Education Funding by Endowment

One of the hard realities of funding education is that during recessions when need for quality education and its related services are the highest, the funding is the most limited. A big part of state budgets goes to education. This is especially troublesome when Republicans become ardent in their stand against placing any additional tax burden on those who have not been hurt by the economic downturn.

While I was helping out with Steve Wilson’s campaign a couple of years ago; we came up with an interesting proposal. Have each school district create a local endowment fund. Every year the school board could take the return on investment from the fund, and use it for its budget. During good economic years, the state would kick in some reasonable amount of funds to build on the principle … and inevitably cut the contribution during bad years. The investing would be managed by the local school board. The schools themselves would be able to move surpluses to this fund, as well as have fund-raisers to supplement the fund. Kids could sell lemonade on the street corner.

Then when a certain ‘trigger’ was hit, such as a less than 1% growth in state GDP, the school districts could draw the regular return on investment plus 10% of the principle of the fund.

I don’t ever see this as the main way schools would be funded. Return on investment would simply be too volatile. But it could be a way by which they could ride out many of the tougher economic downturns.

Just a thought … DonC

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