PERFORMANCE AUDIT

____________

Manheim Central
School District
Lancaster County, Pennsylvania
____________
June 2018
Dr. Peter J. Aiken, Superintendent Mrs. Linda Williams, Board President
Manheim Central School District Manheim Central School District
281 White Oak Road 281 White Oak Road
Manheim, Pennsylvania 17545 Manheim, Pennsylvania 17545

Dear Dr. Aiken and Mrs. Williams:

Our performance audit of the Manheim Central School District (District) determined the
District’s compliance with certain relevant state laws, regulations, contracts, and administrative
procedures (relevant requirements). This audit covered the period July 1, 2012 through
June 30, 2016, except as otherwise indicated in the audit scope, objective, and methodology
section of the report. The audit was conducted pursuant to Sections 402 and 403 of The Fiscal
Code (72 P.S. §§ 402 and 403), and in accordance with the Government Auditing Standards issued
by the Comptroller General of the United States. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings
and conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objectives.

Our audit found that the District complied, in all significant respects, with relevant
requirements, except as detailed in our two findings noted in this audit report. A summary of the
results is presented in the Executive Summary section of the audit report.

We also reviewed the District’s procedures related to certain areas of school safety. Due to
the sensitive nature of this issue and the potential for malicious use of our findings, we did not
include the results of our review in this report. However, we communicated the results of our
review of school safety to District officials, the Pennsylvania Department of Education, and other
appropriate agencies we deemed necessary.
Dr. Peter J. Aiken
Mrs. Linda Williams
Page 2

Our audit findings and recommendations have been discussed with the District’s
management, and their responses are included in the audit report. We believe the implementation
of our recommendations will improve the District’s operations and facilitate compliance with legal
and relevant requirements. We appreciate the District’s cooperation during the course of the audit.

Sincerely,

Eugene A. DePasquale
May 30, 2018 Auditor General

cc: MANHEIM CENTRAL SCHOOL DISTRICT Board of School Directors

Table of Contents

Page

Executive ..................................................................................................................................... 1

Background Information ............................................................................................................. 2

Findings ....................................................................................................................................... 9

Finding No. 1 - The Former Assistant Superintendent’s Separation Agreement

Was Not Publicly Disclosed and Approved by the Board .................... 9

Finding No. 2 - The District Reported Unqualified Earnings to PSERS for a

Former Assistant Superintendent .......................................................... 13

Status of Prior Audit Findings and Observations ....................................................................... 16

Appendix: Audit Scope, Objectives, and Methodology ............................................................. 19

Distribution ................................................................................................................................. 22
Executive Summary

Audit Work during a preceding executive session. The

Board and District management should have
The Pennsylvania Department of the provided residents of the District with
Auditor General conducted a performance notification about the previously signed
audit of the Manheim Central School Separation Agreement and its associated
District (District). Our audit sought to costs on the published agenda for the
answer certain questions regarding the January 27, 2014, school board meeting in
District’s application of best practices and accordance with the Public School Code
compliance with certain relevant state laws, (see page 9).
regulations, contracts, and administrative
procedures and to determine the status of Finding No. 2: The District Reported
corrective action taken by the District in Unqualified Earnings to PSERS for a
response to our prior audit Former Assistant Superintendent. The
recommendations. District incorrectly reported unqualified
earnings to the Public School Employees’
Our audit scope covered the period Retirement System (PSERS) for a former
July 1, 2012 through June 30, 2016, except Assistant Superintendent. Since PSERS
as otherwise indicated in the audit scope, retirement benefits are calculated using a
objectives, and methodology section of the formula that factors in an employee’s final
report. (See Appendix) Compliance specific average salary, the reported unqualified
to state subsidies and reimbursements was earnings of approximately $16,000
determined for the 2015 and 2016 school improperly inflated the former Assistant
years. Superintendent’s retirement benefits (see
page 13).
Audit Conclusion and Results
Status of Prior Audit Findings and
Our audit found that the District applied best Recommendations. The District
practices and complied, in all significant implemented our prior recommendations in
respects, with certain relevant state laws, regard to the finding concerning inaccurate
regulations, contracts, and administrative reporting of retirement compensation (see
procedures, except for two findings. page 16). In regard to the finding concerning
child accounting, the District implemented
Finding No. 1: The Former Assistant recommendations 1-4 and partially
Superintendent’s Separation Agreement implemented recommendation 5 (see
Was Not Publicly Disclosed and page 17).
Approved by the Board. During our review
of the board meeting minutes related to the
acceptance of the former Assistant
Superintendent’s resignation, we found that
the Board of School Directors (Board) did
not publicly disclose and approve a
separation agreement that was discussed

