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Archive for Monday, July 20, 2009

Schools’ $1.4B in reserves off-limits

July 20, 2009

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What if you were a legislator, trying to figure out how to balance the state’s budget during the current recession, and someone told you that public schools, which receive about half of the state budget, had $1.4 billion sitting in the bank?

The issue comes up every now and then. Schools do carry sizable cash balances at times. For example, on July 1, 2008, there was $1,360,553,905 in the bank accounts of school districts across the state, according to the Kansas Department of Education.

But Deputy Education Commissioner Dale Dennis says most of that money is dedicated to specific things such as capital outlay, repaying bonds and special education costs.

Schools build up these balances to make sure there is enough during times of low cash flow. For instance, schools receive tax payments in June and January. In between those months, they have to pay out a lot of money, he said. And sometimes that cash flow is lower because the state has delayed payments to schools to prop up its own bottom line.

So while the money may look attractive to a legislator trying to patch a budget hole, it is already spoken for, according to Dennis.

Corporate tax breaks

On another topic, a reader sent an e-mail saying the state could save money by closing corporate tax giveaways, noting a recent audit raised questions about the effectiveness of these breaks.

The 2008 report by the Legislative Division of Post-Audit says the state spent about $1.3 billion on economic development in the form of expenses and tax breaks during the previous five-year period. “Most studies of economic development incentives suggest these incentives don’t have a significant impact on economic growth,” the report said.

Nearly everyone in the economic-development field has disagreed with that report, and it remains to be seen what effect, if any, it will have on policymakers.

Lotto losses

The Kansas Lottery reported last week that its sales for fiscal year 2009, which ended June 30, were nearly $230.5 million, which represented a decrease of 2.6 percent from the previous fiscal year.

That’s not the first time lottery sales have fallen. Since the lottery started selling tickets in fiscal year 1988, it suffered a decrease from the previous fiscal year in 1990, 2000, 2001, 2005 and 2008. The record year was in 2007 — almost $240 million.

Comments

63BC 5 years, 5 months ago

I appreciate the confirmation of these large cash reserves held by school districts, but I honestly do not understand the explanation.

Mr. Dennis seems to say that there are reasons why districts maintain these reserves. Undoubtedly. Particularly so they don't run short of cash when times are tough. Very reasonable.

Given that times are historically tough, isn't now the occasion to draw down those reserves? Why do they need to be at $1.3 billion?

That seems to argue districts ought to be pulling from their savings accounts, just like businesses and families do when revenue is down.

dandelion 5 years, 5 months ago

Then what would happen when the state says "Oh we will be a month late paying you"? There would be no money to make payroll. This happens often. Also, the reserves are for when a furnace dies or the school van blows a rod. Everyone, including schools should have a reserve savings for unforeseen events, even in hard times. I know it's not easy to save, but it helps you when something breaks down. Then you don't have to use a credit card to fix it.

pace 5 years, 5 months ago

Mr. Rothschild isn't getting through to me. Does he mean the Lotto paid out more than they took in? The powers that be are always touting corporate welfare as a win. Looks like Riley county type thinkers out there. Building boom anyone.

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