Pittsburgh School District ‘Missed Out’ On $2 Million In State Reimbursement, Audit Finds

Jun 20, 2019

An audit of the Pittsburgh Public Schools’ transportation department found that the district was eligible for nearly $2 million in state fuel reimbursements, but that taxpayers were "shortchanged" by the district’s lack of proper record-keeping.

“It is too late now for the district to recoup that $2 million, but I am glad to see the district has begun seeking that reimbursement,” said Pennsylvania Auditor General Eugene DePasquale, noting that the district received $717,863 for 2017 and 2018 combined. “That’s nearly three-quarters of a million dollars the district can invest in student education.”

The audit listed four findings, including poor recordkeeping and failing to monitor transportation vendors for performance and safety standards.

PPS chief operations officer Pam Capretta refutes some of the findings and says the district had addressed issues raised before the audit process began.

According to DePasquale, this was the first audit of the district’s transportation department. The auditor general last reviewed the district in a 2015 performance audit. 

DePasquale is also conducting a separate audit of the district’s travel and sponsored trips policies, as well as its practice of not bidding contracts.

He said that audit will conclude by the end of the calendar year. That investigation is in response to media reports that Pittsburgh Superintendent Anthony Hamlet and other administrators took a trip to Florida and a side trip to Cuba that was not approved by the board.

Fuel reimbursement

DePasquale’s team found that the district failed to make transportation vendors submit fuel compensation data for five consecutive years, which he says left that $2 million on the table.

Under the state’s Vehicle Code, liquid fuels are tax-free when purchased by a political subdivision including public schools. But districts have to maintain proper records and receipts.

Without proper records, my team was unable to determine if the district missed out on additional funds from the state. - Auditor General Eugene DePasquale

Noted in the audit, district management agreed that it missed an opportunity to receive fuel tax refunds between 2011 and 2016, but that steps had been taken to correct the situation before the auditing process began by creating a tracking sheet to “better enable transportation vendors to compile fuel consumption data and report this information to the district.”

Capretta said in October 2017, two months after her appointment as COO, she had discovered that the district was not submitting for fuel reimbursement and devised procedures to provide the required documents.

Poor recordkeeping

The audit also criticized the district’s lack of recordkeeping, which DePasqule says made it difficult to tell if the district missed out on more money.

In a separate finding, the audit states that the district did not comply with the record retention portion of the state’s School Code from 2014-2017. The state gives districts a transportation subsidy for most students who are provided transportation. During those years the state received $32 million in transportation reimbursement, but according to the audit, the district did not have documentation to support those reimbursements.

“The lack of recordkeeping by the district’s former transportation director was completely irresponsible and unacceptable,” DePasquale said. “Without proper records, my team was unable to determine if the district missed out on additional funds from the state.”

In response, PPS said it has provided the records required, but that the district will review its process for document retention.

“I don’t believe that we did not follow state code. I think it’s an interpretation of what source documents are required,” Capretta said.

She said the district did follow some of the recommendations and changed the way it increases rates with vendors.

Rather than increase rates to all contracts by 2 percent, as the district has done in previous years, it now negotiates with companies.

The school board approved contracts with 19 carriers at Wednesday’s meeting. Capretta said the contracts go above and beyond state requirements to include video recording capabilities in 9-passenger vans.

No bidding process

The district does not competitively bid its transportation contracts with bus and vehicle carriers. Capretta says if it were to do that, it would end up costing the district a lot of money.

DePasqale said he is “blown away” that the district says it does not believe that a competitive bidding process would be beneficial.

The process is not legally required, but he says only 20-25 of the state’s 500 school districts do not competitively bed their contracts.

“It is not a requirement by state law, but they are violating what I think is best practice,” he said.

While he said when companies compete districts get a better deal, Capretta said it wouldn’t work in Pittsburgh’s favor.

In Allegheny County, there are around 20 vendors that can provide service. While Capretta says smaller districts can put out a request for proposal to those vendors and engage in competitive bidding amongst the companies to limit the number of carriers, Pittsburgh needs to use all of the vendors, because some carriers would not be able to provide the vehicles or capacity needed to support the district. The district needs 800 vehicles to serve its students. They use a variety of vehicles from 9-passenger vans to 48-passenger yellow buses.

“If we would competitively bid out, based on our recent meetings with our carriers … we asked them what time of rate increases they might need and we were hearing anywhere between a 10 and 15 percent increase,” Capretta said.

Those increases would have equated to $3 to $4.5 million increase. Instead, the average increase the district gave carriers was 3 percent or about $1 million dollars.

“I do not believe a few vendors (identified through competitive bidding) would meet our needs,” Capretta said.