Thursday, March 10, 2011

Don't punishing school districts for good budget practices

Save money and spend wisely, but not too wisely.

What?

That’s right. A state senator thinks that school districts that save money should be punished for saving too much.

School districts in the state of Michigan have a cumulative savings account in so called “rainy day” funds of $1.6 billion. The districts have scrimped and saved as much as they could so they would have a cushion against drastic cuts in state aid or other funding. This not only is a wise thing to do, but fits very well into concepts supported by the Responsible Community.

State senator Jack Brandenburg, R-Harrison, thinks this is “obscene.” He is the chair of the Senate finance committee. It is Brandenburg’s belief that in the slow economy and with the state’s budget problems, each school district should spend their fund before they receive any more state aid. For each school district with a budget surplus the bill that he wants to offer would cut off of school aid until the fund is below 15% of the district’s annual budget. It would seem that Brandenburg would want it to be the other way around. He should offer incentives to school districts to save money and be financially responsible.

Brandenburg is a member of the party that demands government be operated like a business. Any business around, large or small, would be happy to have a reserve of more than 15%. A responsible community, school district or municipality, should save as much money as it can while still providing the services that its citizens expect. The fund, besides being a cushion against swings in funding, can be invested to help provide income to defray the costs of operating, or perhaps, be self sustaining.

Brandenburg is also a member of the party that believes in local control. Making sound budgeting decisions by each of the school districts that has enough of a surplus to establish a rainy day fund reflects exemplary local control. The state should not dictate the budgeting principals of these school districts.

When a community operates out of the establish norm, such as not being able to pay its bills, it is taken over by the state to bring its budget in alignment with general accounting and management principals. But, if that a community swings that other way, operating in a way that reflects sound business practices, it should not be punished.

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