Education Finance

This week, I had the honor to meet with the Budget Review Subcommittee on Primary and Secondary Education, which is co-chaired by Sen. Vernie McGaha and Rep. Tommy Thompson. I was asked to present about three key issues, and this edition of my blog provides highlights of the meeting.

Issue 1 was impact of budget cuts on local school systems – For FY09, school districts saw significant reductions in Flexible Focus dollars. Flex Focus dollars provide monies for extended school services, preschool, professional development, textbooks and safe schools. In addition to budget cuts made through the enacted budget, there was a statewide 2 percent cut in late FY09 that impacted school districts. This budget cut amounted to about $6.1 million and was made to the textbook line item based on recommendations of superintendents. For FY10, the Flex Focus reductions and the textbook reduction were carried over, and, in July, we were asked to prepare an additional 4 percent budget reduction. This budget reduction also was made to the textbook line item, in the amount of $12.9 million. The bottom line to school districts is that Flex Focus dollars have been reduced by 36 percent, on average statewide. A document showing each district’s allocations for Flex Focus and other items is available here.

Issue 2 dealt with the funding streams from the American Recovery and Reinvestment Act (ARRA) – The information provided to the subcommittee can be accessed here. The key concern for everyone is that the State Fiscal Stabilization Funds that were used to maintain FY10 SEEK base of $3,866 per student and also will hopefully be used to maintain SEEK funding for FY11 will not be available in FY12. The General Assembly and Governor Beshear will be dealing directly with this issue as they develop the biennial budget for FY11 and FY12.

Issue 3 dealt with fiscal stability of school systems – The Kentucky Department of Education does monitor the fund balance statements of local school districts. The general fund balance and child nutrition fund balance are tracked separately. School systems are having to deal with state budget cuts and numerous obligations (sick leave pay outs, construction, unfunded mandates, school-based council carryover funds and more), and they are having to prepare for the future when federal dollars may not be as available as they are currently. I would encourage all local boards to take the advice of the Kentucky School Boards Association and hold at least one meeting per year where the local community is informed about the need for a fund balance and projected use of the funds. Also, local superintendents should keep their legislative delegations informed about the same.

We are working very hard at KDE to review all expenditures. KDE has seen an overall 28 percent reduction in funds since FY08. We are looking carefully at all programs to ensure they are effective and efficient. We also are looking at outside funding through competitive programs such as Race to the Top and monies from foundations. There are signals of economic recovery; however, prudent planners will continue to work to ensure expenditures are focused on the core mission of schools, which is learning.