State auditor general to probe Phila. School District

PHILADELPHIA State Auditor General Eugene DePasquale said Thursday his office had begun an audit of the Philadelphia School District to examine finances, school safety, academics, and the impact the loss of state charter-school reimbursement funds had on the district's bottom line.

Superintendent William R. Hite Jr., who joined DePasquale for the announcement at district headquarters, said he welcomed the review.

"When you are challenged financially, like we are, obviously, here," Hite said, "it is extremely important to get as much information from independent third parties as possible about how effectively we are able to use the funds we have at our disposal."

By law, DePasquale's office has to audit every school district in the state. State funds cover about 55 percent of the district's $2.4 billion budget.

Hite said that if the charter-reimbursement program had not been eliminated in 2011, the cash-strapped district would have received at least $170 million more in state money this academic year. When the state charter-school law was passed in 1997, the legislature created a program to reimburse districts for a portion of their charter-school costs. That program was discontinued three years ago.

The district is facing a $28 million shortfall through June and is projecting a funding gap of $440 million for the fiscal year that begins July 1.

DePasquale said the review of Philadelphia's schools would cover the academic years of 2009 to the present.

He said his staff also would determine whether the district followed through with the recommendations made during the Auditor General's Office's last audit of the district, in 2011.

DePasquale said his predecessor, Jack Wagner, had found several serious problems related to school safety and financial stability.

DePasquale, a Democrat, said his office had found that regardless of individual school districts' wealth, all had felt the effects of Gov. Corbett's decision to eliminate the statewide reimbursement program for charter schools the year he took office. Philadelphia, which has 86 charter schools, has more than half the charters in the state.

DePasquale said the sudden loss of more than $100 million in 2011 had a profound impact on the district's finances. That amount, he said, exceeds the total budgets of at least 400 of the state's 500 other school districts.

DePasquale said he expected the audit would be completed in 2015. His office probably will make interim reports, but he said no information would be available before the legislature approves a state budget for the year starting July 1.