Setting aside taxpayer money for unexpected school costs

By Todd Kunz

EASTERN IDAHO (KIDK/KXPI) – Did you know your school district is most likely saving extra money of yours in a rainy day account? Combined statewide in Idaho, they have about $215 million stockpiled, according to 2015 numberscompiled by Idaho Education News. These accounts are called “rainy day” accounts, or savings stashed away for those emergency situations that are bound to come up.

This brings many questions. Is this fair to you as a taxpayer to stockpile your money to be used later? Maybe it is the wisest thing they can do with it, but how much can a school district “put away?” What can the money be used for?

Eyewitness News anchor Todd Kunz talked to a watch dog group, a state legislator and a local superintendent to find these answers.

“I think occasionally, and perhaps more often than not, they sort of take advantage of the fact that our children are so important,” said Lindsay Russell Dexter, senior policy director at the Idaho Freedom Foundation.

“Is this fair to the taxpayer?” asked Kunz.

“I would suggest that it isn’t,” said Russell Dexter.

There is no state law in Idaho that says how much a district can save, but it cannot be more than the district’s annual operating budget.

“It’s not necessarily that they’re holding that money, it’s more at what percentage,” said Russell Dexter.

Smaller districts may carry amounts that might show a higher percentage of their operating budget. Recent numbers from Idaho Education News show nine school districts with the highest percentage in their savings accounts. Two of those in the eastern side of the state, Mackay at 85 percent and West Side School District at 73 percent of its operating budget.

“I don’t think the percentages are misleading. I think sometimes the talking points behind why supplemental levies and bonds are necessary is more misleading,” said Russell Dexter.

She said a more effective use of taxpayer dollars is probably not to save more than 10 percent. The Idaho Freedom Foundation just aims for transparency when it comes to these public dollars.

“I would never suggest that the state mandate any sort of budgetary requirements on any districts. I think it’s really important and more of a relationship between that district and the taxpayers,” said Russell Dexter.

On the flip side of the equation stands the school districts themselves.

“We have about 10% of our operating budget in reserves,” said Dr. Geoff Thomas, superintendent of the Madison School District in Rexburg. “We share that information obviously with the school board. They oversee it every month and we share that with our teacher’s association, so they know exactly where we’re at financially. And it’s exactly where our auditors ask us to be.”

There are good reasons to have some money set aside, he said. One reason is that a district’s bond ratings are judged based on the value of a savings account.

“So for example, if you want to go out for a bond, you get a much better interest rate if you have a nice savings account,” said Thomas.

Another reason is when there is an economic downturn like in 2008. Thomas said their budgets were cut 14 to 15 percent overnight.

“Well, thank goodness we had some cushion in there. The key is you want to have enough to make sure you can pay your employees and provide the resources for children in case there is a rainy day, in case there are several rainy days, or a rainy month, or a rainy year or two. And it’s just wise. Just like in your own home, you want to have a good savings account, not so much that you become miserly, but just enough to be fiscally prudent,” said Thomas.

Public concern could arise when a district is holding emergency money and then goes to the voters asking for a bond or a levy.

“The campaigns, in local districts that suggest these significant raises in bonds and levies, need to be more transparent in the fact that they do have such a significant amount of money in their rainy day fund,” said Russell Dexter.

It’s important to note the difference between a bond and a levy. Bond money can only be used for building and construction, whereas levy money can solely be used for operating and maintaining a school. It’s entirely possible for a district to ask for a bond to build while holding a large savings account. That emergency savings could have come from a levy, and by law, cannot be used as bond money to build.

There are 115 public school districts and 35 authorized charter schools in Idaho. Kunz asked state representative Wendy Horman if this is fair to the taxpayer.

“So I think the reality is that this is really a community decision,” said Horman, a Republican from Idaho Falls, District 30.

Horman said this is about a community holding its district accountable for wise use of funds. The state of Idaho offers no guidance, and she doesn’t feel it should dictate what should ultimately happen at the local level. However, the state legislature is mindful of transparency.

“So as co-chair of the committee that’s looking at overhauling the public school funding formula, one of the things we are very interested in, of course, is supplemental levies and as a factor of that, it’s come to our attention that some districts do have large amounts in reserve. So we are very interested in getting a report at one of our upcoming meetings on how that’s working,” said Horman.

“Every district that I’m associated with, including our own, we want to be wise and good stewards of the tax monies that come in,” said Thomas.

According to Idaho Education News, the average district savings account in 2015 was 23 percent. Horman said there are many factors that determine how much money a district should keep in reserves. Are they growing quickly? Is there declining enrollment? Are buildings aging? Or could there be a possible catastrophic event with a facility?

Dr. Thomas said smaller districts may have a larger percentage saved because they are nervous. Any little unexpected expense could have a huge impact.

In the end, the Idaho Freedom Foundation, the legislature and the superintendent favored wise use of funds and transparency, and it all should happen at the local level.