Funding to the cap: an entitlement?

Posted: Sunday, May 02, 2010

This is the text of the memo submitted with the Assembly resolution which set the Borough contribution to the School District at $4 million below the maximum allowed by the state:

"This resolution sets the minimum amount which the Borough will be providing to the School District for Fiscal Year 2011. Subsequent action by the Assembly when adopting the budget, or later , may amend this amount upwards, but not downwards. This resolution sets the floor for School District funding.

"The substitute resolution approves the total education budget requested by the Kenai Peninsula Borough School Board in their Fiscal Year July 1, 2010 to June 30, 2011 budget. This allows the School District to function at the level achieved by "funding to the cap". Thus there is no need for the School District to reduce planned operations nor to make any teacher layoffs based on funding from the Borough. The resolution reduces the contribution by the Borough to the School District by $4,000,000.

"The net affect will be that the School Board has the option of maintaining the total education budget as adopted by moving funds from the School District Fund 375 Equipment. The School Board may have other sources of funds which they may chose to use instead, the choice is theirs.

"Fund 375 Equipment is mentioned because it contains $7,937,171. The insertion of funds into Fund 375 was not budgeted by School Board action in annual budgets presented to the public or to the Assembly. Money which was surplus to operational needs was transferred into Fund 375 via accounting notation. Money placed in Fund 375 has no designated uses and was not subject to any appropriation for expenditure in the School budgets of FY2008, FY2009, FY2010 or the upcoming FY 2011.

"The Kenai Peninsula Borough has done its part for many years by funding education to the maximum allowable level. What we have seen for the last 3 years is that the School District has not spent all the money they received and has accumulated excess money in a fund with no goals and no plan for the use of those funds.

"To reiterate: Under this proposal, the School District still has the capability to maintain an education program which is fully funded to the level described as 'funding to the Cap.'"

Is this fair to the School District? This is my recent experience:

Every year, the School Board requests the maximum allowed funding, the Assembly is heavily lobbied to "Fund to the Cap" for the sake of the children who are our future. Each year for the past 20, the Assembly has funded to the cap.

In April of 2008, the district requested and received funding to the cap for FY2009. As of June 30th 2008, the District transferred $3 million into the Equipment fund because it was left over from FY2008 . The District did not advise the Assembly or the public they had surplus funds or a specific purpose for the funds.

In April of 2009, the district requested and received funding to the cap for FY2010. As of June 30th 2009, the District transferred $3,936,171 into the Equipment fund because it was left over from FY2009 . The District did not advise the Assembly or the public they had surplus funds or a specific purpose for the funds.

Will the District have surplus funds from FY2010? We have not been told.

School Board President Arness's comparisons of Borough and School District fund balances, besides being numerically inaccurate, are misleading comparisons of quite different entities. It is the Borough, not the District, which builds and maintains 2 million square feet of school facilities worth more than $500 million.

I agree there are legitimate reasons to accumulate funds for various projects and equipment replacement. Lacking documentation to that effect for the Equipment Fund, it simply appears that the funds were stored there to stay below the State mandated maximum reserve of 10 percent of expenditures.

The District has been giving inconsistent explanations about the equipment fund, but still has opportunity to present a rational plan which may change the Assembly's approach. On February 16th, the Equipment Fund balance was brought up to the District. Two months later the District declared, in contradiction to earlier assertions, some of the funds belonged to Charter Schools. It appears the District has little insight into the purpose of nearly $8 million they have stashed away.

President Arness wants certainty of funding. The Assembly can be pretty certain the District will always ask for the maximum. If school funding is fixed at the maximum, we can be certain the Borough fund balance will evaporate and property taxes will increase.

We must all decide: Is school funding at the cap an entitlement, or should funding levels be decided by facts and reason?

Bill Smith represents District 8 -- Homer on the Kenai Peninsula Borough Assembly.

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