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Auditor General's Office Completes Financial and Regulatory Audit for School Years 2013-14 through 2016-17

The Pennsylvania Department of the Auditor General recently released the Performance Audit of the Norristown Area School District. The performance audit evaluated the application of best practices in the area of finance as well as the District’s compliance with certain relevant state laws, regulations, contracts and administrative procedures for the period July 1, 2013 through June 30, 2017. The audit found that the District “applied best practices in the area listed above and complied, in all significant respects, with relevant requirements” with the exception of two findings that were noted.

The first finding indicated that the District’s general fund balance decreased by more than $9 million during the audit period. Unfortunately, the mandates that exist in public educations (PSERS, charter tuition, special education expenses, etc.) coupled with inadequate and inequitable state funding, required the District to spend down fund balance to meet its financial obligations. Anne Rohricht, Chief Financial Officer, shared, “During the audit period, our mandated expenses for charter school tuition, special education programming, and mandated retirement rose by over $17 million. However, the funding from the Commonwealth of Pennsylvania only increased by $7.2 million. The lack of fair and appropriate funding from Harrisburg creates some huge financial challenges for our District and unfortunately compelled us to use fund balance rather than place additional tax burdens on our residents.” Ms. Rohricht also felt it was important to note that the NASD fund balance more than doubled to almost $3.4 million by the end of the 2017-18 school year, which was outside the scope of the review by the Auditor General. “Our current School Board and Administrative team are committed to improving the financial position of our District and have begun to discuss the need for Board Policy governing fund balance levels.” District efforts to improve the financial position of the District were also recently highlighted in Moody’s Investor Services Annual Issuer Comment Report released on March 15, 2019, which states “Management has begun to remedy the district’s financial pressure through reforms in its special education administration, a continued willingness to raise it property tax levy, and conservative budgeting. The recent negotiation of a five-year teacher contract will allow for improved long term budgeting.”

The second finding specified that transportation reporting errors resulted in a net overpayment of state subsidy in the amount of $56,087 to the District. The District agrees that clerical errors were made in the annual reporting for transportation, but points out that they were very minor. Rohricht shared, “One error involved the misreporting of 46 students, or 0.17% of the estimated 27,000 students that were transported by NASD over the four-year audit period.” Nonetheless, District officials have worked to develop short-term and long-term plans to address the shortcomings in current reporting processes. Norristown is not alone in its struggles with transportation reporting. In October 2018, the Office of the Auditor General issued a press release highlighting the need for training on pupil transportation reporting procedures and indicated that many public schools are also struggling to get the complex annual reports filed accurately. The Auditor General’s office is working closely with PASBO (PA Association of School Business Officials) to develop training on the required reporting and NASD looks forward to participating in this training to improve our procedures and insure accuracy when preparing the annual transportation reports.

NASD is committed to addressing the concerns noted by the Auditor General and commends staff for their cooperation with the audit team. “We are proud of the efforts of our staff that work tirelessly throughout the year complying with the many laws, regulations, mandates, and voluminous data reporting requirements and thank them for the assistance with the audit process.”

If you would like to read the entire audit report, please visit the following website: