NEWS RELEASE
For Immediate Release
Contact: Steve Halvonik
South Allegheny Audit Text
Lehighton Audit Text

Auditor General Jack Wagner Says Pa. School District Superintendent Contracts Need Greater Public Disclosure and Tighter Provisions

HARRISBURG (Sept. 22, 2008) – Auditor General Jack Wagner said today that recent audits of the South Allegheny School District in Allegheny County and the Lehighton Area School District in Carbon County again point to the need of local school boards to provide greater public disclosure of superintendent contracts, and tighter superintendent contract provisions, so that Pennsylvania taxpayers are better protected from costly contract buyouts.  Wagner said that his auditors determined that more than $1.3 million in taxpayer dollars have been spent to pay for superintendent contract buyouts over the past three years in seven audits of school districts conducted by his department. 

Wagner renewed his call for the General Assembly to tighten contract language after finding the two latest school districts paid more than $475,000 to buy out superintendent contracts due to inadequate contract terms.  Wagner first called on the General Assembly to eliminate confidentiality agreements in June 2006, and has cited five other school districts in previous school district audits for confidential or costly superintendent contract buyouts.

“Secret contract buyouts have no place in the commonwealth’s educational system because they fail to assure the public that school districts are protecting their interests.” Wagner said. “It’s only fair that the people who are responsible for paying the bills have a right to know all of the terms of an agreement before it is approved. School boards should stop negotiating buyouts without telling the public the reason for the buyout, and the General Assembly should tighten existing laws to require that any buyout provisions be detailed in the original employment contract.”

Wagner said the failure to include adequate buyout provisions in current superintendent contracts could cost Pennsylvania taxpayers millions of dollars when school districts terminate their superintendents early.

Wagner’s audit of the South Allegheny School District found that the district terminated two superintendent contracts that cost taxpayers $325,000, but the details were hidden from the public by confidentiality clauses in the contracts.  The costly buyout occurred because the district did not specifically define what the superintendent would receive in compensation and benefits in the event of an early termination.  His audit of the Lehighton Area School District determined that this same lack of detail in the district’s superintendent’s contract led to a confidential buyout of $150,000.

School districts may also end up paying twice for the same service when they have to pay an acting or new superintendent in addition to the buyout amount of the prior superintendent who has left the district before the end of his or her contract, Wagner said.  The Lehighton Area School District paid $63,200 to its acting superintendent, and the South Allegheny School District paid $48,825 to its interim acting superintendent, after the school districts’ superintendents were terminated prematurely.

The Lehighton Area School District audit covered the fiscal years ended June 30, 2006 and 2005 and included a superintendent contract which extended from 2004 to 2009.  The South Allegheny School District audit covered the fiscal years ended June 30, 2004 and 2003 and included superintendent contracts that extended from 1999 to 2009. >

The five other school districts cited by Wagner for confidential or other inadequate superintendent contract buyouts over the past three years, include:

• Mt. Lebanon School District (Allegheny County): Buyout in excess of $420,000
• Pittsburgh School District (Allegheny County): Buyout in excess of $150,000
• Derry Township School District (Dauphin County): Buyout in excess of $126,000
• Warren County School District (Warren County): Buyout in excess of $101,000
• Coudersport Area School District (Potter County): Buyout in excess of $73,000

Wagner said that the excessive costs of superintendent contract buyouts could be averted or reduced if school districts explicitly negotiate termination provisions as part of the original employment contract.

However, Pennsylvania law does not require that employment terms and conditions and total compensation, including annual salary and benefits, be expressly stated in a superintendent contract.

“Given the level of local authority, at a minimum, legislative mandates requiring the disclosure of all current and future costs associated with a superintendent contract are necessary,” Wagner said.

To address the issues identified by his audits, Wagner recommended that school districts limit their potential liability by granting future superintendents the three-year minimum contract term permitted by state law; that future superintendent employment contracts contain adequate provisions from the outset of the employment relationship to address premature termination of employment; and that superintendent contracts do not contain confidentiality clauses that prohibit public disclosure of the reasons for the termination of superintendents to justify the school district’s expenditure of public funds to buy out the superintendent’s contract.

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.

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