School funding is a lot like your household budget. If you are a property owner, you have a chunk of property taxes that come due once a year that you can’t cover with one month’s paycheck. So you have to plan ahead and set some money aside. And you had better have a little reserve savings to fall back on when your car transmission goes bad or the water heater dies.
School budgets are one target as our state legislature tries to solve the $200 million education shortfall. Two years of federal stimulus money propped up our school budgets after state tax revenues dropped in 2008. Those funds run out in June. One scheme that is still bouncing around is legislation to free up school funds that are currently for restricted use. Some want to raid every dollar in school bank accounts, claiming they are hiding bags of loot.
Large amounts are tied up in bonds and interest. But bond issues were approved by local voters and any diversion of funds to other purposes requires going back to voters for approval—it is the law and it is only fair.
But why not change regulations to open up restricted funds such as capital outlay or require schools to spend down and exhaust any discretionary funds? That is where our household budget example applies.
Special education funds come to Kansas in lump sums, starting months after the school year begins. Yet each school must provide special education programs and pay those teachers from the beginning of the school year. If schools are funded on a day-by-day basis receiving just-in-time payments from the state to cover payroll, superintendents would have to trot down to payday loan stores to borrow money to carry them through until the next federal payment (they cannot do that). And now, capital outlay reserves are dropping fast, and don’t exist for some schools. But the bigger the school, the more discretionary reserves need to be available for the boiler that breaks down and that roof that leaks.
Every responsible business maintains some reserve for unexpected contingencies.
The irony is that the major advocates for raiding school funds claim to represent business interests. Yet they will be the first to accuse schools of poor business management as soon as schools are unable to repair boilers and fix roofs, or sustain special education programs until the next federal funds arrived.
The harsh truth is that some schools have absolutely no reserve funds, restricted or discretionary, to fall back on in emergency situations. A little over one year ago, in December 2009, state tax revenue fell short to the point that the Kansas was unable to make its regular payments to school districts on time. Kansas fell behind by nearly a month. Schools were even allowed to tap some “restricted” accounts to make payroll, as long as they put the money back as soon as the state could meet its obligation. Sadly, at that time there were a handful of USDs that had no backup funds at all. The deputy commissioner of education and the state budget director made a heroic effort to pass through state funding to those districts on time. Today, one education specialist estimates up to half of Kansas USDs may have now exhausted all restricted and discretionary funds.
Attempting to close the $200 million education shortfall by changing regulations on restricted funds and forcing schools to use up all discretionary funding places Kansas schools on a hand-to-mouth existence. It makes any school bus breakdown or leaky roof a financial disaster they cannot solve in a timely manner. Since it is the smaller schools that have fewer to no reserves, this would rapidly accelerate school consolidation.
And such a “solution” is a one-time raid that leaves Kansas schools in a perpetual funding crisis. Meanwhile the $200 million shortfall in ongoing operating costs would continue after the contingency funds were gone. Such a one-year short-sighted “solution” merely “kicks the can down the road.”