School District Reserve Funds Remain Bloated

Overview

Pennsylvania school districts hold $12.9 billion in reserve funds, including $7.2 billion in general fund reserves. Public school districts receive more than $23,800 per student–among the highest in the nation–and continue to amass reserves despite claims of underfunding. Large reserves and record state spending are not translating into better academic outcomes. Allowing funding to follow students to diverse educational options would empower parents to choose the learning opportunities that best meet their children’s needs.

Key Points

General fund reserves held by Pennsylvania school districts: $7.2 billion.
Total fund reserves held by Pennsylvania school districts: $12.9 billion.
Reserve funds held by Pennsylvania public cyber schools: $707.5 million.
Growth in general fund school district reserves since 2020: $2.3 billion.
A majority of school districts and public cyber charter schools maintain reserve funds above the recommended 20 percent of annual spending, at 53 percent and 79 percent, respectively.
Despite record state education funding, students’ educational proficiency continues to stagnate. The latest Pennsylvania State System of Assessment (PSSA) results show more than 68 percent of eighth graders are below proficient in math. Keystone Exam scores reveal more than 54 percent of students are below proficient in algebra.

Understanding Reserve Funds

Reserve funds for schools are comprised of local tax dollars. School district reserves consist of assigned, unassigned, and committed funds, as reported annually by the Pennsylvania Department of Education (PDE). Reserve funds are fungible, and districts can repurpose their assigned use.

More than $7.2 billion is held in general fund reserves by Pennsylvania school districts, according to the most recent (2024–25) PDE annual financial report (AFR) data.
This represents a $2.3 billion increase since 2020–21. Collectively, school district reserve funds have risen in 17 of the past 18 years.^[1]

In addition to unassigned, assigned, and committed funds, school districts hold reserves in non-spendable and restricted categories. In 2025, non-spendable and restricted reserve funds totaled $486.8 million. Moreover, school districts held $4.9 billion in capital project funds, $44.2 million in special revenue funds, $345 million in debt service funds, and $63.5 million in permanent funds.^[2]

At the end of the 2024–25 school year, school districts reported $12.97 billion in total reserve funds combined. For comparison, the state’s Budget Stabilization Reserve Fund, known as the Rainy Day Fund, reached $8 billion in 2026.^[3]
Total reserve funds are likely higher than reported due to the failure of 18 school districts to report fund balances for the 2024–25 school year.

Public School Reserve Funds Breakdown

In 2016, the state’s previous auditor general, Eugene DePasquale, recommended that reserve funds be no more than 20 percent of a school district’s total spending.^[4] Yes, PDE’s latest AFR data show more than half of the commonwealth’s 500 school districts (53 percent) have general fund reserves in excess of 20 percent of their spending, with an average district general fund reserve balance of 22 percent of expenditures. In 2025,

398 districts report general reserve funds above 10 percent of spending,
266 districts report general reserve funds above 20 percent of spending, and
59 districts report general reserve funds at 40 percent of spending or greater.^[5]

Reserve levels have grown alongside historic increases in funding.

Over the last decade, state funding for school districts increased by $7.4 billion (67 percent).
In the 2024–25 school year, Pennsylvania’s public schools received $38.4 billion from federal, state, and local tax dollars, an average of $23,870 per student.^[6]
The most recent national data (2024) shows that Pennsylvania’s per-student spending ranks tenth highest in the nation, approximately $3,960 more per student than the national average.^[7]
Pennsylvania’s 2026–27 budget increased state support of public schools to $18.6 billion, an $896 million increase from last year.^[8]
School districts move reserves between funds to justify unnecessary tax hikes. A 2023 performance audit by Pennsylvania’s Auditor General, Timothy DeFoor, found that the 12 audited districts’ “common yet questionable practices … are placing an excess burden on taxpayers across Pennsylvania,” pointing to the shell game of shifting reserves to avoid referendums for property tax increases. The auditor noted districts use referendum exceptions “as a regular budgeting tool, rather than an extreme measure to meet a fiscal shortfall.” ^[9]
Over the four-year audit period, the 12 districts raised taxes 37 of a possible 48 times while holding an average of more than $360 million in unused, unrestricted General Fund balances.^[10]

Public Cyber Charter Schools

Cyber charter schools are public schools, funded by tax dollars. Public school districts pay tuition to charter schools for each district student attending the school. The tuition paid is approximately 75 percent of the cost to educate students at a district school.

