Chief recovery officer prepares to unveil fix for Harrisburg School District
More than four months after being appointed chief recovery officer by the state, Gene Veno intends to unveil his plan next week to improve Harrisburg School District's finances and academics.
The plan is expected April 24.
"We are going through a budget crisis of dire proportions," Veno said. "The tsunami has finally hit. Our goal is to save the district. Our goal now is to improve the district and set a course that will bring financial stability and educational standards that are second to none."
Harrisburg School District is looking at roughly a $140 million annual operating budget for next school year and a current operating deficit of about $5.2 million, he said. Its bond debt on 25 years of amortization is about $437 million, based on current interest rates.
The district has received permission from the state Department of Education to go above the Act 1 index on next year's property taxes to cover the shortfall. However, Veno is advising officials to avoid a potential 9.7 percent tax hike, arguing that taxpayers are burdened enough now.
That could be a hard sell with district finances expected to worsen in the coming years. Five-year projections show the loss of revenue of $36 million by 2018 as money follows students to charter schools in an increasing trend, Veno said.
Academically, the district ranks 494th out of 500 in Pennsylvania.
"It's going to take time, but if we start that course, start that journey, it's going to be accomplished," said Veno, who sat down last week with the Business Journal to discuss his approach to this recovery task, his coordination with the city as it works through its own fiscal issues and what to expect in his plan.
A big part of that strategy involves consensus building with all stakeholders, including teachers, and spreading optimism that the tide is turning and the district's best days are ahead.
"There will be a rebirth in the city as there will be in the district," he said. "We're going through the change of the financial conditions right now. You have to embrace the change."
Q: How have you approached the job of healing a school district and improving the negative image that it's cultivated over many years?
A: That's a two-part question. (On) the fiscal side, we have now seen where we are. We have seen there is a deficit in our operating budget. We have seen that there is an outstanding bond debt ratio that is due. I have not made it a position in my role to point a finger at why it happened, but I did look and see what happened.
My goal now is to change what could be, which is an opportunity for us to write history in the Harrisburg School District to get a solid financial footing so we can provide the best quality education for the students in this district.
With that, the most important part of the question was the mindset of the community. We need to do a better job in developing a positive flow of information coming from our district. We first need to change the mindset of the child and let them know in early grades, as possible, that they're important and we value them in their seat as a student. As far as teachers and support administrative staff, the superintendent and the board, we need to do a better job in meeting with community parents and letting them know the many valuable services that we do have in this district, the quality schools we now have because of the bonds that have been raised to modernize many of the schools.
What have you learned from the city's recovery process?
The City of Harrisburg and the school district are linked together. You can't have a great city without a good school board and vice versa. To have a great city and a school board is a positive program for all citizens, not only in Harrisburg but the surrounding communities.
We are dovetailing to the point where we are going to make that change, and it's to the betterment of the community.
Gen. (William) Lynch (Harrisburg's receiver) and I have developed a good professional relationship. The district is very similar (to the city). We have to look at our budget and see (if) we are able to afford and sustain salaries and benefits that are currently in operation in this district. That's part of my recovery plan. The recovery plan has to look at an overall view of the finances.
On similarities (with the city), there has been a lot of "pay-it-later" and "do-it-now" mentalities. We can't do that anymore. There is a real opportunity to share in the responsibility, but more important is to share in the revitalization of this city and this school district by working as hard as we are.
In broad strokes, paint me a picture of what we might see in the final plan.
It will touch on everything from academics to financial budgets to the bond deficit. We will address issues from food services. We will be addressing issues as it relates to capacity of buildings, classroom utilization and many other areas as it relates to the overall administration of this district.
It has to be shared pain. We can't just find money if it's not there just to do one aspect of the budget. Everyone is going to share a little bit of pain.
You're a de facto real estate officer tasked with probably selling or leasing district assets to pay down the debt. How much of the plan revolves around real estate, and how does the city's Keystone Opportunity Zone proposal factor in?
Very much so. We are going to enter into a relationship, as is the city, with a KOZ program. There are three buildings we'd like to see immediately brought in. That would be William Penn High School, Shimmell and Hamilton. Hamilton was originally considered to be the site for our administrative building, but we have made a decision to go to Lincoln. As a result, (the current administrative) building will end its lease in 2014 and move to the Lincoln facility.
We would like to see all buildings we have that are currently shuttered to be considered for resale. We will continue to look for opportunities to reduce the debt load by selling these buildings. Of the five that are currently shuttered, three would be put immediately in the KOZ zone.
What other options exist aside from big tax increases and selling real estate to generate added revenue?
We're under contract with Capital Area Head Start through 2014. We're looking at what other options we can offer and what we can do to bring in that K-3 and K-4 child and keep them in our program.
We're also looking at increasing revenue from delinquent taxes. I've looked into the PILOT programs, (or) payments in lieu of taxes. I think there is an opportunity there since we are in a city that has a 47 percent tax base. Of that 47, the school district only gets 38 percent, so we're at a disadvantage when it comes to the tax base.
And also we're looking at those that are not paying taxes that should be.
What are your thoughts on a new tax abatement ordinance to help with development?
You have to look at it from a perspective of growth. If developers and other government agencies are looking to increase development within the county and the city, we have to take a strong look at that. That's where PILOTs come in. I think there are options on that and it has to be considered.
About Gene Veno
Gene Veno, 63, was appointed Dec. 12 by state Education Secretary Ron Tomalis as the chief recovery officer for the Harrisburg School District, which is in moderate financial recovery status.
He and his wife, Linda, have been married 39 years. They live in Lower Paxton Township and have two children — a son, Genecarlo; and a daughter, Gianna.
Veno earned a bachelor's degree in business education from Elizabethtown College and a master's degree in public administration from Marywood University.
In Scranton, he served on the Scranton School Board. In 1984, he was appointed secretary of the Pennsylvania Milk Marketing Board.
In 1989, he established Gene Veno & Associates in Harrisburg. The governmental policy and lobbying firm developed a niche in representing business entities on a state and national level.
In addition to the consulting practice, Veno was an adjunct professor at Lebanon Valley College and Harrisburg Area Community College, where he taught marketing and business management classes.