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 Background Information
School Characteristics Mission StatementA
2016-17 School YearA
County Lancaster To prepare responsible citizens who are
Total Square Miles 78.2 lifelong learners.
Resident Population B 24,089
Number of School
4C
Buildings
Total Teachers 228
Total Full or Part-
145
Time Support Staff
Total Administrators 19
Total Enrollment for
Most Recent School 2,928
Year
Intermediate Unit
13
Number
Lancaster County
District Vo-Tech
Career &
School
Technology Center
A - Source: Information provided by the District administration
and is unaudited.
B - Source: United States Census http://www.census.gov/2010census.
C - Stielgel Elementary was closed at the end of the 2016-17
school year.
Financial Information
The following pages contain financial information about the Manheim Central School District
(District) obtained from annual financial data reported to the Pennsylvania Department of
Education (PDE) and available on PDE’s public website. This information was not audited and is
presented for informational purposes only.

General Fund Balance TOTAL DEBT

For Year End June 30
FOR YEAR END JUNE 30
General Fund Balance
Debt
$20 16.1 $150
Millions

13.9 112.9
MILLIONS

$15 11.5
$100
$10 7.9 7.6
45.9 42.9 39.6 45.5
$50
$5

$0 $0
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Note: General Fund Balance is comprised of the District’s Committed, Note: Total Debt is comprised of Short-Term Borrowing, General Obligation
Assigned and Unassigned Fund Balances. Bonds, Authority Building Obligations, Other Long-Term Debt, Other
Post-Employment Benefits, Compensated Absences and Net Pension Liability.

Manheim Central School District Performance Audit

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 Financial Information Continued

Total Revenue and Total Charter Tuition

Expenditures Payments
Fo r Year En d Ju n e 30 For Year End June 30
Total Revenue Total Expenditures Total Charter Tuition Payments

$60 $1,000
MILLIONS

Thousands
$900
$50 906.1
$800
844.0

50.0
48.4

48.0
$700 771.0 796.7
45.9

45.8
$40
44.9
44.8
42.6

42.1

$600
40.0

641.3
$30 $500
$400
$20
$300
$10 $200
$100
$0 $0
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Revenue By Source
For Year End June 30

34.3
33.2
31.9
31.0
30.1

$35
MILLIONS

$30
$25
$20
14.1
13.3
12.6
12.1
11.8

$15
$10
1.9
1.6

1.6
1.3

$5
0.6
0.0

0.0

0.0

0.0

0.0

$0
2012 2013 2014 2015 2016

Local Revenue State Revenue Federal Revenue Other Revenue

Manheim Central School District Performance Audit

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 Academic Information
The graphs on the following pages present School Performance Profile (SPP) scores,
Pennsylvania System of School Assessment (PSSA), Keystone Exam results, and 4-Year Cohort
Graduation Rates for the District obtained from PDE’s data files for the 2014-15 and 2015-16
school years. 1 These scores are provided in the District’s audit report for informational
purposes only, and they were not audited by our Department. Please note that if one of the
District’s schools did not receive a score in a particular category and year presented below, the
school will not be listed in the corresponding chart. 2 Finally, benchmarks noted in the following
graphs represent the statewide average of all public school buildings in the Commonwealth that
received a score in the category and year noted. 3

What is a SPP score?

A SPP score serves as a benchmark for schools to reflect on successes, achievements, and yearly
growth. PDE issues a SPP score using a 0-100 scale for all school buildings in the
Commonwealth annually, which is calculated based on standardized testing (i.e. PSSA and
Keystone exams), student improvement, advance course offerings, and attendance and
graduation rates. Generally speaking, a SPP score of 70 or above is considered to be a passing
rate.

PDE started issuing a SPP score for all public school buildings beginning with the 2012-13
school year. For the 2014-15 school year, PDE only issued SPP scores for high schools taking
the Keystone Exams as scores for elementary and middle scores were put on hold due to changes
with PSSA testing. 4 PDE resumed issuing a SPP score for all schools for the 2015-16 school
year.

What is the PSSA?

The PSSA is an annual, standardized test given across the Commonwealth to students in grades 3
through 8 in core subject areas, including English and Math. The PSSAs help Pennsylvania meet
federal and state requirements and inform instructional practices, as well as provide educators,
stakeholders, and policymakers with important information about the state’s students and
schools.

