State Auditor General Eugene DePasquale Gives the Scranton School District an "F"

in Performance Audit

October 24, 2017 - 11:33 am

State Auditor General Eugene DePasquale in Scranton today to release his performance audit of the Scranton School District.    According to the Auditor General  (the performance audit) "shows serious financial instability and an extreme level of board and administrative staff dysfunction rarely observed in school district audits." The 107-page audit report, which covers July 2012 through June 2016, contains nine findings and 38 recommendations for improvement. DePasquale said the district’s chronic operating deficits and a negative general fund balance led the district to incur unsustainable amounts of debt.

Diving deeper into the financial mismanagement, auditors found over 12 years, the district circumvented payment procedures, improperly provided health benefits, and failed to issue required Internal Revenue Service and  Pennsylvania Department of Revenue tax documents for a mechanic performing services as a non-employee of the district. 

DePasquale gave district officials and the board an “F” for failing in their oversight of a $26 million student transportation contract that included over $4 million in questionable fuel surcharges over 10 years.

Auditors found that twice in three years, while the district was in a declining financial position, it offered enhanced retirement incentives – an additional $15,000 per year for seven years — without a commitment to specific offsetting cost reductions and without a prior cost-benefit analysis.

The additional incentives replaced standard retirement incentive of $10,000 per year for seven years, a benefit not typically found in other school district’s contracts.

Auditors also found the district:

failed to request and obtain overdue health insurance payments – or cancel coverage — from three former employees, including from one former employee who still has an outstanding balance of $17,896;

entered into separations agreements with two former employees that resulted in questionable use of taxpayer funds and possible inadequate reporting of retirement wages to PSERS; and

did not provide adequate oversight of the IT inventory process and had gaps in the inventory records.

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