October 28, 2011 | 07:27 AM
No the fund balance is not invested cash. Cash is invested. In an ideal world the fund balance equals real cash - but its never reality. The fund balance is a "holding" account for prior years accumulated over / under budget items - its accounting at its core...think of it as retained earnings for a business.
Further, what is sitting in the bank is earning less than 1% for the investment products schools are allowed to invest it in. Schools have cash flow issues every year. They get essentially three major money flows in - Dec (tax roll paid to date), Jan ( same thing as December) and then they get next to nothing til August when the final tax settlement gets made with the county. I'm not sure when open enrollment money comes in - but I think its late too. So, they get maybe 50% of the cash they tax levy for and have to wait for the rest. So, they do a tax anticipation loan every year to cover cash flow - those "loans" may run as much as 2 or 3% to borrow - so whatever you are "earning" from cash in the bank is really a net loss (1% earned less 2% to borrow is a negative 1%).
Teacher pension money (normal) is sitting in the Retirement System that belongs to the State. Schools don't own that or control the way its paid out. The other issue is that some schools also pay out huge lump sums of real cash to retiree's (not normal and I don't know if this school does this - but ALOT do) as a kind of length of service bonus when they leave. Maybe even offer retiree health. Theory used to be that these big payments were offset by hiring first year teachers who earn less. Lastly, it is prossible that the school has old unfunded pension obligations at the state retirement pool that they owe too. Some districts borrowed for it - others are letting it ride.
I too could not be a teacher. I enjoy my kids - but massive kids every day changing every year..no thanks. But, I knew that and chose my profession. I'm betting major dollars that my job would not be what teachers would chose to do. That's ok...viva la difference. We all make choices.
I do feel that what had been a teachers promised / anticipaed benefits being snatched out from under them was kind of crappy. They had long held a belief that this retirement package would be there and this drastic change did not leave them time for planning an alternative. However, I have no idea how the districts can afford to pay them either. Its an ugly world.