Breaking into the Silos of Money

If you’re running a school district, it seems like there’s never enough money. The federal law known as No Child Left Behind (NCLB) threatens to shake up your way of doing things should your school fail to meet a multitude of testing targets. Teachers, like anyone, hope for more money in their paycheck each year. And many schools, built decades ago, get hit by rising fuel costs. The Legislature, meanwhile, has cut back on one of the revenue streams you depend on, the Base State Aid Per Pupil, or BSAPP. (Don’t you just love how the education industry is filled with acronyms?)

So what do you do? You might look for ways to economize. Negotiate cheaper deals on supplies. Ask your staff to take a pay cut, as has happened in many businesses. Or … you could sue your customers, who in this case are the taxpayers and their elected representatives. That’s what a number of districts are doing, hoping that the Kansas Supreme Court will re-open the Montoy lawsuit.

An alternative is to tap some of the unspent money that you’ve got on hand. Now, it’s useful to have some unspent money around. If you live in a house and have a mortgage, you might send your bank a check every month. Some of it goes towards the mortgage, but the rest goes to pay property taxes and homeowners’ insurance. You might also save of money for regular, big expenses that hit at once, such as the bill for auto insurance, or winter heating bills.

But how much of a cushion should you have? That’s a debatable question. If your auto insurance is $500 a year, payable once a year, it might make sense to have $400 stashed away a month or two before the bill is due. It would not, though, make sense to have $2,000 saved for auto insurance. And the best reason to have some money saved is so that you can spend it if you have an unexpected drop in income or increase in expenses.

School districts have roughly the same situation. Some cushion is good. And now would be a good time to spend that cushion. The Kansas Policy Institute has chronicled, on several occasions (see, for example, this report back in November) that districts across the state have hundreds of millions of dollars in reserve. Some  of it is legally obligated to pay off construction costs, so it can’t and won’t be touched.

But there’s plenty of money that could be spent now, especially if the Legislature were to loosen the restrictions on what is called “categorical funding,” which some people might call “micromanagement.”

Rather than sue for more, districts ought to spend down some of those reserves. They should also ask the Legislature for permission to spend some of the categorical funding in ways that school leaders see best.

Do districts need more money? Perhaps. But they should make sure they make use of what they have rather than call out the lawyers.

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