LANCASTER COUNTY, Pa. — A dozen Pennsylvania school districts, including three in Lancaster County, have been accused of raising school property taxes even when they had enough money to cover their budgets.
A new report by the State Auditor General alleged 12 school districts were playing a “shell game” with property taxes to improperly raise tax rates.
School districts are allowed to raise school property taxes each year based on an inflationary index. Any additional increase must be approved by voters in a referendum or granted via exemption by the state.
According to the report, the school districts collectively raised taxes 37 times over four years, growing their total funds to $390 million.
The report said districts moved funds between different accounts in order to seem that they had less money in their general funds, which allowed them to increase taxes.
The strategy is not illegal. But it violates the intent of the law by raising taxes while simultaneously holding excess funds, according to Nathan Benefield, senior vice president at libertarian think tank Commonwealth Foundation.
Benefield agreed with the report’s suggestion for stricter regulations on how school districts qualify for property tax hikes.
Pennsylvania school districts have faced penalties for the practice.
Another district on the report’s list, Lower Merion in Montgomery County, last October agreed to reimburse taxpayers $27 million for raising taxes despite full funds.
The three school districts listed in Lancaster County were Hempfield, Lancaster and Penn Manor.
The report drew the ire of some taxpayers in those districts.
“There's a lack of consideration for where the economy is right now,” said Bridget Z, who lives near McCaskey High School in Lancaster. “So many people are living paycheck to paycheck, some not making it paycheck to paycheck. With utilities, groceries, everything going up, this is just a really bad time to be raising taxes.”
All three Lancaster County school districts released responses to the report.
In a detailed online response, Penn Manor officials said tax increases were necessary for a $100 million construction project at the high school. Officials wrote in a statement,
“We are proud of the fiscal management of Penn Manor, which ranks 404th of 500 school districts in Pennsylvania in the amount it spends to educate each student."
In a separate online response, Hempfield officials said they have to decide whether to raise taxes for the next school year in December or January, about eight months before the start of the school year. The next year’s budget isn’t known at that time. Officials explained:
“Historically, we have felt it important to leave all options open due to the timing of when the decision needs to be made and the information known at that point in time. That way, in the event additional revenue would be needed for things such as PSERS, Special Education, and/or rising costs of supplies that are out of our control, the option is available.”
The Lancaster School District said in a statement:
"The audit report refers to common practices of school board budgeting, which the auditor general agrees are fully legal. The School District of Lancaster has a long history of prudent, forward-looking, transparent financial management."