PITTSBURGH (KDKA) — State Auditor General Tim DeFoor says two local school districts are among 12 that moved school funds from one account to another to raise taxes.

As KDKA-TV money editor Jon Delano reports, both North Allegheny and Canon-McMillan say they did nothing wrong.

Unlike Ohio, where voters vote on every school property tax increase, school boards here can raise school taxes a certain amount without a referendum. If boards want higher taxes, they can apply to the Pennsylvania Department of Education for an exception as long as they don't have a large surplus of cash in an uncommitted account, like a rainy day fund.

"This department had been receiving concerns from private citizens and the legislature that school districts were raising taxes to cover costs where they had money in their accounts to actually cover these costs, making the tax increase unnecessary," says DeFoor.

DeFoor said his audit found that 12 school districts had $390 million in uncommitted funds but shifted $102 million into capital fund accounts to make themselves eligible for the higher property tax exemption.

Delano: "Is this a shell game?"

DeFoor: "It definitely appears that way."

"What the auditor general found is that school districts have kind of moved money around to different accounts — still have a large reserve but less than 8 percent in this undesignated account – so they are able to raise taxes despite having really excess reserves," says Nathan Benefield, senior vice president of the Commonwealth Foundation, a conservative think tank in Harrisburg.

Benefield says many school districts have surplus accounts of up to 40 percent of their annual spending.

But Hannah Barrack, executive director of the PA Association of School Business Officials, says with higher costs, unfunded mandates, and unknown education dollars from the state, both having and moving dollars around makes sense.

"That is a really common and appropriate financial practice that happens all the time for the purpose of assuring that the school district is stable," says Barrack. "The general fund is allowed to remain stable during volatility and variable times."

DeFoor's report claimed Canon-McMillan and North Allegheny never broke the law but each transferred funds and sought exceptions to raise taxes. In statements, both school districts said they did nothing improper.

As for the auditor general's report, Barrack says, "It's sort of a solution for a problem that doesn't exist. There are not massive numbers of districts that are exceeding the index. They are not raising property taxes above that index."

But school boards are raising taxes. This year, school boards can raise their taxes up to 4 percent without moving monies around to seek an exception from the state.

DeFoor says taxpayers really need to stay on top of their school district's finances.