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Archive for Sunday, December 9, 2001

Tight cash flow delays state funds for schools

December 9, 2001

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— The state's cash shortage has touched all Kansas school districts this month, as monthly payments from Topeka to districts were delayed nearly a week and were only 75 percent of the amounts due.

"Our cash isn't flowing as we had hoped. We're simply not collecting revenue at a pace fast enough to pay all the obligations," state budget director Duane Goossen said Friday.

To cover the balance owed to districts, Gov. Bill Graves will seek approval in the coming week to borrow a record amount from invested state funds to pay future bills, Goossen told The Wichita Eagle.

State aid normally is deposited in school districts' accounts at the first of the month. December's 75 percent payments were deposited Friday.

Goossen said the remaining school money should be distributed sometime in the coming week.

"But that's not a sure thing," he added.

This is the first time the state has been late more than a day or two on its school aid payments since the current funding formula was passed in 1992, said Dale Dennis, deputy commissioner of education.

School expenditures now account for more than half of state's general operating fund.

The latest revenue forecasts show the state collecting $113 million less this year than budgeted. Since that forecast in early November, the state reported collecting $35.7 million less than expected in November.

The State Finance Council, made up of legislative leaders and Graves, will consider the governor's request Thursday to approve an extra $200 million in certificates of indebtedness.

Those certificates allow the state to borrow money from other idle state funds that are in short-term accounts that pay interest.

In September, the finance council approved $150 million in debt certificates, the same amount as the previous two years.

Prior to that, the most the state had borrowed from its invested funds was $140 million in 1987.

If the extra borrowing authority is not approved, Goossen said, the state will be unable to pay its bills until mid-January. After that, the cash flow looks sufficient until early March, when the state would again see its cash depleted until the April 15 income tax filing deadline, he said.

Senate President Dave Kerr, R-Hutchinson, said he expects the finance council to approve the debt certificates without controversy. Borrowing from idle funds is likely to become even more common with tight budgets anticipated over the next couple of years, he said.

Kansas' largest school district the Wichita district received an $11.6 million payment Friday and is still owed nearly $4 million for December.

Linda Jones, the Wichita district's chief financial officer, said timely payment of the final 25 percent is crucial because in December, teachers are paid before Christmas break, rather than the end of the month.

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