PDE names chief recovery officer as Chester Upland reports audit progress and smaller projected shortfall

The Chester Upland School District's receiver told the board and the public on Thursday that the Pennsylvania Department of Education has appointed Dr. Eric B. Holmes as the district's chief recovery officer and that upcoming audits should materially change the district's projected fund balance.

The receiver said PDE's appointment is in response to the district's recovery plan and that Dr. Holmes will begin on July 1, 2025. The receiver described the appointment as part of implementing the recovery plan and said a meet-and-greet will be scheduled "at the appropriate time."

The receiver also addressed a widely circulated figure in the district's recovery-plan documents. He said a $365 million negative fund-balance figure in the plan represents a worst-case scenario "if we do absolutely nothing with implementing our recovery plan." He added that PFM's modeling shows that implementing the recovery plan would result in a projected fund balance of about negative $23 million at the end of five years, and that pending audited financials will provide a clearer picture.

"There's an audit that should be completed within the next few weeks and will be released that will give us a better picture that will shift that number in a more positive light," the receiver said, adding that another audit is expected to begin and that the audit team anticipates roughly 16 weeks to complete the work. He said the district arrived with three audits outstanding and that auditors did not have access to final beginning balances when PFM modeled scenarios.

The receiver credited district administration work for shrinking recurring unpaid vendor liabilities from about $15 million a year to roughly $1.7 million a year, which he said will improve the district's reported shortfalls once audited numbers are available. "Because of the hard work and dedication of the administration over these last couple of years... we now at least budget for our shortcomings from the prior year," he said.

Speakers at the meeting also raised concerns about the recent closure of Prospect Crozer hospital and what the closure means for taxes owed to the district. A public commenter asked how the closure would affect money Prospect Crozer owes the district. The receiver said the district had not received a property-tax payment from Prospect for three years and that the district's real-estate attorney made an appearance in the bankruptcy proceedings and that liens were filed.

Superintendent-level staff provided operational updates that the meeting recorded: as of April 24, 270 of 396 school staff members had been out of work for 10 or more days (68%); 102 of 396 had been out 18 or more days (26%). The superintendent also said the district's enrollment remains near 3,100 students and that the district is reporting 139 displaced students (in-district, out-of-district, charter or cyber placements). The district continues recruitment efforts and is finalizing personnel budgets for 2025-26, according to the superintendent's report.

The receiver and administration reiterated that the recovery plan is being implemented and that the PDE appointment of a chief recovery officer is one of the plan's recommendations now in place. The receiver said once audits are complete, he expects the district's fund-balance estimate to improve and said he anticipates the number could be at or above zero once audited adjustments are reflected.

Looking ahead, the district said it will release the forthcoming audit results when they are complete and arrange introductions for Dr. Holmes after he begins July 1.