Watch CBS News

Audit Of Penn Hills School District Uncovers Debt Of $167 Million

PENN HILLS (KDKA) – Details of an eight-month audit of the Penn Hills School District were released Wednesday morning.

In announcing the findings of the audit during a new conference, Pennsylvania Auditor General Eugene DePasquale said, "It boggles the mind. This was the worst school district audit since I've been auditor general that we have done."

He said one of the major takeaways of the review of the school district is "multiple criminal investigations."

Officials say the district long-term debt went from $11 million in 2009 to about $170 million in 2015.

"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," Auditor General Eugene DePasquale said. "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."

Meanwhile, the district's General Fund balance fell from $3.4 million in 2010 to a negative $18.8 million in 2015.

"The most significant contribution to this financial disaster is the fact that the district failed to have a long-term plan to pay for the debt incurred with the construction of a new high school and elementary school, and renovations to the middle school," DePasquale said. "Despite being warned by the architect's feasibility study that the district should increase taxes, consolidate three elementary schools and reduce staff to pay for construction expenses, the former business manager completely neglected to budget for construction and related debt payments."

DePasquale says big changes in the school district are on the way.

"The district's problems are so serious that major changes are going to be necessary to keep the district afloat and to avoid going into the state's Financial Recovery status," he said during the news conference.

Read The Full Report Here

The audit alleges a bus contractor "may have stolen as much as $384,500 from the district."

Credit card abuse was another contributing factor found in the audit.

The auditor general said there was one card with the name "Anyone In Uniform."

"That meant that anyone with a Penn Hill School District shirt or ball cap could use the credit card to buy who knows what without showing any type of identification," DePasquale said.

According to the press release, nearly two dozen cards were issued despite a policy in place that was supposed to limit access to only four positions.

More than $424,000 in purchases were racked up on the cards during the audit period.  The cards were supposed to be used for emergency purchases only. However, during August 2012, the cards were used to purchase doughnuts for meetings, lunches at restaurants, hotel rooms and more.

"And then there is the even more troubling case of an employee purchasing a residential water heater for $358.98 with the district's purchasing card," DePasquale said. "The invoice authorizing payment for this item was approved by the former business manager, despite the lack of a receipt, and — we checked — the water heater is not on district property."

Another troubling issue was a missing sum of $22,000 that was generated from ticket sales for admission to athletic events. The money was never deposited into the General Fund.

"Athletic programs count on admission fees and $22,000 is a significant amount for a high school athletic program," DePasquale said. "The student athletes are the ones who will suffer most, no matter whether this was an act of theft or not."

The audit also revealed flawed background checks for school bus drivers.

"Two bus drivers had permanent convictions," DePasquale said. "One, a felony drug offense; and another, an aggravated assault crime. They should have been barred from being near students."

Meanwhile, residents of Penn Hills were angered and shocked by the release of the audit findings.

Join The Conversation On The KDKA Facebook Page
Stay Up To Date, Follow KDKA On Twitter

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.