• December 26, 2014

KISD has no plans to tap fund reserves to offset cuts

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Posted: Sunday, April 3, 2011 12:00 pm

By Andy Ross

Killeen Daily Herald

The debate over just how deep to cut the public education budget in the next biennium is ramping up in Austin, but in school districts across the state - including Killeen - job layoffs and other cost-saving measures are already well under way.

Now, Democrats and groups like the Texas State Teachers Association are putting pressure on Gov. Rick Perry to use remaining Rainy Day money to fund education and prevent districts from taking further action.

Perry, however, has pledged to keep away from the Rainy Day Fund.

He has also, in recent remarks, indicated school districts should be taking a closer look at their own reserve funds before laying off teachers.

"It's about $12 billion in reserve accounts in our independent school districts, so should the state spend their Rainy Day Fund before those are accessed? It's a good debate to have. My answer is no, I don't think so," Perry said, according to reports from the Texas Tribune.

On Friday, Perry's deputy press secretary, Lucy Rashed, didn't directly address districts' reserve funds, but said it's the governor's position that layoffs come from the local level and not the state.

"School personnel decisions are made by local superintendents and school boards," Rashed said. "Every aspect of government is being asked to tighten their belts, just as Texas families and employers have done in recent years."

When asked this past week about the Killeen Independent School District's reserves, Superintendent Robert Muller said the district is in a "very good position," with just over $72 million in the unreserved fund balance at the close of the 2010 fiscal year.

Muller said the idea of drawing down KISD's fund balance in order pay employees is not a situation he sees as good business.

"As a general rule you don't want to use your fund balance to pay for personnel," Muller said. "In the districts that have done that, it has led to problems."

The superintendent said KISD's fund balance does fluctuate throughout the year, but typically remains at a level high enough it could hypothetically pay for three months of operating expenses. Muller said KISD's monthly operating expenses are close to $24 million.

Muller said he is approaching the looming budget shortfall from the state as more of prolonged reality than a one-time problem.

"Something we've heard from different groups is it is not just a one biennium issue," Muller said.

Other reserves

But KISD's fund balance is not the only source of reserves.

The other major chunk of money outside the general fund is the Strategic Facility Plan, which the district primarily uses to fund school construction projects and other long-term infrastructure growth.

At the end of the 2010 fiscal year, KISD's SFP held a balance of $120.1 million. Currently, the SFP is being used to fund a series of projects, the largest being the Career Academy and Pathways at-risk campus. The estimated SFP fund balance at the end of fiscal year 2012 will be $75 million, said Megan Bradley, KISD's chief financial officer.

In recent years, KISD has established a generous policy for committing funds to the SFP.

Going into the current 2010-11 budget, for example, the district was able to plan for a roughly $19 million surplus (including general fund, school nutrition and debt service revenue). Of that surplus, $13.7 million was budgeted into the SFP.

A separate fund known as the Capital Improvements Fund received $3.3 million, while the remaining surplus was allocated to the fund balance reserve.

In addition, the district also allocated around $3.2 million into the SFP from unbudgeted surplus - money designated for general fund expenditures that is not expected to be spent.

Like the fund balance, Muller said he does not believe the SFP should be raided in order to save jobs and compensate for lost state revenue. He said it is important to keep the district's SFP in healthy condition in order to plan for growth, particularly in terms of building new elementary campuses.

Muller did note, however, that KISD's current cost-savings plan calls for a $6 million reduction to the SFP next fiscal year.

"We are anticipating reducing our transfer to the Strategic Facility Plan and at the same time capital projects are being reduced substantially, so we are addressing that," Muller said.

The district's plan to bridge an estimated $28 million revenue reduction for next year encompasses a host of measures. They include eliminating more than 200 positions, cutting stipends and reducing or eliminating funding for programs.

Raising the maintenance and operations portion of KISD's property tax rate to $1.04 per $100 of property valuation also is proposed.

At the state level, legislators are considering budget bills for the next biennium that call for between $4 billion and $8 billion in cuts to public education.

Contact Andy Ross at aross@kdhnews.com or (254) 501-7468. Follow him on Twitter at KDHeducation.

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