The Norman Transcript

August 30, 2012

Carryover funds necessary for districts

By Joe Siano
The Norman Transcript

NORMAN — During the most 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 carryover, according to the lawmaker, and thanked him for his research.

Nelson is likely one of many state officials who do not understand the nature and necessity of carryover funding — and especially since the 2008 recession — or why carryover is at its highest the first month of a school year.

Norman Public Schools’ carryover funds represent approximately one month of the district’s operational expenses. One month’s worth of salaries, utilities, fuel, school 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.

Carryover is the highest at the beginning of the year, balances are limited by law, and often a large percentage of carryover is committed for expenses for which districts are expecting invoices. By the end of this school year, NPS’ carryover will be less than one month’s operational expenses because our state funding has again unexpectedly been reduced.

School districts across Oklahoma have had to employ several strategies since the state began cutting their funding. Funds have been reduced on more than one occasion at mid-year or after employee contracts were in place. As unforeseen cuts in revenue have occurred one after the other, the necessity for a reserve fund has become even more crucial to operational stability.

State funding has been cut several times since 2008. For NPS, it totals approximately $4 million. Examples of how cuts are often unexpected include: Notice three weeks before the school year began that our revenue would be $1 million less (although our enrollment increased), a new state regulation that eliminated $250,000 from our special education programs mid-year, delayed local ad valorem collections and unfunded mandates like the recently adopted teacher evaluation system that will cost NPS about three times the funds provided by the state.

When the unexpected occurs, carryover allows us to maintain services and protect students to the extent possible.

Because NPS’ state funding is being reduced again, we are dipping into our month’s worth of operational reserve this school year. We will do this to hire more teachers to compensate for enrollment growth and keep our growing class sizes down, comply with new laws and absorb higher fixed costs like utilities, fuel, supplies, etc. If this results in our carryover 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 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, then criticize schools for maintaining a reserve for the same purpose: Provide stability of services when funding fails to meet basic obligations.

Dr. Joe Siano is superintendent of Norman Public Schools and president of the Oklahoma Association of School Administrators.