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Pa. schools and $$ behind the curtain

Does state law allowing school districts to keep large reserves of tax dollars amount to overtaxing state residents?

State Budget Secretary Charles Zogby: "I don't think anybody would suggest it's imprudent to have reserves. But it's a good question. Is there too much?" (Photo by La Shinda Clark Suburban / Staff Photographer)
State Budget Secretary Charles Zogby: "I don't think anybody would suggest it's imprudent to have reserves. But it's a good question. Is there too much?" (Photo by La Shinda Clark Suburban / Staff Photographer)Read more

ARE MOST Pennsylvania school districts fooling Pennsylvania taxpayers?

Are they hoarding money while annually seeking more while poorer districts, including Philly's, operate in crisis?

Well, there's an interesting line in Gov. Corbett's recent response to a school-funding survey.

The survey was by the Philadelphia Public School Notebook, an independent, nonprofit news service supportive of city schools.

The line?

"The 500 school districts throughout the Commonwealth have more than $3.5 billion in unreserved fund balances, representing overtaxation of their residents."

You read that right.

The state Department of Education confirms the number ($3.58 billion) from its most recent data - 2011-12 school-district fund balances.

For context, the state budget for Basic Education Funding, K-12, is $5.4 billion.

So it seems a lot of tax dollars are being held by schools.

A department spokesman says that current balances are likely less than $3.58 billion - 2012-13 numbers are due in spring - but notes that such balances increased every year since 2005, when the total was $1.9 billion.

The money is federal, state and local taxes that districts can keep in interest-bearing accounts.

They're essentially rainy-day funds. There are no restrictions on use.

Some examples of balances: Lower Merion School District, Montgomery County, $55 million; Downingtown Area School District, Chester County, $38 million; Bensalem Township School District, Bucks County, $31 million; Radnor Township School District, Delaware County, $18 million.

Even small districts hold big bucks: Susquenita School District, Perry County (one elementary school, one middle school, one high school), $10 million in reserves.

Only 12 of the 500 districts have no such funds; 11 of the 12 show negative numbers: Philadelphia, of course; East Allegheny; Wilkinsburg, Allegheny County; Aliquippa, Beaver County; Twin Valley, Berks County; Coatesville, Chester County; Steelton-Highspire, Dauphin County; Pocono Mountain, Monroe County; Eastern Lebanon; York; and Monessen, Westmoreland County.

The 12th district, Catasauqua Area, Lehigh County, shows a zero balance.

So roughly 97 percent of districts have money squirreled away - in some cases tons - while other districts claw for cash.

Doesn't this suggest an imbalanced use of tax money?

Or beg for lower local taxes, even givebacks, in some districts?

At a minimum, isn't it a lot of money to be sitting there?

State Budget Secretary Charles Zogby: "I don't think anybody would suggest it's imprudent to have reserves. But it's a good question. Is there too much?"

The Pennsylvania School Boards Association (PSBA) says the funds are good business practice, needed to combat rising pension costs and other expenses.

And PSBA spokesman Steve Robinson says Corbett's $3.5 billion number is "wrong" because it counts money "committed or assigned" for specific needs or projects. He says the real number is $1.5 billion.

But Education Department spokesman Tim Eller says that districts can maintain three funds ("committed," "assigned" and "unassigned") and that the governor's number, the total of the three, is correct because districts can move money among the funds and all the money is available for any use.

Wythe Keever, spokesman for the Pennsylvania State Education Association, the state's largest teacher union - which sides with the PSBA - says the funds are necessary and being spent down due to Corbett's "inadequate state funding." He says the governor "appears desperate to deflect attention from his sorry record."

Corbett's press secretary did not respond to requests for comment on this issue.

To be clear, state law allows districts to stash cash.

And the amount is limited only in "unassigned" funds and only as it relates to local taxes.

Districts cannot keep more than 8 to 12 percent of overall expenditures (depending on size) in an "unassigned" fund, then seek tax increases.

But if a district does not seek tax increases, it can keep any amount. And it can transfer funds from "unassigned" to "committed" or "assigned" to stay under thresholds.

The four fund-rich suburban districts mentioned above all have more money in "committed" or "assigned" funds than in "unassigned" funds.

And Education Department data show that 70 percent of districts last year had more than 12 percent of total expenditures in reserve accounts.

Doesn't this suggest that current law encourages hoarding and favors wealthier districts?

Senate Education Committee Chairman Mike Folmer, R-Lebanon County, says, "I don't have any answers."

He says he knew that districts had reserves but didn't know the amounts.

He adds, "That might be something we should look at."

The six school districts in Lebanon County hold reserves of $28 million.

House Education Committee Chairman Paul Clymer, R-Bucks County, says, "You raise a very good point. It's a lot of money. Maybe we need to have a public hearing, bring in business managers and school boards and have a discussion."

The 13 districts in Bucks County have reserves of $197 million.

I get the need for reserves.

I understand that 2011-12 totals are very likely larger than 2012-13 data will show.

And maybe Corbett's trying to turn criticism of his education funding back onto most school districts.

Still. It's a ton of tax dollars. It underscores inequities in education funding. And it deserves serious review.