Luna's school budget depends on $52 million transfer

Luna's school budget depends on $52 million transfer

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Idaho Freedom Foundation staff
January 28, 2010
Idaho Freedom Foundation staff
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January 28, 2010

The biggest portion of Idaho public schools superintendent Tom Luna’s plan to close the gap in funding in next year’s budget is transferring $52.8 from the Public Schools Earnings Reserve Fund to schools. That fund is part of the state endowment, which the Land Board controls.
“This is a one-time drawdown of an excess reserve fund,” Luna said. Schools will already get $30 million from the fund in the next budget, but Luna said more can be swept since the fund is expected to have $90 million. “The consequences (to schools) justify that the money needs to be released,” Luna said.
“It was a surprise to me,” said Sen. Dean Cameron, R-Rupert. He is one of the leaders of the Joint Finance-Appropriations Committee (JFAC), which is starting its budget-making process. “I’ve been looking under a lot of rocks and I had not considered tapping into the earning reserves fund. I think it’s a tremendous suggestion.”
However, it’s not clear the Land Board will sign off on the transfer. “I’m afraid that we will not see that Land Board money,” said Rep. Maxine Bell, R-Jerome, the other JFAC leader. She said the rest of the Land Board, including the governor, secretary of state, attorney general, and controller, may not want to lower that fund. “I don’t think it’s an unreasonable thing to assume the Land Board needs that kind of reserve.”
“From what I’m hearing, it’s highly unlikely the land board will go along with that (transfer),” Rep. Shirley Ringo, D-Boise said. The land board will consider the issue at its next meeting on Feb. 16 in Boise. Luna said he’s spoken to the other board members, but hasn’t asked if they would support his recommendation. In addition to the $52.8 million transfer, Luna is calling for $5.5 million in funds dedicated to driver training and safe and drug free schools.
Next year’s public schools budget includes an overall reduction of $129 million, according to the Legislature’s budget staff. Luna has said it’s a $135 million reduction because of an anticipated growth in students next year. Most of that drop comes from $112 million in expiring federal stimulus funding. That money plugged a hole in state spending for education that Otter’s budget isn’t fully filling. State funding for schools will drop $14 million in the next fiscal year. At more than $1 billion, public schools take up the lion’s share of the state’s anticipated $2.4 billion budget.
Luna outlined some targeted reductions that could save more than $25.2 million in the next budget. See a list of his recommended reductions here. “I had hoped that our state revenue would have turned around,” he said. “Unfortunately that is not the case.” Luna said those six reduction areas would have to lowest impact on students. For the remaining gap of at least $45 million, Luna said “the most prudent approach is to take any remaining shortfall into an across –the-board line-item reduction.” That would amount to a 3.74 percent reduction to travel costs, school employee salaries and benefits, and other spending categories. Without the Land Board transfer, that reduction could be 10-12 percent, according to Luna.
Luna did not discuss school consolidation with lawmakers. Combining smaller school districts could save on administrative and other costs. “Everybody thinks we should consolidate, but not their district,” Luna said. He said he’s working on a consolidation plan that he will present to lawmakers in a few weeks. “I think the savings won’t be as great as we think,” Luna said.
Many lawmakers on JFAC said they appreciated Luna’s list of targeted reductions. “He did a superb job of pointing out everything that would not affect the child,” said Bell. “He did what he needed to do.”
“He’s got to do some of that,” said Wendy Jaquet, D-Ketchum.
Officials from some school groups said Luna should look for more sources of revenue. “These cuts are going to affect student achievement,” said Sherri Wood, president of the Idaho Education Association, a group that represents teachers. “We need to have a serious discussion about how we support our public schools, and that needs to happen in the (Capitol).” Wood said that could mean raising taxes or adding more tax collectors to the Idaho Tax Commission. Idaho Association of School Administrators director Wayne Davis said he would also like more discussion on raising revenue for schools. He also said he would like school districts to have more control in deciding where to make reductions than Luna’s across-the-board cuts could allow.
Cameron agrees with Davis’ call for more local control. “In these circumstances, we ought to give the school districts as much flexibility as possible in the dollars that are allocated,” he said. “Allow the local districts to decide whether those programs should continue or not and allow the local districts to have that control. That’s a fundamental debate.”
Luna’s school budget suggestions are based on Gov. Butch Otter’s tax projections and spending decisions. Lawmakers are now projecting lower tax revenues than Otter. If those projections hold, Cameron said it could lead to more reductions for school funding. “Then you would have to increase the across-the-board cut,” he said.

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