Financial Stewardship
I am blessed to serve as the new superintendent in Pearland ISD, having joined a school district which is both financially efficient and high performing. 

Indeed, Pearland ISD is one of ONLY 46 districts (out of 1000 in Texas) recently designated by the Texas Comptroller as a 5 star district for financial efficiency and student performance. This award covers years prior to my arrival and thus I’m the thankful beneficiary of wise decisions already made. In short, Pearland ISD spent much less and produced much better student achievement results than almost anywhere else in Texas. 

Like Joseph in the Old Testament, the district stored up funding for the leaner years. This is fortunate because we are now in the midst of a new two year funding “famine.”

A Background
Back in 2005, the Texas legislature imposed a new “target revenue” scheme that froze revenue levels for every school district in the state. Since there were already huge gaps in school funding between districts, the problem has grown each year since then – even when the state added minimal “across the board” funding increases. Unfortunately, Pearland ISD began that freeze as an underdog, receiving significantly less funds than the average school district.

In 2005-06, the state also cut property taxes (a popular move) and substituted a business tax (an unpopular move), claiming that such a swap was revenue-neutral. Indeed, it was not. The new business tax failed to recoup the revenue projected. The legislature has made no effort since to correct their massive miscalculation.

In 2009, the state crisis deepened. Legislators used one time federal tax stimulus funds to plug the growing hole in their state coffers. In 2011, that money was gone and the state’s funding hole grew much larger. Local school districts also felt the pinch because state leaders did not refrain from continuing to create unfunded mandates (like the new massive testing regimen) in the midst of their funding crises. Neither political party in Texas can properly be labeled as favoring “small government.”

Last year (2010-11), our local board had advance warning of an additional blow when state experts projected a 7.4 million dollar local loss of school funding for the 2011-12 and 2012-13 school years – as compared to previous funding formulas.

Proactive Measures
It is a double whammy to get your funding drastically reduced – and already be on the list of those receiving significantly less money per child than the state average. So it is highly commendable that Pearland ISD conservatively estimated both expenditures and revenue these past few years – and lived well within their budget. Perhaps most remarkably, the district grew its fund balance prior to this school year by almost the same exact amount (7.4 million dollars) that is lost in state revenue this year and next.

Now that the state has implemented its severe cuts, Pearland ISD as a lean district is positioned to add funding in critical areas. We have maintained the critical 90-day funding reserve, protecting us from having to borrow money if the state precipitates another short-term funding crisis. The board can authorize (and has authorized) spending local funds for present and future non-recurring expenditures. For example, the Board has allocated additional funding for technology and instruction, affecting almost every workstation and student lab in the district.

While most school districts have seen their fund balances (savings accounts) greatly diminished over the past several years – and have resorted to using such funds for annual recurring expenditures, Pearland ISD has successfully avoided that trap thus far. In addition, we’ve had one local bright spot: federal stimulus dollars allocated to school districts could be used for expenditures already made in 2010-11. So our board used the federal funds to free substantial local dollars for other purposes. In short, they avoided the trap of using such dollars for new positions and salaries that would dry up as soon as stimulus dollars stopped coming. We are living within our means.

Conclusion:
Having been a superintendent for 20 plus years, I have witnessed state legislators actually advocate for the confiscation of local fund balances, claiming that local taxpayers should not have jurisdiction over those funds. Thus, every competent administration and school board in Texas pays careful attention to auditor warnings on optimum fund balance size – and tries to maintain a cushion that is neither too big nor too small. Unfortunately, a growing number of school districts have given into temptation, becoming penny wise and pound foolish, by spending their savings accounts on annually recurring expenditures. As you have read in the papers, such districts are now facing salary cuts, lay-offs of current employees (rather than through natural attrition) and significantly reduced student services.

Pearland ISD is to be commended for having lived within their means, maintained their savings account, and put aside some funds for the current “famine.”

I thank God I have come to serve in a district that sets the example for others in the area of both financial stewardship and student achievement. Our present goal is nothing short of producing world class schools in the coming years. The prior work of the board and administration built a strong financial foundation for accomplishments ahead. 

JOHN P. KELLY, Ph.D.

Superintendent, Pearland ISD