Philly School District owes $2.8M to over 700 former employees

Audit Finds Philadelphia School District Owes $2.8 Million to More Than 700 Former Employees

The School District of Philadelphia owes $2.8 million in termination pay to 729 former employees, according to a new audit that raises fresh concerns about payroll practices and financial oversight inside the district.

The unpaid compensation dates back to 2021 and earlier, the audit found, and includes money owed to former workers for accrued but unused paid time off after they left district employment.

Under current labor agreements, separated employees are supposed to receive those termination payments within 30 to 75 days of departure, according to the Controller’s Office. Employees younger than 55 are to be paid directly by check, while those 55 and older receive compensation through a tax-sheltered annuity plan.

The largest share of unpaid money involves employees who separated in fiscal year 2024. According to the audit breakdown, 569 former employees from that year alone are owed nearly $2.3 million. Another 57 employees from fiscal year 2023 are owed $320,500, while 55 from 2022 are owed $72,600 and 48 from 2021 or earlier are owed $114,800.

City Controller Christy Brady told NBC10 Investigators the problem appears to be growing. She said the district recently implemented a new payroll system, which officials suggested may be one reason for the lapse, but her office plans to keep reviewing the issue because the money is owed to former employees.1

Brady also noted that some of the people still owed money may have moved or died, complicating the district’s efforts to resolve the backlog.

The findings come alongside other concerns identified in the same audit. Investigators previously reported that auditors could not locate 96 of 147 sampled district-owned items across 10 schools, representing nearly $300,000 in missing or unaccounted-for property. The audit also found more than 200 inactive student activity fund accounts totaling nearly $200,000.

The Philadelphia Federation of Teachers said it filed a grievance in May over unpaid termination compensation owed to its members. A union spokesperson said PFT President Arthur Steinberg is in active discussions with Superintendent Tony Watlington’s administration and hopes a fair settlement can be reached before the matter advances to a hearing.

In a statement to NBC10, the school district emphasized that the city controller’s fiscal year 2025 review resulted in an unmodified, or clean, audit opinion and found no material weaknesses or significant deficiencies in its $5 billion annual budget.

District officials said they have agreed with the audit’s recommendations, developed corrective action plans, and already made progress on improving record-keeping, inventory controls, and accountability measures.

Still, the audit adds to mounting pressure on the district to explain why hundreds of former employees remain unpaid years after leaving the system.