DeFoor’s clumsy audit papered over the truth about school districts’ finances | Opinion

The claim that school districts are moving money from one type of fund balance to another is a nefarious act is misleading at best and disingenuous at worst

Auditor General Tim DeFoor speaks at a press conference on the business waiver audit, September 14, 2021 (Capital-Star photo).

By Susan Spicka

Auditor General Timothy DeFoor’s clumsy attempt to present the school district budgeting processes as nefarious is deeply troubling. 

It should not come as a surprise to anyone that school districts put money into fund balances. In fact, it’s standard business practice to hold 5% to 10% of operating budget in reserve. 

Pennsylvania ranks 43rd in the nation in terms of the state’s share of funding for K-12 schools and school districts must be prepared to pay for skyrocketing mandated costs when state funding inevitably falls short.

For example, special education expenditures grew to nearly $6 billion in 2020-21 and only about $1 billion was funded by the state. Charter school tuition costs grew to nearly $2.7 billion in 2020-21. The state provides no reimbursement for these costs.   

In addition, since 2016, when the Pennsylvania legislature put its construction funding reimbursement program into a moratorium, the state has provided zero dollars to districts to help them pay for expensive facility maintenance, renovation, and construction needs.

School districts are forced to scrimp and save money if they hope to be able to replace leaky roofs, remove lead and asbestos, update ventilation systems, and take care of literally every single other facility need they face.

And let’s not forget that school districts need fund balances so they can pay their bills without taking out expensive loans when state lawmakers fail to pass a budget on time.

DeFoor’s characterization of school districts moving money from one type of fund balance to another as a nefarious act is misleading at best and disingenuous at worst.

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School district budgeting is complex, school district fund balances are highly regulated, and school boards carefully consider how to commit and assign funds based on the short and long-term purposes for the funds.  Anyone who reads past the first few pages of DeFoor’s report will understand this.

And if DeFoor is sincerely concerned with the use of tax dollars in school fund balances it is puzzling that he has not engaged in auditing the fund balances of cyber charter schools. Cyber charter schools are funded by tuition payments made by school districts. In 2021 these payments totaled more than $1 billion and charter tuition costs are cited as one of the top reasons that school districts must raise property taxes. 

Cyber charter school fund balances are unregulated by the state. Again, cyber charter school fund balances are unregulated. Cyber charters allowed to hold an unlimited amount of money in their fund balances without any plan for how it will be spent. 

A recent report from the PA Charter Performance Center found cyber charter school unassigned fund balances more than doubled from 2019-20 to 2020-21 and skyrocketed seven-fold as compared to the 2018-19 school year. Unassigned fund balances grew nearly 10 times faster in 2020-21 for cyber-charters (+119%) than school districts (+12%). Using the standards applied to Pennsylvania school districts, 11 of 14 cyber-charters are holding excessive surpluses.

With no state regulations over cyber-charter fund balances and a free pass from the Auditor General, the opportunities for waste, fraud, and abuse of these dollars are extraordinary. 

In addition, DeFoor’s choice to hold school districts and charter schools to different standards of accountability should present a grave concern to Pennsylvanians. 

If Auditor General DeFoor is using his office to target some public school entities for audits (school districts) while giving others a free pass (cyber charter schools), it creates the appearance that he is using his office and his power to promote a political agenda, and not to protect the people of Pennsylvania from the misuse of their tax dollars. 

The auditor general is supposed to be the commonwealth’s fiscal watchdog — an independent voice in Harrisburg whose focus is to ensure that tax dollars are being spent efficiently and effectively by the entities that are entrusted with them.

He should be carrying out that role fairly and examining fund balances for each type of public school entity, not a curiously hand-picked few.

Susan Spicka is the executive director of Education Voters of Pennsylvania. Her work appears frequently on the Capital-Star’s Commentary Page. She writes from Shippensburg, Pa. 

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Capital-Star Guest Contributor

The Pennsylvania Capital-Star welcomes opinion pieces from writers who share our goal of widening the conversation on how politics and public policy affects the day-to-day lives of people across the commonwealth.