Public cyber charter schools cannot turn away students, nor can they raise or collect property taxes. Cyber charter schools experience frequent changes in enrollment and delayed payment from districts, which result in uncertain revenue.

Pennsylvania’s 14 public cyber charter schools hold $707.5 million in reserve funds.
Of the 14 public cyber charter schools, 11 (79 percent) hold reserve funds above the 20 percent recommended threshold, compared with 53 percent of school districts.^[11]

Pennsylvania’s funding formula is broken. The same funding formula that allows school districts to hoard billions in reserve funds encourages public cyber schools to preserve millions in reserve funds.

Large Reserves Benefit Adults, Not Students

Despite bloated reserve funds, standardized test scores are stagnant, and school violence remains a significant problem.

Pennsylvania public school students face unprecedented levels of violence. More than one-third of all public schools qualify as persistently dangerous according to PDE incident reports.^[12]
Student achievement in Pennsylvania is stagnant or worsening.
- According to the 2024 National Assessment of Educational Progress (NAEP), or Nation’s Report Card, less than half of Pennsylvania’s public-school students are proficient in any category.
  - The NAEP results, released in January 2024, show 69 percent of Pennsylvania’s eighth-grade students as not proficient in either math or reading.
- - Among fourth graders, only 41 percent reached proficiency in math, with just 31 percent proficient in reading.^[13]
  PSSA’s 2025 scores show more than 68 percent of eighth graders as below proficient in math and approximately 50 percent as below proficient in language arts.

Solutions

Reserve Fund Transparency and Oversight: Current reserve fund levels indicate districts have significant financial security yet continue to raise taxes.

To improve transparency and protect taxpayers, the legislature should implement the Auditor General’s recommendations regarding reserve fund usage, including:
- Clarifying how reserve funds are defined.
- Establishing clear benchmarks for appropriate fund balances.
- Implementing stricter limits on reclassifying or shifting funds to bypass statutory caps, to prevent districts from shifting funds to avoid property tax referenda.

Fund students rather than school district bank accounts: Students deserve more than a system that prioritizes financial stockpiling over academic achievement.

Pennsylvania must move toward funding students, not systems. Lawmakers have two pathways to allow funding to follow the child. Expand current EITC and OSTC tax credit scholarship programs, or pass Lifeline Scholarships for children assigned to low-achieving schools.^[15]
- Lifeline Scholarships, in HB 1489, would provide students residing within the attendance boundary of a school ranked in the bottom 15 percent of academic performance with the opportunity to attend the school that best fits their needs.^[16]
In addition, Gov. Josh Shapiro must opt in to the Federal Scholarship Tax Credit (FSTC) program by January 1, 2027, for Pennsylvania students to be eligible in 2027, the initial year of the tax credit. The program allows donors to receive a non-refundable dollar-for-dollar credit of up to $1,700 on their federal income taxes in exchange for donating to a participating Scholarship Granting Organization of their choosing. FSTC scholarships can go to kids participating in public or private schools.^[17]
- If Governor Shapiro does not opt Pennsylvania in, donors can still receive the tax credit by donating to SGOs in other states.

It’s prudent for schools to maintain emergency funds. But the long-term trends show districts are hoarding money without delivering quality education.

Find the reserve funds for your local school district and public charter schools on our searchable database.

Appendix: School District and Charter Reserve Funds

Source: Pennsylvania Department of Education, Annual Financial Reports, 2024–25 General Fund Balance. Note: School districts with $0 did not report updated balances to the department.

[1] Pennsylvania Department of Education, Annual Financial Report (AFR) Data Detailed, “General Fund Balance: 2015–2016 to 2024–2025,” April 2026 [update], https://www.pa.gov/agencies/education/programs-and-services/schools/grants-and-funding/school-finances/financial-data/summary-of-annual-financial-report-data/afr-data-detailed.

