In August, Knott County Schools Superintendent Kim King said there was “no fixing” her district’s dire financial situation after taking hits of $1 million or more from a combination of economic and demographic factors.
The Kentucky Board of Education wants to try to help Knott, Leslie, Pike and other districts facing serious financial cuts.
The state board is asking the General Assembly to appropriate money for an existing emergency loan fund for districts that are facing serious financial challenges due to a change in the way the unmined coal tax is calculated and declining revenue collections. Board members have not yet specified an amount.
Currently, under state law, districts can participate in an emergency loan fund; however, no funds have been appropriated. The state board of education wants to request that the General Assembly appropriate money for the fund and change the law to further specify how districts could participate.
“I do think that the emergency loan for school districts in great need is a much-needed initiative,” Leslie County Schools Superintendent Linda Rains said last week. “Several districts will possibly benefit from this opportunity since so many of the Eastern Kentucky coal counties are indeed suffering financially. I am sure criteria will need to be established to determine who and what will qualify a district for the use of these funds.”
Leslie County Schools Associate Finance Officer Harold Morgan said he and Rains planned to talk with Kentucky Department of Education officials on Dec. 11 about Leslie County’s financial situation.
Kentucky Education Commissioner Stephen Pruitt said in a Dec. 6 report to the state board that local school districts that rely upon unmined coal tax revenue receipts learned almost a year ago that their revenue from this tax would be reduced due to lower property assessments. Fourteen local school districts were affected by a loss of at least $100,000. Knott County lost more than $1 million. Pruitt said it had an impact on the Eastern Kentucky region primarily.
State Rep. Steven Rudy, RPaducah, chairman of the House Appropriations and Revenue committee, said he had had preliminary conversations about the education department’s request for money for the emergency loan fund. Rudy said it’s not just the coal county school districts in Eastern Kentucky that are facing financial challenges; he said one of the county school districts that he represents in far Western Kentucky is also facing a shortfall.
“We are looking at it, we are monitoring it closely and we are considering all the options. We want to work with the commissioner to find a resolution,” said Rudy.
State Sen. Chris McDaniel, RTaylor Mill, Rudy’s counterpart in the Senate, said any new funding would be a struggle.
“Any new money anywhere is going to be almost impossible regardless of reason” with pension obligations and Medicaid growth and Corrections growth, he said.
Several of the districts facing the financial crisis have received high ratings from the state for academic achievement, including Knott.
Knott County Schools Finance Director Greg Conn said that district would appreciate “any help we can get.” Come next school year, he said, district officials would have to make some major decisions about how to stay afloat.
Conn wasn’t anticipating a merger or closing. But he said severe cuts were in the future.
“Not just programs. You are talking about positions. Just trying to stay afloat,” Conn said. “It just does not look good right now the way it’s going.”
State education officials said they are working closely with Pike County Schools as well.
Pruitt said districts have been working with the Kentucky Department of Education to examine all opportunities for efficiency — staffing levels, transportation routes and facilities consolidation.
Also, the Kentucky Board of Education is asking lawmakers to amend statutes to authorize county school districts to merge in a situation of financial insolvency in one of the districts. Currently, a similar provision exists for financially insolvent independent districts but not for financially insolvent county districts. Kentucky Department of Education General Counsel Kevin Brown said officials did not currently have a county school district in mind for a merger.
Pruitt said in his report that in addition to the local revenue challenges, all districts could be affected by proposed budget reductions for this fiscal year and employer pension contribution rates could increase.
“We ultimately have to consider whether a district has adequate resources to provide a quality education to its students in this fiscal environment,” Pruitt said.