Yesterday the Kansas House of Representatives Education Budget Committee heard testimony on HB 2748. The bill would give Kansas school districts flexibility in spending funds.
Kansas Policy Institute President Dave Trabert offered written and oral testimony. He told the committee that the ability to flexibly use find balances would let school districts avoid layoffs of teachers and other employees.
The use of fund balances has been a subject of controversy, with school spending advocates insisting that while these fund balances exist, they can’t — or shouldn’t — be used to fund current operations. But as Trabert told the committee, and recent Kansas State Department of Education figures show, Kansas schools have been using these fund balances to allow increased spending even as revenue to districts has fallen.
In his oral testimony, Mark Tallman, Assistant Executive Director/Advocacy for the Kansas Association of School Boards (KASB) explained the need for fund balances. The reasons are valid, and no one doubts that the balances are needed.
Tallman said that districts have recognized that by transferring less into funds than they think they will need, they can spend down fund balances. This contradicts arguments that school spending advocates have made in the past.
In his testimony, Tallman made a curious observation about how total school spending is not often mentioned by school districts. He said that the usual number given for school spending as a percent of the state’s budget (he used 51.75%) is valid if referring to the state’s general fund budget only. If the state’s all funds budget were referenced, the percentage would be smaller.
This would be true if the comparison was made between Kansas state school funding and the all funds budget. But the all funds budget includes many federal sources of funding. If we take the total spending on Kansas schools ($5.667 billion in 2009) and divide by all funds spending ($13,960.3 billion for fiscal year 2009), the percentage is 40.6.
Testimony from Diane Gjerstad of the Wichita school district said that the issue of restricted funds comes down to two factors: timing of funding, and restricted use. She also mentioned capital and bond funds, which are not part of the current legislation, and are excluded from analysis prepared by groups that promote the use of funds.
But what Tallman and other school spending advocates cannot do is explain why these balances have grown rapidly over the past several years. We might expect that the fund balances would grow at about the same rate as overall school spending, but they’ve grown much faster. The only way these fund balances can grow over time is if school districts have not spent all the money that has been added to the funds.
The bill passed the committee and may be considered by the entire House.
In hearings like these, it becomes evident that school finance is complicated, and in ways that probably work against schools being able to meet their challenges by using their funds most effectively. An example of distinctions that Tallman mentioned is what while the Kansas Constitution prevents public schools from charging tuition, they may charge fees. How is a fee — if it is required — different from tuition? Tallman said a fee for a specific purpose like textbooks is permissible, but a fee for general education is not.
To understand Kansas school finance, you have to make distinctions like these.
Further complications in Kansas school funding became evident on the floor of the Kansas House in an amendment to a bill that would let counties add an extra .25 cents per dollar to their sales tax. These funds would be distributed to school districts within the county. But even school spending advocates in the House argued against the amendment, saying it is unfair to counties with a small amount of retail trade per student, and therefore would disturb Kansas school funding equalization.
The fund balance issue is important as these balances may allow schools to continue spending without requiring tax increases on Kansans. While the fund balances are a short-term solution, hopefully that is all the state needs until the economy recovers.