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I have been working on this idea for some time and I am ready for some feedback. please post your questions and comments.

The benefits to implement this type of community reinvestment are varied but foremost it creates local controls of investment and it changes the idea of taxing to provide for the common good.

Remember we can only talk policy if we have the legislative power to carry it out!

If we are in the minority, all our efforts should be to elect representatives that will vote for their constituents best interest.


Issue:                                                  Stable long term funding for public schools

Currently funding has three sources.
 Federal and state monies with local property taxes completing the funding.
This funding scheme is not responsive to local school districts because of the gap between local needs and mandates from higher governments.

Proposal:

School district level endowment funds.
A bill needs to be passed giving local school districts the authority and the guidelines to set up an investment fund to provide a stable local source for public education.

Impact:

Local school districts would have an investment vehicle that would allow them to raise funds locally and provide funds growth for long term district needs
Districts would have a local source of funds to supplement educational needs
Communities can voluntarily invest in their children’s educational future
Long term replacement of funding from unreliable source.

Implementation:

Endowment fund will need investment guidelines
State and federal money could be allocated to smaller or poorer districts to speed up the investment process
Restriction to stable bond markets will provide safe growth and reduce the risk of the stock market
Funds should have local control. This proposal is not intended to give out of state businesses an opportunity to profit.
Local banks and credit unions should be given preference in fund activities
Capping the fund size will create an end to additional fundraising for investment by the district
Spending a percentage of the yearly income will provide funds for the district and show constituents a return on investment.

Guidelines:

Fund should be capped when it provides between 50 and 100% of the yearly district budget
Yearly expenditures should be between 10 and 20% of yearly income
Districts must publish fund activities annually to include what the fund purchased
School districts should be able to pool a small percentage of their funds to create opportunities to fund larger projects.

Benefits:

Local involvement and control of spending will be more responsive to district needs
Replacement of unreliable funding
Reduction in local property tax needs
Reduction in need for state and federal funding
Creating an investment fund would allow for more local sources of bond money
Communities can invest locally

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Comment Preferences

  •  Tip Jar (0+ / 0-)

    I don't hit. But I do hit back

    by mcgee85 on Sun Jan 13, 2013 at 06:12:49 PM PST

  •  mcgee - I think it's a great concept (1+ / 0-)
    Recommended by:
    tjlord

    and there should be legislation allowing any public school district to raise an endowment fund. I don't agree with many of your specific thoughts about the regulatory framework you suggest, but that would be negotiated on a district by district basis.  I think there are two big challenges. First, raising a large enough endowment to make any real difference. School budgets are large dollar amounts and the income earned on an endowment fund is modest. Second, states are moving toward mechanisms to equalize per student funding on a state wide basis. It would be very difficult to raise an endowment fund if the income from the fund will be deducted from government funding so there is no net benefit the the local students. One possible approach is that the endowment would fund enrichment programs not funded through state or local sources.

    "let's talk about that"

    by VClib on Sun Jan 13, 2013 at 06:24:13 PM PST

    •  I will echo this (0+ / 0-)

      please remember that many school districts have limited skill sts in this area.

      Schools have tried this - the latest debacle was the sad tale of

      School District of West Allis-West Milwaukee; Kenosha School District No. 1; School District of Waukesha; Kimberly Area School District; and School District of Whitefish Bay.
      They are currently parties to
      SEC v. Stifel, Nicolaus & Co., Civil Action No 2:11-cv-00755 (E.D. Wis. Filed Aug. 10, 2011)
      The premise was they were
      searching for ways to maximize their limited resources to cover unfunded employee liabilities. To try and cover them they made investments in supposedly safe securities. In fact they were highly leveraged, risky, esoteric vehicles. The school districts relied on a trusted financial adviser and his firm. The adviser unfortunately had little knowledge of the risky investment he recommended. The firm did know but sold the securities. Now there are millions in losses.
      There are multiple articles about this. Here is one

      There is no environmental, social, economic or resource problem that wouldn't be helped by 3 billion fwer people on the planet.

      by tjlord on Sun Jan 13, 2013 at 06:44:55 PM PST

      [ Parent ]

      •  fund investment (0+ / 0-)

        This is designed to be straight forward. Invest in municipal bonds, state bond issues, or treasury bonds period.
        Steady secured growth over several decades along with community investment will result in a large enough fund providing some stability to overall funding. local banks and credit unions can make the financial transaction needed to invest and pay out a portion of the proceeds back to the district

        I don't hit. But I do hit back

        by mcgee85 on Mon Jan 14, 2013 at 11:37:54 AM PST

        [ Parent ]

    •  sorry (1+ / 0-)
      Recommended by:
      VClib

      meant to add this to doc2's comment

      There is no environmental, social, economic or resource problem that wouldn't be helped by 3 billion fwer people on the planet.

      by tjlord on Sun Jan 13, 2013 at 07:08:35 PM PST

      [ Parent ]

    •  fund growth (1+ / 0-)
      Recommended by:
      VClib

      The value of long term investment in safer bonds is the key.
      School districts are going to be around for a long time. We are currently funding public education I just want to create a fund that will grow over time, provide funding for extras that are going unfunded, and to invest community money in the community. I had envisioned your last point about enrichment programs.

