PENN HILLS, Pa. — An audit of the Penn Hills School District shows long-term lack of oversight led to an outstanding debt of $170 million and multiple criminal investigations, Pennsylvania Auditor General Eugene DePasquale announced Wednesday.
“Penn Hills School District is nearly broke. A former business manager made a series of bad decisions and financially catastrophic mistakes that could have been avoided if the school board and the former superintendent had done their jobs,” DePasquale said. %
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In a period of five years, the district’s debt saw a sharp increase from less than $11 million to $167 million in 2015, according to a release. The debt now stands at $170 million.
“Everyone seems to have turned a blind eye as the school district marched toward financial disaster. The school board, along with the former superintendent and business manager, all failed the students and parents of this district,” DePasquale said.
The district’s former business manager, Richard Liberto, whose simultaneous positions of school board treasurer and secretary violated the Public School Code, delayed presenting a January independent audit report to the board.
DePasquale said the school audit is one of the worst he has ever seen.
“The district’s problems are so serious that major changes are going to be necessary to keep the district afloat,” he said.
The report found that among the financial mistakes was the borrowing of $135 million for construction projects, without plans for repayment. Another $424,000 were misspent on meals, hotels and other expenses, including a personal home water heater.
It was also discovered that school bus drivers were not given background checks. Of 25 sampled, two had criminal records for drugs and aggravated assault and have since been fired.
A copy of the report has been sent to the Allegheny County District Attorney's Office, the U.S. Attorney for the Western District, the Department of Revenue and the state Ethics Commission for further investigation into possible criminal and tax violations.
The audit, which covers July 2012 through June 2015, contains eight findings and 28 recommendations. The findings are as follows:
- The district's general fund declined to negative $18.8 million because the school board failed to properly oversee the former superintendent and business manager.
- Continued budgeting errors and operating deficits, as well as increased debt service, led to a negative $18.8 million general fund balance.
- The district violated its own policy regarding the use of credit cards and did not monitor purchases.
- The district is missing at least $22,000 in ticket sales from sporting events.
- Because the district failed to monitor its busing contractor, the contractor misappropriated $384,500 in district fuel.
- The district's busing expenses significantly exceeded the state reimbursement amount.
- Poor billing practices resulted in the district losing thousands of dollars' worth of fuel.
- The district used school bus drivers who did not meet employment requirements.