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HB 1307 Summary of Fiscal Distress Provisions

HB 1307 Summary of Fiscal Distress Provisions

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Published by PAindy

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Published by: PAindy on May 24, 2012
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05/24/2012

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House Bill 1307/School District Financial Recovery
o
 Applicability:
All school districts except Philadelphia.
o
 Early Warning System:
PDE early warning system identifies and assists school districts experiencingmild financial difficulties.
o
 Declaration of School District Financial Recovery Status
:
o
Secretary declares financial recovery status if a school district satisfies either of thefollowing:
“Moderate”: Average daily membership greater than 7,500 AND receives basiceducation subsidy advance
(currently Harrisburg and York)
;
OR 
“Severe”: Receives basic education subsidy advance AND EITHER: (1) currently infinancial distress; or (2) engaged in litigation against the Commonwealth seekingfunding to remain in operation
(currently CUSD and Duquesne)
.
o
Within 2 years, State Board must issue final-omitted regulations establishing further criteria.
o
Commonwealth commits to ensuring continued effective education of district students.
o
Chief Recovery Officer (CRO)
o
Appointed by and serves at the pleasure of Secretary.
o
PDE pays salary and expenses.
o
Develops and implements a financial recovery plan for the school district.
o
Financial Recovery Plan
o
Provides for education of students and payment of financial obligations.
o
May require school district to use special tools, if appropriate, including (but not limited to)the following
(many of which are currently available to the Philadelphia SRC)
:
Reopen budget.
Convert school buildings to charter schools.
Cancel or renegotiate contracts, other than collective bargaining agreements (CBAs).1
 
Increase tax levies, subject to Act 1.
Close or reconstitute a school.
Renegotiate CBA, provided that parties have 90 days to ratify or CRO establishes a personnel salary schedule and other contract terms effective until a new agreement isratified.
 No right-to-strike.
 
o
Sets forth criteria Secretary must use to terminate financial recovery status.
o
 Severe Financial Recovery (CUSD and Duquesne):
o
Within 14 days of declaration of financial recovery, school board must vote to proceed with:(1) development and implementation of a plan; or (2) appointment of a Receiver.
o
CRO must prepare plan on a shorter schedule (30 days, vs. 90 days for Moderate).
o
Financial Recovery Transitional Loan Program
o
Each financial recovery school district is eligible for a long-term, interest-free loan.
Amount and terms set forth in plan.
o
Funded by annual appropriation, principal repayments, other unencumbered funds of PDE,and interest earned.
o
Loans are immediately due and payable if district fails to implement plan and is not progressing toward financial stability.
o
A charter school may agree to assist the school district in repayment of the loan.
o
Must be used to implement the plan and pay current expenses.
o
Transition Period:
After financial recovery status is terminated, the school board resumes control butthe CRO/PDE oversees the district for the longer of 5 years or for as long as a municipality within thedistrict is in distress under Act 47.2

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