NORRISTOWN, Pa. — Education officials fear a judge’s decision ordering a suburban Philadelphia school district to revoke its tax hike could lead to lawsuits around Pennsylvania challenging other school districts’ tax increases.
“I’ve never heard of this happening before . . . a judge substituting his/her judgment of financial needs of the district in place of locally elected school board members,” Jim Buckheit, executive director of the Pennsylvania Association of School Administrators, told The Philadelphia Inquirer.
He said he anticipates lawsuits against other districts that have healthy fund balances but raise taxes above the maximum amount allowed under state law.
On Monday, a Montgomery County judge ordered the Lower Merion School District to revoke its latest tax increase, saying the district misled taxpayers by projecting large budget deficits when it was socking away millions.
Common Pleas Judge Joseph A. Smyth said in his decision that the district could increase taxes for 2016-17 but by no more than 2.4 percent.
He said he would “leave for another day” the question of refunds and credits for those who already paid their current school tax bills.
The district said Tuesday that it will appeal the decision.
The ruling came in a class-action lawsuit filed in February by a local lawyer and two others, claiming the district had misappropriated funds and its hefty end-of-year surplus was “ill-begotten.”
Schools across the state are holding more money in their reserves for a rainy day.
In 2014-15, they had nearly $4.3 billion sitting in fund balances, which is about a 5 percent increase over the previous school year, according to state Department of Education data.
School administrators said that while the funds grew through 2015, last year’s nine-month state budget impasse forced many districts to dip into their reserves.
“Given what we went through … all you do is encourage more cautious, fearful budgeting” by school finance officers, said Jay Himes, executive director of the Pennsylvania Association of School Business Officials.
Steve Robinson, a spokesman for the Pennsylvania School Boards Association, said school districts should have 5 to 10 percent of their operating expenditures in reserve. He noted that low fund balances can affect credit ratings.