Archive for Tuesday, July 12, 2011

State’s requirement for Lawrence Public Schools to spend down savings account by June 30 has been years in making

July 12, 2011

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The Lawrence school district may have had a fine plan to absorb and adjust for declining revenue from the state, but that doesn’t change the fact that the district must spend $3 million during the next 12 months, a state official said Wednesday.

It’s either that, or be in violation of Kansas law that mandates that the balance of a major savings account be equal to no more than 6 percent of the district’s total operating budget.

“Looks like to me they had a pretty good plan,” said Dale Dennis, deputy education commissioner for fiscal and administrative services, “but the law says 6 percent by July 1.”

Back in March, the district had decided to dip into its $6.8 million special contingency fund to help offset an expected $3 million decline in state revenues for the coming school year. The plan: Spend $750,000 in contingency funds, along with make other changes — close Wakarusa Valley School, reclaim the district’s Diploma Completion Program, boost bulk purchases, etc. — to cover the $3 million loss.

The district had envisioned spreading out $3 million from savings over four years, a period that district administrators and board members fear could include even more reductions in state financing. The money in the savings account would be counted on to help soften the budget blows.

As Dennis said Tuesday, the district “had a pretty good plan,” but he emphasized that the law was the law: In 2008, legislators allowed districts to boost their savings from 6 percent of their operating budgets to 10 percent, as a way to let districts prepare for difficult economic times ahead.

But the law mandated that the savings accounts be lowered back to 6 percent of operating budgets by June 30, 2012.

Kathy Johnson, the district’s budget director, told board members Monday night that state officials previously had indicated that cap on contingency funds would be somewhat flexible, and that districts would be able to spend the accounts “down” but not replenish them until they were below the 6 percent cap.

“That’s the advice we were given,” she reiterated Tuesday.

That message changed last month, Johnson said, when she and other budget directors gathered for a workshop with the Kansas State Department of Education. No, the state folks said, the accounts must be no higher than 6 percent of operating budgets, without exception.

“It’s like going to speed limit: You can go 8 miles over the speed limit, and it’s all good,” Johnson said. “Then you go 1 mile an hour over, and now you’re going to get a ticket.

“The law didn’t change, but you change what you do so you don’t get a ticket.”

On Tuesday, Dennis said he didn’t know about any “difference in interpretation” regarding the requirements for spending down savings, only that the law’s the law. And the deadline is by July 1.

“We re-emphasized it this year, at the budget workshop,” Dennis said. “It was a reminder.”

Now district administrators and board members will be left to determine how to spend the money.

Vanessa Sanburn, a board member who had approved the budget plan calling for a gradual expenditure of contingency funds, worries that decisions during the next 12 months might threaten a long-term focus on targeting specific areas of concern: boosting the number of students and schools making adequate yearly progress on standardized tests, closing the achievement gap between overall students and those considered at risk, and more.

Stretching out the use of contingency funds had been expected to help prolong such programs through continued periods of tight budgets, she said, but such goals now will become only more difficult.

“We want to keep that extra help focused on the people who need it most, in a long-term way,” Sanburn said.

Comments

3LHSfans 3 years, 8 months ago

WOW, why don't you just line up all the Wakarusa Valley parents and kids and slap us in the face! First it was directed by the Task Force (with the exception of Greg Hough) that it wasn't feasible to keep Wakarusa Valley open due to budget cuts. Remember, there is nothing wrong with the building and there is room to accommodate additional students, other buildings need significant repairs done. We couldn't dip into contingency funds. Those were needed to cover payroll since the State is always late on payments. Second, rather than saving money by closing Waky there are now funds available to fund all day kindergarten at Broken Arrow and Sunflower. Third, the school is opened as the Virtual School. While this is great for the community to continue to be able to use the school for certain events, there are still all the expenses. The explanation as always, "it's paid from a different pot of money." The teachers are still being paid via different jobs in the district (thank goodness, we need these people to educate our children). Now, we need to SPEND $3M from contingency funds and by the way, there's plenty to cover payroll?! I'm guessing that if the Task Force would have been made aware of this situation, that there would be a significant number of tax payers that would be much happier today than we are not to mention our children wouldn't be being split to multiple schools. Granted, they only have to get split in half but sometimes those options just don't work. Good luck with that whole bond issue for new schools. By the way, welcome new board members. Sonja Hart, Wakarusa Valley PTO President (2010-2011)

WilburNether 3 years, 8 months ago

Great idea, but the K-12 industry is all about taking more of your money, not giving some back.

