Penn Hills school finances taken over
The state Department of Education has placed the Penn Hills School District into financial recovery status, seizing control of the district’s finances after years of continued budget strife.
The designation, announced Wednesday, followed a blistering audit in May 2016 by state Auditor General Eugene DePasquale that alleged mismanagement and a lack of oversight of district finances. Mr. DePasquale said at the time that he had referred the conclusions to law enforcement officials, but no public action has occurred.
Through the designation, the state will appoint a chief recovery officer who will carry out a plan designed to lead the district to financial health. The school board will create a special advisory committee to provide recommendations and feedback on the plan.
The state designated Penn Hills as a financial watch school district in June 2017, providing extra help and financial resources in the months since. The state provided the district with an extra $2 million during both last school year and this school year, but the district’s budget woes continued, officials said.
Numerous challenges qualified the cash-strapped district for the designation, including a delinquent tax rate of more than 10 percent and total outstanding debt greater than the district’s total annual expenditures, according to a news release.
The district is roughly $172 million in debt, with about 13 percent of its budget spent on debt service, obligations it described as “crushing” in a budget presentation last year. At the current rate, Penn Hills expects that debt to remain on the books through 2043.
Penn Hills joins Duquesne as the second school district in the Pittsburgh area in financial recovery status. Other districts with the designation include Harrisburg, York City, Chester Upland and Scranton.
Penn Hills can appeal the designation until Jan. 30. After that, the state will appoint a chief recovery officer within five days.
School board President Erin Vecchio did not immediately respond to a request for comment.