Reserves a one-time contingency, schools say
by DAWNE LEIKER
In the midst of a raging debate over school funding, Kansas think tanks have published data designed to influence public opinion regarding school districts' cash reserves.
According to the Kansas Policy Institute, Kansas school districts are sitting on $700 million in cash reserves, much of which could be used to fill the void caused by legislative funding cuts.
Area school district administrators disagree with the findings of the institute.
According to Richard Cain, Hays USD 489 assistant superintendent of finance, "We don't do cash reserves beyond what we need to operate."
He said funds for capital outlay, food service and some bond and interest dollars must be kept in reserve to meet obligations, but these are not funds that can be spent for other purposes.
According to a press release from the Kansas Association of School Boards, "more than two-thirds of the state's school districts' cash balances are restricted to particular purposes."
The largest fund, $451.7 million, is capital outlay, primarily raised by local mill levy for construction, repair and equipment. These funds are restricted by the Kansas Constitution to be used only for the purpose for which they were raised.
This also holds for bond and interest, $344.4 million, comprised of local tax money. Using these funds for other purposes not previously designated would result in defaulting on debt payments.
"To say districts have 'extra' cash in these funds is like looking at your bank balance on the first of the month and ignoring the bills due before your next paycheck. It is the same short-sighted approach that led to so many other financial problems facing the state and nation," according to the KASB.
Area districts' unencumbered cash balances for 2008-2009 comprised of funds for capital outlay, special education, food services and contingency reserve include: Hays USD 489, $240,191; Victoria USD 432, $293,490; and Ellis USD 388, $857,217.
Steven Taylor, Ellis USD 388 Superintendent, said in an e-mail, "We are fortunate to have a contingency reserve to help cover unexpected expenses. However, this is one-time money that once it is spent it is gone."
The amount held in the reserve, according to Taylor, is "not even enough to cover one month's payroll. Had we not had any cash reserves this year, we would have been in danger of not making payroll and paying bills due to the late state aid payments."
Instead of being treated as "unnecessary slush funds, district balances should be viewed as prudent financial management decisions by local school district," said the KASB news release. "Expecting school districts to use these funds to make up for severe cuts in state funding will only delay addressing the real problem. School districts need reliable, on-going revenues to meet their legal obligations to increase student achievement."
"If all the superintendents in the state were sitting on buckets full of money, we would not be shooting ourselves in the foot ... laying people off and cutting services," said Linda Kenne, Victoria USD 432 superintendent. "It would have to be a huge collusion between all the districts."
Kenne pointed out it is essential to have money in food service prior to the start of a new school year. She added that funds must be carried over in local option budget supplemental general funds.
The Victoria school district has some carryover in special-education funds, although Hays currently does not. She said it is impossible to know when a new student could be added to the special education role and the district must be in a position to meet whatever special needs the student has.
She said that contingency funds may be carried over. The amount is limited to a certain percent of the general fund. These funds must be spent for contingency capital outlay.
"What if your boiler blows up," Kenne said, "Anyone would be a fool not to have money in that fund."
Both Cain and Kenne call into question the motives of the Kansas Policy Institute. They point out the intent of the institute and similar groups is to negatively influence new taxation policies which would greatly impact corporate interests in the state.
One particular corporation seems to drive the efforts. Kenne said, "Koch Industries' address is the same as the Kansas Policy Institute."
"Do you want the state to be owned by Koch Industries?" she asked.
Kenne was emphatic that children and not corporations should be the primary focus of school funding issues.
"These are all our children involved. ... These are your nieces, nephews, grandchildren," she said.
If a child is in the educational system during a time when programs and teachers are cut, "they don't get a do-over," she said.
Since July of last year, districts lost $39 million in general aid or $62 per pupil. The school finance formula is currently estimated at $100 million short of authorized budgets, requiring another $150 base budget cut. A further $250 million shortfall must now be dealt with based on the latest state revenue projections. An across-the-board spending cut of that amount would reduce school aid another $200 per pupil.
Kenne said the reopening of a lawsuit against the state by Schools for Fair Funding in January was a necessary step in assuring that districts receive adequate educational funding. In fact, she said, looking back over U.S. history, major advancements for school districts have nearly always been won in the court room.
"This is the one redress we have. They obviously won't listen to us when we go to Topeka," Kenne said.