Dave Trabert 3 years, 8 months ago

USD 497 Lawrence is only talking about the money in their Contingency Fund, which represents just 24% of their total carryover surplus balance in all operating funds (excluding capital and bond funds) at the beginning of the last school year. Some of that money had restrictions on its use but a new law, SB 111, removes restrictions on a group of twelve funds for this school year. USD 497 had $18.2 million in those funds, which include the Contingency balance. Complete details are exclusively available at www.KansasOpenGov.org/Carryover.aspx

It may also be of interest to know that the district has one of the highest ratios of operating carryover surplus-to-operating expenses. The district began the 2009-10 school year with $22.9 million in operating surplus against $102.2 million in operating costs for that year (the most recent for which data is available). That's a 22.4% ratio, which is higher than 244 districts statewide. 87 districts managed their cash flow with a ratio of less than 10%.

The board and administrators of USD 497 certainly facing some challenging decisions (like most other taxpayers and employers in the state) but this new law affords them another viable option to manage district finances by utilizing prior year surplus funds.

notanota 3 years, 8 months ago

They can now spend down money that was previously reserved for things like at risk, summer school, and special ed students "without restriction" (other than the restriction that they have to spend it now and not wait for a rainy day or more cuts from the states.) Because saving that money to pay for paraprofessionals or tutors over the next four years would be fiscally irresponsible, especially if the state cuts funding to the point that we lose federal matching funds again. Let disabled kids eat cake.

Dave Trabert 3 years, 8 months ago

The money isn't reserved for paraprofessionals, etc. - it's what's left over from prior years. Carryover balances only increase when spending is less than revenue each year. New revenues come in each year for each area.

notanota 3 years, 8 months ago

"The funds included are At Risk (4yr Old), At Risk (K-12), Bilingual, Contingency Reserve, Driver Training, Parent Education, Professional Development, Summer School, Textbook and Student Material Revolving Fund, Special Education, Virtual Education and Vocational Education. "

notanota 3 years, 8 months ago

New revenues may come in, but they certainly don't come in as large of a quantity, Dave. Hence the whole plan of spending down the funds over four years instead of one.

Dave Trabert 3 years, 8 months ago

That simply isn't true. And no one is talking about spending all of their funds down over one or any number of years.

notanota 3 years, 8 months ago

Really? We're not going to get a decrease in state funding relative to expenses in the next four years? Promise? And I didn't say "all" either. You do like to parse the words, Dave.

tomatogrower 3 years, 8 months ago

So now, if the state is late one month sending the money to the schools, which happens often, everyone in the district will get paid late. If the school is hit with a tornado, the state is going to send them extra funds to survive, riiiight.

If Graves hadn't given away all our surpluses in tax cuts, and saved that money for a rainy day, we wouldn't be in this fix now. Tax rates were much higher back then, and things were booming, and this was before the real estate debacle. Now tax rates are low and the economy is bad, well for most anyway. Rich people are doing great. It's raining and we have nothing to fall back on, thanks to a Republican governor. My memory isn't as short as most people in Kansas, and my mind can see the connections.

Dave Trabert 3 years, 8 months ago

Actually, the state has been late in past years and employees have not been paid late. And spending some of prior years' surplus wouldn't change that. First of all, USD 497's operating surplus balances have increased dramatically over the last five years:

2005 - $5.3 million 2006 - $5.8 million 2007 - $8.9 million 2008 - $15.7 million 2009 - $22.9 million 2010 - $28.4 million

No one is suggesting that all of their carryover reserves be used, but they certainly have the ability to use a portion of it.

Also, keep in mind that every district has faced the same circumstance with being paid late. Districts with far lower carryover ratios pay people on time, so I'm sure USD 497 can do so as well.

By the way, the $935 million surplus we had in 2007 went away because the legislature under Gov. Sebilius spent it. And tax rates are not low, they are uncompetitively high and getting worse.

tomatogrower 3 years, 8 months ago

And the Grave's tax cuts had nothing to do with it. Nothing to see here. Ignore the elephant behind the curtain. Sebilius went through departments and streamlined them to save money. I remember the brouhaha when she wanted to sell all the unnecessary state vehicles. Republican lawmakers were probably using them to move back and forth to Topeka. She made a lot of people mad who were getting perks from the state, but Brownback is going to make sure he gets revenge on the children and poor.

notanota 3 years, 8 months ago

Shh, you're ruining Daves "non partisan" narrative. His Koch overlords don't like it when he's not on message.

Dave Trabert 3 years, 8 months ago

Which 'Grave's tax cuts' are you referencing? We have annual tax revenues going back to 1993 and until the current recession, there were only two years when tax revenue declined. A very small ($85 million) decline in 1999 and a slightly larger one ($235 million) in 2002 - both related to economic downturns. In 1993, general fund tax revenue was $2.8 billion. It hit $4.1 billion in 2000 and by 2008 reached $5.9 billion before beginning to decline from massive private sector job loss.

