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"It will take a long time to wade through the 139-page ruling, but even a cursory examination makes it clear that the three-judge panel didn’t let the facts get in the way of their decision. Instead, they made what amounts to a political decision that says the Legislature must increase funding by at least $548 million to meet the Rose standards even though school districts don’t know how to measure those standards." http://kansaspolicy.org/KPIBlog/124008.aspx


Kansas school funding decision ignores facts in arriving at a political decision
www.kansaspolicy.org
Today’s ruling on Gannon v. State of Kansas in which the Shawnee County District Court declared school funding to be unconstitutionally low ignores a long list of facts that disprove school districts’ contentions.  The three-judge panel ma
Wed, 31 Dec 2014 17:14:11 +0000
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KPI president Dave Trabert on today's ruling in the on-going school finance litigation, "This ruling willfully ignores a long list of facts that disprove school districts' contentions. The judges may even have ignored the State Supreme Court's order that adequacy is to be determined on whether outcomes - as defined by the Rose capacities - are being met. The judges essentially dusted off their original decision that was rejected by the Supreme Court and added some new legal jargon attempting to justify their original action in arriving at what is little more than a political decision."

Stay tuned for more analysis...
Tue, 30 Dec 2014 20:26:35 +0000
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Gov't can provide quality service while saving taxpayers money.


A plan for balancing the Kansas state budget

Kansas Policy Institute President Dave Trabert presents KPI's plan to balance the state's budget without service reductions or tax increases. Trabert spoke a...
Thu, 18 Dec 2014 17:34:52 +0000
Last Refreshed 1/25/2015 4:06:14 PM
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K-12 Carryover Cash Increases are Real
Posted by Dave Trabert on Monday, February 27, 2012

The February 21 newsletter published by Kansas Education Policy Report, a subscription-based news service located in Topeka, included the following accusatory statement:

"That’s because districts receive large property tax distributions in May of each year, near the end of the school year, which makes their June 30 carryover amounts look artificially high – a quirk in the system that is often exploited by critics who allege districts carry excessively large cash balances.” 

Saying that critics are ‘exploiting’ what they call a quirk in the system is simply not true and an attempt to brush aside a very substantive issue.  Anyone who has followed our writing on carryover cash balances knows full well that the primary issue is that the balances continue to grow each year, which the commentary completely ignores.

Payments and expenditures occur on the same schedule each year.  These funds operate on a cash basis, just like personal checking accounts.  Since there is an annual reconciliation of outstanding encumbrances as of June 30, the only way that ending unencumbered balances grow is for annual revenue to exceed annual expenditures.  

The July 1 unencumbered balances by district and fund are available at KansasOpenGov.org.  Annual unencumbered carryover cash balances in current operating funds (excluding those dedicated to Capital Outlay, Debt Service and Federal funds) grew every single year since 2005 as follows:

2005 – $458.2 million
2006 – $494.1 million
2007 – $542.3 million
2008 – $587.1 million
2009 – $699.2 million
2010 – $774.6 million
2011 – $868.3 million

The 2011 total includes $8.3 million in Activity Funds which had not previously been reported by districts, but the balance of the $402 million difference between 2005 and 2011 ending balances represents state and local taxpayer funds that districts received but did not spend.  

Districts need some degree of carryover balance but the fact that these balances have grown nearly 90% in the last six years is a clear indication that the funding formula is giving districts more money than they need to provide current services.  

Further evidence is found by examining the trend in Current Carryover Ratio, which measures the beginning balance in current operating funds (as described above) as a percentage of that year’s current operating expense (total expense less capital and debt service).  The 2006 Current Carryover Ratio was 11.7% (July 1, 2005 beginning balance divided by 2005-06 current expenditures).  The ratio dropped a bit in the next two years but look at what happened in the last few years:

2006 – 11.7%
2007 – 11.0%
2008 – 11.3%
2009 – 11.9%
2010 – 14.4%
2011 – 16.0%

The 2012 budgeted ratio is even higher, although the exact amount depends upon which budget data one uses from KSDE.  The Carryover Reserve Ratio report on KansasOpenGov also shows that dozens of districts have consistently operated with less than a 10% ratio…quite a few even operate with less than 5%.  That is a strong indication that many of those districts operating with reserve ratios of 20% (and much higher) are likely doing so by choice, not necessity.

Deputy Commissioner Dale Dennis has said on numerous occasions that districts increased their reserves (by not spending tax dollars on current services) in the last three years in reaction to changes in state funding and because the state has been late making payments.  Motivation aside, districts’ choice to put some of their aid dollars in the bank indicates that at least that amount of money must be considered discretionary; surely, districts would not deny services to students that they believed are truly needed when they have more money to spend.  

It is also noteworthy that districts have reportedly been paid on time this entire year and it is anticipated that that will continue into the future.  Still, the last report from KSDE showed that districts had only chosen to draw down $24 million of the $154 million authorized by SB 111.

The bottom line, if you will, is that every dollar unnecessarily appropriated to one service is a dollar that is either taken away from another service or is unnecessarily taken from taxpayers.  We believe government has a fiduciary and moral obligation to use taxpayer funds efficiently and effectively.   While there is no question that government entities need some degree of carryover reserves, the evidence overwhelming indicates that school district operating reserves are much higher than is necessary.
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