THE RELATIONSHIP OF SCHOOL DISTRICT INVESTMENT RETURN TO SELECTED CHARACTERISTICS, REVENUE SOURCES, AND INVESTMENT PRACTICES IN PENNSYLVANIA.

Public education in the Commonwealth of Pennsylvania involves a significant amount of money. The total was 4.4 billion dollars in the school year ended June 30, 1979. This sum of money, which was spent by the 505 school districts in the Commonwealth, was derived from three main sources: subsidy payments from the State, subsidy payments from the Federal government, and local taxes and other local sources. Money does not flow to and from the school districts in a pattern which follows for the disbursement of funds immediately upon the receipt of subsidies and tax revenues. When receipts of cash do not precede or coincide with the disbursement of cash, borrowing is necessary. However, when the inflow of cash exceeds the outflow for any part of the school year, an opportunity is presented to school district administrators to invest and earn interest income on the temporary surplus of monies. The investment of school district monies to earn interest income is an important element of the financial management of public schools. However, legal limitations on investment opportunities, the flow of cash from its source, and the investment practices of administrators can either aid or impede investment income returns to school districts. This research study focuses on analysis of the relationship of selected demographic and economic characteristics (resident population size, aggregate resident personal income, gross annual budget, property market value, expenditures per pupil, annual debt service), various sources of revenue (state subsidies, local taxes and other local sources), and investment practices (commercial bank certificates of deposit, savings associations certificates, savings accounts, federal treasury bills, repurchase agreements, tax anticipation loans, etc.) to aggregate rate of investment return for Pennsylvania school districts. This is an educational administration research study which uses an inferential statistical approach. The research methodology makes use of (a) scatter diagrams to illustrate the nature of data relationships, (b) calculations of the coefficient of determination for individual independent variables and a dependent variable, and (c) multiple regression and correlation analysis of multi-independent variables and the dependent variable. A sampling of 125 school districts selected randomly on a proportional basis is drawn from the universe of 503 second-, third-, and fourth-class school districts in the Commonwealth. The analyses examine the relationships of the individual independent variables to the aggregate rate of investment return and do not infer a cause-effect relationship. The conclusions and recommendations of the study address the results as predictors of investment return for school districts and the need for information, guidance, and continuing education of school administrators relative to the investment of temporarily idle funds