SC Public Schools Banking Millions
South Carolina’s “cash-strapped” public schools are threatening teachers with pay freezes and possible layoffs, but local districts are sitting on mountains of hidden money carried over from previous budget years.
According to data collected from the State Department of Education and local school district websites, South Carolina’s eighty-five school districts were carrying forward fund balances totaling nearly $700 million as of a year-and-a-half ago … and city and county governments could be sitting on millions more.
Unfortunately, there is no publicly-accessible website which provides this information to the taxpayers, as educrats have successfully fought against the creation of an online checkbook that would put all of our education expenses online.
Specifically, State Sen. Larry Martin blocked passage of an online checkbook proposal last year on the grounds that at $500,000 it was “too expensive” to implement.
In addition to the nation’s worst public schools, South Carolina has one of the most dysfunctional education funding systems in the nation, with less than half of each taxpayer dollar actually making its way to the classroom.
And now we may know one reason why …
INSIDE THE NUMBERS
As of June 2007, South Carolina’s public schools were sitting on fund balances worth $700 million, with numerous districts carrying forward fund balances amounting to nearly a fifth of their entire annual budgets.
This is a dramatic increase in the amount of surplus funds districts are holding onto – up 75% from an estimated $400 million in 2003 – and would clearly call into question the need for additional state money as well as costly referenda at the local level.
Horry County, for example, carried forward a $45.6 million fund balance in June ‘07, which was 18.5% of its annual budget.
Richland County School District 1 had an even higher percentage, carrying forward $44.1 million – or 19.8% of its budget.
Lexington-Richland School District 5 had a high percentage, too, carrying forward roughly $22 million – or 18.1% of its budget.
Greenville County Public Schools carried forward the largest balance by dollar amount – $52.5 million – accounting for 13% of its total budget.
SOME HISTORICAL PERSPECTIVE
Prior to 1991, local government units in South Carolina were not permitted to carry forward fund balances, but a law passed that year enabled them to maintain a “reasonable” balance.
Unfortunately, the definition of “reasonable” was not specified – a provision that was insisted upon by the educrat lobby.
In contrast to the massive fund balance percentages we’re seeing at the local level, state government has historically maintained a 3% fund balance for operations and a 2% fund balance for capital projects.
So how did these districts manage to squirrel away so much money? And why wasn’t it sent back to local residents in property tax relief?
Well, each year, all eighty-five school districts in the state are required by federal law to submit a report to the Department of Education detailing how much money they are carrying forward.
Unfortunately, the DOE does not make this information public and requires taxpayers to submit a Freedom of Information Act (FOIA) request to obtain it.
There is also considerable variance in reporting this information publicly at the local level.
What we do know is that the fund balance total for all districts in 2003 was $397,340,929, and by 2007 it had mushroomed to $694,878,740.
SITTING PRETTY
Some might assume that a poor revenue year like the one we’re going through now might mean the depletion of these fund balances, but that certainly doesn’t appear to be the case in Lexington-Richland 5, which is looking at a $7 million increase in its fund balance for 2008.
That would push its surplus to more than 20% of its annual budget, and the district can spend that money on anything it wants – even capital projects – without voter approval.
Similarly, Lexington County government is reportedly sitting on a fund balance of nearly $50 million.
A common method used by local governments to amass these exorbitant fund balances is to undervalue property tax millage while at the same time overestimating expenses during the budgeting process.
This creates a perception that these local governments are “balancing the budget” – or perhaps even facing shortfalls – when in reality they are secretly squirreling away tens of millions of dollars into these surplus accounts.
Ingenious, right?
Then, when the next fiscal year rolls around, they simply base their projections on the previous year’s estimated expenses, not the money that was actually spent.
WHERE FROM HERE?
Earlier this year, State Superintendent of Education Jim Rex announced his plan to freeze teacher salaries due to state budget cuts, telling reporters “we’re trying to find a way to circle the wagons around the classroom.”