1
PDE is the sole source of academic data presented in this report. All academic data was obtained from PDE’s
publically available website.
2
PDE’s data does not provide any further information regarding the reason a score was not published for a specific
school. However, readers can refer to PDE’s website for general information regarding the issuance of academic
scores.
3
Statewide averages were calculated by our Department based on individual school building scores for all public
schools in the Commonwealth, including district schools, charters schools, and cyber charter schools.
4
According to PDE, SPP scores for elementary and middle schools were put on hold for the 2014-15 school year
due to the state’s major overhaul of PSSA exams to align with state Common Core standards and an unprecedented
drop in public schools’ PSSA scores that year. Since PSSA scores are an important factor in the SPP calculation, the
state decided not to use PSSA scores to calculate a SPP score for elementary and middle schools for the 2014-15
school year. Only high schools using the Keystone Exam as the standardized testing component received a SPP
score.

Manheim Central School District Performance Audit

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The 2014-15 school year marked the first year that PSSA testing was aligned to the more
rigorous PA Core Standards. 5 The state uses a grading system with scoring ranges that place an
individual student’s performance into one of four performance levels: Below Basic, Basic,
Proficient, and Advanced. The state’s goal is for students to score Proficient or Advanced on the
exam in each subject area.

What is the Keystone Exam?

The Keystone Exam measures student proficiency at the end of specific courses, such as
Algebra I, Literature, and Biology. The Keystone Exam was intended to be a graduation
requirement starting with the class of 2017, but that requirement has been put on hold until at
least 2020. In the meantime, the exam is still given as a standardized assessment and results are
included in the calculation of SPP scores. The Keystone Exam is scored using the same four
performance levels as the PSSAs, and the goal is to score Proficient or Advanced for each course
requiring the test.

What is a 4-Year Cohort Graduation Rate?

PDE collects enrollment and graduate data for all Pennsylvania public schools, which is used to
calculate graduation rates. Cohort graduation rates are a calculation of the percentage of students
who have graduated with a regular high school diploma within a designated number of years
since the student first entered high school. The rate is determined for a cohort of students who
have all entered high school for the first time during the same school year. Data specific to the
4-year cohort graduation rate is presented in the graph. 6

5
PDE has determined that PSSA scores issued beginning with the 2014-15 school year and after are not comparable
to prior years due to restructuring of the exam. (See also footnote 4).
6
PDE also calculates 5-year and 6-year cohort graduation rates. Please visit PDE’s website for additional
information: http://www.education.pa.gov/Data-and-Statistics/Pages/Cohort-Graduation-Rate-.aspx.

Manheim Central School District Performance Audit

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 2014-15 Academic Data
School Scores Compared to Statewide Averages

2014-15 SPP Scores

Manheim Central Senior High School, 86.6

0 10 20 30 40 50 60 70 80 90 100

Statewide Average - 70.8

2014-15 Keystone % Advanced or Proficient

English Manheim Central Senior High School, 84.9

Math Manheim Central Senior High School, 78.9

0 10 20 30 40 50 60 70 80 90 100

Statewide English Avgerage - 70.7 Statewide Math Average - 62.4

2014-15 PSSA % Advanced or Proficient

Manheim Central School District Average, 70.8

Burgard Elementary School, 64.8
English Doe Run Elementary School, 78.5
Manheim Central Middle School, 67.7
Stiegel Elementary School, 72.2

Manheim Central School District Average, 52.6

Burgard Elementary School, 50.3
Math Doe Run Elementary School, 58.5
Manheim Central Middle School, 47.0
Stiegel Elementary School, 54.5

0 10 20 30 40 50 60 70 80 90 100

Statewide English Average - 60.0 Statewide Math Average - 41.2

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 2015-16 Academic Data
School Scores Compared to Statewide Averages

2015-16 SPP Scores

Manheim Central School District Average, 75.1

Burgard Elementary School, 65.8
Doe Run Elementary School, 79.7
Manheim Central Middle School, 61.1
Manheim Central Senior High School, 91.2
Stiegel Elementary School, 77.9

0 10 20 30 40 50 60 70 80 90 100

Statewide Average - 69.5

2015-16 Keystone % Advanced or Proficient

English Manheim Central Senior High School, 86.8

Math Manheim Central Senior High School, 87.6

0 10 20 30 40 50 60 70 80 90 100

Statewide English Average - 74.6 Statewide Math Average - 65.4

2015-16 PSSA % Advanced or Proficient

Manheim Central School District Average, 68.6

Burgard Elementary School, 63.9
English Doe Run Elementary School, 73.7
Manheim Central Middle School, 67.7
Stiegel Elementary School, 68.9

Manheim Central School District Average, 54.7

Burgard Elementary School, 48.1
Math Doe Run Elementary School, 65.0
Manheim Central Middle School, 48.1
Stiegel Elementary School, 57.4

