Tuesday, May 10, 2011, 08:06AM CST
By Lynn Walsh and Steve Miller
Texas’ largest school systems are laying off teachers by the hundreds and thousands while hanging on to the tens of millions of dollars in their “rainy day” and reserve funds -- and some in those communities, including some teachers, say that’s a bad idea.
The Houston public schools, the state’s largest school system, has laid off more than 700 teachers to solve its budget crunch while having $279 million in reserves. The Dallas schools are considering laying off more than 1,110 employees and expect to have $85 million to $95 million in reserves at the end of the fiscal year. And the San Antonio public schools have more than $63 million in reserves, though they have found other jobs for teachers who faced threats of layoffs.
None of the three systems currently plans to dip into those bank accounts to save teachers' jobs, though their budget proposals for the next fiscal year are in varying states of flux.
“I think they should be using the rainy day fund,” said teacher Susan Wingfield, who will be laid off at the end of this school year after 11 years in the Houston schools, the last seven teaching art at Lamar High. “We need to educate these students … We need to spend money on teachers' salaries to do that instead of laying them off.”
The Austin and Amarillo public school systems both plan to use some of their reserves to plug their budget holes and prevent or reduce layoffs, spokesmen for those districts said. The Austin schools have $165 million in reserve and plan to use $43 million of it, while the Amarillo schools don't yet know how much of their $55 million in reserves they will spend.
But school officials in some districts say they need to keep their rainy day funds for an even rainier day than today. And some say the state should spend its rainy day money first, before school districts dip into their own reserves.
A reserve fund “is not money that just sits there,” said Amy Beneski, director of governmental affairs for the Texas Association of School Administrators.
The state of Texas does not require a public school district to keep money in a savings or reserve account, nor does it specify how much money a school district should keep in reserve, according to both Allen Spelce, a spokesman for the state comptroller, and DeEtta Culbertson, a spokeswoman for the Texas Education Agency.
However, the amount of a school district's reserves factor into its bond ratings, a sort of credit rating for public entities. The worse the bond rating, the more it costs to borrow money.
“The rule of thumb is about two (to) three months of operating capital," Culbertson said.
That's a problem for some school districts already. Dallas would need about $150 million to run its schools for two months, but has less than $100 million in the kitty. Two months of running the San Antonio schools would cost $67 million, spokesman Leslie Price said, but the school system is short a few million dollars toward that goal.
“For us, the challenge is that we have to make ends meet for a year or two, but can’t go too deep into the fund," Dallas ISD spokesman Jon Dahlander said. "It’s just not there. With that $85 million or $95 million, with the current projected cuts in the legislature -- the House wants $126 million – we’d bottom out completely.”
The amount of reserves also figures into the state's rating system for school districts' financial integrity, called FIRST. It requires school systems to “maintain approximately 60 days of operating expenses in their general fund account,” Culbertson said.
The school systems have a right to worry about drawing down their reserves and hurting their ratings, said Lonnie Hollingsworth of theTexas Classroom Teachers Association. "I’m sure that’s justified. But some districts have more than the suggested two months in reserve. And in a regular year, I’d say they need to be spending that on teacher salaries, but this time around, it’s going to save teacher jobs."
The Austin schools will still have three months of expenses on hand after drawing down $43 million from its reserves this year, AISD spokesman Andy Welch said. The system has cut more than 1,100 jobs through attrition and layoffs, including 500 teachers laid off, he said.
The Houston schools have reserve funds in two accounts -- the rainy day fund, holding about $80 million, and the “undesignated fund balance," which holds about $199 million, the district’s financial head, Melinda Garrett, recently told trustees.
Houston has “never tapped into the rainy day fund,” HISD spokesman Jason Spencer said in an e-mail. With about $130 million a month in operating expenses, the $279 million on hand would likely keep the 200,000-student system running for about two months.
Six of Houston’s nine school trustees told Texas Watchdog in recent interviews that they did not oppose using some of the district's rainy day fund to ease the school systems' budget crunch, though all six also said the state legislature should first dip into the state's rainy day fund to help school districts across Texas.
“I am not opposed,” trustee Manuel Rodriguez said. “There might be a possibility of taking $10 million out of one of the funds to help plug the hole or reduce the gap, but, you know, once that money goes away, it doesn’t come back very easily.”
