This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.
A Montgomery County judge has ordered one of the state’s highest-achieving school districts to slash its local property taxes, saying it fudged annual budgets in order to dupe taxpayers and justify tax hikes.
Montgomery County Court of Common Pleas Judge Joseph Smyth said in a Monday decision that the Lower Merion School District — which borders Philadelphia to the west and spends more per pupil than almost any other district in the state — ”deliberately engaged in a course of conduct” that allowed it to raise taxes for years without going to a voter referendum.
To do that, Smyth said, Lower Merion district officials led residents and state officials to believe that the district was in danger of running major deficits when, in reality, it had millions in reserve.
The judge issued an injunction that forces the Lower Merion district to withdraw a school board-approved tax increase of 4.44 percent for the 2016-17 school year. The board must rescind the tax at its next meeting.
Lower Merion district officials said Tuesday that they would appeal the ruling.
A state law known colloquially as Act 1 precludes school districts from approving tax increases larger than 2.4 percent without a voter referendum. The state, however, can exempt school districts facing budget shortfalls triggered by rising special education or pension costs. According to Smyth’s decision, Lower Merion routinely projected deficits, successfully applied for a state exception from Act 1, and subsequently ended the year with large surpluses.
Between 2009 and 2015, the district’s annual budget estimates anticipated a combined $40 million shortfall, but the district actually wound up with surpluses totaling more than $42 million.
In 2011-12, for example, the district budget projected a $5.1 million deficit and ended the year with a $15.5 million surplus.
“An injunction against this repeated practice of the Lower Merion School District is the only appropriate remedy to bring the illegal practice to a halt,” Smyth wrote in his 17-page opinion.
The Lower Merion district has raised taxes 53.3 percent since 2006, the opinion noted. In the last decade, no district in the commonwealth has requested as much tax money through Act 1 exemptions, according to a recent analysis by the Associated Press. The AP found that 384 out of 500 Pennsylvania school districts have received an Act 1 exemption from the state in the last decade.