Economic downturns aside, tax revenue in Kansas has grown significantly and well beyond inflation and population growth. Between 1993 and 2008, tax revenue grew 107.8%; inflation (midwest urban cities) rose 46.7% and population increased 9.8%. Tax revenues grew nearly twice as fast as inflation and population combined.

Dave Trabert 3 years, 8 months ago

Really? A politician's bio is your source? Tell me what large general fund tax cut he inititated and I'll look into it. In the meanwhile, if he did cut general fund taxes, are you suggesting that the $1.15 billion / 37% increase in tax collections that occured in the first 7 years of his administration weren't high enough? (I'm not including 2002 because of the recession).

notanota 3 years, 8 months ago

"Others, however, have said much of the state's financial problems can be tied to tax cuts approved by the legislature and Graves in the late '90s. Graves, though, told conference attendees that he didn't regret the tax breaks."

  • source Lawrence Journal World.

notanota 3 years, 8 months ago

And to nitpick slightly, there were tax cuts under Sebelius, too.

mom44 3 years, 8 months ago

What a crazy whacked out state this is, as far as education finance. I just got back from a visit to MN and they are also dealing with education funding issues. There, local districts are having to take out short term loans to cover costs, with an IOU from the state. In last Sunday's StarTribune , the executive director of MN Association of School administrators says "It's like hitting kids is places where bruises don't show."

That's how I feel about the idea of all of a sudden having to spend down our district's savings, with more budget cuts sure to come in the near future.

Also quoting the same article, Minneapolis schools' chief financial officer says, "We're really not able to make good long-term decisions when we don't know what's going to happen from year to year.... "As long as there's uncertainty, we're saying, "We're not going to do this,"or "We're not going to do that."

Hopefully Lawrence school board members will be able to make some wise choices that will benefit our kids and schools for many years to come. $3 million is a lot to be trusted with to spend in such a short amount of time. And no doubt there WILL come a time in the near future that we will wish we still had it in the bank. Ugh.

WilburNether 3 years, 8 months ago

Too funny. The K-12 industry whines about not being able to take even more of our money, even as they stockpile million$ upon million$ of our dollar$. And now they are whining about being forced to spend it!

Amazing. Disgusting. The selfishness and greed of the K-12 industry know no bounds.

Now let's hear the flames from the KNEA union thugs.

parrothead8 3 years, 8 months ago

Seriously? You're calling them selfish and greedy because they want a savings account of more than 6% of their annual operating income during a time when education budgets are being slashed on an annual basis?

You're probably the type who thinks billionaires have YOUR best interests in mind, huh?

tomatogrower 3 years, 8 months ago

They only want the schools to spend down their surpluses, so the cuts they made won't be noticed, and they will get reelected. It's all about winning the elections. It's not about solving problems.

tomatogrower 3 years, 8 months ago

"Stephen Morris, the president of the State Senate, said there had been ''a lot of resentment'' among his fellow moderate Republicans about primary challenges. But he praised the overtures Mr. Brownback has made during the campaign toward moderates, adding, ''We really don't know what to expect from Sam.''

Bill Graves, a former two-term Republican governor, said he suspected that moderation would come naturally. ''There is a huge difference between being a vote in a legislative body on policy issues and being chief executive,'' he said. ''There is a certain pragmatism you have to bring every morning in order to serve the state.''"

I found these quotes when I was researching Grave's tax cuts. I guess Graves was wrong. Moderation is not on Brownback's agenda.

Dave Trabert 3 years, 8 months ago

Again, which general fund tax cuts are you referencing? Tax collections increased $1.15 billion / 37% between 1994 and 2001 (then dipped due to the recession).

notanota 3 years, 8 months ago

You seem to remember the difference between tax burdens and tax revenue when you complain that other states have lower taxes than we do, but you conveniently forget about it here and instead, when Tomato refers to a "tax cut," deliberately assume he's referring to a revenue cut and not a cut in tax burden.

I can go look on your Koch buddy Tax Foundation's website and see that the tax burden was cut quite a bit in the 90s and then had to be raised again in response to the falling revenue in 2002. Seriously - are you deliberately being that obtuse, or are you just a lousy researcher?

tomatogrower 3 years, 8 months ago

He also seems to not understand that if Graves had not cut taxes, and put the surplus money away for rough times, we would be sitting rather nicely right now, and talking about how wise Graves was. The only wisdom he had was to put a lot of money into highways, so he could get a cushy job in the trucking industry while he collects KPERS. What is happening now is the legislators want schools to use the savings to make it look like they didn't cut anything from schools, so they, the politicians can get reelected and cut even more from the schools.

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