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Thu March 10, 2011
Lawmaker suggests schools use rainy-day funds
A Michigan lawmaker says school districts that have set aside a rainy-day fund should use that money, rather than use more taxpayer funds.
But some school administrators say that would end up costing districts more in the long run.
It’s common practice for Michigan school districts to aim for a 15 percent budget surplus for their rainy-day fund.
But the economy has drained those funds for about 300 districts.
About 200 traditional, non-charter districts do have reserves of 15 percent or more.
State Sen. Jack Brandenburg, R-Harrison Twp., may propose legislation to require districts to use the reserves before they can get additional tax funds.
Brad Billadeau is with the Michigan Association of School Administrators.
He says the rainy-day savings aren’t a luxury.
"Those funds represent things like cash on hand, accounts receivable, inventory and prepaid assets," Billadeau says. "Fund balances are necessary to offset borrowing costs that districts incur when they don't receive state funds in summer months."
Billadeau believes some lawmakers are looking for alternatives in the event a proposed pension tax fails.