The Lower Merion School District must go back to the chalkboard and do its 2016-2017 budget again, a judge ordered Monday.
The ruling is a result of a lawsuit filed in May seeking to overturn the district's 4.4-percent tax increase in the fiscal year that begin July 1.
Montgomery County Common Pleas Judge Joseph Smyth ordered the district to revisit their annual spending plan and capped any tax increase at 2.4-percent, which is the limit under the current formula designed by the state to keep tax hikes in line with inflation.
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Lower Merion resident Arthur Wolk, an attorney who filed the complaint, said after the ruling that the district has routinely underestimated revenue projections during the last decade. He said the practice created a $57 million surplus in district banks accounts as taxes for township residents rose 53 percent over the same period of time.
Smyth, in his ruling, said annual budgets dating to 2008-2009 greatly exceeded district officials' yearly revenue expectations.
"In fact, for every fiscal year from 2008-2009 through 2014-2015, the School District passed a budget that projected multimillion-dollar deficits, yet year-end audits showed multimillion-dollar surpluses, amounting to a total during that span of over $42,500,000," Smyth wrote.
Wolk said Tuesday the district shouldn't have more than about $20 million in reserves, according to state law that allows for 8 percent of a district's total budget to be held in surplus. Lower Merion has a budget of about $260 million, he said.
In addition to calling out district officials for acting "as if they're running their own kingdom," he blamed the elected school board members.
"The board is a rubber stamp." he said. "They absolutely have no real power. They are inexperienced. They have no training."
In a statement, district Superintendent Robert Copeland and school board President Robin Vann Lynch defended the budget and said they would appeal the ruling.
"The Court’s decision imposes legal standards upon LMSD that are different than any other public school district in Pennsylvania and makes the District’s budgeting even more challenging by introducing greater uncertainty into the process," the statement said. "The District has consistently been lauded for sound fiscal management by credit ratings agencies, resulting in a desirable Aaa bond rating and savings to taxpayers."