Wichita school superintendent: Reserve cash isn't free money

There's no such thing as free money, Wichita superintendent John Allison told school board members Monday.

"Unencumbered cash does not mean extra money just sitting around," Allison said. "These are budgeted. ... If you borrow that for other expenses, the money is not there when the bills come due."

Allison spent more than a half-hour explaining one of the more complicated aspects of the district's budget process and one that recently has prompted scrutiny and criticism: year-end cash balances and unencumbered funds.

Dave Trabert, president of the Kansas Policy Institute, urged board members during the public comment portion of the meeting to consider using funds from carryover cash balances, which he said have increased the past several years.

"The fact that the ending balances continue to increase unquestionably shows that some portion of the . . . surpluses are available to be spent," Trabert said.

Senate Bill 111, a measure passed by the Kansas Legislature this year, allows districts to shift money from some accounts, such as bilingual education and at-risk programs, to cover routine operating expenses. Under the measure, Wichita would be permitted to use up to $16.4 million from its reserve funds this year.

"While that's a lot of money," Allison told board members, "that's less than eight to nine days of operating expenses."

He said the money was critical to the district's cash flow. Eleven of the past 12 monthly payments from the state were late, Allison said, and the district had to draw from reserves to meet payroll and other expenses.

"So SB 111 allows us to rob Peter to pay Paul," said board member Betty Arnold. "Is there anything being hatched out for when Peter goes broke?"

"I guess you rob George," Allison joked.

He warned that looking at the district's fund balances on June 30, the end of the fiscal year, can be misleading because revenue and payments change dramatically during the year. Funds come into the district monthly, quarterly or annually, depending on the program.

The special-education fund, for example, was about $12.5 million in June 2010. At the end of December, the fund had about $1,200.

Allison said he plans to continue being careful not to dig too deep into cash reserves. "It's conservative, but I think it is also responsible use of fund balances as we look to this year and into the future," he said.

In other business, board members agreed to lease land near 127th East and Pawnee to a Charles Reinert, a local farmer.

In January 2010, the board paid $1.56 million for 125 acres in that area to build one of two new high schools in the 2008 bond issue plan. The new southeast quadrant high school is now on hold because of funding concerns.

According to the meeting consent agenda, Reinert will cultivate and harvest crops on the property "until the district is ready to proceed with construction of the project." The district will get one-third of the profits from the sale of crops, officials said. A copy of the lease agreement was not immediately available.

Board members also elected new officers. Betty Arnold was elected president by a vote of 6-0. Connie Dietz, the current board president, was elected vice president by a vote of 4-2. Lanora Nolan and Sheril Logan voted for Nolan for vice president. Barbara Fuller was absent.

This story was originally published July 12, 2011 at 12:00 AM with the headline "Wichita school superintendent: Reserve cash isn't free money."