Pennsylvania school districts (still) hoard your tax dollars

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“It’s typical Pennsylvania,” says Democratic State Auditor Gene DePasquale, who audits school districts. “It’s a mindset that says they have to hoard money.”

Let’s talk about your tax dollars and public education.

Let’s talk about school districts across Pennsylvania holding reserve funds of your tax dollars in interest-bearing accounts.

State Department of Education data puts the total at the end of the 2015-16 fiscal year at $4.4 billion.

That’s with a “B.” And it’s an amount equal to 75 percent of the state budget for basic education this fiscal year.

Almost every school district (485 of 500 districts; 97 percent) shows reserves. They grow annually. In just five years, they grew by more than $1 billion. They even grow in districts that seek to raise taxes.

To me, this raises some basic questions – again.

I write about this every year. Every year, I get pretty much the same answers.

Districts need reserves in case of state budget delays. Districts face uncertain futures with regard to construction costs and ever-escalating pension costs. Reserves make it easier to borrow since moneylenders like reserves.

Fine. Some reserves are OK, even necessary.

But every year, I’m told reserves are being spent and next year’s totals will go down. Yet they never do. Not even after Gov. Corbett’s 2011 billion-dollar education cut.

So what’s with the Keystone State and education dollars? And, on this issue, when is enough enough?

“It’s typical Pennsylvania,” says Democratic State Auditor Gene DePasquale, who audits school districts. “It’s a mindset that says they have to hoard money.”

He says poorer districts deplete reserves (or have negative balances) while other districts add to reserves. He says, “How we fund our schools needs to dramatically change.”

He’s now beginning to audit reserve funds when he audits school district budgets.

Gov. Wolf’s budget secretary, Randy Albright, is “not unsympathetic” to the argument many reserves are too high: “It underscores some of the inequity in the way we fund schools…we could and should begin to talk about fund balances.”

I’d note running up reserves is perfectly legal. I’d also note the legislature’s in the habit of increasing school funding, regardless of reserves.

I’d note messages seeking comment from House and Senate Education Committee chairmen  Rep. David Hickernell (R., Lancaster) and Sen. John Eichelberger (R., Blair)  brought no responses.

And I’d note all seven school districts in Blair County show reserves ($91 million total), as do all 16 districts in Lancaster County ($200 million total).

Just sayin.’

As to Philly and its 'burbs, there’ve been some changes. The city’s district, historically in the red, shows $88 million in reserves for the fiscal year in question.

District CFO Uri Monson credits the turnaround to increased city revenue, refinanced high-interest debt and legislation to make the $2-per-pack cigarette tax permanent. He projects reserves of $104 million this year.

That’s roughly 3 percent of the district’s $3 billion budget. Monson says credit rating agencies recommend 5 percent to 10 percent reserves. DePasquale says Philly’s reserves are “right in the fairway of where a district should be.”

Many others are not.

A just-released analysis by the conservative Commonwealth Foundation says 220 districts hold reserves totaling 20 percent or more of their budgets. Examples: Neshaminy, Bucks County, $37 million in reserves, 21 percent of budget; Avon Grove, Chester County, $26 million, 35 percent; Colonial, Montco, $32 million, 28 percent; Lower Merion, Montco, $56 million, 24 percent.

Lower Merion was sued last year for seeking a tax increase while holding large reserves; it’s seeking a tax increase again this year.

Pittsburgh School District had the state’s largest reserve, $189 million, for the year in question. The district says the number now is $133 million.

There also are reserves held by vocational, technical and charter schools. They bump statewide totals to $4.7 billion.

Reserve data isn’t easily found. If interested, go to education.pa.gov; in the search box type “AFR data detailed;” click on it; scroll down to Miscellaneous; click on the dates beside “General Fund Balance.” Enjoy.

And ask yourself who, at the state or local level, is diligently managing your tax dollars.