      I don't hit. But I do hit back

      by mcgee85 on Mon Jan 14, 2013 at 11:30:59 AM PST

      [ Parent ]

  •  Institutional investing today (1+ / 0-)
    Recommended by:
    tjlord

    is a complex business. School districts are not big enough to hire their own qualified investment professionals, which is why money is generally managed at the state level, or at the state or large city-wide pension fund level. If districts all over the country were free to pick their own portfolios of bonds and stocks, you'd be guaranteed to have multiple blowups in which all of the funds are lost. It is also just inefficient for each district, which is all about teaching kids, to have to have that level of financial sophistication.

  •  This Sounds Like a Recipe for Advancing the Rich (2+ / 0-)
    Recommended by:
    Dretutz, Chas 981

    beyond the poor even more than property tax funding does it.

    There's already at least one business advertising donating to your favorite school district, I hear ads on progressive talk radio.

    The problems we have in education are at the bottom not the top. Education, and everything else about our nation.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun Jan 13, 2013 at 07:21:32 PM PST

    •  it is already being done by rich booster clubs (0+ / 0-)

      This would give everyone a vehicle to invest in their children and their community.
      By taking advantage of long term growth all funds would grow and eventually provide a broad base to increase spending on our public schools. When you mandate a certain percentage of the annual return be spent you get an annual increase of funding.

      I don't hit. But I do hit back

      by mcgee85 on Mon Jan 14, 2013 at 11:44:27 AM PST

      [ Parent ]

  •  No. Flat out no. (0+ / 0-)

    We have an "endowment fund" for our district.  And it is solely for the benefit of the richer companies.  

    The companies are allowed to make a "donation" to the fund.  In return, they are exempt from paying their personal (business) property taxes to the school district.  They do not have to make a minimum donation.

    The companies involved in this finance their candidates for the board.  The school district does not have any say on how these funds are spent.  So, of course the majority go for football program support, second to technical school support.

    So, my answer is NO.

     

    If you want to know the real answer: Just ask a Mom.

    by tacklelady on Mon Jan 14, 2013 at 08:03:08 AM PST

    •  yours is done wrong. (0+ / 0-)

      This is not setup as a corporate tax scam. voluntary contributions are accepted just as any fundraiser works.
      You bring up a great point. corporate take over of Government is happening everywhere and we don't want to give them another pile of money to steal. I will take that into consideration when I work with my legislators

      I don't hit. But I do hit back

      by mcgee85 on Mon Jan 14, 2013 at 11:50:02 AM PST

      [ Parent ]

  •  I'd be surprised if any school district (1+ / 0-)
    Recommended by:
    Chas 981

    was actively restricted from doing such a thing. Perhaps the "normal" way is to set up a nonprofit that holds the endowment and then disburses it. Our tiny district, for example, has a small trust that was set up upon someone's death to provide library materials.

    As for who would manage it, all of our school district's funds are pooled with other local funds and managed by the county.

    As others have pointed out, the real problem is creating the initial source of funds. Most school districts have annual budgets in the hundreds of millions of dollars range. An endowment for a particular small activity, like a library, or art supplies, or the like, is pretty doable. In some cases, (wealthy districts, not Title 1 districts!) PTAs pay for a couple of staff members. To expect more from an endowment is not terribly realistic.

    Fry, don't be a hero! It's not covered by our health plan!

    by elfling on Mon Jan 14, 2013 at 08:20:34 AM PST

    •  The key is long term growth (0+ / 0-)

      Any stable source of funds is preferable to the current system of holding our kids hostage while we try to tax people and business to educate them. This concept of investing rather than taxing changes the conversation.
      We have a variety of fundraisers going on all the time for school events. We should coordinate and expand these efforts. When we combine fundraising with investment in local, state, and treasury bonds the fund will certainly grow and provide an increasing dividend to our public schools

      I don't hit. But I do hit back

      by mcgee85 on Mon Jan 14, 2013 at 11:57:30 AM PST

      [ Parent ]

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