The Pennsylvania State Comptroller General said Wednesday that 12 school districts, including five in suburban Philadelphia, will move funds into their budgets to increase taxes beyond state limits without first obtaining voter approval. said that
“Basically, it’s a shell game,” said General Accountant General Timothy Defuer, who said the practice was used in all 12 districts his office recently audited. Chester County, Bucks County Neshaminy. Districts were selected based on the size of their fund balance and previous audits, DeFoor said.
All of the districts audited for the 2018-2021 fiscal year sought exceptions to the Act 1 Index, the limit imposed by the state on property tax increases. School districts have told the Pennsylvania Department of Education that certain cost pressures, such as increased special education costs and mandated contributions to the state pension system, will push the index (which is linked to inflation and annual changes) to You can ask for permission to increase taxes. They must show that they cannot cover the costs without tax increases.
The audited districts moved unused funds from the general fund to reserves and qualified for the exception, Dehua said. He said the practice was not illegal, but lacked transparency.If the district does not get an Act 1 exception from the state, it will have to hold a referendum to raise the tax above the threshold. There is
Instead, “unspent money is sitting in the bank for a rainy day that may never come,” Dehua said at a press conference in Harrisburg. You will never get a chance to vote.”
Dehua said the 12 districts audited represent a cross-section of urban, rural and suburban communities. “It’s safe to say that if this is standard operating procedure,” he said, it could be happening across Pennsylvania.
School officials protested, saying the school district was acting responsibly and securing funds to cover mounting costs beyond their control.
The Pennsylvania Association of Schools Practitioners said, “It is imperative that any school district maintains a financial balance in order to manage its finances prudently.” You pointed out that you are putting money in to cover three areas of tuition. Districts are facing rising costs, limiting cost reductions.
And most school districts don’t raise taxes beyond the Act 1 index, even if they apply for exceptions, according to the Association of Business Officials.
“We are prudent to sustain our education programs in the face of budgetary delays and uncertainty due to increased mandated costs, reduced revenues, global pandemics, increased healthcare, and even new legislative dynamics. It just goes against sound financial practice of second-guessing the decisions of locally elected officials who plan to do so,” the association said.
For the West Chester Area School District, Business Affairs Director John Sculley said DeFour did not adequately characterize the district’s budgeting practices. Scully said the money was transferred from the district’s general fund to the capital fund, but the money was spent on technology and infrastructure improvements in the same year.
Scully said he “doesn’t send money at the end of the year to qualify” for the tax deduction. obtained permission to increase taxes beyond the Act 1 limits, but imposed less tax increases than approved. The year the index was 2.4% he was 2.8% and the year after the index was 2.3% he was 2.8%.
West Chester noted it had the highest credit rating from Moody’s, and North Penn School District also advertised a high credit rating.
North Pen Superintendent Todd Bauer said in a statement, “I am disappointed to hear the misleading rhetoric regarding this report. We actually used the Act 1 exception only once.
The Lower Merion School District said in a statement that the school board chose not to seek an Act 1 Index exception this year, marking the seventh consecutive year that taxes will not be raised above the limit. (We applied for one exception during the audit period for pension costs, but ultimately did not use it.
The district said it “continues to use standard accounting and budgeting practices in school districts across the federation,” following Lower Merion’s recent agreement to return $27 million to taxpayers to settle the lawsuit. Given that some of DeFour’s recommendations have already been implemented or are irrelevant, he added, over property tax increases.
Republican DeFour, elected in 2020, called on lawmakers to close the “loopholes” that allow districts to move money without counting in the Act 1 exception calculation. He suggested that the school district’s fiscal year, which currently begins on July 1, may be changed so that the school districts do not have to finalize their budgets without knowing how much money they will receive from the state.
The Association of Business People asked for additional analysis before changing its policy “based on a survey of only 12 school districts.”