There is little doubt that, as state Auditor General Timothy DeFoor recently reported, some public school districts move around money to avoid reporting excessive cash reserves that would preclude them from raising local taxes.

But that is only part of the story. Public school districts don’t operate in a vacuum but according to the structure devised by the Legislature.

Largely because Pennsylvania ranks 43rd nationally in the state government’s contribution to public education — less than 40% of the total — public school districts are over reliant on local property taxes. And, because legislators frequently fail to pass the state budget by the time districts must have theirs in place, districts must provide themselves flexibility.

Public school district reserves are regulated by the state and, therefore, subject to audit. Reserves generally are not supposed to exceed 8% of the current budget.

Tellingly, lawmakers don’t restrict their own reserves. Both houses regularly accumulate massive reserves, sometimes exceeding the annual $300 million-plus operating budget of the entire Legislature.

And DeFoor also has not gotten below the surface.

Charter schools are public schools. Their revenue comes from taxpayers. Each school district, which derives its revenue from state and local taxes, pays tuition to charter schools for each child living within its boundaries who attends a charter school. The tuition is based on the district’s cost per student rather than on the charter school’s actual costs.

Yet the state does not place the same restrictions on charter school reserves that it places on school district reserves. According to the Pennsylvania Charter Performance Center, unassigned fund balances held by charters grew faster than those held by school districts in the 2020-21 school year. The report said 11 of the state’s 14 charter schools hold surpluses beyond those that the state allows for conventional school districts.

Public education money should be spent on education rather than held in excessive reserves. But that will not happen as long as the Legislature fails to take up a greater percentage of education funding, ties the school budgeting calendar to its own unpredictability and fails to subject charter schools to the same level of accountability that it demands of school districts.

— The Citizens’ Voice (Wilkes-Barre)

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