointing separate officers to draft recovery plans for each of them. The two districts are the public school systems of Harrisburg and York.

State Education Secretary Ron Tomalis determined that both districts were in states of moderate financial recovery. The districts can appeal the determination in commonwealth court.

The school boards retain control of their finances, but they have 90 days to work with the newly appointed chief recovery officers to devise plans to restore fiscal stability, according to education department spokesman Tim Eller.

School boards can gain access to state loans if they agree to a plan. If not, school districts could be forced into receivership after a year if they can't resolve their finances.

Two other districts -- Chester Upland and Duquesne City -- have also found to be in distress since the state legislature passed a new law in June. The law gives the state a way to intervene when school districts meet certain measures of distress.

Harrisburg's schools, for example, received three advances Hilary Russof basic education funding from the state in the previous five school years, Eller said.

In March 2009, Harrisburg's school district received an $11 million advance. It then received advances of $7 million in July 2010 and $4 million in May 2011, he said.

The Harrisburg district had $266.6 million of debt outstanding as of July 1, 2010, Eller said.

A separate law, Act 47, governs cities, towns and counties that are struggling financially in Pennsylvania.

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