You’ve heard the rhetoric from school officials and media – Kansas schools are underfunded, broke, etc. – but new data from the Department of Education shows that district operating cash reserves set a new record, finishing the school year with $911 million in the bank! They started the year with $853 million in reserves, so the $58 million increase reflects the amount of state and local aid that wasn’t spent.
These totals don’t include reserves for capital outlay or debt service, and federal funds are not included. This district-level data is available at KansasOpenGov.org for viewing and downloading:
The judges who think schools are underfunded continue to ignore the fact that local school boards aren’t even spending all the aid they receive. School funds operate on a cash basis (like your checkbook), meaning the balances only increase when less is spent than received. Since 2005, unused operating aid totaled $443 million (the difference between operating balances for 2005 and 2016).
School officials offer a variety of excuses for holding such reserves but each is easily refuted using their own data. When KPI first discovered the true magnitude of school cash reserves in 2010, some districts claimed they didn’t have the amounts shown; some said they had the money at one point but it was all spent and others said they had the money but weren’t allowed to spend it. None of those claims is valid. Every entity needs some measure of cash reserves and in fact the $468 million held at the beginning of the 2006 school year represented 11.4 percent of that year’s operating expense. Spending for the 2016 school year has not been released at this writing but the carryover ratio had jumped to 16.6 percent for the 2015 school year.
In fact, dozens of districts routinely operate with less than 10 percent operating reserves; it’s just a matter of cash management. The State of Kansas is statutorily required to have 7.5 percent of General Fund spending in reserve, although legislators have routinely ignored that over the years and in fact had illegal negative ending balances under Governor Mark Parkinson and Budget Director Duane Goossen.
Some districts have increased operating reserves at the recommendation of the Kansas Department of Education in case funding is late (which hasn’t happened for years) or is drastically cut, but to the extent that has occurred, it’s a decision to divert money from Instruction to create a larger bank balance.