NEWS RELEASE
For Immediate Release
Contact: Steve Halvonik 717 787-1381

Auditor General Jack Wagner Finds New Castle Area
School District Improperly Received $54,784 in State Funds

Overpayments were caused by erroneous reporting of federal wages

HARRISBURG, PA., May 14, 2009 – Auditor General Jack Wagner said today that the New Castle Area School District, in Lawrence County, received $54,784 in state funds to which it was not entitled because it inaccurately reported employee wages to the commonwealth.

Wagner recommended that the Department of Education deduct the improperly received state funds from the district’s future allocations to resolve the overpayment.

“As auditor general, my job is to ensure that school districts receive the funds to which they are entitled, and that school districts comply with all state laws and regulations,” Wagner said. “In this case, the New Castle School District failed to comply with state laws and received funds it was not entitled to. The Department of Education should work with school district officials to rectify the errors found by our audit as soon as possible.”

Wagner said the errors were the result of district personnel failing to subtract, from total wages reported, all Social Security and Medicare wages that were paid with federal funds during the 2005-06 and 2004-05 school years.

School districts are required to pay the full amount of Social Security and Medicare taxes and are subsequently reimbursed the commonwealth’s matching share, excluding wages that are paid with federal funds. For employees hired prior to July 1, 1994, the commonwealth’s matching share is 50 percent of the employer’s share of tax due, and for new employees hired after July 1, 1994, the commonwealth’s matching share is based on the state aid ratio or 50 percent of the employer’s share of tax due, whichever is greater.

School district management agreed with the finding, but indicated that the district assumed that the monies received from the district’s intermediate unit were actually from state funding sources, and did not include federal funds.

Wagner’s auditors found that the school district received an improper reimbursement of $28,713 for the 2005-06 school year, including $23,272 in Social Security and $5,441 Medicare tax reimbursements. For the 2004-05 school year, the district received $26,071 in improper reimbursement, including Social Security tax reimbursements of $21,130 and Medicare tax reimbursements of $4,941.

Wagner’s audit generally covered the period Oct. 19, 2005 to July 28, 2008. The audit also found that the district received $18,982 in transportation reimbursements from the state to which it was not entitled because the district overstated the number of students transported.

The full audit report is available on the Department of the Auditor General’s Web site at www.auditorgen.state.pa.us.

Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the Commonwealth’s elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations. The Department of the Auditor General conducts more than 5,000 audits per year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department’s Web site at www.auditorgen.state.pa.us.

###