Also supporting the use of some reserve money were HISD trustees Harvin Moore, Mike Lunceford, Carol Galloway, Anna Eastman and Juliet Stipeche. Unable to be reached for comment were Larry Marshall, Greg Meyers and trustees president Paula Harris.
“I am not saying we won’t use it,” Moore said. “But the state needs to do all they can from their rainy day fund before school districts use their reserve funds.”
The state’s rainy day fund receives money from oil and gas production taxes, said R.J. DeSilva, a spokesman for the state comptroller. Currently there is $8.2 billion in the fund, though $3 billion of that is likely to be tapped to fill the state's budget shortfall for the current fiscal year.
“The state can afford to let some of that money go,” Galloway said. “They should release some of that money for education, because if we don’t educate our young people, I can just imagine what situation we will be in ten years from now.”
But local school districts' rainy day or reserve funds generally must come from property taxes, and they can be slow to build up.
“No one is expecting the budget to get any better in 2013, so they are holding on to it," Beneski said.
And there's always the chance of some major unforeseen catastrophe on the horizon. Rodriguez recalled how, when Hurricane Ike hit the Gulf Coast in 2008, the Houston schools had to shut down for several days -- but still had bills to pay during that time. (Hurricane expenses were actually paid by the school system's insurance carriers and not out of the rainy day fund, Spencer said.)
“Something has to be able to sustain unforeseen emergencies and needs,” Rodriguez said.
He compared the reserve funds to an individual retirement account.
“You have your IRA and you lose your job. You don’t run to liquidate your IRA right away...You look for other jobs, you find ways to survive without having to go and dismantle your retirement plan. So, that’s where we are. I am willing to dip into it, but not in large quantities to where we destabilize the district’s financial stability.”
None of the three systems currently plans to dip into those bank accounts to save teachers' jobs, though their budget proposals for the next fiscal year are in varying states of flux.
“I think they should be using the rainy day fund,” said teacher Susan Wingfield, who will be laid off at the end of this school year after 11 years in the Houston schools, the last seven teaching art at Lamar High. “We need to educate these students … We need to spend money on teachers' salaries to do that instead of laying them off.”
The Austin and Amarillo public school systems both plan to use some of their reserves to plug their budget holes and prevent or reduce layoffs, spokesmen for those districts said. The Austin schools have $165 million in reserve and plan to use $43 million of it, while the Amarillo schools don't yet know how much of their $55 million in reserves they will spend.
But school officials in some districts say they need to keep their rainy day funds for an even rainier day than today. And some say the state should spend its rainy day money first, before school districts dip into their own reserves.
A reserve fund “is not money that just sits there,” said Amy Beneski, director of governmental affairs for the Texas Association of School Administrators.
The state of Texas does not require a public school district to keep money in a savings or reserve account, nor does it specify how much money a school district should keep in reserve, according to both Allen Spelce, a spokesman for the state comptroller, and DeEtta Culbertson, a spokeswoman for the Texas Education Agency.
However, the amount of a school district's reserves factor into its bond ratings, a sort of credit rating for public entities. The worse the bond rating, the more it costs to borrow money.
“The rule of thumb is about two (to) three months of operating capital," Culbertson said.
That's a problem for some school districts already. Dallas would need about $150 million to run its schools for two months, but has less than $100 million in the kitty. Two months of running the San Antonio schools would cost $67 million, spokesman Leslie Price said, but the school system is short a few million dollars toward that goal.
“For us, the challenge is that we have to make ends meet for a year or two, but can’t go too deep into the fund," Dallas ISD spokesman Jon Dahlander said. "It’s just not there. With that $85 million or $95 million, with the current projected cuts in the legislature -- the House wants $126 million – we’d bottom out completely.”
The amount of reserves also figures into the state's rating system for school districts' financial integrity, called FIRST. It requires school systems to “maintain approximately 60 days of operating expenses in their general fund account,” Culbertson said.
The school systems have a right to worry about drawing down their reserves and hurting their ratings, said Lonnie Hollingsworth of theTexas Classroom Teachers Association. "I’m sure that’s justified. But some districts have more than the suggested two months in reserve. And in a regular year, I’d say they need to be spending that on teacher salaries, but this time around, it’s going to save teacher jobs."