0 10 20 30 40 50 60 70 80 90 100

Statewide English Average - 60.1 Statewide Math Average - 44.3

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 4-Year Cohort Graduation Rate

4-Year Cohort Graduation

Rate
100

80

90.6

89.7

88.8
88.4
60

40

20

0
2014-15 2015-16

District Graduation Rate Statewide Average

Manheim Central School District Performance Audit

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Findings

Finding No. 1 The Former Assistant Superintendent’s

Separation Agreement Was Not Publicly
Disclosed and Approved by the Board

Criteria relevant to the finding: During our review of the board meeting minutes related to
acceptance of the former Assistant Superintendent’s
Section 508 of the Public School resignation, we found that the Board of School Directors
Code (PSC) provides, in part: “The (Board) did not publicly disclose and approve a separation
affirmative vote of a majority of all
the members of the board of school
agreement that was discussed during a preceding executive
directors in every school district, duly session. The Board and District management should have
recorded, showing how each member provided residents of the District with notification about the
voted, shall be required in order to previously signed Separation Agreement and its associated
take action on, among others, the costs on the published agenda for the January 27, 2014,
following subjects:***
school board meeting in accordance with the Public School
Entering into contracts of any kind, Code (PSC).
including contracts for the purchase
of fuel or any supplies, where the Pursuant to the PSC, any contract where the amount
amount involved exceeds one involved exceeds $100 requires the affirmative vote of a
hundred dollars ($100).***
majority of all the board members and must be “duly
Failure to comply with the provisions recorded, showing how each member voted.” Further,
of this section shall render such acts pursuant to the Sunshine Act, any official action and
of the board of school directors void deliberations on discussions held during an executive
and unenforceable.” See 24 P.S. § 5- session must be taken at an open meeting.
508.

Sunshine Act Contract Provisions

Section 708(c) of the Sunshine Act On November 24, 2009, at a public meeting, the Board
provides as follows: “Limitation.-- appointed the former Assistant Superintendent to the
Official action on discussions held position of Assistant Superintendent and subsequently
pursuant to subsection (a)[regarding approved her employment contract for a five-year term
the Purpose of executive sessions]
shall be taken at an open meeting.” commencing January 4, 2010, and ending January 4, 2015.
See 65 Pa.C.S. § 708(c).
Board Action on the Resignation and Separation
Section 704 of the Sunshine Act Agreement
provides as follows:

“Official action and deliberations by The former Assistant Superintendent’s submitted a letter of
a quorum of the members of an resignation effective December 31, 2013, which was placed
agency shall take place at a meeting on the agenda for the January 27, 2014, board meeting. At
open to the public unless [otherwise] this meeting, the Board formally accepted the former
closed [pursuant to the act]. . .” See Assistant Superintendent’s resignation with an effective
65 Pa.C.S. § 704.
date of December 31, 2013. The approved meeting minutes

Manheim Central School District Performance Audit

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Criteria relevant to the finding did not contain a motion to approve the Separation
(continued): Agreement or any acknowledgement that the former
Assistant Superintendent signed this agreement on
Provisions in the Contract; and January 10, 2014.
Separation Agreement

Severance Payments District officials stated that the Separation Agreement was
discussed during executive sessions at previous board
Separation Agreement Section 2.2.4 meetings and during an executive session prior to the
Severance in the amount of $45,000 meeting on January 27, 2014; however, the board meeting
made payable to [her] attorneys.
minutes did not disclose or acknowledge the Separation
Separation Agreement Section 2.4 Agreement.
The School district will pay
[Assistant Superintendent], a Details of the separation agreement were made available to
settlement agreement in the amount the public when published in a newspaper article on
of $25,000.
March 6, 2014. The news organization obtained the
separation agreement through a Right-to-Know Law
request.

Separation Agreement Provisions

The Separation Agreement was signed on

January 10, 2014, with an effective date of
December 31, 2013. The Agreement provided the former
Assistant Superintendent with a severance payment in the
amount of $45,000 and a settlement payment of $25,000.
These provisions were not included in the former Assistant
Superintendent’s contract.

Despite the December 31, 2013, effective date on the

Separation Agreement, we found that the former Assistant
Superintendent had not engaged in any work activity for
the District since November 11, 2013. From
November 12, 2013, through December 31, 2013, the
former Assistant Superintendent was paid her contracted
wages despite not engaging in any work activity for the
District or being on any type of leave/suspension. The total
cost to the District of the wages paid during this time, the
severance payment, and the settlement payment was
$85,885.

Summary

The Board accepted the former Assistant Superintendent’s

resignation during a public board meeting, which did not
disclose the existence of or any of the terms in the
previously signed Separation Agreement.

