12 Pa. School districts accused of moving money to raise taxes

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TUN, JERRY, UNDER PENNSYLVANIA ACT, SCHOOL DISTRICTS MAY increase property taxes up to a certain limit. ANY HIGHER, AND YOU NEED VOTERS TO TAKE IT OR GET AN EXEMPTION FROM THE STATE TO QUALIFY. WITH ALL THAT STATED, THE GENERAL AUDITOR SAYS THAT A DOZEN SCHOOL DISTRICT HAVE RECEIVED THESE EXEMPTIONS EVEN WHEN SITTING ON SURPLUS. THE UNUSED MONEY THEN LIES IN THE BANK FOR A RAINY DAY. THAT MAY NEVER HAPPEN AND TAXPAYERS WILL NEVER GET THE OPPORTUNITY TO VOTE ON A TAX INCREASE. AUDITOR GENERAL TIM DE FORCE SAYS THAT OVER THE FOUR FOUR FISCAL YEARS ENDED 2021, DISTRICT REQUESTED EXEMPTIONS THAT INCREASE THEIR GENERAL APPROPRIATIONS BY $390 MILLION. FORCE SAYS DISTRICTIONS HAVE QUALIFIED FOR THE TAX RISE BY MOVING MONEY AND DOING THINGS SUCH AS ALLOWING EXCESS FUNDS FOR CAPITAL PROJECTS. SO ONE DISTRICT SEEMS TO HAVE LESS DOLLARS ON HAND. IT IS LEGAL. HOWEVER, THE PROBLEM IS, IT IS NOT NECESSARILY TRANSPARENT. SCHOOL DISTRICT OF LANCASTER, HEMPFIELD SCHOOL DISTRICT AND PENN MANOR SCHOOL DISTRICT WERE IDENTIFIED IN THE AUDITOR’S REPORTS. EACH DISTRICT STATED IN A STATEMENT THAT THE TEST SHOWS NO ERROR BEHAVIOR AND STATED THAT WE HAVE HAD MEETINGS IN PUBLIC. PENN MANOR’S CHIEF FINANCIAL OFFICER CHRIS JOHNSTON SAYS THAT THE DISTRICT HAS USED THESE TAX RISE AS PART OF A $100 MILLION MULTI-YEAR COLLEGE RENOVATION PLAN. SO IT COULD AFFORD INCREASED COSTS FOR RETIREMENT AND SPECIAL EDUCATION. IT IS THE LAW AND IT IS SOMETHING WE MAY DO. SAYS JOHNSTON. THERE WERE NOT ONLY MEETINGS BUT THE BOARD OF DIRECTORS APPROVED THE PLAN AND THEY ARE CHOSEN BY THE VOTERS, THE FOUR SAID IN HIS REPORT TODAY THAT THERE ARE SOME RECOMMENDATIONS HE WOULD LIKE TO IMPLEMENT IN ORDER TO PREVENT THIS SITUATION FROM HAPPENING AGAIN . WE HAVE MORE ABOUT THIS

Some Pennsylvania school districts are accused of moving money to qualify for tax increases

A dozen Pennsylvania school districts — including some in the Susquehanna Valley — are accused of playing a shell game to move money so they can collect taxes. Under state law, school districts can collect property taxes up to a limit. Any higher increase will require a public referendum or an exception granted by the state. Pennsylvania auditor general Tim DeFoor said 12 districts received these exemptions despite sitting on surpluses. “The unused money then sits in the bank for a rainy day in May never comes, and taxpayers never get a chance to vote on a tax increase,” DeFoor said. Districts qualified for the tax increases by moving money and things like earmarking excess funds for capital projects, making it appear as if a district had fewer dollars to spend, according to DeFoor. “It’s legal, but the problem is that it’s not necessarily transparent,” he said. Lancaster School District, Hempfield School District and Penn Manor School District were among the districts identified in the Comptroller’s Report. Each district said in a statement the audit found no wrongdoing. “We had meetings in public,” said Chris Johnston, Penn Manor’s chief financial officer. That way, it could still afford the rising costs of retirement and special education. “That’s the law, and it’s something we’re allowed to do,” Johnston said, as the public approved the plan. The Pennsylvania Association of School Business Officials was also critical of DeFoor’s report, saying that having a fund balance is often critical to ensuring prudent financial operations for districts. The association said DeFoor’s report appears to exaggerate how many counties across the state are seeking exemptions. based on the limited data available, suggests the number is even lower,” the group leaders wrote in a statement to use before requesting an exemption from the referendum to increase taxes via the index. Revision of Pennsylvania School Code terminology used in determining the mandated threshold for collection of taxes from unreserved, unrestricted to unrestricted to include committed and allocated funds in the calculation to prevent t prevent school districts from Withhold millions of dollars in general fund obligations and duties while increasing taxes. Determine if there should be parameters for budgeting practices and carrying over operating surpluses as taxes are increased. For example, the requirement that all transfers from the general fund be considered unallocated funds and included as inter-fund transfers in a general fund budget before being transferred to other government funds. The review team made the following recommendations for the Department of Education: Review and revise the process of approving referendum waivers when the district has committed and allocated General Fund credits. Based on our audit results, school districts have adequate funds for related expenses, carry over excess surplus, and fail to use reported funds on time or to balance the provisional budget before requesting an increase in taxes over the index for the exact same type of expenses. Consider revising the PDE exemption guidelines for the property tax referendum accordingly. DOWNLOAD: Get news, weather and traffic alerts on your phone with the WGAL app.

