PHOTO PROVIDED The Keystone Central School District Board of Directors are pictured during its voting session on Thursday night, where it approved a proposed $94 million budget with no tax increase. The board will formally adopt a budget during its meeting in June.

MILL HALL — As the Keystone Central School District Board of Directors continued its budget discussions in May, many of its members referenced the potential for the district to enter into receivership with the Pennsylvania Department of Education due to its projected deficit and increased costs.

But what is receivership and how close is the district to being placed under its purview?

According to a representative of PDE, KCSD isn’t there yet.

“PDE has not identified the Keystone Central School District as being a financially distressed school district,” Erin James, PDE press secretary told The Express.

The discussion surrounding receivership and the district’s financial woes was a major topic at the board’s work and voting session in May.

During its voting session, the board voted 8-1 to approve a proposed $94 million budget for 2026-2027 with no tax increase included. Board member Dr. Bill Baldino voted against the measure.

It was noted by Superintendent Dr. Francis Redmon the budget presented came after KCSD’s Business Manager Joni MacIntyre was directed by the finance committee to construct it with no tax increase. Redmon said, however, the board could elect to change it prior to final adoption on Thursday, June 18.

Many board members expressed concerns about the proposed budget at its voting session on May 14, with receivership being brought up more than once.

The Express contacted PDE following the meeting to learn more about receivership and its processes regarding districts which are identified to be in financial crisis.

James said the Pennsylvania School Code identifies specific conditions school districts would need to enter into either financial watch or financial recovery. She noted PDE uses an Early Warning System to identify districts at risk of financial instability and provides technical assistance.

“PDE uses many sources of financial and other data to analyze a school district’s financial health and make these determinations,” James said. “For example, an initial analysis would consider a school district’s fund balance ratio, its borrowing base capacity and its debt ratio, among other factors.”

If the Keystone Central School District moves ahead with its proposed budget, the district would be facing a roughly $3.6 million deficit, pulling from its fund balance and reducing it to about $100,000 going into the 2027-2028 fiscal year.

It has been noted by MacIntyre during various budget presentations, PDE prefers a healthy unassigned fund balance to be about 7 to 8 percent of a district’s General Fund Balance.

James told The Express there are other factors that may be analyzed in determining whether or not a district could fall under financial watch or financial recovery.

“Further analysis may consider community market values, existing property tax burden on the community, the Act 47 status of political subdivisions within the district, a cash flow analysis and more,” she said.

When a district is determined to fit the criteria for financial watch, James said PDE will offer training and technical assistance. According to PDE’s School District Financial Recovery Early Warning System documents on its website, if this were to occur it would notify the district’s superintendent, board president and solicitor.

James said receivership is considered the “most severe oversight of a school district” with PDE typically identifying districts in either moderate or severe financial recovery status.

“The districts in financial recovery status that meet certain conditions operate under the direction of a receiver,” she said.

According to PDE’s website, a receiver could be appointed by the Court of Common Pleas via petition if:

— The school board rejects the Chief Recovery Officer’s (CRO) Financial Recovery Plan.

— The school board does not comply with directives issued by the CRO.

— The school board does not satisfy the objectives in the Financial Recovery Plan during a period of time after its designation of financial recovery is terminated.

— In certain instances, related to severe financial recovery school districts, the school board votes to move to receivership.

The receiver could be the current CRO but, if another is appointed, the CRO would operate as an advisor for the receiver.

The receiver then would implement PDE’s Financial Recovery Plan.

PDE’s website notes a receivership is set to expire three years after initial appointment, but the PDE secretary may petition for an extension.

After the district exits receivership, the school board would resume full control.

At this time, PDE has identified four school districts in Financial Recovery Status:

— Chester-Upland School District in Dauphin County.

— Duquesne City School District in Allegheny County.

— Sto-Rox School District in Allegheny County.

— Steelton-Highspire School District in Dauphin County.

PDE currently has three districts under Financial Watch Status:

— Aliquippa School District in Beaver County.

— Reading School District in Berks County.

— Wilkinsburg Borough School District in Allegheny County.

The length of time a district can be in receivership may vary, though only one has officially exited the program.

According to a press release from Gov. Josh Shapiro’s office, Harrisburg City School District was the first, and only, district to have its receivership end on June 17, 2025.

The district entered Financial Recovery in December 2012 and entered Receivership in June 2019.

The release noted the district entered into receivership in 2022. With the three-year term up, the school board was handed back control of the district’s financial decision-making.

Harrisburg City School District continues to be monitored under Financial Watch by PDE.