Contingency funds to the rescue?

Many Kentucky school districts probably would have to dip into contingency funds to absorb a projected 4 percent state budget cut, but that might only postpone the pain, public school superintendents say.

Several superintendents said in interviews Tuesday that, since many districts have built up their contingency funds in anticipation of future needs such as enrollment growth, using the funds to offset a budget cut now might leave some districts short next year or later.

"This current year's cut, if it comes to fruition, will make next year very difficult," predicted Kelley Crain, superintendent of the Fleming County Public Schools and president of the Kentucky Association of School Superintendents. "What I'm hearing from the superintendents I've spoken with is that it's going to significantly impact services for kids."

State Education Commissioner Jon Draud has asked the state's 174 public school superintendents to submit reports to him by noon Wednesday, analyzing how a 4 percent state budget reduction would affect their districts. Draud acted in response to Gov. Steve Beshear's directive last week that all state agencies and public universities prepare plans for a 4 percent cut.

A number of Central Kentucky school superintendents said Tuesday that their districts would be able to weather such a reduction by withdrawing money from their contingency funds to make up the difference.

Indeed, using contingency money might be the only alternative for some, since their operating budgets already are "locked in" for this year and can't be easily reduced or changed.

"When you're dealing with a potential cut at the middle of the year, you already have programs started, you already have people hired," said Scott Hawkins, superintendent of the Woodford County Public Schools. "There's not much you can necessarily eliminate at this point in time. Contingency funds may be the only option for many, if not most districts."

Hawkins said his own district would make up for a cut by taking money from its contingency fund, which he said had been beefed recently because "we were kind of fearful this might happen."

Crain said districts might be able to save relatively small amounts of money by cutting back on things like tutoring programs. But, overall, individual school districts' ability to weather a state budget reduction probably will depend on how much contingency funds they have available to see them through, she said.

State law requires districts to maintain a contingency fund equal to 2 percent of their operating budget, but some well-off districts have built up their funds to 5 percent or more.

Crain noted that if a district's contingency fund were hovering just above the 2 percent mandated level, dipping into that money to make up a budget cut now could send the fund into deficit.

"I believe, and I think most superintendents would agree, that there certainly would be an impact on the services we can deliver to students," she said. "You're talking about increased class sizes and reduced programs. For many districts, I think that's how cuts would have to be absorbed."

Madison County School Superintendent Thomas Floyd said his district has more than enough contingency money on hand to accept a 4 percent state budget reduction this year without cutting personnel.

"Can we keep that up? No, sir," he said.