TEA Looking at Letting School Districts Draw From Fund Balance During Budget Crisis

About a month ago, Dallas Independent School District spokesman Jon Dahlander told Unfair Park that even during this current budget crisis, the district has no intention of touching its fund balance, which, he said, should sit at somewhere near the $100-million mark. Explained Dahlander, the DISD's reserve fund is not like the state's Rainy Day Fund, which is replenished by oil and gas proceeds. He also reminded that ex-chief financial officer Larry Throm told the school board to get that thing back up to $150 million. Said Dahlander, "The goal for any school district is to be able to have two pay periods in the bank."

The Texas Education Agency uses the fund balance to determine a district's fiscal well-being; far as the TEA's concerned, districts with "a fund balance less than 12.5% (1½ months) of the district's general fund expenditures" is considered insolvent, and districts statewide are loath to touch the thing for myriad reasons. But even as long ago as November, DISD Superintendent Michael Hinojosa knew, deep down, he may have to tap that fund, which, during The Great Budget Crisis of 2008, hovered around $37 million. There's been no mention of the fund balance in any of the budget-reduction scenarios presented to the board, including last week's not-as-bad-as-the-worst-case-scenario Version 2.0.

But on her blog this morning, DISD trustee Carla Ranger points out that two days ago, Robert Scott, the state's commissioner of education, sent this missive to district administrators statewide acknowledging that the TEA has begun "the process of modifying indicators in the 2010-2011 School Financial Integrity Rating System of Texas (FIRST) that require school districts and charter schools to maintain approximately 60 days of operating expenses in their general fund account." He says the agency will know more in May, at which point it'll send word and ask for comment, but long story short, he writes:

Given the state's future revenue projections, it is the intent of the agency to avoid penalizing districts and charters that elect to expend portions of their fund balance in the upcoming biennium as a result of the nation's slow economic recovery and any changes the Legislature may make in state funding. The agency's goal is to provide school districts and charter schools flexibility to manage their budgets locally, and TEA will work on changes to the FIRST rules relating to the 2011-2012 and 2012-2013 fiscal years, which will affect FIRST ratings issued in 2013 and 2014.

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Robert Wilonsky
Contact: Robert Wilonsky