A dozen Pennsylvania school districts — including some in the Susquehanna Valley — are accused of playing a shell game to move money so they can collect taxes.

Under state law, school districts can collect property taxes up to a limit. Any increase beyond this requires a referendum or a state exemption.

Pennsylvania Auditor General Tim DeFoor said 12 districts received those exemptions despite sitting on surpluses.

“The unused money then sits in the bank for a rainy day that may never come, and taxpayers never get a chance to vote on a tax hike,” DeFoor said.

Over the course of four fiscal years ending in 2021, districts requested additional exemptions, DeFoor said $390 million to their general means.

Districts qualified for the tax increases by moving money and doing things like earmarking excess funds for capital projects, making it seem like one district had fewer dollars to spend, according to DeFoor.

“It’s legal, but the problem is that it’s not necessarily transparent,” he said.

Lancaster School District, Hempfield School District and Penn Manor School District were among the districts identified in the Comptroller’s Report. Each district said in a statement the audit found no wrongdoing.

“We had meetings in public,” said Chris Johnston, Penn Manor’s chief financial officer.

He said the district used those tax increases as part of a multi-year, $100 million plan to renovate the high school. That way, it could still afford the rising costs of retirement and special education.

“It’s the law and it’s something we’re allowed to do,” Johnston said.

Johnston said not only have there been meetings, but board members elected by the public have approved the plan.

The Pennsylvania Association of School Business Officials also criticized DeFoor’s report, saying that a bank balance is often critical to ensuring prudent financial operations for districts. The association said DeFoor’s report appears to exaggerate how many counties across the state are asking for exemptions.

“In 2021-22 — the most recent year of publicly available data — only 7 out of 500 school districts used the Act 1 exemptions. The number for 2022-23, based on the limited data available, suggests the number is even lower is,” the group’s leaders wrote in a statement.

recommendations

The review team made the following recommendations to the General Assembly to help school districts fund education and protect taxpayers:

  • Add a provision to the Taxpayer Relief Act (Act 1) that requires districts to use committed and allocated general fund balances and the prior fiscal year’s excess funds before requesting a referendum exemption to levy taxes on the index.
  • Revise the Pennsylvania School Code terminology used in determining the mandatory threshold for collecting taxes from unreserved, unrestricted to unreserved to include committed and allocated funds in the calculation to prevent school districts from spending millions of dollars in commitments and allocations of the general fund withheld while increasing taxes.
  • Determine if there should be parameters for budgeting practices and carrying over operating surpluses while increasing taxes. For example, the requirement that all transfers from the general fund be considered unallocated funds and included as inter-fund transfers in a general fund budget before being transferred to other government funds.

The review team made the following recommendations for the Ministry of Education:

  • Review and revise the procedure for approving referendum exceptions when the district has pledged and allocated general fund credits. Based on our audit results, school districts have adequate funds for related expenses, carry over excess surplus, and fail to use reported funds on time or to balance the provisional budget before requesting an increase in taxes over the index for the exact same type of expenses.
  • Consider revising the PDE exemption guidelines for the property tax referendum accordingly.

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