Beth Ann Rosica: The unchecked authority of school boards to raise taxes

Pennsylvania’s Auditor General issued a report this month raising concerns over tax increases imposed by local school boards, alleging the districts “are raising taxes while holding millions of dollars in their General Fund accounts.” (page 1)

The report audited twelve districts across the commonwealth, and while there were no findings of illegal activity, the report concluded that the districts were “adhering to the letter of the law and not the intent of the law,” when raising taxes. (page 1)

Prior to pandemic-induced school closures and lockdowns, most voters paid very little attention to their local school boards, either in terms of their elections or their operations. Now, though, many more parents and taxpayers are attending school board meetings, asking questions, and getting involved in the local races. What some voters are learning is that our elected school board directors have a great deal of decision-making power.

The biggest impact is a board’s ability to raise taxes. Pennsylvania is one of very few states vesting this authority in local school boards.

In Pennsylvania, school boards have the authority to raise taxes without a voter referendum. “Act 1 of 2006, known as the Taxpayer Relief Act, was intended to give voters a greater say when a school district needed to raise property taxes beyond limits set by the law. Yet school districts were raising taxes through exceptions granted by the state, while continuing to have sufficient funds in the General Fund to cover any budget shortfalls.” (page 1)

One of the twelve districts audited was the West Chester Area School District, which has been under scrutiny for a myriad of other issues. According to the audit, WCASD was selected because they had not been audited since 2017, held high balances in their accounts, and requested referendum exceptions from the Pennsylvania Department of Education to raise taxes without consulting the voters.

The audit showed in 2018, the WCASD Board of Directors voted to approve a referendum exception to increase taxes while maintaining a balance of $21 million in their accounts. In 2019, they voted again to approve a referendum exception with $24 million in the bank. In 2020, they did not apply for a referendum exception but raised taxes more moderately with $28 million in their accounts. 

How was this legal? The board played a shell game of moving money around to different funds. 

Each district has three funds to operate the schools: capital projects fund, debt services fund, and the general fund. The Pennsylvania Department of Education only evaluates the general fund when a board seeks a referendum exception, and that fund must be below a certain threshold in order to be eligible for the exception. WCASD simply moved money out of the general fund into the other funds to legally apply for the exception.

In the report, the auditor general highlighted these schemes, saying, “We disagree with these practices.” (Page 5)

The report found that in addition to the shell game, WCASD also “sandbagged” their budget, meaning the budget was overly conservative to imply there was not enough money to cover the costs. Yet year after year, the district’s projections of expenses were highly inflated, and the variance between the budget and the actual numbers exceeded millions of dollars. Table #3 on page 144 shows that the variance between the budget and the actual numbers ranged from $8 million to $35 million over the time period of the audit and when taxes were raised three out of four years.

Clearly, the district’s policies and practices do not take into consideration the financial burden on taxpayers. However, the district cannot enact these policies without the consent of the school board. The school board directors are elected to represent the taxpayers and their best interests. Yet, the audit reveals a very different scenario.

“The overall results of this audit should raise concerns due to the district’s common yet questionable practices that are placing an excess burden on taxpayers across Pennsylvania,” DeFoor said in the report. (page 5)

When contacted for a comment about the audit report, the WCASD communications director shared a statement that is posted on their website. This response is typical of the district — instead of addressing the issues or taking any responsibility for their decisions, they dismiss any implication of wrongdoing.

“The district works diligently to provide an exceptional level of education while maintaining the lowest tax rate in both Chester and Delaware Counties,” the statement notes. Citing the lowest tax rate in the county hardly addresses the issue that they raised taxes when it was not necessary.

The district took the same dismissive attitude in their response to the auditor general. Rather than focusing on the seriousness of the issues, the district pushed back saying that the report could potentially damage its reputation. In a December 14, 2022, letter, WCASD Superintendent Dr. Robert Sokolowski, wrote to the auditor general, saying,“the issues called out by the DAG above are in many cases inaccurate and have the potential to damage WCASD’s reputation in the eyes of its taxpayers.” (page 148)

The bottom line is that neither WCASD nor its board did anything illegal. One could argue that their actions were unethical or not transparent. In either case, the taxpayers are footing the bill for these regular increases and only the board can approve these decisions. Without a board vote, these tax increases could not be enacted.

As the auditor general noted, “Overall, they stated if the district remains compliant with any explicit legal requirements and regulations, the Board has the authority to do what it feels is in the best interest of the district and its taxpayers. Similarly, transferring excess surplus funds from the General Fund to Other Capital Funds, whether budgeted or not budgeted, is lawful if the Board approves the transfer.” (page 4)

School board elections will take place in November all across the commonwealth, and it is an opportunity for taxpayers to make their voices heard regarding this issue. In WCASD, five seats are up for re-election, and all the current board members with the exception of one — Stacey Whomsley — voted to approve the 2022-2023 budget. I encourage all voters to research the incumbent’s voting record to cast an informed ballot for the candidate who best represents your concerns, particularly regarding raising taxes.

Beth Ann Rosica resides in West Chester, has a Ph.D. in Education, and has dedicated her career advocating on behalf of at-risk children and families. 

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