The School District of Philadelphia owes more than 700 former employees millions of dollars in termination payments, according to a new report first obtained by the NBC10 Investigators.

The audit found 729 former employees are owed $2.8 million in termination payments. The unpaid payments date back to 2021 and earlier.

On Wednesday, the NBC10 Investigators first reported how auditors could not locate two-thirds of the property they sampled during an inventory review. The Controller’s Office selected 147 items from inventory records at 10 schools. Of those, 96 items totaling nearly $300,000 could not be located, according to the audit.

The unaccounted-for inventory ranges from audio-visual equipment and classroom tools to cafeteria tables and musical instruments, including at least three pianos identified during on-site visits last summer. Brady said Board of Education policy requires the district to track school property, including its location and whether an item was removed or sold.

Brady’s office could not estimate the total number of unaccounted-for items districtwide because doing so was outside the scope of the audit. The district operates more than 200 schools.

The wage-related findings are similar to those in the 2025 audit, which found the district owed more than $2.2 million to more than 400 former employees. The controller’s office provided this breakdown by fiscal year of separation:

Fiscal year of separationNumber of employees owed termination payTotal termination pay owed2024569$2,292,900202357
$320,500202255
$72,6002021 & prior48
$114,800Total729
$2,800,800

“It is an issue, and we are keeping track of it because obviously it has gone up,” City Controller Christy Brady told the NBC10 Investigators. “Now they did just institute a new payroll system, and the school district did say that could have been one of the reasons why, but we will always be testing it because this is money due to former employees.”

Brady suspects the 700 former employees include people who have moved or died.

Under current labor agreements, employees who separate from the district are entitled to termination pay for accrued but unused paid time off within 30 to 75 days of their departure, the Controller’s Office said.

The district is required to pay employees younger than 55 directly by check. Employees 55 and older receive their compensation through a tax-sheltered annuity plan.

A representative for the teachers union, the Philadelphia Federation of Teachers (PFT) Local 3, said the union filed a grievance in May over the termination pay owed to its members.

“PFT President Arthur Steinberg is in active discussions with Dr. Watlington’s administration about coming into compliance with the CBA,” a spokesperson said in a statement. “The PFT is hopeful that a fair settlement can be reached before this matter goes to a hearing.”

In addition to the findings involving district assets and unpaid termination pay, the audit found more than 200 inactive student activity fund accounts totaling nearly $200,000.

The school district provided the following statement to the NBC10 Investigators:

“The School District of Philadelphia is pleased that the city controller’s FY 2025 audit resulted in an unmodified (clean) audit opinion and identified no material weaknesses or significant deficiencies. This marks more than a decade of consecutive clean audit opinions, with no material findings, reflecting the district’s strong commitment to fiscal stewardship, transparency, and accountability. The district’s financial reporting excellence has also been recognized annually by both the Government Finance Officers Association (GFOA) through its Certificate of Achievement for Excellence in Financial Reporting and the Association of School Business Officials (ASBO) International through its Certificate of Excellence in Financial Reporting. Although the audit did not identify any material weaknesses or deficiencies in a $5 billion annual budget, we appreciate the city controller’s partnership and have agreed with all recommendations outlined in the audit. The district has already developed corrective action plans and made progress to address each recommendation. To strengthen record keeping and inventory management, the district has implemented centralized oversight, inventory audits, staff training, enhanced accountability measures, and improved asset-tracking procedures. We will continue working to improve our processes, strengthen accountability, and make sure public dollars are managed wisely and responsibly. This audit reflects the progress we have made as we work to deliver the highest level of service to our students and families.”

The NBC10 Investigators can be reached at david.charns@nbcuni.com and ali.ingersoll@nbcuni.com.