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Editor's note: This article was originally published Sept. 10, 2012.

York City schools are fighting their label as a financially distressed school district as they try to avoid state takeover.

School board president Margie Orr said a letter to contest the label has been submitted to the state as part of the Department of Education's procedure.

York City was among four schools to be given the "preliminary declaration of financial recovery status" by the state as part of a new law to help get those districts out of their lengthy financial rut.

York City, Harrisburg, Duquesne and Chester Upland would be required to go under state supervision. If the label is upheld, York City would get a state-appointed recovery officer to provide oversight and work with York City to craft a financial recovery plan.

The recovery officer's plan would need the approval of the school board. Once the board approves the plan, the district is bound by law to follow it.

The plan could include ideas such as converting schools to charters, reducing programs and reopening contracts, although the state couldn't force a wage freeze. The recovery officer would ensure the board is following the plan.

Orr did not go into detail about why York City was contesting the status, other than to say the district believes "protocol wasn't followed" by the state.

Orr deferred further comment to the district solicitor, who wasn't immediately available.

Department spokesman Tim Eller said a hearing will be scheduled "in the near future" at the district's request to resolve the matter. Department of Education Secretary Ronald Tomalis makes the final decision on the district's status, he said.

Response: According to the letter submitted by the district by solicitors from Gettle & Veltri law firm, they believe there is a lack of sufficient information to show they are worthy of financial recovery status.

District solicitors admit that around August 2011, an audit of district records revealed a fund balance from the 2010-11 school year that "may have been substantially overstated by approximately three million dollars which, if true, would have eliminated or substantially eliminated the District's fund balance - a balance that was used, in part, to balance the 2011-12 fiscal year budget."

Kenn Medina was business manager at that time and was since dismissed by the district; district administrators said in hindsight Medina's office had made errors in budget calculations, such as forgetting to account for all charter school payments, that threw the 2011-12 budget out of whack.

Still, the solicitors wrote, "although the District may have financial problems, the problems are not serious or so serious that they cannot be handled and managed effectively by the District" and the school board. Changes to the funding formula would be of greater help, the district argued.

York City also admitted they did, upon the advice of a consultant from the state, get an advance on their funding in April 2012 because of cash flow problems. That cash advance proved to haunt them, though, because the state law outlined financial recovery status in part as any district that got a funding advance. York City wouldn't have gotten the advance if it had known, solicitors said.

Among other arguments, the district said the state law prohibits the General Assembly from "regulating the affairs of school districts."

Superintendent Deborah Wortham recently said York City already has been getting out from under its financial cloud and should be viewed as the "model" for turning districts around.

The district switched to a K-8 model and closed its middle schools this fall as part of that "model."

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