NEWS RELEASE
For Immediate Release
Contact: Steve Halvonik 717-787-1381
Report Text
Examples of Storage Areas

Auditor General Jack Wagner’s Special Investigation Finds $834,000 Wasted by York City School District & PA Dept. of Education

HARRISBURG, Pa., Nov. 15, 2011 – Auditor General Jack Wagner today recommended that the U.S. Department of Education initiate administrative proceedings to recover approximately $834,000 of misspent federal grant funds received by the School District of the City of York through the 21st Century Community Learning Centers Grant Program. Wagner also found that the district and the Pennsylvania Department of Education, which administers the federally funded program, wasted the balance of grant funds allotted to the district by the end of the grant year to avoid having to return unspent grant money to the federal government.

"With Pennsylvania, and the nation, mired in its greatest economic downturn since the Great Depression, school districts and government agencies should be focused on saving taxpayer money, not wasting it,” Wagner said. “This investigation provides a perfect illustration of the bureaucratic empire-building mentality that contributes to hidden waste in government programs at all levels. It is deplorable that $834,000 of taxpayer money was squandered on unneeded equipment and supplies for no other reason than to avoid having to return the money to the federal government.”

Wagner’s investigators found numerous examples of wasteful purchases on items sitting unused in storage areas throughout the district. Examples include: $43,000 for laptop computers and computer carts; $15,250 for Wii video game systems; $100,000 for books; and $6,000 in tickets to Hersheypark that were not used before the expiration date.

According to Wagner’s investigators, after it became apparent that the school district had vastly overestimated the number of students who would be participating in the taxpayer-funded grant program, rather than reduce the budget and return unneeded grant funds, the district needlessly spent more than $834,000 at the end of grant periods. Investigators also found that a state Dept. of Education program officer insisted that the district spend all the grant funds by the end of the grant periods instead of urging the district to return the money. Due to the Dept. of Education’s failure to provide leadership to the district with regard to the appropriate use of public funds, Wagner recommended that federal officials pursue both the school district and PDE jointly for recovery of the misspent public funds.

The 21st Century Community Learning Centers Grant Program is a federal grant program administered by the Pennsylvania Dept. of Education to competitively award grant money to school districts, charter schools, education institutions, and community-based organizations to provide academic, artistic, and cultural enrichment opportunities for children, particularly students who attend high-poverty and low performing schools.

The Department of Auditor General’s Office of Special Investigations conducted an investigation into the district’s use of 21st Century grant program funds at the request of the U.S. Department of Education. The school district spent a combined total of $4.6 million from May 2003 through December 2010. The investigation focused on the period January 2008 through August 2009, during which at least $834,000 of public funds was discovered to have been misspent.

Wagner called on the U.S. Department of Education and its Office of Inspector General to determine the extent to which needless, wasteful, and abusive spending of grant program funds may have occurred in other school districts throughout the commonwealth and the nation.

School district employees told Wagner’s investigators that the Dept. of Education’s program officer insisted that the district spend the unused taxpayer-funded grant program money rather than have it revert to the federal government. Wagner’s investigators found several examples supporting this claim, including:

• A Sept. 15, 2008 email sent by the district’s federal program grant accountant to various district employees indicating that PDE’s program officer would be coming to the district to discuss his goal, which was to prevent the district from losing the carryover funds, and, to avoid losing the funds, the district had to spend approximately $427,000 within 19 days.
• A Jan. 27, 2009 email from the district’s federal program grant accountant that instructed the district’s librarians to spend a total of $100,000 by ordering at least $10,000 of materials for each of the district’s nine libraries, and further, that the materials have to be ordered and paid for within approximately two months.
• An assistant superintendent of the district told investigators that he felt pressured again in the spring of 2009 to spend an additional $407,000 of grant funds in a short period of time, because the PDE program officer was contacting him weekly in March, April, and May 2009 stressing that the district needed to find ways to spend the funds so that the funds would not revert to the federal government.

In addition to his recommendation for administrative proceedings to be brought against both the school district and PDE by the U.S. Department of Education, Wagner made five additional recommendations to the school district and PDE to fix the deficiencies identified by his investigation, including that:

• Under the guidance and supervision of PDE, unneeded items purchased with taxpayer-funded grant program money should be redistributed to other school districts in the commonwealth that are participating in the grant program and have a genuine need for the items;
• PDE must not encourage school districts to spend funds for no other reason than to avoid the grant funds reverting to the federal government;
• PDE should implement the practice of zero-based budgeting for grant programs in which the budget is based on the number of participants. Zero-based budgeting would curtail wasteful spending, because program budgets would be revised annually to take into account any changes in the level of student participation;
• The district should improve its administration of grant programs to ensure that the programs are operating efficiently and effectively for the benefits of students; and
• The district must refrain from spending grant funds unnecessarily, regardless of any external pressure to do so.
  

A full copy of the investigation report, including separate written responses by the School District of the City of York and the Pennsylvania Department of Education, is available to the public 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.

###