Pennsylvania Auditor General Tim DeFore is responding to criticism of his office following audits of dozens of school districts.
The investigation, released Wednesday, examined several years’ worth of financial documents from districts in nine counties. Even though they have hundreds of millions in extra cash, they have been seen repeatedly raising taxes above normal.
Between 2018 and 2021, the district collectively increased tax rates nearly 40 times, according to a press release. They already have $500 million in excess cash, but they’ve asked the state for a special tax exemption — and it looks like they’ll need more by moving that extra money elsewhere.
“In my opinion, it’s a bit of an abuse of the system: if you don’t need something, don’t apply for it. If you’re going to move money and claim you don’t have any money, that’s unfair.
The practice is not illegal, but DeFoor described it as a “loophole” that state lawmakers must close in the upcoming session. The Auditor General’s report recommends a new requirement for districts to use all available funds before requesting additional tax increases.
“As far as putting money away for a rainy day, that’s great for private individuals like us, but not necessarily for a governmental entity,” DeFore told WITF’s The Spark Friday.
Some districts say they don’t have a full understanding of their budgeting process when looking at the microcosm of the Auditor General’s report.
An official with the West Chester School District told The Philadelphia Inquirer that it once turned over some of the district’s extra money, but not to get a special tax permit. The district used the money to build improvements that year.
Pennsylvania school business officials say the cost of tuition and charter school tuition has risen by billions of dollars over the past few years.
“Special education spending has grown to nearly $6 billion in 2020-21, and only $1 billion is funded by the state,” the group said in a Wednesday press release. “Charter school spending has grown by nearly $2.7 billion in 2020-2021 without state refunds.
The investigation did not specifically examine whether public charter schools were holding on to excess funds unnecessarily. DeFoor answered questions from The Spark host Scott Lamar about that.
“We’ve heard concerns about charter schools from residents and the General Assembly. That’s something we talked about,” DeFore said, without elaborating on why charters were excluded from the investigation.
The Auditor General added that his office allowed the target districts to review the report before publication and included their criticisms in the final version.
“No one likes to be audited. If there are any audit findings, of course you criticize the findings. However, I stand by them,” he said.
Under state law, school districts are allowed to request special tax increases — usually determined by voters — only if their unspent funds on hand are less than 8 percent of their total annual budget. According to the Association of School Business Officials, only seven of Pennsylvania’s 500 school districts asked the state for an increase last school year.