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Stumbo on school district contingency funds

October 27, 2009

House Speaker Greg Stumbo, a Prestonsburg Democrat, released a column today offering a bit more explanation of his recent comments about dipping into school district contingency funds to help balance the state budget.

Stumbo House95

House Speaker Greg Stumbo, Prestonsburg Democrat (LRC photo)

Stumbo has come under fire for suggesting that school districts dip into their contingency or “rainy day” accounts so the state can reduce what it funnels to local schools.

When Gov. Steve Beshear was in town recently, he was asked for his thoughts about Stumbo’s suggestion, and said “it’s way too early for decisions to be made about how to balance the budget.”

With the start of the legislative session just more than two months away, and the governor’s budget due in late January, that comment begs the question of when the right time to begin coming up with those solutions is.

The Glasgow Daily Times panned Stumbo for his suggestion that school districts use these funds, which are a mix of local and state dollars, to make up for state cuts in funding.

From the Glasgow editorial

It seems disingenuous for Gov. Steve Beshear to say there are no plans to cut funding to public education when fellow Democrat, and partner in state government, Stumbo is pitching the idea of taking money out of those same district’s coffers. It smacks of Beshear handing the districts the checks from the state only to have Stumbo’s plan mug them of the cash as they leave the bank.

Stumbo explains that the state wouldn’t be raiding these accounts to fund other areas of state government, but would be calling on school districts to begin carrying a larger share of the budget burden, or as he writes, “it may be time for Peter and Paul to help themselves more during these rainiest of days.”

Here’s Stumbo’s complete column –

As Governor Beshear and the General Assembly prepare for the upcoming legislative session, it is becoming increasingly clear that the state’s two-year budget will be the most challenging Kentucky has faced since the Great Depression.

Federal stimulus dollars have helped significantly, but unless Congress provides additional funds, the stimulus dollars will run out by the budget’s second year.  Barring an economic miracle, there will be considerable budget gaps and no painless way to fill them.

We must also consider sky-rocketing health insurance and retirement costs, increases in a Medicaid program that already covers a fifth of our population and the growing needs of our schools and universities.  Each of these areas must be adequately funded if we hope to move forward as a state.

It was with this in mind that I discussed the possibility of using a portion of surplus funds that are kept by our elementary and secondary schools for unplanned expenses and “rainy days.”

I want to make it clear that I do not believe these funds can be used for any programs or expenses outside of the school’s district.  In fact, as Attorney General, I filed litigation to protect education dollars.

The surplus funds are a mixture of local and state dollars prudently set aside by the school districts for future needs and expenses.  It would be patently unfair to “rob Peter to pay Paul,” but it may be time for Peter and Paul to help themselves more during these rainiest of days.

I believe all options need to be considered as we begin writing the state’s budget in the next several months.  If this is an unprecedented suggestion, it is because we are in unprecedented times.

In our current budget, kindergarten through high school accounts for more than 40 percent of our state tax dollars; when you add postsecondary schools, the figure for education jumps to 58 percent.  Critical health and family services and the judicial and justice systems push the total over 90 percent.

Because so much of the state’s budget goes to these areas, they are the ones most affected by cuts that have topped more than $1.5 billion during the last two years.  Additional cuts are expected to exceed a billion dollars in the upcoming two-year budget.  Federal stimulus dollars have helped us balance our current budget, but these are one-time funds and not a permanent revenue source.

I have no doubt that we will find a way to live within our means, but it will not be easy.  My goal is to continue protecting, if not increasing, school funding.  Reducing money for education would have negative effects lasting for generations.  School surplus funds may or may not be part of that equation, but if they can be a bridge to better days, it is an idea that at least deserves to be discussed.

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