Pennsylvania Auditor General Eugene DePasquale says the Harrisburg School District’s cafeteria is giving him heartburn, and it’s not about the food.
DePasquale said that the cafeteria operations lost $1.6 million from 2010 to 2015, the period his staff audit covered. The district, he added, continues to struggle with excessive debt, a drop in the property-tax collection rate and a spike in payments to charter schools.
“While the district made progress toward getting its fiscal house in order, the district still has many, challenges and has a long, way to go,” DePasquale said Tuesday.
Harrisburg and other school districts are in limbo during the four-month old state budget impasse, awaiting passage of a spending plan necessary for reimbursements.
Auditors, he said, found “chronically weak” internal controls governing cafeteria fund activities, including inadequate cash-register staffing and poor accounting for the number of meals served.
The cafeteria fund had an accumulated deficit of a half-million dollars in 2010. Expenditures exceeded revenues for four of the five school years from 2010 through 2014. In the 2013-14 school year, the district reduced the accumulated deficit with a nearly $1.3 million transfer from the general fund. Even after this transfer, said the audit, the cafeteria fund had a remaining deficit of $877,108, as of June 30, 2014.
“The good news is that the district’s general fund balance increased between 2007 and 2013, from $7.6 million to $29 million and its general fund ratio, which in an indicator of liquidity, increased from 1.15 to 1.81 for the same period,” DePasquale said. “That is pretty much where the good news ends.”
The district’s debt service, he said, rose from 10% of general fund expenditures in 2011-12 to 13.8%, or nearly $14.5 million, for 2012-13 school year. The Pennsylvania Association of School Business Officials recommends a percentage of less than 10%.
Charter school tuition payments, said DePasquale, more than doubled from $4.4 million in 2011 to $9 million in 2013, adding pressure to the district’s bottom line, especially because state charter school reimbursements ended in 2011.
While DePasquale said school district officials agreed with the findings and recommendations, the district’s former state-appointed chief recovery officer took exception.
“The auditor general’s audit was a waste of taxpayers’ dollars,” Veno said. “All they needed to do was read two recovery plans my team developed.”
Veno, whom former state education Secretary Ron Tomalis appointed in 2012, resigned June 30 after the district became the first statewide to approve a recovery plan under Act 141, the state workout program for distressed districts that took effect that year.
The district had surpluses the past two years.
“We left the district and community with a Standard & Poor’s rating of A,” said Veno. “What took two auditors general and five years to complete, our chief recovery plan uncovered and improved in our first five months under Act 141.”