Rex, of course, neglected to mention that when you adjust for inflation, the Department of Education budget has grown by an average of 8% a year even after the most recent cuts.
Rex has also tripled the number of employees making $100,000 at his department and added 65 new names of folks making $50,000 or more since he took office.
How will the Superintendent respond to the news that schools are sitting on hundreds of millions of dollars?
That should be interesting …
Last year, several groups studied the issue of South Carolina’s outdated funding method, but no concrete recommendations were adopted.
Several lawmakers, including Beaufort Sen. Tom Davis, are pushing for a per pupil funding formula that would more equitably distribute state funding.
Other conservatives, including Comptroller General Richard Eckstrom, are leading the fight for an online checkbook as part of a broader spending transparency effort.
South Carolina currently has dozens of different funding categories for education dollars, which necessitates numerous fund administrators at the state level and dozens more full-time employees at the local level to sort out the antiquated maze.
Back in 2002, Gov. Mark Sanford proposed scrapping that system in favor of block grants to the local districts in six core funding categories, but like most common sense education reforms in this state, his proposal went nowhere in the S.C. General Assembly.
WEB EXTRA:
View 2003-2007 Fund Balances for S.C. School Districts
Comments
By Bill on January 12th, 2009 at 7:50 am
We live in the information age. Transparency is easy, inexpensive and fast. If someone is against transparency, look at their wallets as they have something to hide.
Sen MArtin, usually a good guy, needs to get right side on this issue. It is the publics money and their right to know.
By E. T. Bass on January 12th, 2009 at 9:17 am
This will probably come as a huge surprise to all the parents who have bought in ( through no fault of their own) to the districts’never ending poor mouthing and begging. I am always hearing about how teachers have to buy classroom supplies out of pocket. Do they know about the millions that administrators have stashed away? Hopefully this excellent post will help open peoples eyes to the reality that schemers and scam artists run this state’s education system.
By concernedcitizen on January 12th, 2009 at 10:29 am
This is very disconcerting.
Where are you getting your information from? What is the original source of your .pdf at the end of the article?
By Philip Branton on January 12th, 2009 at 11:42 am
Teachers…….you do realize that you are being treated exactly like the ILA workers…??? LOL….LOL !!! Why should county money even GO to Columbia …??? Why should the County “HOLD” this taxpayer money from year to year..??? Hmm….think teachers…THINK! Construction “inflation”…?? Book Deals..?? How about fluctuating ENERGY …costs???? Hmm…..do you really need a teachers…PENSION?? Think…?? Shouldn’t YOU be able to CHOOSE between letting the county invest your retirement or a LOCAL 401k advisor …you know personally????
WAKE …UP …..TEACHERS !!!!
Aren’t you all supposed to take CEU classes to keep up …??? are they NOT Mandatory??? How many CEU classes has anyone at the Dept of Education in Columbia took???? LOL ?!?! What about Mrs. Gilda Cobb-Hunter…??? SHe is getting an AWARD….for WHAT ????
Teachers …it is your OWN bed that your making !!!
By Philip Branton on January 12th, 2009 at 12:32 pm
Hey…Sic..
As per article…
http://greenvilleonline.gns.gannettonline.com/apps/pbcs.dll/article?AID=/20090108/TECH01/703081103/1001/TECH
Does this NOW mean that we will have Wii Fit classes for OUR kids too?? I wonder if Andre and Henry are leading any Wii online …Senior GAMES????
By Jon on January 12th, 2009 at 12:40 pm
This is accurate for some districts but is not an endemic problem. The biggest issue is that the money, which follows the student, does not cross district lines if the child’s parents so choose. Hence, big districts get big surplusses and the poor districts stay poor. The educators are not to blame for this, but rather the funding structure.
By Trey on January 12th, 2009 at 12:48 pm
From a policy perspective it is probably worth mentioning that the top 10 districts with largest fund balances have 46% of their kids in poverty. The bottom 10 have 80% of their students in poverty.
