North Hills Disputes Claim Of $13 Million In Reserves

ROSS TOWNSHIP, PA - Pennsylvania’s 500 school districts continue to hoard reserve funds and the North Hills School District is no exception. But how large that fund is depends on how you crunch the numbers.

North Hills had $13.6 million in reserve during 2016-17, according to a study by the Harrisburg conservative Commonwealth Foundation. While that number technically is accurate, David Hall, district director of finance and operations, says the amount of money the district actually has in uncommitted reserves is only $4.3 million.

Why do districts maintain fund balances? According to the Pennsylvania School Boards Association, fund balances are needed to respond to emergencies or other unforeseen event such as an unanticipated building repair; cover unexpected revenue shortfalls; maintain good credit ratings to reduce the cost of borrowing or issuing debt or to keep a district running in the event of late or lower than expected state subsidies.

The Commonwealth Foundation examined the total of all available reserves, and North Hills’ $13.6 represents 17,9 percent of total district spending in 2016-17. State Auditor General Eugene DePasquale has said school districts should not keep fund balances exceeding 20 percent of their total expenditures and 17.9 percent approaches that threshold.

But Hall said $5.8 million of that money was earmarked to help the district meet rising increases in its mandated contributions to the Pennsylvania State School Employees Retirement System. Another $3.4 million was allocated to cover district workers’ post-employment expenses, such as retirees’ medical or life insurance costs. About $230,000 covered supplies stored n district warehouses.

Hall said that leaves about $4.3 million in unassigned funds that can be used, for example, to plug holes when the district’s annual budget is being prepared.

Overall, school district reserves for 2016-17 increased by $139 million over the previous year to reach an all-time high of $4.5 billion, according to the Commonwealth Foundation.

“School districts now hold enough money to cut every Pennsylvania student a $2,860 check,” Nathan Benefield, Commonwealth Foundation vice president and chief operating officer, said in a release. “While ‘rainy day’ funds are necessary at some level, nearly half of school districts have fund balances exceeding 20 percent of total spending.”

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