Wagner to Audit Superintendent Buyouts

from the inbox:

Auditor General Jack Wagner today notified four Pennsylvania school districts that his department will audit provisions of their recent superintendent contract buyouts.

Receiving notification letters were the School District of Philadelphia, the Allentown School District in Lehigh County; the Central Dauphin School District in Dauphin County; and the Gettysburg Area School District in Adams County.

Wagner's two-page letter said the audits will be conducted in accordance with applicable government accounting standards, and would cover the period from June 2007 through conclusion of the auditors' field work.

Preliminary objectives will include, but will not be limited:
· To determine whether employment contracts with administrators contained adequate separation provisions sufficient to protect the interests of each school district, its students and its taxpayers in the event the employment of administrators ends prematurely for any reason;
· To determine whether the school districts provided as much information as possible to taxpayers explaining the reasons for the separation of the superintendents and justifying the school districts’ expenditure of funds to buy out the contracts;
· To determine whether the school districts entered into employment contracts with the superintendents at the three-year minimum provided by state law in order to limit potential financial liability by the districts and taxpayers in the event financial liability was not adequately limited through contract provisions;
· To determine, to the greatest degree possible extent, the total financial cost of each superintendent contract buyout or other administration official’s contract buyout; and · To determine whether the separation agreements were transparent and without confidentiality clauses so taxpayers are made aware of the buyout occurred.

The letters followed Wagner's announcement last week that the Department of the Auditor General had changed its policy and would conduct immediate audits of superintendent contract buyouts. Previously, the Department of the Auditor General examined terms of superintendent buyouts as part of its routine school audits, which are conducted roughly every three years.

The policy change was in response to the terms of recent buyouts in the Allentown School District and the School District of Philadelphia. The outgoing Allentown superintendent is receiving a $50,000 contract buyout and the outgoing Philadelphia superintendent is getting a $905,000 severance package, which includes $405,000 from anonymous private donors.

The superintendent buyouts in Allentown, Philadelphia, Central Dauphin and Gettysburg are the latest that Wagner is scrutinizing. The seven other school districts previously cited by Wagner’s audits, whose buyouts cost taxpayers almost $1.4 million, were:
· Mt. Lebanon School District (Allegheny County): Buyout in excess of $420,000
· South Allegheny School District (Allegheny County): Buyout in excess of $375,000
· Lehighton Area School District (Carbon County): Buyout in excess of $150,000
· Pittsburgh Public Schools (Allegheny County): Buyout in excess of $150,000
· Derry Township School District (Dauphin County): Buyout in excess of $126,000
· Warren County School District (Warren County): Buyout in excess of $101,000
· Coudersport Area School District (Potter County): Buyout in excess of $73,000

Wagner said that public school districts in Pennsylvania are grappling with great financial challenges, and superintendent buyouts send the message that they are not careful stewards of taxpayer dollars.

“Superintendent severance packages are questionable not only because they appear to waste money, but because they often lack transparency. As the state’s independent fiscal watchdog, I want to make full details of buyout available to taxpayers,” Wagner said.

Wagner made specific recommendations to the General Assembly in August 2005 to amend state law to reduce or eliminate the need for buyouts. Wagner has recommended:
· School districts should limit their potential liability by granting future superintendents to the three-year minimum contract term permitted by state law, rather than more lengthy contracts,
· Future superintendent employment contracts should contain adequate provisions from the outset of the employment relationship to address premature termination of employment, and
· Superintendent contracts should not contain confidentiality clauses that prohibit public disclosure of the reasons for the termination of superintendent to justify the school district’s expenditure of public funds to buy out the superintendent’s contract.