By Trey on January 12th, 2009 at 1:07 pm
May not be an equity issue here after all. The 10 district with the greatest number of kids in poverty have an average fund balance per student of $846. The 10 districts with the fewest number of kids in poverty have an average fund balance per student of $963. Closer than I would have thought.
By Fashizzle on January 12th, 2009 at 2:57 pm
An educational bureaucracy where $700 million can just disappear proves itself to be ineffective and wasteful. Give parents the dollars. Let choice and competition work in an actual marketplace and this abuse will stop. Score another expose for Will and the blogosphere. Add this one to the tally Bin, WMD…since we know you’re keeping score.
By Fat Albert on January 12th, 2009 at 5:14 pm
I am told that school districts are required to maintain at least a balance of 8% of their outstanding bonds in an account. Is this true, SIC? I have no idea. If so, that would be a reasonable explination for some of it. Even so, I believe this information has truly been hidden from the general public. If nothing else, it should be law that school districts, counties and municipal governments should publish financial information annually on their websites and the local newpapers.
By baker on January 12th, 2009 at 6:05 pm
It’s no secret that school districts and other local government entities have fund balances or reserves. This isn’t a major scoop.
I’ve read where 5-15% of an overall budget is considered a reasonable reserve. Now, I don’t exactly understand the whole thing very well — in particular, why that money can’t be tapped into in times of need. My guess is that, in many cases, districts and local governments in fact DO tap into those funds from time to time but try to drain their savings any time a budget crunch hits. At the same time, Will cites districts in SC that have a reserve higher than 15%….that sounds pretty high to me.
In any case, I’m not an accountant, and I’m no expert on borrowing issues or government finance, in general. But my understanding is that all this has to do with credit ratings and the like.
So I would figure that, in general, there really isn’t much controversy here, though, on a case by case basis, as with many issues, there be districts that deserve criticism or at least some tough questions.
By baker on January 12th, 2009 at 6:06 pm
I meant that I figure districts try to NOT drain their reserves, if possible, even when budgets are tight.
By Sarah on January 12th, 2009 at 6:37 pm
Fat Albert… re-read the article. Ditto on the transparency.
The law says local government entities are allowed to maintain a “reasonable†fund balance. “Reasonable”
Actually, it would be cool if Sic checked with the state treasurer’s office and got the reserves/fund balances (our hard earned money sitting in someone else’s bank account earning interest) for counties and cities and compile it with the school districts’ $700 million. Might as well include the water districts, fire districts, sewer districts, recreation districts, etc.
By Fed Up in Lexington County School District One on January 12th, 2009 at 7:30 pm
Looks to me like the first thing SC needs is some new governmental accountants at all those Taj Mahal school district headquarters — how about some with integrity?!?
This is ludicrous — and on top of it all, we have to sit here and cringe every year to see those kids beating a path to our doorway with their fundraiser crap. From the over-priced Christmas paper to the over-priced jump ropes and other junkola they prize the kids with…
All I can say is THANKS FITS! THANKS for exposing this madness!
By Catherine on January 12th, 2009 at 7:49 pm
Sic — my issue with this is A) the source of the data and B) the shoe on the other foot. That show is how you’d have just as much fun with an article that showed how the school districts managed to spend each and every penny each year. I’d rather carry forward than have crazy people buying paper clips and anything they can before the magic date of July 1. Why not compliment them for saving?? After all, they could be saving for a new building, holding that money as match for a pending grant — lots of very legitimate reasons.
When you want to complain about education, let me know. I’m happy to help but with real data and real SC politics.
By flipnut on January 12th, 2009 at 8:54 pm
Personally I think the real fraud is counties like York send more cash to Columbia than we receive back. We can’t build the schools fast enough up to keep up with all the new students and CMS refugees here while other counties in the state can’t keep school buildings filled.
We are using the same funding scheme to fund schools that North Carolina uses to fund roads. IT’s worked very well in NC, and seems to be working just as well for us. I can’t wait until state reps start playing with the funding schemes to direct cash to Florence for example at the expense of Greenville, York, Charleston and Columbia who actually need the cash for new school buildings.
