§ 18.5. Issuance of declaration under section 621-A(a)(2) of the School Code.
(a) Consistent with section 621-A(a)(2)(i) of the School Code (24 P.S. § 6-621-A(a)(2)(i)), the Secretary may consider the following criteria when determining whether to issue a declaration that a school district is in financial recovery status:
(1) The school district receives at least 85% of its per pupil funding from the Commonwealth and collects less than 50% of local taxes levied to fund the school district.
(2) The school district’s unreserved fund balance has declined for 3 consecutive years and is less than 5% of the school district’s annual expenditures. As used in this paragraph, a school district’s unreserved fund balance means the school district’s unassigned fund balance.
(3) The school district’s fixed costs are at least 30% of the school district’s total annual expenditures.
(4) The school district’s total outstanding debt is greater than the school district’s total annual expenditures.
(5) The salaries of teachers or other employees of the school district are unpaid at least 15 days after payment is due.
(6) The school district is subject to withholding of its State appropriation under section 633 of the School Code (24 P.S. § 6-633).
(7) The school district is subject to withholding of its State appropriation under section 785 of the School Code (24 P.S. § 7-785).
(8) The school district is subject to withholding of its State appropriation under 53 Pa.C.S. § 8283(c) (relating to remedies).
(9) The school district has defaulted on the payment of a debt due to a school district, intermediate unit or charter school that remains unpaid on or after January 1 of the year following the school year it was due and there is not a dispute regarding the validity or amount of the claim.
(10) The school district’s assigned and unassigned total fund balance is less than zero in the school district’s general fund.
(11) The school district’s assigned and unassigned total fund balance in the school district’s general fund as a percentage of total expenditures is less than 3%.
(12) The school district experiences a delinquent tax rate of more than 10%.
(13) The assessed valuation of taxable real estate in the school district, as certified by the State Tax Equalization Board, has not increased over the previous 5 years.
(14) An amount due a joint board of school directors under a joint board agreement remains unpaid beyond the due date specific in the joint board’s articles of agreement.
(15) The school district has contracted a loan not authorized by law.
(16) The school district has accumulated and operated with a deficit equal to at least 2% of the assessed valuation of the taxable real estate within the school district for 2 successive school years.
(17) The school district experiences a deficit of 3% or more for 3 consecutive school years resulting in a reduction of unassigned fund balance each year.
(18) A new, merged or union school district has been formed and one or more of the former school districts which compose the merged or union school district was a distressed school district under section 691 of the School Code (24 P.S. § 6-691) or a financial recovery school district under Article VI-A of the School Code (24 P.S. § § 6-601-A—6-693-A) at the time of the formation of the new, merged or union school district.
(b) As provided by section 621-A(b) of the School Code, a school district will not be declared in financial recovery status if the circumstances in subsection (a) have been caused by the failure of the Commonwealth to make a payment of money due to the school district at the time the payment is due, including payment of Federal funding that is distributed through the Commonwealth.
(c) The Secretary may decline to issue a declaration that a school district is in financial recovery status when the Secretary determines that the school district, within the previous 5 years, has faced an emergency that caused the occurrence of a circumstance in subsection (a).
(d) When the Secretary issues a declaration that a school district is in financial recovery status, the Secretary will specify the criteria in this section that placed the school district in financial recovery status.
Cross References This section cited in 22 Pa. Code § 18.6 (relating to limitation).
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