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Midyear cut in funding puts Brownback, school districts at odds over use of reserve funds

The Kansas City, Kan., school district will lose about $1.4 million in state aid through a budget cut from the state. Among the district’s schools is Sumner Academy (seen here).
The Kansas City, Kan., school district will lose about $1.4 million in state aid through a budget cut from the state. Among the district’s schools is Sumner Academy (seen here). Kansas City Star file photo

It’s true. Most Kansas school districts — though not all — have ample financial reserves to cover for Gov. Sam Brownback’s midyear cut of $28 million from elementary and secondary education.

But as Brownback suggests that schools can survive the 1.5 percent cut without harming their classrooms, school leaders are still crying foul.

Area school districts have contingency funds that generally amount to about 6 percent of their annual operating budgets. And Kansas law allows them some flexibility to draw from other, smaller funds, too, that boost their possible reserves to closer to 10 percent if necessary.

But, the districts say, the governor’s cut is not the kind of contingency they should have to manage.

“To take this to the school districts to pay for a problem they didn’t create is unjust,” said David Smith, chief of staff for the Kansas City, Kan., school district.

Smith and others say the state’s steep income tax reductions are to blame.

But Brownback and proponents of the tax cuts argue that education is driving up costs and excessively straining the state budget, and that schools can — and should — shoulder the $28 million cut.

Overall, Brownback noted in his statement on the funding change, even with the cut schools are receiving $177 million more this year than last.

That increase in large part was driven by a Kansas Supreme Court ruling that called for the state to increase public school funding.

The midyear cut, however, hits schools after their budgets and payroll obligations are established for the year.

The money that districts have accumulated in their reserve funds are public funds provided to schools to educate children, said Dave Trabert, president of the Kansas Policy Institute, which has been scouring school budgets for inefficiencies.

“When they got more money than they needed, they put that money in the bank,” Trabert said. “Now it’s time to use that money to educate kids.”

School leaders describe the size of their reserves as more purposeful, not simple overflow.

The current school year’s contingency funds — including about $8.3 million in Kansas City, Kan., $5.6 million in Shawnee Mission, $9.7 million in Olathe and $11.2 million in Blue Valley — would be needed to meet payrolls, schools say, if state funding payments were delayed, as happened five years ago.

Districts also self-insure against unforeseen legal settlements or catastrophic building damage.

Furthermore, the revenue that districts rely on does not come in a consistent flow. For instance, many property tax bills aren’t paid until after the first of the year, adding to an ebb in revenue that bottoms out in December.

“We’ve gotten to Dec. 30 and had $80 left in the bank,” said John Hutchison, the chief financial and operations officer for the Olathe school district.

The 1.5 percent cut will mean a loss in state aid of about $1.6 million this year for Olathe, the largest area district. Shawnee Mission will lose $1.4 million, Kansas City, Kan., $1.4 million, and Blue Valley $1.2 million.

Although area districts have balances in their contingency funds, a few districts in Kansas, including Concordia west of Topeka, do not.

The small district of just over 1,000 students was already wrestling with difficult budget decisions — and a zero balance in its contingency fund — when it was hit with a midyear cut of $63,000.

“We chose to spend it down, and then unforeseen things brought it to zero,” said Concordia Superintendent Beverly Mortimer. Health insurance costs have eaten into the district’s budget, as has a drop in the revenue the district was getting for low-income students.

Trust in the Legislature is fractured, she said. “We thought somewhere it (the uncertainty in legislative and judicial budget battles) would level out and we could predict what we’re going to have,” Mortimer said. “But that hasn’t happened yet.”

Although Concordia is an extreme case, many districts have felt pressure in recent years to spend down their reserves, said Mark Tallman, associate executive director for advocacy at the Kansas Association of School Boards.

“Ironically, after years of criticism that their reserves were too high, now we’re finding out that wasn’t the case,” he said. “Now they’re going to have to spend down their reserves … and the bigger concern is that the prospects going forward look worse.”

As with most other districts, Blue Valley will look for ways it can make some budget cuts during the balance of the school year, but the choices are limited, Superintendent Tom Trigg said.

“We’ll cut back on what we can cut back on, but the vast majority is encumbered,” he said. “We will have to lower our contingency reserve. … It is too bad the state is in the situation it is in.”

To reach Joe Robertson, call 816-234-4789 or send email to jrobertson@kcstar.com.

Cuts and contingency funds

Here are districts’ midyear funding cuts, effective March 7, as well as their cash in 2014-2015 contingency funds.

District

Midyear funding cuts

2014-15 contingency funds

Olathe

$1.56 million

$9.74 million

Shawnee Mission

$1.44 million

$5.64 million

Kansas City, Kan.

$1.4 million

$8.25 million

Blue Valley

$1.18 million

$11.18 million

De Soto

$349,000

$2.8 million

Gardner Edgerton

$279,000

$1.6 million

Turner

$253,000

$2.5 million

Spring Hill

$175,000

$500,419

Bonner Springs

$143,000

$1.25 million

Piper

$96,000

$542,198

Source: Kansas Department of Education

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