[2] School districts vary in how they report reserves under the general fund and outside special funds. These variations account for the $7.6 billion reported under general fund reserves in the School District Total Reserve Fund graph and the $7.2 billion in general fund reserves reported in PDE’s general fund balance report.

[3] Commonwealth Foundation, “What You Need to Know About Pennsylvania’s 2026–27 State Budget Deal,” July 12, 2026, https://commonwealthfoundation.org/research/pennsylvania-state-budget-2026/

[4] Jan Murphy, “School Districts Reserve Funds Continue to Grow, Amassing $4.3 billion in 2014–15,” PennLive Patriot News, June 15, 2016, https://www.pennlive.com/politics/2016/06/school_districts_reserve_funds.html.

[5] Pennsylvania Department of Education, Annual Financial Report (AFR) Data Detailed, “General Fund Balance: 2015–2016 to 2024–2025.”

[6] Pennsylvania Department of Education, Annual Financial Report (AFR): Summary-Level, Revenue Data For School Districts, Career and Technology Centers, and Charter Schools (2024–25), April 2026 [update], https://www.pa.gov/agencies/education/programs-and-services/schools/grants-and-funding/school-finances/financial-data/summary-of-annual-financial-report-data/afr-data-summary-level.

[7] Clara Moore et al., “Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2022-23 (Fiscal Year 2024),” (Washington D.C.: National Center for Education Studies, April 2026), 7, https://ies.ed.gov/use-work/resource-library/report/first-look-ed-tab/revenues-and-expenditures-public-elementary-and-secondary-education-school-year-2023-24-fiscal-year.

[8] Commonwealth Foundation, “What You Need to Know About Pennsylvania’s 2026–27 State Budget Deal.”

[9] Pennsylvania Department of the Auditor General, A Performance Audit: School Districts—General Fund Balances: Applying for Referendum Exceptions, Designating Funds, and Increasing Taxes, January 11, 2023, https://www.paauditor.gov/wp-content/uploads/audits-archive/Media/Default/Reports/speSchoolReservesAuditReport012523.pdf.

[10] Pennsylvania Department of the Auditor General, “Auditor General DeFoor Questions Annual Property Tax Increases for 12 School Districts; Calls on Legislature to Close Loopholes,” January 25, 2023, https://www.paauditor.gov/auditor-general-defoor-questions-annual-property-tax-increases-for-12-school-districts-calls-on-legislature-to-close-loopholes/.

[11] Pennsylvania Department of Education, Annual Financial Report (AFR) Data Detailed, “General Fund Balance: 2015–16 to 2024–2025.”

[12] Rachel Langan, “Persistently Dangerous Pennsylvania Public Schools,” Commonwealth Foundation, August 4, 2025, https://commonwealthfoundation.org/research/persistently-dangerous-pennsylvania-public-schools/.

[13] National Center for Education Statistics, “Nation’s Report Card: Pennsylvania Overview,” January 29, 2025, https://www.nationsreportcard.gov/profiles/stateprofile/overview/pa?cti=PgTab_OT&sub=MAT&chort=1&year=2024R3&st=MN&sfj=NP&sj=PA; Commonwealth Foundation, “Pennsylvania Public Schools: Nation’s Report Card 2024,” February 25, 2025, https://commonwealthfoundation.org/research/pennsylvania-public-schools-nations-report-card-2024/.

[14] Pennsylvania Department of Education, Assessment Reporting: “2025 PSSA English Language Arts Results,” “2025 PSSA Math Results,” and “2025 Keystone Results,” accessed September 11, 2025, https://www.pa.gov/agencies/education/data-and-reporting/assessment-reporting.

[15] Commonwealth Foundation, “PASS/Lifeline Scholarship Program,” May 5, 2025, https://commonwealthfoundation.org/research/lifeline-scholarship-program-pass/.

[16] Rep. Clint Owlett, House Bill 1489, Pennsylvania General Assembly, Regular Session 2025–26, https://www.palegis.us/legislation/bills/2025/hb1489.

[17] Commonwealth Foundation, “What Is the New Federal Scholarship Tax Credit,” February 25, 2026, https://commonwealthfoundation.org/blog/what-is-the-new-federal-scholarship-tax-credit/.