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.
This is a very embarrassing time to be a Texan in regards to public education. Have you seen (or do you recall) this letter that Strayhorn wrote to Perry back in 2006 when some of these schemes were just coming to fruition? http://www.window.state.tx.us/news/60515letter.html
ALL SCHOOL DISTRICTS DOESN’T HAVE THE SAME TAX BASE AS HISD. HISD SHOULD UTILIZE ITS RESERVE FUND TO STOP THE CLOSURE OF AND SCHOOLS, AFTER ALL IT’S OUR TAXES DOLLARS.HISD NEEDS AN AUDIT FROM ROD PAIGE TO PRESENT. HOW MANY OTHER DISTRICT WERE ABLE TO PASS 1.6 BILLION IN BONDS IN A 5 YR SPAN WHICH ONLY INCLUDED CONSTRUCTION OF BIG PRETTY BUILDINGS BUT NO PROGRAMS, SALARIES,SUPPLIES, COMPUTERS, AND ETC. PER CAMPUS.AUDIT OF 2010 STATED LACK OF FINANCIAL TRANSPARENCY. PRIORITZING IS THE KEY SINCE 2007 155 MILLION IN BONUSES, BUT CAN’T AFFORD TO PAY SALARIES OR KEEP SCHOOLS OPEN.CONSTRUCTION BUDGET WAS 1 BILLION ,BUT THE BOND WAS 805 MILLION WHERE DID THE 195 MILLION COME FROM.I’M SURE THE OPERATION COST OF A 300,000 SQ. FT. ADMINISTRATION BUILDING OUT WAY ANY SCHOOL ON THE LIST TO BE CLOSED.
@Travis, why would we want to use bond money for salaries and educational programs? Bond money should only be used to construct and maintain long lived assets.
Where do you want the administrators to work? On desks in the halls of schools? Every school district has a central office where they do things like payroll, pay bills, file state ad federally required paperwork, etc.
Of course Slick Rick (and our Legislators) are looking at the various ISD reserve funds – it’s money that THEY don’t have to come up with! It puts the burden once again on the backs of the local school districts without any help from the state. The reserve funds belong solely to the ISDs, who were mandated by the Legislature to keep them at no less than two month’s operating expenses. If the Gov and/or Legislature begin to look seriously at these LOCAL funds, the people of Texas descend on Austin with the clear message to leave those reserves alone then kick every legislator and the governor firmly in the butt just before kicking them out of office!
The recent statement concerning school districts fund balances simply underscores the governors lack of knowledge OR understanding of why school reserves are necessary. Not just for emergencies but also for cash flow and other reasons. Schools would not need near the reserves they have built up since the 1980″s if local schools could count on the guaranty of state funds. When the state changed to target revenue it saved homeowners thirty percent in most cases but it also but the state in the position of having to pick up the difference. Essentially we replaced a know revenue with unknown revenue. We all know what happened to that plan! Projecting revenue for schools has long been a “best guess” scenario. All those in positions of leadership can either be part of the solution or part of the problem. Our children deserve solutions.
I am wondering when Texans and Americans are going to wake up and realize they have been royally screwed by the GOP? (and Dems too) Budget cuts for the poor and middle class, education, public workers, Social Security, Medicare and Medicaid but pass subsidies for Big Oil, NASCAR, farm subsidies/Big Ag and now a tax holiday for Corporations.
http://nationaljournal.com/budget/despite-many-critics-proposals-for-a-repatriation-tax-holiday-gain-support-20110325?page=1
Are Texans and Americans ever going to get mad?
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