New Castle News

June 18, 2013

Audit: Children of New Castle school employees didn’t pay tuiton

Debbie Wachter
New Castle News

NEW CASTLE — Non-resident students who attended New Castle schools for free had parents who worked for the district.

That was a finding in a state audit that is to be discussed this week by the New Castle school board.

The Pennsylvania auditor general’s office determined that seven non-resident students went to district schools but did not pay tuition over the course of four years.

The names of the district employees involved were not revealed in the audit, but the findings criticized the district for failing to obtain required tuition.

The audit has found the matter to violate both the Pennsylvania Public School Code and the district’s own board policy.

As a result, the audit concludes, the district will have to repay $110,664 to the state — money it had received in state subsidy, based on that number of students attending a district during that time span.

The audit covered Feb. 2, 2010, through Sept. 12, 2012.

Last month, retired superintendent George Gabriel said that policing out-of-district residency is not a typical practice for the superintendent, rather, that usually is left to the individual building administrators who register students.

The noncompliance specific to the state subsidies and reimbursements was determined to have occurred in the 2008-09, 2009-10, 2010-11 and the 2011-12 school years. The auditors looked at those years when they found non-compliance for the audit years, the report indicates.

The review showed that at different times during those cited school years, seven children of district employees were enrolled as resident students, even though a review of payroll records showed the employees lived outside district boundaries.

The auditors found that those students’ registration forms on file at the district showed their homes were within the district boundaries.

Five of their forms showed they lived in the district with their parents, while two students’ forms showed they resided with their grandparents.

Further review of the payroll and other documents showed the children’s legal residences were all outside of the district’s boundaries, according to the audit. No affidavits, custody agreements or other legal documents supporting legal guardianship were on file for the two students said to have been living with their grandparents.

There was no documentation to show that the district took steps to verify the children’s residency status, the audit found.

The auditors concluded that the employees’ children were not residents of the district and that their parents should have been paying tuition to the district while they were enrolled there. The report shows that:

•Two non-resident students attended for the 2011-12 year and should have paid a total of $14,337 in tuition.

•Six students attended for both the 2009-10 and 2010-11 school years, when they should have paid $43,569 and $45,573 for each of the two years

•One nonresident student attended for the 2008-09 year and should have paid $7,815.

“Furthermore, the issue is particularly concerning given that these children’s residency status could have been easily verified by reviewing the district’s own payroll records,” the report said.

“Consequently, not only did the district’s personnel ignore its internal controls for verifying residency status, but its administration and its (school board) also do not appear to have had an accountability mechanism for ensuring that these controls were enforced.”

The audit report states that by failing to enforce internal controls, the district forced the taxpayers to absorb the costs of educating seven students who were not their financial responsibility.

The report notes that management waived the opportunity to reply to the finding at the time of the audit.

The auditors recommend the district bill the parents and pursue collection of the tuition owed for the educational services provided.

They also recommend the district establish accountability procedures that allow the administration and the board to monitor compliance with all internal processes.

An attached letter sent to the district with the performance audit report notes, “Our audit found significant noncompliance with state laws and administrative procedures,” as detailed in three findings within the report.

The other two audit findings addressed bidding for a purchase made under the umbrella fund, and proper documentation of student activity funds.

David DiGiammarino, school board president, said last week that the audit findings will be discussed at the board’s public policy meeting scheduled for 5:45 p.m. tomorrow.

“We’re going to address it,” he said. “It’s a serious matter.

“We’re going to address the revenue that the state will collect and how we will go forward. (The auditors are) saying you can go back on these families and collect the money and that’s what we’re going to look at.”