Kansas school districts will fall about $100 million short of needed funds by the end of the current 2010 fiscal year according to Dale Dennis, Deputy Commissioner of the Kansas Department of Education.

But school districts statewide had $175.7 million in their contingency reserve funds at the beginning of the current fiscal year. Dennis says those taxpayers’ dollars can be used to cover the shortfall, but once districts spend that money it’s gone.

School districts had a total of $1.5 billion in unencumbered cash going into fiscal year 2010, $128 million more than the $1.36 billion they had going into 2009.  Subtracting balances in funds set aside for capital outlay and debt service, districts still had $699 million in unencumbered operating funds going into 2010, a 53 percent increase over the previous year.

Dennis said the balances grew because districts are anticipating further cuts from the legislature brought on by spending exceeding revenue this year. “So what they were trying to do is prepare for this year. That’s just it in a nutshell,” Dennis said in a phone interview Thursday. “They were trying to prepare for this year.”

“That’s responsible governing by their school boards,” said Rep. Jason Watkins (R-Wichita), vice chairman of the House Appropriations Committee. The committee asked districts during the 2009 Legislative session to do everything they could to build up their contingency reserve funds, Watkins said during a phone interview Thursday.

Dennis says lower tax collections brought on by falling property values will account for about $23 million of the anticipated $100 million difference. Some of that is because of increased spending on enrollment growth. Unemployment and declining family incomes mean more students are considered “at risk” and therefore boost funding to the districts.

The $100 million Dennis forecasts, if spread evenly across all districts, would be about $222 per student. All but 64 of the state’s 293 districts have more than that amount in their contingency reserve fund. When all other operating funds are included, all but seven districts had sufficient cash as of July 1 to cover the shortage.

A challenging balance

Even though there is enough in the contingency funds statewide, some districts have higher balances than others. Some have zero balances. The other challenge is that some of the cash is from local option budgets paid by local taxpayers for use in their district.

The Blue Valley district in Johnson County, for example, collects the maximum allowed from its district taxpayers and reported more than $45 million in unencumbered operating funds going into 2010. “Some of that money is from local tax payers and on top of that they’re a net exporter of funds to other districts,” Watkins said. “Do you penalize schools that did the right thing and saved because we asked them to? Do you just not make up the shortfall at all, which is the more likely scenario? We can’t give money that we don’t have.”

“Schools should learn to live within their means, just as families and businesses must,” Watkins said. “If my wife comes home tonight and says we have a $10,000 shortfall … we can’t just go to the state and say we have a shortfall.

“It’s the same thing for business. It certainly wouldn’t be right for me to go to the business next door and say, you have to give me some of your money because we didn’t budget right over here.”

July 1, 2009, unencumbered cash for all districts

K-12 unencumbered cash –