Gov. Mary Fallin right to veto measure to raise school reserve cap

The Oklahoman Editorial Published: May 19, 2013

THIS year's state budget agreement includes an additional $91 million for public schools, but education boosters say the total school budget remains around $200 million lower (inflation adjusted) than what was spent in 2008 and student enrollment has increased by more than 30,000 since then.

Yet at the same time some officials make the case for greater education funding, other school officials have lobbied for a bill that would potentially allow them to not spend the extra money on students. Gov. Mary Fallin vetoed that bill. Good for her.

Under current law, schools can keep some funds in reserve with savings capped based on school size. The smaller the school, the greater the savings allowed (measured as a percentage of the school's budget). Districts can hold reserves equal to anywhere from 14 percent to 40 percent of the school's budget. If a school busts those caps for two consecutive years, the district's state aid may be reduced. The idea is to allow schools a financial cushion while ensuring that educational opportunities are maintained.

House Bill 1742 would have increased the savings cap for every school district to at least 20 percent. It's not unreasonable for schools to maintain some savings to deal with unexpected financial needs, but recent history suggests many districts don't have a problem saving money. In fact, it may be time to start drawing down those reserves.

Even as the national recession reduced state school funding in recent years, the combined carry-over of Oklahoma schools has boomed. From 2008 to 2012, the carry-over increased 52 percent, rising from $478 million in 2008 to $728 million in 2012. Only once in those four years did the total decline.

The $728 million carry-over significantly exceeds the near-historic amount state government holds in its Rainy Day Fund. The Rainy Day Fund, by the way, was almost depleted during the recession to help schools and other core functions avoid larger cuts.

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