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

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.