A 160-page report from the State Auditor General accuses 12 school districts, including North Allegheny and Canon-McMillan, of raising taxes without voters’ approval while stockpiling money in their reserves. The Auditor General said while this practice is, in fact, legal, it’s not transparent.
Strong words were spoken by State Auditor General Timothy DeFoor, claiming that a dozen Pennsylvania school districts exploited a legal loophole.
“Basically, it’s a shell game,” DeFoor said.
“Applying for a referendum exception was used as a regular budgeting tool rather than an extreme measure,” DeFoor said.
By law, districts can only raise property taxes without voter approval if their fund balances fall below a certain threshold. But the audit said school districts strategically moved money around to avoid the restriction.
Canon-Mac responded, saying the report contains “inaccurate and misleading information and statements.” The district provided Channel 11 with a lengthy rebuttal, saying it vigorously refutes any assertion that the district or its board of directors acted improperly or violated any rule, procedure, regulation or law.
While the report says Canon-Mac raised taxes all four years of the audit (2018 to 2021), Canon-Mac took issue with what it calls “absence of information.”
“The school districts told us they must develop their budgets this way because they never know how much funding they’re going to receive from the state,” DeFoor said. “it’s the taxpayers, those especially on a fixed income, who are carrying this burden.”
North Allegheny sent the following statement from Kermit Houser, Assistant Director of Finance/Treasurer:
“North Allegheny School District fully complied with the audit by Pennsylvania Auditor General Timothy L. DeFoor for the fiscal years ending June 30, 2018, 2019, 2020, and 2021.
The findings by the Auditor General state that North Allegheny School District was in compliance with legal requirements for designating our General Fund monies.
We received the full report yesterday afternoon and the District is reviewing the findings from the report with our Administration, Board of School Directors, and Solicitor and we do not have any further comments at this time.”
Auditors recommended that the state legislature closes legal loopholes– and considers changing the fiscal year for school districts from June 30 to September 30, giving them more time to plan budgets. Additionally, auditors want the Department of Education to revise its guidelines.
“The Department of Education sets the standards for applying for referendum exception; however, these applications are based on budgets, not on actual cash,” DeFoor said.
DeFoor noted that these are 12 out of 500 school districts, saying if this is standard procedure, it’s not a stretch to say it’s not happening across the commonwealth.