North Penn Defends What State Alleged Was 'Hiding Money'

LANSDALE, PA — Weeks after the Pennsylvania auditor general's office issued a thorny report accusing North Penn and 11 other districts of participating in a "shell game" to hide money so they could increase taxes, the district is barking back.

School board president Tina Stoll addressed the issue at length in a Thursday bulletin issued to the North Penn community. She highlighted specifically the fact that the report did not say that North Penn had broken the law.

"It is important to note that of the twelve districts included in the audit, every single district had 'no non-compliance with laws or regulations,'" Stoll wrote. "North Penn only qualified for the audit due to the bonds that were issued for the renovation of Knapp Elementary."

Stoll said that saving money for projects in this way is part of official board policy, and she said that it's needed because the state no longer reimburses districts for charter school expenses.

"This mandated expense has increased substantially over the years," she said. "It may literally be the ONE thing all SB directors in PA - rural, suburban, urban, small district or large- can all agree on and that is that we all want the state to reform how charters are funded."

This loosely falls in line with what North Penn Superintendent Todd Bauer said the day the report was issued. He said that the district has only used a tax exception — which essentially "hid" money — once, and that was to help pay for special education programs. The district applies for an exception regularly "in the event that the Board of Directors chooses to utilize the exception."

Bauer also defended the district's sizable fund balance as a reason for it's high Moody's Bond rating, which allowed it to gain lower interest rates when borrowing for major capital projects. The stadium, along with Montgomery and Knapp elemementary schools, are among the major renovations undertaken by the district in recent years.

DeFoor's original report, however, anticipated many of the responses that North Penn and other districts ultimately issued.

“School districts told us they must develop their budgets this way because they never know how much funding they will receive from the state,” DeFoor said when the report was first issued.. “But at the end of the day, it’s the taxpayers, especially those on a fixed income, that are shouldering the burden. 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 also said that based on his analysis, North Penn and other schools did in fact have the neccessary funds to complete these projects without "hiding" the funds from taxpayers.

"Based on our audit results, school districts have adequate funding for the related expenditures, are transferring excess surpluses, and are not using designated funds timely or to balance the preliminary budget prior to requesting to increase taxes above the index for the very same type of expenditure," he wrote.

Two other Montgomery County districts were cited in the audit, Abington and Lower Merion. Others found complicit in the scheme are listed below:

• Bethlehem Area School District, Northampton and Lehigh counties
• Cannon-McMillian School District, Washington County
• Hempfield School District, Lancaster County
• Neshaminy School District, Bucks County
• North Allegheny School District, Allegheny County
• Northampton Area School District, Northampton County
• Penn Manor School District, Lancaster County
• School District of Lancaster, Lancaster County
• West Chester Area School District, Chester and Delaware counties

The entire audit can be viewed online here.