Eugene A DePasquale Pennsylvania Auditor General

Eugene A. DePasquale

Philadelphia school district plagued by persistent budget deficits, audit says

State audit says school system doesn't have the authority to solve its financial predicament.

The Philadelphia school district faces persistent financial problems and does not have the authority to fix them on its own, the Pennsylvania Auditor General says.

An audit released by Auditor General Eugene DePasquale states that the district's inability to raise its own revenue and mandatory cost increases force the school system to rely on borrowing funds to keep operating.

“Financially, the whole system for funding the School District of Philadelphia is broken,” DePasquale says in a news release. “Many, but not all, of the financial issues are beyond the district’s ability to resolve on its own. What’s needed is an all-hands-on-deck commitment from local, state and federal leaders to work with the district to develop solutions to address its financial challenges and be a good steward of public funds."

The audit says that over the five years covered in the report, the Philadelphia district had a structural deficit totaling $560,165,745.

“For the fiscal year 2013-14 alone, the district paid more than $265 million to cover payments on its borrowing, and more than $146 million of that amount is for the interest alone,” DePasquale says. “The district is consistently paying more each year in interest than it is on the loan principal. That’s a scenario that is just not sustainable."

The district’s local revenue makes up only 33 percent of its budget compared with 70 percent for most other Pennsylvania school districts.

“While other school districts in Pennsylvania have the ability to raise local taxes to support schools, Philadelphia does not have the independent ability to increase tax rates," DePasquale says. "The direct taxing authority lies with the General Assembly and the Philadelphia City Council."

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