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 The PSC requires the Board to approve contracts, including
Separation Agreements, at a public meeting. In addition,
under the Sunshine Act, any official action and
deliberations on discussions held during a board executive
session should have been taken at an open meeting. The
Separation Agreement was not approved at a public
meeting, and the District itself did not release any
information to the public concerning the separation terms.

Recommendations

The Manheim Central School District should:

1. Ensure that all contracts and agreements are approved

at a public meeting as required by the PSC and the
Sunshine Act.

2. Ensure that employment contracts for Superintendents

and Assistant Superintendents clearly state all
termination, buyout, and severance provisions as
required by the PSC. 7

Management Response

“While the District agrees that the separation agreement

was not properly listed as a separate motion and approval,
it was publicly discussed prior to acceptance of the
Assistant Superintendent’s resignation. While not properly
handled in accordance of the Public School Code, there was
no intent to deceive or withhold the existence of the
agreement or the terms of the agreement from the public.

The District lacked a full-time HR Director at the time of

this action and that contributed to the oversight.

The District will ensure that all contracts and agreements

are properly approved in accordance with the PSC and the
Sunshine Act.

The District will also ensure that all Superintendent and

Assistant Superintendent Contracts include the proper
termination provisions as required by Section 1073 (e) of
the PSC.”

7
24 P.S. § 10-1073(e).
Manheim Central School District Performance Audit
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 Auditor Conclusion

The PSC is very clear concerning the need for districts to

record and show how each board member voted when
approving contracts that exceed $100. The District’s
separation agreement with the former Assistant
Superintendent clearly meets this requirement. We are
pleased that the District acknowledges that improvements
can be made to ensure compliance with the PSC and
Sunshine Act. We believe that the implementation of our
recommendations will help to better ensure compliance
with the PSC and the Sunshine Act.

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Finding No. 2 The District Reported Unqualified Earnings to
PSERS for a Former Assistant Superintendent

The District incorrectly reported unqualified earnings to

Criteria relevant to the finding: the Public School Employees’ Retirement System (PSERS)
for a former Assistant Superintendent. Since PSERS
The Public School Employees’ retirement benefits are calculated using a formula that
Retirement Code defines a school factors in an employee’s final average salary, the reported
employee as “[A]ny person engaged
unqualified earnings of approximately $16,000 improperly
in work relating to a public school for
any governmental entity and for which inflated the former Assistant Superintendent’s retirement
work he is receiving regular benefits. 8
remuneration as an officer,
administrator or employee excluding, According to the PSERS Employers’ Reference Manual
however, any independent contractor
(ERM), only qualified earnings should be reported to
or a person compensated on a fee
basis.” (Emphasis added.) See PSERS. Defined broadly, qualified earnings include salary
24 Pa.C.S. § 8102. and wages paid to an employee for work performed. The
ERM defines qualified and unqualified earnings, and it
According to the PSERS Employers’ specifically excludes administrative leave for disciplinary
Retirement Manual (ERM), PSERS
suspension and contract buyouts. 9
allows only qualified earnings to be
reported for the determination of
retirement benefits. Qualified earnings According to a signed separation agreement, the Assistant
include regular salary/wages, Superintendent remained employed with the District
overtime, and wages paid for through December 31, 2013. However, we found that the
extracurricular activities. (See the
Assistant Superintendent’s final day of work was actually
ERM, Chapter 8, rev. 4/15/2016,
page 4.) November 11, 2013. Therefore, the $15,885 in
compensation paid from November 12, 2013 through
In addition, the ERM identifies December 31, 2013, constituted payments for
numerous specific exclusions from administrative leave, akin to a contract buyout. Therefore,
qualified earnings for purposes of
this compensation should not have been reported to PSERS
reporting to PSERS. In Chapter 10, a
section entitled “Administrative Leave as qualified earnings. 10 (Finding No. 1 addresses
Including Suspension,” the following authorization and transparency issues related to the
subsections are addressed (among aforementioned Separation Agreement.)
others):

