Kansas Budget Problems Threaten School Bond Aid

Oops. When I wrote this article, I proceeded as though it was Rhonda Holman who penned the Wichita Eagle editorial I refer to. But the author is Phillip Brownlee. It just seemed like a Rhonda Holman editorial.

Because the State of Kansas is short on money this year and the next few years, lawmakers are looking for ways to save. School bond issues now appear on the radar screen.

Last year, USD 259, the Wichita public school district, used the fact that the state would pay 25% of the cost of repaying bonds as a key issue in their “informational and educational” campaign to persuade Wichita voters to pass a $370 million bond issue. Here’s some background on the law and how it works.

The statute that governs the amount that the state pays school districts for bond issues is KSA 75-2319. The statute describes a process whereby the state board of education computes the assessed valuation per pupil (AVPP) of each school district in the state. Then, each district is assigned a state aid percentage. The less AVPP, the higher the percentage. The opposite is true as well. In fact, some school districts receive no state aid at all.

This calculation is performed each year. Because the formula is based on the relationship between the characteristics of any single school district and the state as a whole, the state aid percentage might change. The 25% that the Wichita school district used in their campaign for the bond issue is not guaranteed to be true for years in the future. It could increase, or it could go down.

In today’s Wichita Eagle, editorialist Phillip Brownlee (Don’t break contract on bond aid) writes that “the state is committed to pay 25 percent.” Voters went to the polls “understanding that the state would and was obligated to help pay.”

But as we see, the promise claimed by USD 259 is merely a state statute, subject to the whims of the legislature and governor, not to mention the ability of the state to pay. Further, the 25% could change, too. This information was evidently judged not relevant by the Wichita school district.

So what is likely to happen? According to reporting on KAKE television, USD 259 chief financial officer Linda Jones says the projects would go on, and local taxpayers would pay the difference. Brownlee echoes this: “If lawmakers now renege on this contract, local taxpayers will see their taxes go higher than the amount they counted on when they approved the bond issues.” (Here again Brownlee refers to a non-existent contract.)

There are, however, a few other courses that neither of these two mention.

One is to wait. The bill, in it current form, says that payments to school districts would resume after June 30, 2011.

Another course — citizen activist Charlotte Foster asked me if this is possible — is to reduce the amount the Wichita school district borrows and spends. If the district would not spend the entire $370 million, it could keep its promise to local taxpayers that the mill levy would rise by a specific amount. That’s a promise Brownlee doesn’t mention in his editorial.

Is it possible for the Wichita school district to spend less than $370 million on this bond issue? The resolution voted on authorizes the district to issue bonds “in an amount not to exceed $370,000,000.” It doesn’t say the district is required to spend that much. Further, no time limit is specified. Either of these two courses are permissible.

Mr. Brownlee claims that reducing the state aid for school bonds would be unfair, as if taxation is ever fair. Certainly the 49% of the voters who voted against this bond issue didn’t agree with the need to spend $370 million. I don’t think they’d mind if the Wichita school district, in recognition of fiscal realities, decides to spend less than authorized.

Background:

Jay Emler, Republican from Lindsborg introduced Senate bill 20, which says, in part: “On and after January 1, 2009, through June 30, 2011, school districts are not entitled to receive payments from the school district capital improvements fund for any general obligation bonds issued on and after January 1, 2009, through June 30, 2011.”

Kansas Votes will cover this bill here.

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