The Neshaminy School District responded to a claim by the Pennsylvania auditor general that the district and 11 others used a legal loophole to raise taxes when they may not have had to.
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Auditor General Timothy DeFoor, a Republican, announced at a press conference this week that Neshaminy and other districts used a “legal standard practice where districts are raising local property taxes while holding millions of dollars in their general funds.”
At his press conference in Harrisburg, DeFoor said the 12 districts his office pointed to had healthy fund balances that could have been used to fill budget gaps. He called it a common practice to shuffle unspent money into other funds to justify tax increases.
Last June, the Neshaminy School Board approved a $196.2 million budget that raised taxes from 165.6 mills to 171.23 mills. Don Irwin, the district’s business administrator, said at the time that the increase would equal out to an average cost of $62.19 per household, but it would have been a $157.84 increase without state aid.
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District officials said at the time that the tax increase was due to rising costs, contractual obligations, and several large projects, including construction of a new elementary school in Middletown Township, being in the works.
The district, in their Friday evening statement, said the school board has “carefully balanced fiscal responsibility to the taxpayers, the financial stability of the district, and the needs of students.”
Neshaminy officials said they went years without a tax increase and never went above state limit from 2018 to 2022.
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The district said they plan to enact any recommendations from the auditor general, but they stressed the office “did not find non-compliance with laws or regulations” at Neshaminy.
The auditor general’s report outraged some residents who took to social media following the news.
Below is the Neshaminy School District’s full statement:
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The Neshaminy School District Administration and Neshaminy Board of School Directors has carefully reviewed the Performance Audit Report which was released to the public on January 25, 2023. The District accepts the facts as presented, and plans to implement all of the recommendations made in the report. The report notes that the auditors “did not find non-compliance with laws or regulations.” We do feel that some of the characterizations made in the report of the District’s management of the General Fund Balance as it relates to tax rate increases need further explanation, however.
Over the past decade, the Neshaminy Board of School Directors has carefully balanced fiscal responsibility to the taxpayers, the financial stability of the District and the needs of students. The District was (and continues to be) faced with a number of financial challenges including significant increases in payments to the state education pension system (PSERS), operating cost increases, and the need to fund multiple capital projects such as vital District-wide school building renovations and upgrades, technology improvements, and financing for new construction. With these obligations in mind, the District planned ahead and used its positive financial position (partially due to the Fund Balance) to obtain more favorable rates when borrowing money for new construction projects. This was accomplished without raising taxes for seven years from 2010 to 2016. The tax increases from 2018-2022 were either at or below the Act 1 index set by the Pennsylvania Department of Education for those years, and no increase was imposed for the 2021-2022 school year:
While it is true that the Board did apply for the referendum exemptions to exceed the index as stated in the report, it is important to note that this option was never used. The purpose was to keep that option open should unforeseen circumstances present themselves as multiple capital projects were completed. This was viewed at the time by the District as prudent planning to keep the projects on track and avoid additional financing expenses.
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We believe that the tax history as shown above demonstrates Neshaminy’s long-term responsibility and commitment to the community that we serve. The School Board and District Administration will continue to pursue those goals within the guidelines presented by the report.
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