State appoints new financial monitor for Erie School District as end to oversight nears

The Erie School District has a new state-appointed financial administrator, signaling that the district soon could be removed from state financial oversight.

Jim Ohrn, vice president and chief financial officer of Custom Engineering in Erie, is filling the post that had been vacant since the abrupt departure of Charles Zogby in February 2020. Gov. Tom Wolf appointed Ohrn, Erie schools Superintendent Brian Polito said on Tuesday.

Ohrn said he will hold the position part-time as he remains at Custom Engineering. He said his main job as financial administrator will be to review the district's state-mandated financial improvement plan to confirm the district has achieved all the benchmarks to release it from the financial oversight it has been under for nearly five years.

Polito in November petitioned the state Department of Education to remove the district from financial watch, but the process had been on hold as the district waited for the appointment of a new financial administrator. The state placed the district under watch in exchange for the district getting $14 million in additional state aid, starting in 2018, to stay solvent.

Ohrn met with the Erie School Board at the study session prior to the board's regular meeting on Wednesday night. He said he plans by early next week to meet with Polito and representatives of the district's state-appointed financial advising firm, Public Financial Management, of Philadelphia. Ohrn, in an interview, said he will go over the district's finances to prepare for an exit from financial watch in "an expedited way."

He said he expects his tenure will last a matter of weeks and possibly a month.

"I believe it is going to be a short term," Ohrn said.

Ohrn said he had already reviewed the district's financial improvement plan with Polito. Ohrn, 71, is also a member of the school district's outside financial advisory team, created 10 years ago under the superintendent at the time, Jay Badams, to help the district deal with its protracted financial crisis. Polito, a certified public accountant and the superintendent since 2017, was the district's chief financial officer under Badams and has met regularly with the advisory team.

"It's a ramp-up that I am doing," Ohrn said. "I am hitting the ground running."

He said he is glad to be able to help the school district get out of financial watch.

"I am excited," he said.

"You have come along so far," Ohrn said to the School Board. "You have made so much progress. I want to be part of this when you get out of financial watch."

Ohrn's pay, and supporters

Ohrn is also chairman of the board of the United Way of Erie County, which works closely with the Erie School District on the United Way's community schools model. Polito is a member of the United Way board.

Ohrn said the state will pay him an hourly rate rather than a full salary. Zogby, who was financial administrator for nearly two years, made $148,000 a year in the post. The state set the amount.

Ohrn's appointment has the backing of one of the local elected officials who has advocated for the Erie School District.

State Sen. Dan Laughlin, of Millcreek Township, R-49th Dist., said he submitted Ohrn's name for Wolf's consideration for financial administrator. Laughlin, first elected in 2016, helped the school district secure the additional state aid.

"When I ran for office in 2016 my number one priority was to solve the Erie School District’s financial crisis," Laughlin said. "When the increase in funding came with strings attached, my goal shifted to making sure the Erie School District became the gold standard of how to fix an ailing district. With the help of Superintendent Polito, financial administrator Charles Zogby and the willingness of the School Board to make tough decisions we have accomplished that goal as well."

Of Ohrn's appointment, Laughlin said: "We are very fortunate a highly qualified member of our community is willing to step forward and serve as the new financial administrator that will help guide the school district through the final steps out of financial watch. Jim Ohrn is a true community leader and I was proud to offer his name to the governor."

Aiming for an end to oversight

The Erie School District has been under state oversight since the fall of 2017, when the General Assembly approved the additional $14 million in annual, recurring state aid, starting in 2018. Also in exchange for the receipt of the money, the district had to abide by the financial improvement plan, which Zogby developed and which the state Department of Education approved in 2019.

If it is removed from financial watch status, the Erie School District would no longer face the prospect of a state takeover due to unstable finances. Removal would also signal that the district has finally escaped from the financial problems that had limited the resources for its 10,000 students as well as teachers and staff.

In November, when he petitioned the state Department of Education to remove the district from watch, Polito said his administration has completed nearly all of the 20 requirements of the state-mandated financial improvement plan.

The requirements included showing the district has a stable budget for the next five years, saving money on custodial services, selling unused schools, stabilizing charter school enrollment and improving the district's buildings and educational offerings.

End of watch?:Erie School District aims for new era, asks state to end financial oversight, citing stability

But the school district needs a financial administrator to get out of financial watch. State law dictates that the financial administrator, after consulting with the state secretary of education, "may remove the district from financial watch status."

The Erie School District efforts to get out of financial watch were in limbo as long as it had no financial administrator.

Open spot:Erie School District turns to Harrisburg to fill vacancy in exit strategy from financial watch

Ohrn's appointment will move along the removal process, Polito said.

"It has certainly been a long journey over the last couple of years," he said. "I am very proud of what we have done to turn our finances around."

The Erie School District primarily blamed underfunding from the state for many of its financial woes, though administrative decisions prior to Badams taking office also created the budget crunch. The $14 million in additional state aid allowed the district — with a current budget of $267 million — to balance its budget while setting aside millions of dollars to update its curriculum, add programs and undertake a massive project to improve its buildings.

The district received another enormous boost in the 2022-23 state budget. The package increased the district's state subsidy by about $17.2 million — $15.8 million more for basic education and $1.4 million more for special education.

Help from Harrisburg:Erie School District gets $15.8 million increase in state basic education funding

Taxing issues:Erie School District got $17 million more from state. Why are taxes going up?

Picking a new financial administrator

The state law that put the Erie School District under financial watch also created the mechanism for the selection of a financial administrator. The governor was to pick the person from a list of the three names that the president pro tempore of the state Senate submitted.

Wolf, a Democrat, in February 2018 appointed Zogby, choosing him from a list of names he received from the president pro tempore of the Senate at the time, Joe Scarnati, a Republican from Jefferson County. Zogby started as financial administrator in March 2018.

In Ohrn's case, he said he was on a list of names that Wolf received from the current president pro tempore of the state Senate, Jake Corman, of Centre County, R-34th Dist. Laughlin said he submitted Ohrn's name to Wolf through Corman's office.

Zogby, who lived in Erie while he was financial administrator, had been based in Harrisburg for years. He had been a former secretary of education and secretary of the budget for former Pennsylvania Republican governors, including Erie native Tom Ridge. Wolf's office never disclosed the reasons for Zogby's departure as financial administrator, and Zogby never responded to requests for comment.

Vacancy created:State reveals few clues on Zogby’s Erie dismissal

Contact Ed Palattella at epalattella@timesnews.com. Follow him on Twitter @ETNpalattella.

This article originally appeared on Erie Times-News: Erie School District finances: PA appoints new financial administrator