The Austin schools will still have three months of expenses on hand after drawing down $43 million from its reserves this year, AISD spokesman Andy Welch said. The system has cut more than 1,100 jobs through attrition and layoffs, including 500 teachers laid off, he said.
The Houston schools have reserve funds in two accounts -- the rainy day fund, holding about $80 million, and the “undesignated fund balance," which holds about $199 million, the district’s financial head, Melinda Garrett, recently told trustees.
Houston has “never tapped into the rainy day fund,” HISD spokesman Jason Spencer said in an e-mail. With about $130 million a month in operating expenses, the $279 million on hand would likely keep the 200,000-student system running for about two months.
Six of Houston’s nine school trustees told Texas Watchdog in recent interviews that they did not oppose using some of the district's rainy day fund to ease the school systems' budget crunch, though all six also said the state legislature should first dip into the state's rainy day fund to help school districts across Texas.
“I am not opposed,” trustee Manuel Rodriguez said. “There might be a possibility of taking $10 million out of one of the funds to help plug the hole or reduce the gap, but, you know, once that money goes away, it doesn’t come back very easily.”
Also supporting the use of some reserve money were HISD trustees Harvin Moore, Mike Lunceford, Carol Galloway, Anna Eastman and Juliet Stipeche. Unable to be reached for comment were Larry Marshall, Greg Meyers and trustees president Paula Harris.
“I am not saying we won’t use it,” Moore said. “But the state needs to do all they can from their rainy day fund before school districts use their reserve funds.”
The state’s rainy day fund receives money from oil and gas production taxes, said R.J. DeSilva, a spokesman for the state comptroller. Currently there is $8.2 billion in the fund, though $3 billion of that is likely to be tapped to fill the state's budget shortfall for the current fiscal year.
“The state can afford to let some of that money go,” Galloway said. “They should release some of that money for education, because if we don’t educate our young people, I can just imagine what situation we will be in ten years from now.”
But local school districts' rainy day or reserve funds generally must come from property taxes, and they can be slow to build up.
“No one is expecting the budget to get any better in 2013, so they are holding on to it," Beneski said.
And there's always the chance of some major unforeseen catastrophe on the horizon. Rodriguez recalled how, when Hurricane Ike hit the Gulf Coast in 2008, the Houston schools had to shut down for several days -- but still had bills to pay during that time. (Hurricane expenses were actually paid by the school system's insurance carriers and not out of the rainy day fund, Spencer said.)
“Something has to be able to sustain unforeseen emergencies and needs,” Rodriguez said.
He compared the reserve funds to an individual retirement account.
“You have your IRA and you lose your job. You don’t run to liquidate your IRA right away...You look for other jobs, you find ways to survive without having to go and dismantle your retirement plan. So, that’s where we are. I am willing to dip into it, but not in large quantities to where we destabilize the district’s financial stability.”
***
Contact Lynn Walsh at lynn@texaswatchdog.org or 713-228-2850 or on Twitter at @lwalsh. Contact Steve Miller at 832-303-9420 or stevemiller@texaswatchdog.org.
Contact Lynn Walsh at lynn@texaswatchdog.org or 713-228-2850 or on Twitter at @lwalsh. Contact Steve Miller at 832-303-9420 or stevemiller@texaswatchdog.org.
Keep up with all the latest news from Texas Watchdog. Fan our page on Facebook, follow us on Twitter and Scribd, and fan us on YouTube. Join our network on de.licio.us, and put our RSS feeds in your newsreader. We're also on MySpace, Digg, FriendFeed, and tumblr.
Piggy bank photo by flickr user razor512, used via a Creative Commons license.
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Comments
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Jac Cyn
Friday, 02/03/2012 - 12:47AM
Use the 16 million dollar FOUND Bond Money 1/24/2012
Enough is Enough!!! Why isn't this money being used to give the teachers their pay raises! It's time for some kind of relief to the tax payer!! NO MORE tax hikes! Stop paying the school board members and superintendent high salaries that have "NO ADDED VALUE" help the struggling teachers whom can make a difference in our kids lives and the struggling tax payers that foot the bill for every little cry out! |
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