Rick Perry sure does like the idea of spending other people’s money.
Pressed on using the Rainy Day Fund to help close of the state’s massive budget shortfall and avoid dramatic cuts, particularly to school funding, Gov. Rick Perry earlier this month pointed to another source of money he believes should be tapped first: the reserves held by many Texas school districts.
“It’s about $12 billion in reserve accounts in our independent school districts, so should the state spend their Rainy Day Fund before those are accessed?” Perry said. “It’s a good debate to have. My answer is no, I don’t think so.”
According to spreadsheets prepared for the governor and provided to the Tribune, the state’s 1,030 school districts have — in total — $10.2 billion in reserves and another $2.1 billion in unspent federal stimulus money. Facing a reduction in state education spending of between $4 billion and $10 billion, many school districts have said they will be forced to lay off teachers and other staff and even close schools. Can they use their reserve funds to avoid such draconian cutbacks? The answer is not as simple as the governor’s statement would imply.
Hard to believe that Perry could be oversimplifying, isn’t it? For one thing, the state requires school districts to maintain a cash reserve, which is supposed to be enough for them to operate for 60 days. As the story goes on to note, the districts collectively have only about $430 million above the amount recommended by the state. One reason they need such a cushion is because a standard accounting trick the state employs when it needs a little slack to balance its budget is delaying payments to other entities – like, for instance, school districts – for a day. Nice work if you can get it, right?
It’s also the case that while districts together have some excess reserves, not all of them do individually, and no mechanism exists to transfer such funds from one ISD to another. Even if one did exist, as Rep. Rob Eissler points out, it would be perverse to make them do so.
Eissler, a former school board member who now heads the House’s Public Education Committee, says it “would be a strong reach” to try to get the school districts to throw their money into the pot to make the state budget work. He doesn’t think it would be a smart thing to do. It’s not the state’s money, for one thing, and the districts aren’t all in the same financial shape.
“Let’s say School District A really watched their money and really got good results and has a healthy fund balance, and we’re going to penalize them because School District B just spent everything they had and didn’t pay attention to their finances and they’re in the hole?” he says. “We’re trying to reward productivity. That would not.”
Not that Rick Perry cares. He has a point to make. On a related note, Abby Rapoport observes that Senate Republicans are dangling the “local control” carrot in front of school districts, which in this case means “we’ll relieve you of some responsibilities as we take away all your money”. Given a real choice, I don’t know how many school districts would choose a deal like that.