Not long after the Pennsylvania Auditor General’s office released a review of the Wilkinsburg School District’s finances in 2013, it was placed on the state’s financial watch list.
And not long after that, the district entered into a “pay-day type” loan that it wasn’t able to pay back and that ultimately cost the cash-strapped district $1.2 million.
“We are surprised the state even allowed that type of thing to take place,” Auditor General Eugene DePasquale said during a news conference Wednesday.
His office released its latest audit of the Wilkinsburg School District’s finances — spanning from July 1, 2013 to June 30, 2017 — which included four findings and 16 recommendations. Among the findings was the district’s “risky” tax collection deal it made in June 2013 with an unnamed third party to collect delinquent real estate taxes.
According to the audit report, the deal allowed the district to access a $2.4 million line of credit that it could use to help meet day-to-day operational costs. The plan was to use the collection of the delinquent taxes to pay off the loan, but since a majority of those taxes were “uncollectable,” the audit said, the district was left on the hook for about $1.2 million.
When district leaders realized it was a “bad debt,” they elected to use some of the $3 million the district received from the Pennsylvania Department of Education to assist with transition expenses related to Wilkinsburg’s partnership with the Pittsburgh Public Schools that allows the district’s oldest students to attend Westinghouse Academy in Homewood.
“I am stunned that Wilkinsburg district officials made this risky bet while operating under financial watch status,” Mr. DePasquale said in a statement. “The Department of Education really needs to make sure the school districts that are already in bad financial condition have appropriate guidance that will prevent them from making matters worse.”
Also among the findings of the audit were that the district did not maintain a required safety plan and comply with bullying prevention requirements. The audit also found that the district didn’t keep proper documentation for more than $1.5 million in state transportation reimbursement costs or for more than $173,000 in state-reimbursed tuition for non-resident students.
“The Wilkinsburg School District appreciates the recommendations provided by the Auditor General’s Office following its review of District finances and operations,” Superintendent Linda Iverson said in a statement. She was hired to lead the district in 2016, and attended the news conference with Wilkinsburg Mayor Marita Garrett. “While the district takes all recommendations seriously, we would like to stress that corrective action for all four findings contained within the report already is in progress.”
She denied that the district used state transition funds for its partnership with Pittsburgh Public Schools to cover delinquent tax payments, because the company the district worked with required payment in full in advance.
“All transition funds received from PDE in 2016 were used to pay for the transition of our students to the Pittsburgh Public Schools,” Ms. Iverson said.
She also said the district is working hard to remedy the “financially-distressed situation” created by previous district leaders, noting that that district ended fiscal year 2018 with a positive fund balance — the first in years — and was able to reduce school taxes by 3.13 mills. The district has also seen small gains in test scores over the past two years and added a social worker to assist students at its two schools.
But Mr. DePasquale went on to say that the new district leadership, along with leaders from the borough, are “off to a good start” in their turnaround efforts.
He praised Wilkinsburg’s partnership with Pittsburgh Public Schools as a success and an example for other districts across the state, and congratulated the district for being able to reduce property taxes to that they are no longer the highest school taxes in Allegheny County. The district finished 2018 with a small general fund surplus, after years of deficits.
“For the first time in a generation, I believe the Wilkinsburg School District is heading in the right direction,” Mr. DePasquale said.
Elizabeth Behrman: Lbehrman@post-gazette.com, 412-263-1590 or @Ebehrman on Twitter.
First Published: February 27, 2019, 11:30 p.m.