Pennsylvania's capital, Harrisburg, now faces another state intervention, this time for its school district.
Following up on a state law passed last summer, Pennsylvania Secretary of Education Ron Tomalis on Wednesday declared Harrisburg's school system in "moderate financial recovery" and named Gene Veno of Lower Paxton Township, Pa. as its chief recovery officer.
Veno, 62, will craft a recovery plan for the district, whose deficit earlier this year reached $16 million.
Should the district reject the plan, Tomalis could petition a court for state receivership.
Veno, now a consultant for the American Association of Public Insurance Adjusters of Washington, D.C., is a former Scranton, Pa., school board member and has drafted a strategic marketing plan for Lebanon Catholic High School.
Moderate financial recovery applies to a system with an average daily membership of more than 7,500 that has received an advance of its basic education subsidy at any time.
Messages seeking further comment were left with a Tomalis spokesman.
Gov. Tom Corbett on June 30 signed a bill creating systems for early detection of financial strain and the crafting of financial recovery plans. Moody's Investors Service at the time called the law a credit positive.
The Harrisburg, York, Chester-Upland and Duquesne school districts immediately qualified.
Tomalis Wednesday named David Meckley, 61, of Spring Garden Township, Pa., to be York's chief recovery officer. Last month he selected Paul Long of Pittsburgh for the same position in Duquesne.
Chester-Upland's board, in a 5-4 vote late last month, rejected the recovery plan proposed by its appointed chief recovery officer, Joseph Watkins, and is challenging a Tomalis motion to name Watkins receiver. Delaware County Court of Common Pleas Judge Chad Kenney held a hearing last week on the matter.
Sen. Jeffrey Piccola, R-Susquehanna Township, who also championed legislation in 2011 calling for the state takeover of the City of Harrisburg, sponsored the school receivership bill on behalf of Corbett. The city itself is mired in about $340 million of debt that it cannot pay, mostly from incinerator retrofit bond financing overruns, and is under a receiver, William Lynch.
David Fiorenza, a Villanova School of Business professor and a former chief financial officer of Radnor Township, Pa., called the school legislation "Act 47-like," referring to the state-sponsored workout program for distressed communities.
But Fiorenza sees problems with the new law.
"This [Corbett] administration is starting to become cumbersome in their regulations and control and not conservative in their approach to allowing school districts to work out their problems," he said in an interview. "Additional layers of consultants and attorneys do not always solve the financial issues they are facing."
Fiorenza said the state should explore economies of scale at the local level, such as municipal and school district consolidation, or shared services among various levels of government.
