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Preparing for the cliff: comparing Florida districts' financial reserves

School finance types can organize whole conferences around the question of what, exactly, constitutes a reserve fund.

But it's clear that Florida districts have taken dramatically different approaches in setting aside money for the proverbial rainy day. As we reported this morning, Hillsborough stands in relatively good shape after years of enrollment growth, budget cuts and efforts to save. Pinellas, with slumping enrollment and high costs, finds itself in trouble.

It's not a new issue. Back in 2009, Hillsborough officials were defending the $338 million they had set aside in what the state calls its "general fund unreserved fund balance." That money -- as much as 22.8 percent of its operating budget, which then stood at $1.5 billion --stood in stark contrast to the $63.4 million or 7.3 percent set aside in Pinellas. (By last spring, Hillsborough's reserves had declined to $288 million or 20 percent of its operating budget, while Pinellas' stood at 7.7 percent.)

To be fair, Hillsborough officials say that not all of that money is a "true reserve," in the sense that portions have been earmarked for other purposes. Some of it helps keep programs alive after grant money runs out. Other money is reserved for fuel or inventory costs. But much of it gets rolled forward from year to year, and in a true crisis -- like a Category 5 hurricane that puts schools underwater -- much of it can be redirected toward employee salaries to prevent layoffs. (And part of the money is a "contingency" fund that isn't tied down in any fashion. Last month that portion stood at $98 million in Hillsborough, with a total fund balance of $319.5 million.)

The Florida Association of District School Superintendents recommends a reserve of 3 to 5 percent, and districts get a scolding from state auditors - as well as lower bond ratings and higher interest rates - if they go below 2.5 percent. While some smaller districts like Jackson County have managed to build up unreserved fund balances of 30 percent or more in recent years, others have seen them evaporate altogether. Indian River County's stood at 1.8 percent last spring, and the year before, Jefferson County dipped $688,816 into the red.)

We should also point out that Hillsborough isn't the only large district to make saving a priority. Orange County, Florida's fourth-largest district, held reserves of $82 million or 8.6 percent in 2004. By last spring, it had socked away $224.7 million or 18.2 percent.

To see how other districts have stacked up in recent years, take a look at the attached documents below.

Downloadable filesRelated Content Size

general_fund_balances_2004-2008.xls 60 KB

general_fund_balances_2009-2010_.xls 44 KB

Posted by Tom Marshall at 12:40:00 pm on May 13, 2011