Education officials say school districts have to divert money from regular education to cover special education costs, but an analysis by the Kansas School Board Resource Center (KSBRC) shows districts transferred at least $71 million more than was necessary during school years 2020, 2021, and 2022.
KSBRC is a subsidiary of Kansas Policy Institute.
The KSBRC findings are based on the transfers each district would have needed to make to have the same cash reserves balances at the end of the 2022 school year as it had at the beginning of the 2020 school year.
For example, the analysis shows that USD 259 transferred $7,682,168 more than was necessary over the three years. In 2020, the district received $50,071,989 in state SPED aid; it had $17,902,368 in other SPED revenue and transferred $57,965,563 in discretionary money to the SPED fund. Total revenue was $125,939,920 and total spending was $122,757,752. Revenues exceeded spending by $3,182,168 and increased SPED cash reserves by the same amount. The district started the year with a beginning cash balance in the fund of $11,817,832 and finished the year with $15 million.
Revenue exceeded spending by $3 million in 2021 and by 1.5 million in 2022. The district could have transferred $7.7 million less over those three years and still had $11.8 million in SPED cash reserves.
Excess transfers to the special education fund for each school district can be found here, totaling $49.6 million.
KSBRC also examined changes in Special Education Co-Op funds on the same basis, except there are charges to Co-Op member districts by the host districts instead of fund transfers. The SPED Co-Op report shows Co-Op host districts overcharged member districts by $21.5 million over the three years.
For example, the SPED Co-Op analysis shows that USD 368 collected $2,176,860 more than was necessary over the three years. In 2020, the district had $14,815,457 in Local Revenue, most of which is charges to member districts for providing services; it had no state revenue and $2,085,633 in federal revenue. Total revenue was $16,901,090 and total spending was $16,636,141. Revenues exceeded spending by $264,949 and increased SPED cash reserves by the same amount. The district started the year with a beginning cash balance in the fund of $1,470,821 and finished the year with $1,735,770.
Revenue exceeded spending by $715,147 in 2021 and by $1,196,764 in 2022. The district could have collected 2,176,860 less from member districts over those three years and still had $1.5 million in SPED cash reserves as it did at the beginning of the 2020 schoo year.
Better cash management makes more resources available
Better cash management is the key to avoiding unnecessary transfers and putting resources to productive use, and many school districts do a better job than others.
The two key criteria are:
- Don’t have more of a beginning balance than necessary in special education (or any other funds), and,
- Limit transfers in to the amounts needed to have an ending cash balance that is sufficient to begin the next year.
On average, school districts had 21% of special education expenditures for the 2022 school year in the cash reserve at the beginning of the year, but 54 districts had less than 10% in reserve. Each district has relatively the same pattern of collecting revenue and spending money during the year, so if 54 districts can operate with less than 10% in reserve, it’s highly likely that the others can, also.
If each district had a maximum 10% balance target, cash balances in the special education funds could have been $116 million lower at the beginning of the the 2022 school year.
Money in special eduction funds can only be spent for that purpose, but districts can effectively spend excess balances for other purposes with better cash management.
USD 259 Wichita transferred a little over $50 million in 2022 from discretionary funds to the special eductation fund. The adjacent example allows for small increaes in special education aid and expenditures, but only transfers $42 million from discretionary funds in 2023. The district would have $8 million more to spend as it wishes (by transferinig less money) and still have an ending balance of $11.5 million.
Education officials complain that state funding for special education is insufficient and forces them to take money away from regular education needs, but it seems that they need better cash management instead of more funding.