8
According to PSERS, the final average salary factors into the retirement benefit calculation.
http://www.psers.pa.gov/Active-Members/Pages/StatementOfAccount.aspx. Accessed on May 3, 2018.
9
Public School Employees’ Retirement System. Employers’ Reference Manual – Chapter 10. Reporting – Leaves of
Absence. Revised May 23, 2016. Page 6.
10
Other compensation related to the former Assistant Superintendent’s separation from the District was properly
unreported to PSERS as qualified earnings and, therefore, is not discussed in this finding.
Manheim Central School District Performance Audit
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 In addition to the District’s reporting of unqualified
Criteria relevant to the finding
(continued):
earnings to PSERS, we found that it incorrectly deducted
7.5 percent of the $15,885 payment, or $1,191, from the
“Eligibility. A PSERS member may former Assistant Superintendent’s earnings as an employee
be granted other types of leaves of contribution to PSERS. We also found that the District
absence (including but not limited contributed the 2013-14 PSERS employer contribution rate
to a disciplinary suspension and
contract buyout), not recognized as
of 16.9 percent, or $2,689, for the $15,885 payment. The
an approved leave of absence by the District should not have deducted the employee
Retirement Code, and, therefore, contribution from unqualified earnings, nor should it have
will not entitle the member to any provided an employer contribution to PSERS on the
credited service during the period unqualified earnings.
of leave.” (Emphasis added.)

“Reporting Requirements . . .
Recommendations
Member Contributions should not
be paid by the school employee or The Manheim Central School District should:
deducted by the employer . . .
Employer Contributions should not Require District personnel responsible for reporting
be paid by the employer.” (See the
ERM, Chapter 10, rev. 5/23/2016,
compensation data to PSERS to review the ERM, in
page 6.) particular the specific definitions and examples of qualified
and unqualified earnings. This will improve the accuracy of
its reporting. It should also ensure that there is a routine and
timely review and approval of compensation reported to
PSERS.

The Public School Employees’ Retirement System should:

Review the compensation reported by the District for the

former Assistant Superintendent cited in this report and
render an opinion on the propriety of the compensation
reported by the District. If any portion of the
compensation is determined to be ineligible for retirement,
PSERS should make the necessary correction(s) to the
pension benefits and contributions.

Management Response

“This was the result of a lack of awareness on the payroll

processors part. The district acknowledges that the payroll
preparer at the time of this oversight lacked the proper
knowledge of the situation and did not properly exclude the
ineligible wages. In addition, the District lacked a full-time
HR Director at the time of this situation.

The current payroll administrator is fully aware of the

contents of the PSERS Employers’ Reference Manual
(ERM) and will ensure that wages are properly reported in
accordance with said ERM.
Manheim Central School District Performance Audit
14
 In addition, the District currently has a full-time HR
Director on staff to coordinate communication for any
similar situations occurring in the future.”

Auditor Conclusion

We are pleased that the District agreed with our finding and
that it is implementing steps to address the issues we noted.
We will review the actions taken by the District in our next
audit.

Manheim Central School District Performance Audit

15
Status of Prior Audit Findings and Observations

O ur prior audit of the Manheim Central School District (District) released on June 30, 2014,
resulted in two findings, as shown below. As part of our current audit, we determined the
status of corrective action taken by the District to implement our prior audit recommendations.
We reviewed the District’s written response provided to the Pennsylvania Department of
Education (PDE), interviewed District personnel, and performed audit procedures as detailed in
each status section below.

Auditor General Performance Audit Report Released on June 30, 2014

Prior Finding No. 1: Possible Inaccurate Reporting of Retirement Compensation

Prior Finding Summary: During our prior audit of the District’s payroll records, we found the
District may have inaccurately reported compensation eligible for
retirement to the Public School Employees’ Retirement System
(PSERS) for the 2008-09, 2009-10, 2010-11, and 2011-12 school
years. Based on the Collective Bargaining Agreements, District
employees were entitled to a non-cumulative stipend of $7,000 from
July 1, 2004 through June 30, 2012, and a non-cumulative stipend of
$3,500 from July 1, 2012 through June 30, 2014, for individuals who
attain National Board Certification (NBC) as defined by the National
Board of Professional Teaching Standards for each year the NBC was
maintained.

Prior Recommendations: We recommended that the District should:

1. Contingent upon PSERS determination, ensure the proper

adjustments are made for all individuals whose eligible retirement
compensation were not correctly reported.

2. Implement procedures for reviewing all salary and contribution

reports prior to submission to PSERS in order to ensure that only
eligible compensation is being reported to PSERS for retirement
purposed, in accordance with the PSERS’ Employer Reference
Manual.

3. Contingent upon PSERS determination, provide to PSERS any

documentation that PSERS needs to adjust incorrectly reported
retirement compensation for periods prior to July 1, 2008, during
the audit period of July 1, 2008 through June 30, 2012, and after
July 1, 2012.

Manheim Central School District Performance Audit

16
 We also recommended the Public School Employees’ Retirement
System should:

4. Review NBC payments made to employees from July 1, 2008

through June 30, 2012, to determine if the compensation was
properly reported to PSERS for retirement purposes.

