Abington School District was called out by Pennsylvania’s Auditor General for excessively conservative budgeting practices. The all-Democratic board of directors approves the budget annually.
Auditor General Timothy DeFoor issued a report in January detailing a comprehensive audit of twelve school districts in the commonwealth. 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)
How districts manipulated their budgets, moved money around between funds, and requested exceptions from the state to raise taxes without taxpayer input are explained in this recent article.
Abington School District in Montgomery County was one of the twelve districts audited. As with the others, the Auditor General found that the district misled taxpayers by presenting budgets that indicated a deficit of funds. With the anticipated deficit, the school board directors voted to apply for the Pennsylvania Department of Education referendum exception that allows them to raise taxes without permission from the voters.
Over the four years audited, Abington requested the referendum exception three out of four years. Due to the overly conservative budget process, the district only used the referendum exception once in 2018. This exception was allegedly to be used to cover the commitment to pension obligations but was not spent during the year that taxes were raised.
“Abington’s business office created preliminary and final budgets that were excessively conservative. Specifically, these budgets reported beginning and ending General Fund balances that were $10 million to $20 million lower than actual balances.” (page 17)
The report offered seven recommendations to improve stewardship of taxpayer funds, and the district agreed to consider three, while they disagreed with the other four. (page 21) Subsequently, the district’s public statement did not indicate that they were considering any of the recommendations, and instead stated that the report was a mischaracterization of their practices and that they were proud of their conservative budgeting process.
“We are disappointed in the Auditor General’s mischaracterization of our practices as non-transparent with regard to the preparation of our annual General Fund Budgets…..Further, we take pride in the fact that the Auditor General found that we use ‘conservative budgeting practices’ in our estimates, as the budget cycle is a six-month long process during which many factors might change.”
The Abington superintendent took exception with the audit’s finding of a lack of transparency regarding the budgeting process. He further stated that the budgets and reports are all available on the district website; however, his assertion that posting budgets and documents is indicative of transparency is misleading.
“In addition to being available under the Business Office section of the Abington School District website, all budget presentations and Pennsylvania Department of Education General Fund Budget reports are posted and archived on the BoardDocs management system. The reporting of funds related to Capital Projects is also transparent, as they are reflected in the Board-approved Monthly Financial Reports, which are public meeting agenda items. The Auditor General’s assertion of a lack of transparency is not reflected in Abington School District’s actual budget process.”
While the reports referenced in the statement are posted on the website, there is very little explanation to accompany the numbers. The average taxpayer would not be able to ascertain whether the budget was overly conservative or whether funds were moved to different accounts or if funds were assigned to one category and then spent in another. Fiscal transparency must mean more than simply posting numbers and reports with little explanation.
While the District’s Chief Financial Officer and Superintendent develop and implement the annual budgets, it is the board of directors who ultimately votes to approve the budget. Without board approval, the district cannot raise taxes without the consent of voters.The district cannot move funds around without the approval of the board.
“Based on our audit results, Abington’s policy allows it to increase taxes while retaining millions of dollars of unspent funds for several years in its General Fund.” (page 20)
At a minimum, Abington taxpayers should be asking the board why it supports overly cautious budgeting that allows taxes to be raised when the auditor general concluded that it was not necessary. Additionally, the district should provide an update on the three recommendations that they agreed to consider. Finally, the district and the board should re-examine whether their practices and communication are truly transparent.
Fiscal transparency means being open and honest about how funds are budgeted, managed, allocated, and spent. If Abington is committed to transparency for all taxpayers, the board should at least consider and evaluate all seven recommendations and determine how to improve their financial practices and policies. Sharing the results of that process with the taxpayers would be a step in the right direction towards full fiscal transparency.
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.