Historically, communities across America have supported referendums in their local school districts, but that is changing as families face ongoing financial strain and begin to question the efficacy of this process—not to mention the ability of school districts to effectively manage these funds.
With communities torn between the need for quality education and harsh economic realities, it’s critical that school districts demonstrate that referendum dollars are being used effectively and delivering tangible benefits to the community. Placing funds with local community banks rather than traditional investment vehicles might offer a solution.
A Better Way to Manage District Funds
The referendum process can be complex, costly, and resource-intensive. Legal and consulting fees, voter behavior studies, marketing and public relations efforts—all of these costs add up, regardless of whether the referendum passes. Therefore, school boards must be confident in their abilities to gain voter approval before proceeding, and they must be prepared to protect and maximize these funds once approved. This often means sticking to familiar investment vehicles and limiting risk whenever possible.
Referendum funds are placed in investment vehicles in accordance with district investment policies, some of which can limit liquidity. By spreading deposits among community banks with deposit protection, districts can optimize deposit yields while ensuring the same level of safety. This also provides tangible benefits to the community.
Keep Funds in the Community
Keeping district funds within the district itself should also be a top priority. By placing deposits in local banks—perhaps through a bank network-based solution— school districts can not only meet compliance requirements outlined in their investment policies (and potentially achieve better returns) but stimulate local economic growth. Deposits at community banks can serve as a catalyst for job creation, business expansion, and population growth, which in turn can boost school enrollment.
In doing so, districts are also able to provide more transparency to the community about the use of their tax dollars, which is critical to maintaining public trust. Beyond traditional financial reports, districts can work with their local banks or network-based solutions to provide detailed progress reports on projects funded by referendums. For example, if funds were raised for a new building, regular updates on construction and the impact on the community—such as improved educational outcomes, enhanced safety, and job creation—can reinforce the district’s accountability to taxpayers.
Referendums serve a useful purpose as schools contend with funding gaps and the growing needs of students. But as popularity for these ballot initiatives wanes, it’s vital that school boards consider alternative investment vehicles to safeguard their funds and reinvest in their communities.
Learn how Ampersand can help your school district with deposit strategies. Contact Ampersand to get started.
