LANSDALE, PA — A new audit by the state found that North Penn School District improperly hid money so that they could continue to raise property taxes and stash the excess funds.

North Penn was among 12 districts statewide that investigators said abused the law.

“These districts have found a way to use the law to their advantage so they could always raise property taxes," State Auditor General Timothy DeFoor said in a statement. "It’s basically a shell game that allowed these 12 school districts to collectively raise taxes 37 times during the four years we reviewed, which increased their respective general fund accounts to $390 million."

In a lengthy statement, North Penn Superintendent Todd Bauer defended the district and said that they had done nothing illegal. He said that the district has only used a tax exception once, and that was to help pay for special education programs. The district applies for an exception regularly "in the event that the Board of Directors chooses to utilize the exception."

"I am disappointed to hear the misleading rhetoric regarding this report," Bauer added.

Bauer also defended the district's sizable fund balance as a reason for it's high Moody's Bond rating, which allowed it to gain lower interest rates when borrowing for major capital projects. The district has undertaken several huge renovations in recent years, including for the stadium and Montgomery and Knapp elemementary schools.

DeFoor, however, said that North Penn was still taking an "extreme measure" in applying for the exception and that they still had "sufficient unused funds that should have negated some of the tax increases.”

"At the end of the day, it’s the taxpayers, especially those on a fixed income, that are shouldering the burden," DeFoor said. "If this is standard operating procedure for these urban, suburban and rural districts, it’s not a stretch to say that it’s common practice across the state."

DeFoor argued that state law must be changed to require districts to use general fund balances and the prior year's financial surplus before raising taxes.

Two other Montgomery County districts were cited in the audit, Abington and Lower Merion. Others found complicit in the scheme are listed below:

The entire audit can be viewed online here.

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