August 03, 2016
Thom Carroll/PhillyVoice
The School District of Philadelphia headquarters on North Broad Street.
The School District of Philadelphia owes $6.5 million in termination pay to former employees, according to a fiscal audit released Wednesday by City Controller Alan Butkovitz.
But district officials say the obligations should be cleared within the next year.
Pay is still owed to 2,500 employees that left the district as long as 15 years, according to the Fiscal Year 2015 audit completed by the controller's office.
Auditors claim that violates existing labor agreements, saying the district has not dedicated resources necessary to making termination payments in a timely manner.
Employees are entitled to payment for unused leave time within 30 to 75 days of termination, according to labor agreements. For employees ages 55 and older, the district deposits the termination pay in a retirement plan. Those under 55 are cut a check.
The district should "develop and implement a better human resource strategy for separating employees to ensure that all necessary contact information is gathered prior to employees separating from service," the audit recommended.
Uri Monson, the district's chief financial officer, said many of the unpaid termination payments stem from the massive layoffs the district incurred five years ago, when funding was dramatically slashed in the state budget.
Monson said the district is hiring additional payroll personnel to clear out the overdue termination payments.
"We know it's an issue," Monson said. "We're putting money and resources into fixing that problem."
Among the audit's other findings: the district needs better accountability over its $33 million Student TransPass program, must reduce the risk for theft of some $5 million student activity funds and improve controls over petty cash amounts.
A review of the Student TransPass program at five high schools found more than 200 TransPasses — valued at about $3,700 — were presumed stolen or missing. That reflected similar findings in previous audits.
School employees responsible for distributing student TransPasses failed to sign eligibility reports verifying that students received the passes, auditors found. They recommended schools require students to sign for the receipt of their transPass and provide explicit instructions for the distribution process.
Monson acknowledged the importance of having as much control over the TransPasses as possible, but said SEPTA is liable for any missing TransPasses per its agreement with the district. The SEPTA Key card, a new payment program being rolled out now, will make TransPasses obsolete, Monson noted.
The audit also found that student activity funds – private funds collected from students for specific educational purposes like yearbooks — continue to be at risk for theft and misuse because schools fail to adhere to established protocols. Auditors recommended the district reinforce guidelines outlined in the School Fund Manual, a process Monson said the district already has commenced.
Also, nearly $40,000 in petty cash funds were found to be missing from 15 accounts at various administrative facilities and schools, according to the audit. Auditors blamed the district for failing to enforce established protocols. They urged district managers assist the impacted facilities and schools with investigating the causes of the shortages and resolve discrepancies.
The district is expected to end the upcoming year with a surplus. But because future expenditures are expected to outpace revenues, the audit projects a $600 million deficit by 2021. That had Butkovitz calling on Mayor Jim Kenney and City Council to provide his office greater auditing authority.
“Our office has the necessary knowledge to navigate their financial records," Butkovitz said in a statement. "We just need the authorization to cut through the red tape and inspect all of the pages in their books.”
Monson said he was not certain what benefit would come of such a model. He noted the district already is audited by several entities, including the state auditor general, Pennsylvania Department of Education and the United States Department of Education. The City Controller's Office is the only auditor that charges the district, he said.
"We literally have auditors walking into each other in our buildings," Monson said.
