At a recent State Board of Education meeting, state Rep. Jason Nelson criticized schools for claiming financial hardship when they had “hefty” balances from the previous school year. Board members appeared surprised that schools would have $670 million in carry-over, according to the lawmaker. They thanked him for his research.
Nelson is likely one of many state officials who don't understand the nature and necessity of carry-over funding — especially since the 2008 recession — or why the carry-over is at its highest the first month of a school year.
Norman Public Schools' carry-over funds represent approximately one month of the district's operational expenses. That's one month's worth of salaries, utilities, fuel, meal costs, etc. Statewide, it may all add up to a headline-grabbing number, but it's still a fraction of an entire year's budget. Carry-over is highest at the beginning of the year and the balances are limited by law. Often, a large percentage of carry-over is committed for expenses for which districts are expecting invoices. By the end of this school year, Norman's carry-over will be less than one month's operational expenses because state funding has again unexpectantly been reduced.
School districts have had to use several strategies since the state began cutting their funding. Funds have been reduced on more than one occasion at midyear or after employee contracts were in place. As unforeseen cuts in revenue have occurred one after the other, the necessity for a reserve fund is even more crucial to operational stability.
State funding has been cut several times since 2008. For Norman it totals approximately $4 million. Examples of how cuts are often unexpected include getting notice three weeks before the school year began that our revenue would be $1 million less (although our enrollment increased). Also, a new state regulation eliminated $250,000 from our special education programs midyear. Other reasons include delayed local ad valorem collections and unfunded mandates such as the recently adopted teacher evaluation system that will cost our district about three times the funds provided by the state.
When the unexpected occurs, the carry-over allows us to maintain services and protect students to the extent possible.
Because Norman's state funding is being reduced again, we're dipping into our month's worth of operational reserve this school year. We will do this to hire teachers to compensate for enrollment growth and keep our growing class sizes down, comply with new laws and absorb higher fixed costs such as utilities, fuel, etc. If this results in our carry-over being only three weeks' worth of operational expenses and more unexpected cuts happen, I hope we won't be criticized for not being conservative enough with the reserve.
The state Rainy Day Fund totals $556 million, yet public schools function at 2008 funding levels and with several thousand more students. It seems disingenuous for state leaders to favor a robust state reserve account and then criticize schools for maintaining a reserve for the same purpose, which is to provide stability of services when funding fails to meet basic obligations.
Siano is superintendent of Norman Public Schools.