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School district a major player in city economy

By Lisa Scheller - | Nov 20, 2002

A Kansas economist says schools are important businesses in small towns. And frequently, a school district is the largest employer around.

“They’re one of the institutions that the community is built around,” said David Darling, community development economist for Kansas State Research and Extension in Manhattan.

Not only do schools serve a valuable social service, they’re also economically important to any community.

For instance, Darling estimated that for every dollar paid to Tonganoxie school employees, particularly to those who live in the district, about 50 cents goes back into the community as money paid for various goods and services.

Richard Erickson, USD 464 superintendent, said of the district’s $7.125 million working budget, about 85 percent, or about $6 million, goes to salaries and employee benefits. Gail Drake, district clerk, estimated district employees’ take-home pay at about $4.2 million annually.

About 80 percent of the district’s roughly 200 employees live in the district.

According to Darling’s calculations, this means school employees could circulate close to $2 million in cash throughout the community.

Bill Altman, president of Community National Bank, said this makes a difference.

“I think it’s great that most of the employees of the district live in the district and reinvest their salaries into the district,” Altman said. “Anytime you have a major employer like that it’s an economic boon to the community.”

Altman said a large employer like that ultimately adds to the banks’ assets, as well when customers deposit funds into checking and savings accounts.

“We loan out 90 percent of that money, which in turn creates more money through fractional reserve banking,” Altman said. This has a snowball effect, he said.

“It creates new money for somebody else and then they deposit it in the bank and that creates more loanable funds which creates more money,” Altman said. “That’s what really grows a local economy.”

Tonganoxie city administrator Shane Krull said good school districts draw more residents, adding to the overall financial effect.

“Oftentimes those towns that are in proximity to the larger metropolitan area works as a good calling card to draw people into the community,” Krull said.