In the end it all comes down to parents, no matter how much or how little cash a school district spends.
By Trey on January 12th, 2009 at 9:19 pm
Catherine,
This looks like real data to me. Every year school district books are audited and a unencumbered fund balance number is at the bottom of every audit report for every school district in SC. It is good to find this date for all of the school districts in the state and over time as well.
By BIN News Editorial Staff on January 12th, 2009 at 9:52 pm
What a willie scam. sic(k) willie claims a “scoop” for what is legal, common knowledge and clearly excellent judgment by our school systems.
Remember, wacko Republicrats and wacko Demopublicans shifted a huge chuck of stable funding for our schools to the sales tax. Now, sales taxes are in the toilet, and our children and schools are suffering even more than before.
Next thing they’ll shift school funding to sin taxes.
Think of the great slogans they can use:
“Smoke More so Kids Can go to School.”
“Gamble More for Education.”
How about a booze tax for schools?
“Have a Cold One for our Schools.”
sic(k) willie, you are a pimp for Howie and his carpetbuggers. Everyone knows it. You, randy Randy and your SCRG and Voice for Voucher Scam blogs are just wasting more and more of Howies’ money. You see, vouchers are dead in SC.
Just ask Jakie. He’ll tell you. In fact, he’d love to tell you in person.
BIN News Editorial Staff
Flair and Balanced
By Todd on January 12th, 2009 at 10:50 pm
Jim Rex: Fire every third person you meet in the halls in the Rutledge Building there on Senate Street, Columbia, tomorrow morning and you won’t miss them by nightfall. If you run by Richland School District 1 offices over there at the corner of Pickens and Laurel, you can fire every other one. The consultants have consultants to advise their consultants.
By Briscoe Darling on January 12th, 2009 at 10:52 pm
Will, good job bringing this to our attention. You should now consider looking at the carryforward balances of state agencies… especially given the fact that several of the so-called “cabinet agencies” that are constantly screaming poverty ,threatening layoffs, service reductions and (gulp) “inmate releases” are awash in ca$h.
By fitsnews on January 12th, 2009 at 11:17 pm
Catherine (et. al.),
The source for this data is the S.C. Department of Education and our state’s 85 school districts.
-FITS
By Statesman on January 12th, 2009 at 11:36 pm
Most school districts made a mad rush to stockpile reserves as a result of Act 388 of 2006. This act places constraints on school boards by limiting millage increases on operation expenditures by percentage of the Southeaster Consumer Price Index (CPI) for the previous year plus population growth. In addition, owner occupied residential homes cannot have their fair market value increased more than 15% within a 5 year period.
Program and personnel requirements have never been fully funded by the state. The state funds 44% of the state required costs. Local monies must take care of the 56%. With increased costs mandated by the state and reduced funding by the state our school district began reducing its budget because without substantial reductions, the $2.7 million surplus would run out in 2-3 budget years.
I do think this “Dose of Medicine” is good for the school districts in the short term to help get spending under control, however, it is going to blow up in the Legislature’s face really soon. Those surpluses will be gone in a couple of years and class size will grow. Hopefully merging districts and other administration reductions will put them on the right track.
By Sam on January 13th, 2009 at 1:00 am
Catherine – You sound like one of those nice school board members who believes everything the administration tells you.
1. In order to have an increased balance in your district’s operating account after all bills have been paid they have either been under-valuing the mil when preparing their budgets so that when the tax monies come in, based on the mil’s actual value, the district collects more money than is needed and ends up with surplus cash; or the district over-states expenses in their budget so when the actual expenses are less… they reap another surplus; or they just plain mis-calculated; or maybe they really were frugal. (I’ll give any district credit for being frugal but not for the objective of creating a slush fund year after year without the taxpayers knowledge.) Like Sic said, this slush fund increased by 75% to almost three- quarter billion dollars in the matter of just a few years. That’s a whole lot more than just being frugal and it sure would be a heck of a lot of “mis-calculations”. We’ve basically been over-taxed millions and millions to create this slush fund.
