Schools' funds for financial safety vary

Some say 10 percent, others say 20 percent. A few aren't comfortable at less than 50 percent.

Opinions on how much reserve funding is enough vary from school district to school district in Missouri, depending on revenue sources, past financial history and general preference.

Withholding of state funds, declines in local property taxes and other past financial problems have caused some districts to build up large reserves, while others struggle to avoid a financial distress level.

Nell Holcomb superintendent David Fuemmeler said his district had a close call with bankruptcy about 15 years ago and has been cautious ever since.

"We've been kind of frugal in trying to build our balances," Fuemmeler said. "But we'll be able to survive the hard times and still give salary raises without going back to the taxpayers."

Fuemmeler also said the 114 percent actually only translates to around $2.7 million because his district's budget is so small.

That amount represents only about 20 percent of Cape Girardeau School District's annual expenditures, or the amount district officials say they would like to have in reserve.

It would take about $3 million in reserve funding to pay the district's bills between October and December without having to borrow money until local tax revenue comes in.

"We look at our cash flow in the fall and how much it would take to not have to borrow money," said Rob Huff, assistant superintendent in Cape Girardeau.

The district ended last year with about 10 percent of annual expenditures in reserve.

Cape Girardeau receives 63 percent of its funding from local property taxes, which are usually received in December. To pay salaries and other bills in November and December, the district takes out a tax anticipation loan.

Districts in that position often require larger fund balances than districts that rely more on monthly state aid payments, said Tom Quinn, the director of school governance for the Missouri Department of Elementary and Secondary Education.

"One size does not fit all," Quinn said. "Those that depend on local revenue often have a more challenging situation with cash-flow issues."

In the Jackson School District, which receives the majority of its funding from the state, officials say 10 percent to 12 percent is their ideal fund balance. The district ended last year at 8 percent.

Superintendent Dr. Ron Anderson said his district usually has less than the 12 percent in reserve due to low spending.

The state Department of Elementary and Secondary Education does not limit how much districts can keep in reserve, but there is a limit on how little can be there. Districts that drop below 3 percent are considered financially distressed and must submit a plan for building fund balances to the state.

"Fifteen percent is kind of a benchmark. I think most superintendents get out of their comfort zone if it drops below that," Quinn said.

cmiller@semissourian.com

335-6611, extension 128