Pennsylvania Auditor General Tim DeFoor is responding to criticism his office has faced following an audit of a dozen school districts.
The probe, released Wednesday, scrutinized several years worth of financial documents from districts across nine counties. It found they repeatedly raised taxes at higher-than-normal rates – despite having hundreds of millions in extra cash.
A press release explains the districts collectively hiked tax rates almost 40 times between 2018 and 2021. They already had some $500 million in surplus cash among them, but they asked the state for special taxing permission anyway – and even moved that extra money around to make it look like they needed more.
“In my opinion, it’s somewhat an abuse of the system: if you don’t need something, then don’t apply for it. If you’re going to move money, and apply for it saying you don’t have any money, that’s something that’s not necessarily fair either.”
The practice is not illegal, but DeFoor describes it as a “loophole” that state lawmakers should close in the upcoming session. The Auditor General’s report recommends a new requirement for districts to use all the cash they have on hand before asking for more tax increases.
“As far as putting money away for a rainy day, that’s great for a private individual such as ourselves, but not necessarily for a governmental entity,” DeFoor told WITF’s The Spark Friday.
Some of the districts under the microscope say the Auditor General’s report lacks a full understanding of their budgeting process.
An official from West Chester School District told the Philadelphia Inquirer that he had moved around some of the district’s extra money at one point, but not to get special tax permission. The district had spent the money that year on building improvements.
The Pennsylvania Association of School Business Officials said districts have needed to save money, as costs for things like pensions and charter school tuition have risen by several billion dollars in the last few years.
“Special education expenditures grew to nearly $6 billion in 2020-21 and only about $1 billion was funded by the state,” the group said in a Wednesday press release. “Charter school tuition costs grew to nearly $2.7 billion in 2020-21 with no state reimbursement.
The probe notably did not examine whether public charter schools are holding onto surplus cash unnecessarily. DeFoor deflected questions about that from The Spark host Scott LaMar.
“We have heard concerns from residents and the General Assembly about charter schools. It’s something we have discussed,” DeFoor said without explaining why charters were excluded from the probe.
The Auditor General added his office allowed the targeted districts to review the report before it was published and included their criticisms in the final version.
“Nobody likes to be audited. If there’s going to be any type of audit findings, of course you’re going to criticize those findings. However, I stand by them,” he said.
Under state law, school districts are allowed to ask for a special tax increase – something that usually is decided by voters – only if the amount of unspent cash they have on hand is less than 8 percent of their total annual budget. According to the School Business Officials association, only seven of Pennsylvania’s 500 school districts asked the state for such an increase last school year.
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