As state spending on education increased, so did districts’ stash of cash
By Eric Boehm | PA Independent
HARRISBURG — As state funding for education increased in the past 15 years, many school districts set aside a hefty stash of cash in savings accounts.
As of the end of the 2011 budget year, Pennsylvania school districts have more than $3.2 billion in reserve funds. Some cash is earmarked for specific projects but not being used and some is simply sitting in accounts, according to data from the state Department of Education.
What’s more impressive is the speed with which some districts have built up their reserves.
The same data show that the total amount in the reserve accounts has nearly tripled from $1.1 billion in 1996-97 to more than $3.2 billion last year. At the same time, state spending on public education has increased from about $13 billion to about $26 billion.
Tim Eller, spokesman for the state Department of Education, said districts are saving this money for expected future expenses while asking taxpayers annually to pay more than is needed.
“Reserve balances are to be used in times like these when revenues are low,” Eller said. “School districts retaining a fund balance or reserves (are) a prudent thing to do, but at what level does that end?”
PA Independent first reported earlier this week that 10 school districts have reserve funds of more than $25 million, but 11 districts have stored at least $20 million in the past 15 years. (See chart)
|Largest Reserve Fund Increases Since 1996-97|
|Source: Department of Education|
|See full list here
Pittsburgh School District leads the way with $148 million in reserve funds and also leads the way in gains during the last 15 years, when the district has stockpiled more than $101 million in cash.
Pittsburgh School District did not return calls for comment Thursday.
Patricia McGlone, spokeswoman for Downingtown Area School District, which had the second largest increase over 15 years, said the growing district was putting money away for the construction of new school buildings, some of which have been completed and others that are planned for the future.
Dave Devare, director of research services for the Pennsylvania School Boards Association, which advocates for public education and local school governance said districts, said districts have built up their reserves in recent years to prepare for increased pension costs over the next decade.
Employer contributions to the state’s Public School Employees Retirement System are divided between the state and individual districts. Those contributions are forecast from about $1 billion this year to more than $4 billion by 2017 — and the system is nearly $30 billion underfunded right now.
Devare said districts also have put money away for future building construction and maintenance, and putting the money in reserve instead of dedicating it to a specific project maintains flexibility.
“Rather than limiting themselves strictly to one capital project, they are reserving that money so if they have to change their priorities, they are able to do so,” Devare said.
The Pennsylvania Association of School Budget Officers, a statewide advocacy organization, says that about 70 percent of districts are reaching into their reserves at some level this year.
PSBA and PASBO have encouraged districts to reach into reserve funds for one-time expenses, since the funds will not renew year after year.
But Gov. Tom Corbett wants districts to use the reserves for educational expenses to avoid cutting programs or laying off teachers and staff.
During a Wednesday appearance on the Dom Giordano Program on WPHT-AM in Philadelphia, Corbett said school districts were making “a concerted effort” to not go into their reserve funds and renewed the call for districts to use some of their reserves this year.
House Republicans joined the call for districts to use some of their reserves on Thursday.
State Rep. Mike Vereb, R-Montgomery, said he was “furious to find that many of the state’s school districts that are crying poor and blaming the state for their fiscal problems are sitting on surpluses, including one that totals $148 million.”
Keeping a small level of reserves for an emergency is prudent budgeting, but taxpayers deserve an explanation why districts have such high levels of money they refuse to use in a tight budget year, he said.