PENNSYLVANIA Bill would limit amount school districts can save

Gov. Ed Rendell has no position yet on the subject, a spokesman says.
HARRISBURG (AP) -- Pennsylvania school districts are hoping that Gov. Ed Rendell rejects a legislative proposal that would limit how much money they can save for a rainy day if they raise property taxes to help fund their budgets.
A $21 billion basic state budget awaiting a Senate vote this week includes language that would prohibit districts that raise taxes from receiving state subsidies unless their unreserved fund balances amount to no more than 8 percent of their total spending.
Rep. David Argall, R-Schuylkill, proposed the language in an amendment to a budget bill the House of Representatives passed Thursday, saying districts shouldn't "stockpile" extra money and then raise taxes when the economy is faltering.
No position
Rendell spokesman Ken Snyder said Monday that the governor has not taken a position on that aspect of the budget bill.
"It changes the budget rather dramatically, and he's going to have to take a look at it and talk to school districts about it," Snyder said.
The Pennsylvania School Boards Association, which lobbies on behalf of the 501 districts, is already inclined to urge Rendell to veto the bill because it provides no school funding increase and doesn't favor the fund balance cap, either, spokesman Tim Allwein said.
"I think there is a lot of concern out there that what the Legislature is doing is essentially removing a way for districts to deal with increasing costs, especially in the last few years when the economy's been so down and appropriations from the state have been down," Allwein said.
Need for reserves
Reserve funds have enabled districts to absorb costs such as higher-than-expected retirement plan contributions and increases in health care insurance, without having to raise taxes significantly, he said.
According to the most current information available from the state, school districts had a combined $1.5 billion in money saved during the 2000-01 school year -- an average 9.6 percent reserve statewide.
More than 300 districts, or 61 percent, had unreserved fund balances amounting to 10 percent or more of their budgets, and 180 districts, or roughly one-third, had fund balances of less than 10 percent. Twelve other districts were operating at a deficit, with fund balances less than zero.
Prefer higher cap
The Pennsylvania Association of School Business Administrators has not taken a formal position on the proposed fund balance cap, but if there has to be one, its members would prefer a limit of 10 to 12 percent of a school district's budget, executive director Jay Himes said.
"To the extent that it removes some discretion at the local level, that's always problematic, and I think there's a little consternation in terms of the timing. We have a budget that essentially freezes or cuts all education funding," Himes said.

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