- Associated Press - Thursday, May 19, 2016

PENN HILLS, Pa. (AP) - A state audit shows a school district’s long-term debt has increased from $11 million to $167 million in five years, and criminal investigations are being urged, the state auditor general announced.

Auditor General Eugene DePasquale said the Penn Hills School District audit, released Wednesday, is the worst he’s ever seen.

“It will take a Herculean effort to turn the district around,” he said.

The western Pennsylvania district floated $135 million in bonds for capital improvements in 2010 with no plan to pay back the money, fueling its gargantuan long-term debt, but it’s clear other expenditures and procedures haven’t been closely tracked, DePasquale said.

Among other things, the audit found that a school bus contractor might have stolen nearly $385,000 from the district, and $22,000 in athletic ticket proceeds was never deposited.

The district’s credit cards were a mess, too.

One district-issued card carried the name Anyone In Uniform, meaning it could be used by anyone with a school district shirt or ball cap to make purchases without showing other identification. The district issued 24 credit cards, even though only four people were supposed to have them, and more than $424,000 was spent.

Despite rules that cards were for emergency use only, they were being used to buy doughnuts for meetings and lunches. One district employee even used a card to buy a $359 water heater for his or her home, DePasquale said.

Even the district’s background checks for school drivers were flawed, with two drivers having felonies that should have barred them from contact with students.

The school board fired business manager Richard Liberto after discovering a $9 million deficit from the previous year and expected a similar deficit for 2014-15. The district borrowed $20 million in October to cover those debts.

Liberto and his attorney, Wayne DeLuca, have denied the board’s accusations when he was fired in November, saying he warned the board and administrators of the financial situation but was ignored.

“I have plenty of documentation to prove that I warned them that his was coming,” Liberto said. “I was the one who contacted the Department of Education back in 2013 asking for help.”

Superintendent Nancy Hines said the district, which has about 4,000 students and 300 teachers, has already enacted changes to deal with the problems and remains “hopeful but extremely cautious.”

But DePasquale said the district needs radical reforms to avoid being placed in the state’s Financial Recovery status.

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This story has been corrected to show the Penn Hills School District has roughly 4,000 students, not 800.


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