5. Based on its final determination, PSERS should adjust all

compensation incorrectly reported by the District for professional
employees from July 1, 2008 through June 30, 2012. Furthermore,
PSERS must advise the District on how to resolve any
compensation incorrectly reported to PSERS for all employees
from July 1, 2004 through June 30, 2008, and July 1, 2012 through
June 30, 2014, who received NBC stipends.

6. Consider incorporating revisions into the Public School

Employees’ Retirement System Employer Manual, which
addresses the handling of stipends such as the NBC, to ensure the
correct reporting of retirement compensation.

Current Status: In January 2016, PSERS determined the compensation to be allowable

retirement wages. This determination by PSERS made our additional
recommendations to the District and PSERS moot.

Prior Finding No. 2: Inadequate Internal Controls over Pupil Membership Data

Prior Finding Summary: During our prior audit of the District’s pupil membership data for the
2009-10, 2010-11, and 2011-12 school years, we found membership
days and instructional time data reported to PDE by District personnel
was inaccurate for the 2009-10, 2010-11, and 2011-12 school years.
District personnel provided detailed pupil membership reports from
their Student Information System (SIS) that did not agree with the
final the Pennsylvania Information Management System (PIMS)
reports. We found numerous discrepancies with the data reported to
PDE.

Prior Recommendations: We recommended that the District should:

1. Develop and implement procedures to ensure detailed SIS

generated pupil membership reports are reconciled to final PIMS
reports and the Instructional Time and Membership Reports
(ITMR).

2. Establish procedures to ensure the proper data elements are

selected within the SIS to generate accurate and reliable
membership reports.
Manheim Central School District Performance Audit
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 3. Develop and implement written procedures for collecting,
recording, and reporting of membership data to avoid reporting
inaccurate data to PDE.

4. Review membership data submitted to PDE for years subsequent

to our audit. If errors are found, submit the revisions to PDE.

5. Retain reports used to reconcile PIMS, SIS, and ITMR data for
audit purposes.

Current Status: We found that the District implemented most of our prior audit
recommendations. The District currently reconciles SIS generated
membership reported to the final PIMS and Instruction Time and
Membership Reports. Additionally, while the District has established
and implemented procedures to generate accurate and reliable
membership reports, we found multiple instances where the District
failed to retain agency placement letters for children placed in private
homes during the audit period. We recommend that the District retain
all placement letters to support information found in PIMS, SIS, and
ITMRs.

Manheim Central School District Performance Audit

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Appendix: Audit Scope, Objectives, and Methodology

School performance audits allow the Pennsylvania Department of the Auditor General to
determine whether state funds, including school subsidies, are being used according to the
purposes and guidelines that govern the use of those funds. Additionally, our audits examine the
appropriateness of certain administrative and operational practices at each local education
agency (LEA). The results of these audits are shared with LEA management, the Governor,
Pennsylvania Department of Education (PDE), and other concerned entities.

Our audit, conducted under authority of Sections 402 and 403 of The Fiscal Code, 11 is not a
substitute for the local annual financial audit required by the Public School Code of 1949, as
amended. We conducted our audit in accordance with Government Auditing Standards issued by
the Comptroller General of the United States. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings
and conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit.

Scope

Overall, our audit covered the period July 1, 2012 through June 30, 2016. In addition, the scope
of each individual audit objective is detailed on the next page.

The Manheim Central School District’s (District) management is responsible for establishing and
maintaining effective internal controls 12 to provide reasonable assurance that the District is in
compliance with certain relevant state laws, regulations, contracts, and administrative procedures
(relevant requirements). In conducting our audit, we obtained an understanding of the District’s
internal controls, including any information technology controls, which we consider to be
significant within the context of our audit objectives. We assessed whether those controls were
properly designed and implemented. Any deficiencies in internal controls that were identified
during the conduct of our audit and determined to be significant within the context of our audit
objectives are included in this report.

11
72 P.S. §§ 402 and 403.
12
Internal controls are processes designed by management to provide reasonable assurance of achieving objectives in
areas such as: effectiveness and efficiency of operations; relevance and reliability of operational and financial
information; and compliance with certain relevant state laws, regulations, contracts, and administrative procedures.
Manheim Central School District Performance Audit
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Objectives/Methodology

In order to properly plan our audit and to guide us in selecting objectives, we reviewed pertinent
laws and regulations, board meeting minutes, academic performance data, annual financial
reports, annual budgets, new or amended policies and procedures, and the independent audit
report of the District’s basic financial statements for the fiscal years July 1, 2012 through
June 30, 2016. We also determined if the District had key personnel or software vendor changes
since the prior audit.

Performance audits draw conclusions based on an evaluation of sufficient, appropriate evidence.

