A law calling for more state oversight of financially distressed Pennsylvania school districts is a credit positive, according to Moody’s Investors Service.
On June 30, Gov. Tom Corbett signed a bill entailing new systems for early detection of financial strain and the implementation of financial recovery plans for struggling school districts.
Chester Upland, Duquesne and Harrisburg are among the school districts that could immediately qualify. Chester-Upland barely avoided closure in January when a federal judge ordered the state to provide $3.2 million in additional funding.
Moody’s cited a May survey by the Pennsylvania Association of School Administrators and the Pennsylvania Association of School Business Officials that said more than half the state’s school districts envision greater financial pressure over three years.
The new oversight law will create an Office of Financial Recovery within the state’s Department of Education, and empower the education secretary to appoint a chief recovery officer to lead a three-member control board.