Are These 8 Pa. School Districts Piling Up Tax Dollars Like Lower Merion?

Districts Stock Massive Reserve Funds While Seeking Tax Hikes

October 12, 2016, HARRISBURG, Pa.—A Montgomery County judge recently ruled that Lower Merion School District misled taxpayers by stashing huge cash reserves while repeatedly hiking taxes on township residents. Could 8 other Pennsylvania school districts be doing the same thing?

Lower Merion’s reserves amount to nearly 25 percent of the district’s total spending. Surprisingly, 8 districts are piling up an even higher percent of cash reserves while also requesting property tax hikes above the state-mandated cap in at least 8 of the last 10 years.

Click here for a searchable, sortable spreadsheet of all 500 school districts showing reserve fund totals and the number of times each district requested a property tax hike above the state cap in the last 10 years.

“Auditor General Eugene Pasquale confirmed that when districts hold more than 2o percent of their total spending in reserve, that’s cause for question,” commented James Paul, senior policy analyst for the Commonwealth Foundation. “This is particularly true when these same districts repeatedly demand more tax dollars from their residents who have little voice in the process.”

The Taxpayer Relief Act of 2006 (Act 1) was intended to reduce property tax burdens and give Pennsylvanians a voice in any property tax increase. Under Act 1, if a school district wants to raise taxes above an annual index (usually between 2 and 4 percent), they must get a waiver from the state or seek permission from voters.

Since Act 1’s passage, however, virtually no districts have sought voter approval. Instead, many districts regularly apply for, and receive, exceptions from Act 1’s voter referendum measures.

A whopping 46 school districts requested property tax increases greater than the state-mandated cap in at least 8 of the last 10 years. Meanwhile, total reserve fund balances statewide hit an all-time high of $4.3 billion in 2014-15, with 210 districts holding reserve fund balances greater than 20 percent of spending.

“Pennsylvanians have the right to know if their school districts are holding millions in reserve while asking for even more of their hard-earned money,” Paul continued. “It’s one thing for districts to plan responsibly for the future; it’s quite another to expect taxpayers to fund massive cash stockpiles that do little to educate students. SB 909, sponsored by Sen. Donald White, would amend Act 1 to require voter permission for any school district tax increase.”

James Paul and other Commonwealth Foundation experts are available for comment. Please contact Gina Diorio at 862-703-6670 or gld@commonwealthfoundation.org to schedule an interview.

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