2. According to Sic’s report, our district carries a huge fund balance, yet they still scream that there isn’t enough money to buy paper. Ha! What are they saving for – a new school?? If they’re saving for a new school, shouldn’t the public be told that that is why we’re being over-taxed??
Catherine, I don’t think people would be opposed to a small fund balance but once that amount is reached, anything collected over and above that should be applied towards the next year as revenue — or give it back to the taxpayers. $700,000 million is ridiculous!
And BIN, yes it may legal to have a reasonable fund balance, but not all laws are good or are carried out as they were intended. This one needs to shored up since they are allowed to “squirrel” our money away but not required to spend it. And when they want to spend it, they can spend it on anything. I don’t know why they bother to go through the effort of having budget hearings for the public but fail to tell the whole story — especially the part about the their plans for the “unbudgeted” millions.
By WorkingMom on January 13th, 2009 at 8:26 am
Transparency is needed. My children were, until last year, in the Georgetown County School District. They have an excess and did a great job communicating about it, with articles in the local paper. And that is the critical component.
To stop carrying forward budget surpluses is a very bad idea. It promotes spending for spending’s sake. And that is not responsible. Just like we carry forward money in our checking accounts, so should they. But they should be tranparent and communicate their reasoning. IT FOSTERS MISTRUST TO NOT COMMUNICATE.
I support the GCSD’s surplus because the reasoning for carrying it is sound. The economy is tourist based and surplus was built intentiionally to carry forward through lean years. Just a couple months ago, there was a long cover story in the local news about the district plans to use to the surplus to keep from raising taxes, or making cuts, in the wake of funding cuts. They also are implementing energy reduction plans and other means to cut expenses without affecting the students. This is responible and reasonable.
By Catherine on January 13th, 2009 at 10:22 am
Gentlemen –
I appreciate the source of the data, as I spend way too much time in the mires of state education and higher education data. It’s what I do for a living. And I promise that no teacher or principal would ever want me on their board. God knows my experience has me agreeing with other comments about how many administrators in Rutledge tower (and Richland 1) we could easily dismiss and never, ever miss.
My comments are more about lumping all districts together into one large mess. Most of the establishment is so afraid of calling out districts that don’t work that it’s easy to lump all 86 districts into either a complete fraudulent system or, to hear others talk, models of progress. Have you checked? There’s no education research at any level (except the rare project) and no – ZERO – accountability at any K-16 level.
My parents were and are teachers. Most days I’m surprised they still speak to me because the WALL of teacher protection is deeper and stronger than anything the police force could conjure. NO teacher will ever call another teacher bad — not a one. So yes, we need transparency. Yes, we need better data (and I’m working on that). Yes, we need to fire people.
Let’s propose some solutions instead of simply complaining — real solutions. All I’m sayin’ is that perhaps our time has come to get something accomplished for real.
By Sam on January 13th, 2009 at 1:06 pm
Statesman — We’ll see if the districts actually cut the fluff from their budgets or take it out on teachers – just to make a point.
Workingmom — Sounds like Georgetown is a decent school district. Do they have a board policy that specifies how large they will allow their surplus to become and have a policy on how they will spent it? Maybe other districts can learn from yours!
By Billy Girlardo on January 23rd, 2009 at 2:47 pm
@ FITS: “The source for this data is the S.C. Department of Education and our state’s 85 school districts.”
Is that as specific as you can get for the source of your included pdf? Talk about crappy journalism…
By fitsnews on January 23rd, 2009 at 2:56 pm
Billy-
Really? Last time we checked info obtained directly from agencies through FOIA requests was usually pretty solid.
-FITS
By Billy Girlardo on January 29th, 2009 at 8:34 am
What URL did you get that pdf from?
Trackbacks