Pennsylvania Auditor General Timothy L. DeFoor said several Lancaster County school districts are among a dozen school districts from across the commonwealth that exploited a legal loophole to raise taxes without a referendum.
“These districts represent a cross-section of Pennsylvania – from wealthier to poorer tax bases and urban, suburban and rural communities,” DeFoor said in a Jan. 25 press release. “These districts have found a way to use the law to their advantage so they could always raise property taxes. It’s basically a ‘shell game’ that allowed these 12 school districts to collectively raise taxes 37 times during the four years we reviewed, which increased their respective General Fund accounts to $390 million.”
DeFoor released an audit of 12 school districts from across the Commonwealth that are raising local property taxes while holding millions of dollars in their General Funds.
The three school districts in Lancaster County on the list are Hempfield School District, Penn Manor School District, and the School District of Lancaster.
“Some startling trends began to appear to our auditors, like moving money around to make sure a district would always meet the threshold to raise taxes,” DeFoor said. “They also applied for a referendum exception as a regular budgeting tool, rather than an extreme measure as the law intends. Each of the 12 districts had sufficient unused funds that should have negated some of the 37 tax increases.”
DeFoor recommended that the General Assembly take measures to prevent the problem, including requiring school districts to use committed and assigned General Fund balances and the prior year’s surplus funds prior to requesting a referendum exception to raise taxes.
He also recommended that the Pennsylvania Department of Education review and revise the process of approving referendum exceptions if the district has committed and assigned General Fund balances.
“If this is standard operating procedure for these urban, suburban and rural districts, it’s not a stretch to say that it’s common practice across the state,” DeFoor said.