Audio: “Rainy Day” Funds Raining on Taxpayers

School districts across Pennsylvania have stashed away millions of surplus funds for a “rainy day,” yet some continue to request higher taxes at the same time. Of course, for many taxpayers, it is already raining. And every dollar held in excess by a school board is a dollar that could be saved, invested, or spent by working families. 

CF’s James Paul spoke with WITF’s Scott LaMar to explain why the combination of high surpluses and repeated requests to raise taxes is harmful to residents of the commonwealth.

Some level of rainy day funds makes sense…but school districts in Pennsylvania are currently sitting on $4.4 billion in funding, while many of those same districts are requesting higher taxes from residents year after year. That’s more than school districts spent on pension costs last year. It’s nearly three times the size of the projected state budget deficit that we are facing for the next fiscal year. It’s a lot of money.

Pennsylvania’s Auditor General Eugene DePasquale says reserve funds greater than 20 percent of total spending should be questioned. In the 2015-16 school year, 220 of Pennsylvania’s 500 school districts met this threshold. At the same time, 13 of these districts requested to raise taxes above the Act 1 Index (a state-mandated cap intended to shield residents from higher taxes) in 8 of the last 10 years.

This is ultimately an issue of transparency and open government. Taxpayers have a right to know how school districts are spending their money. And school board officials have a responsibility to be transparent about the amount of funding held in reserve.

James outlines how taxpayers can be more active and hold school boards accountable. He also identifies a solution to the problem: voter referendums on property tax increases. Click here or listen below to hear more.

Smart Talk airs every weekday at 9AM on WITF's 89.5 FM and 93.3 FM.

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