Philadelphia Schools Owe More Ex-Employees Each Year, Not Fewer
Summary
Philadelphia's independently elected City Controller audits the School District's finances every year, and for at least three years running the audit has flagged the same problem: money owed to people who no longer work there. As of June 2025 the district owed $2.8 million in termination pay to 729 former employees -- up from $2.2 million and 432 people a year earlier, and $1.7 million and over 300 people the year before that. Each year the district works through hundreds of old cases; each year new ones arrive faster than it can clear them, so the total keeps climbing instead of shrinking. Some of that money should already have gone to the state under Pennsylvania's unclaimed-property law.
A debt that grows even while it's being paid down
Termination pay is money the District already owes by contract: under its labor agreements, employees who leave are entitled to be paid out for unused vacation and sick time within 30 to 75 days of separation, depending on their union. SEIU 32BJ Local 1201's contract gives the District 30 days⧉; the School Police Association gets 60; the Philadelphia Federation of Teachers and the Commonwealth Association of School Administration get 75. Employees under 55 are supposed to be paid directly by check; those 55 and older receive the money as a contribution to a tax-sheltered annuity.
The District has not been hitting those windows for years. The FY2024 letter⧉ found $2.2 million owed to 432 former employees as of June 2024 -- and noted that the letter before that had already flagged $1.7 million owed to more than 300 people who'd separated as far back as 2016. Each year the District works through a chunk of the backlog: 197 old cases closed by fiscal 2024, another 272 closed by fiscal 2025. But each year, new departures add more people to the list than the District clears off it, so the total keeps rising: $1.7 million, then $2.2 million, then $2.8 million.
Where the money is supposed to go if no one claims it
Pennsylvania's escheat law says that wages left unclaimed for more than two years belong to the Commonwealth, not the employer sitting on them -- the District is supposed to turn that money over to the state Treasury. As of June 2025, $320,600 of the termination-pay backlog met that two-year threshold and should already have been remitted; a year earlier the figure was $131,000. The District has not said it disputes owing this money -- its own written response to the audit, filed May 14, 2026, says it "remains focused on timely processing" and blames a January 2025 conversion to a new Oracle payroll system plus the loss of a full-time payroll processor for the pace. It reported that of the 729 cases the audit found, only 175 remained open as of April 28, 2026: 17 pending an employment-status update, 36 tied to deceased former employees' estates, and 122 held up by unresolved labor matters.
View data as table
| FY2024 separations, still owed at FY2025 year-end | $2,292,900 | 569 employees |
|---|---|---|
| FY2023 separations, still owed at FY2025 year-end | $320,500 | 57 employees |
| FY2022 separations, still owed at FY2025 year-end | $72,600 | 55 employees |
| FY2021 & earlier separations, still owed at FY2025 year-end | $114,800 | 48 employees |
The same audit found two more overdue balance sheets
The termination-pay finding wasn't the only place the FY2025 audit found money the District couldn't account for. Testing personal property at ten schools, auditors could not locate 96 of 147 inventoried items -- 65% of the sample, worth $297,316, including vocational welding equipment, Smart Boards and musical instruments -- and separately found 74 items physically present at nine of those same schools that weren't in the inventory records at all. At 23 schools, auditors also found $190,218 sitting in 206 inactive student activity fund accounts -- money students raised for clubs, sports or memorial scholarships that the District's own manual says should be redirected within a year of going dormant.
The takeaway
- The debt keeps growing despite active processing. The District closed 197 old cases in FY2024 and 272 more in FY2025 -- real progress on paper -- but new departures added people to the backlog faster than the District could clear it, so the total rose in both years anyway.
- Some of this money legally belongs to the state now, not the District. $320,600 met Pennsylvania's two-year unclaimed-wage threshold as of June 2025, up from $131,000 the year before; the audit doesn't say the District has remitted it.
- The District says it's mostly caught up on the specific 729 cases the audit counted -- but doesn't say when the backlog itself will stop growing. Its own count found 175 of those cases still open in April 2026, and offered no date for when new departures won't keep outpacing the old ones being cleared.
The FY2025 letter's Table 1 lists the fiscal-2024 subtotal as "$2,292,9000" -- an apparent typo (an extra zero) inconsistent with its own Column C + Column D math and its own stated Total row of $2,800,800. This piece uses $2,292,900, the figure that reconciles with the table's total and with the $2.8 million headline figure the Controller's office itself announced.
Sources(3) ▾
- Office of the City Controller, City of Philadelphia (Christy Brady, CPA), Management Letter on School District of Philadelphia's Internal Control, Fiscal Year 2025 (2026-02-17) — The Controller's management letter accompanying the FY2025 School District of Philadelphia financial-statement audit, including the audit team's memo of internal-control findings (2025-001 through 2025-007) and the District's May 14, 2026 written management response and action plan. Findings 2025-001 (outstanding termination payments), 2025-006 (missing property) and 2025-007 (inactive student activity funds) are the load-bearing findings for this piece. Fetched directly as a PDF. controller.phila.gov · original document
- Office of the City Controller, City of Philadelphia (Christy Brady, CPA), Management Letter on School District of Philadelphia's Internal Control, Fiscal Year 2024 (2025-02-18) — The prior year's equivalent management letter, used here for the FY2024 termination-pay total, the FY2024 escheatment exposure, and its own citation of the still-earlier FY2023 finding ($1.7 million owed to more than 300 former employees). Fetched directly as a PDF. controller.phila.gov · original document
- Office of the City Controller, City of Philadelphia, School District Audit Finds More Than 700 Former Employees Are Owed $2.8 Million (2026-07-02) — The Controller's own press release announcing the FY2025 letter's release, including City Controller Christy Brady's on-the-record statement. controller.phila.gov · original document
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As of June 30, 2025, the School District of Philadelphia owed $2,800,800 in termination pay to 729 former employees, according to the City Controller's most recent management letter⧉. It is the third year in a row the Controller's office -- Philadelphia's independently elected auditor, whose findings the District is required to formally answer -- has flagged the same finding, and the third year in a row the total has gone up, not down.