Evidence is measured against criteria, such as laws, regulations, third-party studies, and best
business practices. Our audit focused on the District’s efficiency and effectiveness in the
following areas:

 Administrator Contract Buyout

 Data Integrity
 Bus Driver Requirements
 School Safety

As we conducted our audit procedures, we sought to determine answers to the following

questions, which served as our audit objectives:

 Did the District pursue a contract buyout with an administrator and if so, what was the
total cost of the buyout, what were the reasons for the termination/settlement, and did the
employment contract(s) comply with the Public School Code 13 and the Public School
Employees’ Retirement System (PSERS) guidelines?

o To address this objective, we reviewed the employment contracts, board meeting

minutes, board policies, payroll records, and leave records for all five
administrators who separated from employment with the District during the
period July 1, 2012 through January 5, 2018. Our review of this objective
disclosed two reportable issues as noted in the two findings above.

 Did the District accurately report nonresident students to PDE? Did the District receive
the correct reimbursement for these nonresident students? 14

o To address this objective, we reviewed all nonresident students placed in private

homes enrolled at the District during the period of July 1, 2012 through
June 30, 2016. We reviewed the District’s child accounting records, the
Pennsylvania Information Management System (PIMS) summary reports, District
school calendars, PDE tuition rates, and the agency placement letters. Our review
of this objective did not disclose any reportable issues.

13
24 P.S. § 10-1073(e)(2)(v).
14
See 24 P.S. §§ 13-1301, 13-1302, 13-1305, 13-1306; 22 Pa. Code Chapter 11.
Manheim Central School District Performance Audit
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  Did the District ensure that bus drivers transporting District students had the required
driver’s license, physical exam, training, background checks, and clearances as outlined
in applicable laws? 15 Also, did the District have written policies and procedures
governing the hiring of new bus drivers that would, when followed, provide reasonable
assurance of compliance with applicable laws?

o To address this objective, we randomly selected 10 of the 37 bus drivers and also
randomly selected 2 of the 5 bus driver aides employed by the District bus
contractor and transporting District students from July 1, 2012 through
January 19, 2018. 16 We reviewed documentation to ensure the District complied
with the requirements for bus drivers and if proper clearances were in place for
the aides tested. We also determined if the District had written policies and
procedures governing the hiring of bus drivers and if the procedures would
ensure, when followed, compliance with requirements. Our review of this
objective did not disclose any reportable issues.

 Did the District take actions to ensure it provided a safe school environment? 17

o To address this objective, we reviewed a variety of documentation including,

safety plans, training schedules, anti-bullying policies, and safe schools reports.
We also conducted onsite reviews at three of the District’s four school buildings
(one from each education level), to assess whether the District had implemented
basic safety practice. Due to the sensitive nature of school safety, the results of
our review for this objective area are not described in our audit report. The results
of our review of school safety are shared with District officials and, if deemed
necessary other appropriate agencies.

15
24 P.S. § 1-111, 23 Pa.C.S. § 6344(a.1), 24 P.S. § 2070.1a et seq., 75 Pa.C.S. §§ 1508.1 and 1509, and 22 Pa.
Code Chapter 8.
16
While representative selection is a required factor of audit sampling methodologies, audit sampling methodology
was not applied to achieve this test objective; accordingly, the results of this audit procedure are not, and should not
be, projected to the population.
17
24 P.S. § 13-1301-A et seq.
Manheim Central School District Performance Audit
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Distribution List

This report was initially distributed to the Superintendent of the District, the Board of School
Directors, and the following stakeholders:

The Honorable Tom W. Wolf

Governor
Commonwealth of Pennsylvania
Harrisburg, PA 17120

The Honorable Pedro A. Rivera

Secretary of Education
1010 Harristown Building #2
333 Market Street
Harrisburg, PA 17126

The Honorable Joe Torsella

State Treasurer
Room 129 - Finance Building
Harrisburg, PA 17120

Mrs. Danielle Mariano

Director
Bureau of Budget and Fiscal Management
Pennsylvania Department of Education
4th Floor, 333 Market Street
Harrisburg, PA 17126

Dr. David Wazeter

Research Manager
Pennsylvania State Education Association
400 North Third Street - Box 1724
Harrisburg, PA 17105

Mr. Nathan Mains

Executive Director
Pennsylvania School Boards Association
400 Bent Creek Boulevard
Mechanicsburg, PA 17050

This report is a matter of public record and is available online at www.PaAuditor.gov. Media
questions about the report can be directed to the Pennsylvania Department of the Auditor General,
Office of Communications, 229 Finance Building, Harrisburg, PA 17120; via email to:
[email protected].

Manheim Central School District Performance Audit

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