Pennsylvania Education Secretary Ron Tomalis expects to decide by Tuesday on a request by the chief recovery officer of the Harrisburg school system to delay his final financial recovery proposal.

The system has $265 million of debt principal outstanding, which if interest is counted at current rates, could cost the district $437 million over 25 years, Gene Veno, the recovery officer, and a financial consultant confirmed at a community meeting in the capital city Thursday night.

“That’s a large number, a very challenging number to work with. We’d like to reorganize this debt because it’s the biggest challenge facing the district,” Veno said at the Camp Curtin elementary school. Tomalis appointed Veno in December when he declared Harrisburg’s system moderately distressed.

Veno must get Tomalis’ approval for a 45-day extension to Tuesday’s recovery-plan deadline under the state’s workout program for distressed school systems, known commonly as Act 141.

Dean Kaplan, a managing director at Philadelphia’s PFM Group Inc., advised the district to undertake a “robust effort” to monitor federal funding, push for new federal or private support for core services, improve tax collection and use one-time revenues and unexpected funding sources to pay off bonds and create a capital reserve.

Kaplan called the interest cost an estimate, noting that some of the bonds are variable rate and that current rates are low. Debt service payments will increase from $15.2 million in fiscal 2013 to $17.4 million and $20.5 million over the following two years before stabilizing.

“The interesting thing about this is that the overall debt service, once you hit that new number, is very stable. If we can drive some revenue growth into the budget, then that becomes a more affordable portion of the budget, but it’s the next couple of years of increases that are particularly tough,” said Kaplan.

The school board has 10 days to act on Veno’s plan after receiving it. Should the district reject Veno’s plan, Tomalis could petition a court for state receivership.

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