UPDATE: Changes 2010 spending to reflect revised report from USD259 Wichita.

Public school districts in Kansas say they’ll spend $263 million more this year according to new data released by the Kansas Department of Education (KSDE). The results conflict sharply with district claims that spending has been severely reduced.

But districts budgeted to spend $573 million more this year than last so the cuts are to what they planned to spend, not what they actually spent last year.

KSDE data collected from all 293 districts shows K-12 schools statewide spent $5.667 billion in FY2009 and plan to spend $5.930 billion this fiscal year, about $263 million more. School districts report revenues will be down $107.2 million this year (1.9%) but they offset that decline and paid for the spending increase by using $370 million of their carryover reserves (aid received in prior years but not spent).

Having a spending increase despite announced budget cuts may seem counter-intuitive, but both can coexist. Districts budgeted to spend $573 million more this year; $258 million more in current operating costs and another $315 million for capital projects and debt service. Their new projections reflect a $163.4 million operating increase and a $99.4 million increase in capital and debt service. In government-speak, that represents ‘cuts’ of $94.6 million and $215.6 million, respectively.

According to Dale Dennis, deputy commissioner of KSDE, at least some of the increased spending and use of their carryover reserves might have been required by teacher contracts negotiated before the budget cutting. “They couldn’t go back and do anything about the salaries,” Dennis said in an interview Thursday. “They rode on cash balance quite a bit this year because the decisions on certified licensed people was done before the cuts.”

Districts had $1.5 billion in carryover cash on July 1, 2009, and will end FY2010 with more than $1.13 billion in unencumbered carrover cash reserves. About $621 million of the $1.13 billion, though technically unencumbered, is obligated for capital spending, bond payments and interest. After subtracting the capital and bond money, districts say they’ll have about $515 million in operating cash reserves on June 30 this year.

On March 31 Speaker of the House Mike O’Neal instructed KSDE, the Legislative Research Department and the Revisor of Statutes to collaborate in determining the anticipated ending balances for each of 33 funds used by school districts and what might prevent districts from accessing those funds.

KSDE and KLRD verified the numbers and the Revisor presented a report on fund restrictions.

According to the Revisor, some funds are restricted due to Constitutional requirements; others have transfer restrictions which could be lifted with legislative action. House Bill 2748, introduced Wednesday by appropriations committee chair Kevin Yoder, R-Overland Park, would permit districts to more freely tap those reserves for other purposes. The provision would last only through the 2010-2011 school year.

While districts can, and obviously have, put some of the carryover cash to work, some of the funds contain money from multiple sources. According to the Revisor that money would have to be segregated by source to avoid use of federal money in violation of federal law, use of money from local tax levies against Constitutional provisions and money from a gift or grant in violation of the donor’s requirements.

“That gets real sticky,” Dennis said. He also told the state board of education in November that districts could spend down cash carried in most of the 33 funds that school districts maintain and report.

Meanwhile, the Kansas House and Senate are at odds over balancing the state budget. The Senate ways and means committee’s plan is still $421 million above expected revenues and would require several tax increases, including a proposed one-cent per dollar sales tax increase.

The current House appropriations committee budget does not include as much in budget increases and ends 2011 without tax increases but with about $16 million still in the bank. The House budget also replaces half of the federal stimulus money that’s going away, so schools would only need to use about $85 million of their reserves to hold funding at this year’s level.

Dennis predicts districts will increase job losses this year because some districts have lower cash balances than others. “You’re going to see quite a bit of reduction in staff this year because they’re riding on cash and some could do it another year or so but others could not.”

If the Legislature does take action to free up or otherwise use some of the school unencumbered balances. “If that’s the choice that’s done, then the state’s going to have to pay their bills on time,” Dennis said. Legislation was also introduced this week in the House to require the state to pay schools on time.

_______________________

Data on cash balances posted at Kansas Legislative Research Department is here.

Prior KansasWatchdog reports on K-12 funding

Carryover Cash and Consolidation Hot Topics Before Kansas Board of Education

Districts Have Funds To Meet Projected $100 Million Shortfall

School Districts Permitted to Tap $119 Million in Contingency Funds

School Districts Sitting on $1.36 Billion