3 midstate school districts criticized for raising taxes despite big savings accounts

Written by Ben Allen, General Assignment Reporter | May 30, 2017 12:33 PM

(Harrisburg) -- A right-leaning advocacy group is raising questions about how some midstate school districts handle taxpayer money.

Three districts in the midstate have healthy reserve accounts, but also have frequently asked to raise taxes above the state's limit.

The school districts -- Camp Hill in Cumberland County, Middletown in Dauphin County, and Lebanon in Lebanon County -- all are holding millions of dollars in reserve accounts.

But in the last decade, they've also asked to raise taxes above the state's usual limit at least eight times.

James Paul of the Commonwealth Foundation, says reserve accounts are necessary.

But he says the districts far exceed what's reasonable.

"If you're already sitting on that kind of money and you are requesting permission to raise taxes even above a state-mandated cap year after year, something isn't adding up," says Paul.

State Auditor General Democrat Eugene DePasquale has said he questions reserve accounts that are above 20 percent of all spending.

All three districts have reserve accounts above 25 percent.

Jeff Ammerman with the Pennsylvania Association of School Business Officials says districts are trying to protect themselves.

"There's some legitimacy to that concern, I'm not trying to say that there isn't, but there are reasons why districts do this in a gradual way to try to mitigate those tax increases that may be needed going forward."

Ammerman says each case should be looked at individually, as some districts may be holding money for building projects.

"If that money is not there, districts have less flexibility, would have to almost raise taxes year over year. So this also helps mitigate those tax increases that are necessary," he adds.

James Paul of the Commonwealth Foundation, says that's fair.

"So there are cases where these funds are assigned for a specific purpose. But there are also funds that are sitting in unassigned accounts that are truly rainy day funds."

In Middletown's case, it's Chief Financial Officer David Franklin says most of its fund balance is set to go towards higher pension costs. It also will use some of its reserve to pay for a former health insurance contract, and offset future health insurance costs. 

Franklin adds that it often requests the ability to raise taxes above the state's cap as a protection, because that deadline comes weeks before the Governor's budget is released. 

Paul says districts shouldn't be able to sit on that much money while also consistently raising taxes.

This story has been updated to add context from Middletown, which responded after deadline.

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