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Schools increasingly rely on local funding

By KEN STEPHENS Special to the Salina Journal

A lot of people would like to rewrite the Kansas school finance formula — from Sen. Sam Brownback, the Republican candidate for governor, to members of the Legislature and maybe even some local school board members and superintendents around the state.

But few agree on how to do it, or even what’s wrong with the current, tremendously complex formula. Tinkering with it without adding more money into the pot means there would be winners and losers.

And that makes local school boards and superintendents nervous.

Brownback has said the formula for determining how much state aid each school district gets is broken, though he has declined to say how he’d change it. His opponent, Democrat Tom Holland, has said he supports giving local school boards authority to raise more money through their Local Option Budget while maintaining state equalization aid, which supplements the LOB in poorer districts.

Two state legislators, House Speaker Pro Tem Arlen Seigfreid, R-Olathe, and Sen. Steve Abrams, R-Arkansas City, have offered proposals that also would lift the lid on the LOB, saying doing so would give local school boards more control of their budgets.

“Local control is a great political buzzword right now,” Dodge City Superintendent Alan Cunningham said. “But what it means is that if you have, you can provide, and if you don’t have, you can’t.”

That’s because the LOB relies on local property taxes, and densely developed or mineral rich school districts that have high property valuation can produce more money, or produce the same money far more easily, than districts with lower property valuation.

For example, the Shawnee Mission school district in Johnson County is the richest in the state, with assessed valuation of just over $3 billion in 2009. That school district, with average teacher salary and benefits of $66,806, could afford 46.3 more teachers by increasing its LOB by a single mill ($1 in tax for each $1,000 in assessed valuation).

Meanwhile, in Weskan

Near the other end of the spectrum, the Weskan district in Wallace County in northwest Kansas had assessed valuation of $6.4 million and would have to raise its LOB 6.3 mills to pay for a single teacher at that district’s average salary and benefits of $40,565.

And Weskan is far closer to being a typical Kansas school district than Shawnee Mission.

Based on 2009-10 data from the Kansas State Department of Education, a 1-mill increase in the LOB would be insufficient to pay the salary and benefits of a single teacher in 187 of the 292 school districts in existence last school year. Forty-nine districts could afford one to two more teachers, 40 could afford 2.1 to five more teachers, nine could afford 5.1 to 10 more teachers, four could afford 10 to 20 more teachers and four could afford 30 or more teachers.

The 10 richest districts are all in highly developed urban areas. Three of the four richest are in Johnson County. Wichita is the other in the top four. The 10 poorest are all in rural areas with the exception of Fort Leavenworth, which ranks as the poorest in the state in assessed valuation because the district is comprised entirely of federal property, including a prison, military post and national cemetery.

More relying on LOB

School districts get nearly all their money from three sources: state aid, federal aid and local property taxes. How much comes from each source varies from district to district. But in 2008-09, 58 percent of all school district expenditures came from state money, 7.3 percent from federal money and 34.7 percent from local revenues.

Each district is required to levy 20 mills for its general fund. But districts may levy additional taxes for construction bonds and interest, capital improvements and the Local Option Budget, which some superintendents like to say is for the “extras” a district wants.

Use of the local option budget has grown dramatically over the past 14 years. Out of 304 districts in 1996-97, 142 didn’t have an LOB, according to the Kansas Association of School Boards. A year later, only 72 didn’t. Since 2006-07, every school district in the state (there were 293 last year) has had an LOB property tax levy.

And the extent to which districts have leaned on the LOB also has grown. In 1996-97, only seven of 204 districts exercised the maximum allowable LOB at the time, which was 25 percent of the general fund.

In 2009-10, 245 of the 292 districts exercised the LOB for at least 25 percent of the general fund, and of those, 151 were at the new maximum of 30 percent. Seven more had conducted a local election to allow them to go to 31 percent.

State aid comes in several forms, but the two most important to a district’s operating budget are general state aid and supplemental state aid for its Local Option Budget.

Funding falls behind

By law, the Kansas State Department of Education ranks all the school districts in the state according to their assessed valuation per pupil. Because the state doesn’t have enough money, however, it is paying only 92 percent of the amount schools are due in equalization aid.

The state also is falling short in its ability to pay base state aid per pupil. That was supposed to be $4,492 a pupil this year, according to the law that created the current formula in 2006. But again, because the state doesn’t have the money, school districts are getting only $4,012 a pupil this year.

The state Constitution

The current funding formula was written after Schools for Fair Funding, a coalition of 19 school districts, successfully challenged the constitutionality of the adequacy of state aid and the equity with which it was distributed. The Salina School District was one of the lead districts in the suit.

The Kansas Constitution requires that the Legislature “make suitable provision for finance of the educational interests of the state.”

In its decisions, the Kansas Supreme Court also confirmed that the Constitution requires equity in the distribution of state aid. That means it’s distributed in such a way as to ensure that every student gets an adequate education, regardless of whether the district is rich or poor.

The Legislature’s three-year funding plan passed in 2006 called for annual increases in base aid. But the state didn’t have the money to fund the third year of the plan, and then the recession made it worse. Today, base aid is less than what the Kansas Supreme Court said was inadequate in a series of rulings in State vs. Montoy in 2005 and 2006.

As a result, Schools for Fair Funding has grown into a larger coalition of 72 districts, 64 of which are financially supporting new litigation to again challenge the adequacy of state aid. Salina has elected not to join this suit.

John Robb, a Newton attorney for Schools for Fair Funding, said he expects to file the new lawsuit in the first week of November. It will be at least the fifth school finance court case since 1972.

Robb said proposals to unleash the LOB are coming from legislators in high-wealth areas that can afford it.

The Olathe school district, where Siegfreid lives, is the fourth richest in the state, with assessed valuation of $1.8 billion. A 1-mill increase there would pay for 31.3 more teachers.

“There’s a startling difference in the ability of local districts to keep up, which begs the question: If funding education is a state responsibility, why are they pushing it back on local districts?” Robb said.

Impossible equation?

Writing a formula to satisfy everybody, Cunningham said, is impossible.

Mark Tallman, a lobbyist for the Kansas Association of School Boards, once suggested that he would like to lock a group of the smartest superintendents in the state in a room to rewrite the formula. The kicker, though, would be that when they were done, all their names would be placed in a hat and their names would be randomly drawn to determine which district they would serve in the future.

“So don’t write the formula for the district you’re in now,” Tallman said. “Write a formula you think will work for whatever district.”

The Kansas Supreme Court said in its 2005 and 2006 Montoy decisions: “Increased dependence on local property taxes as decided by each school district exacerbates disparities based on wealth,” the court said in its decision.

Robb, one of the attorneys who argued the Montoy case on behalf of the school districts, said education is a state responsibility. “So when you push it off on local districts to fund, you come up with disparities based on local wealth, which the court already has said isn’t constitutional.”

Just need to fund it

Several superintendents have said that the school finance formula isn’t broken. What’s broken, they say, is the funding for the formula.

Cunningham said the current formula “went a long way” toward providing adequate resources until the Legislature and governor started reducing the Base State Aid per Pupil in the formula the past couple of years.

Strecker said the problem is the lack of a plan to fund the formula. He said some incorrectly place all the blame for the state’s inability to fully fund the formula on the recession.

“When the state had money, it didn’t develop a plan to sustain funding over time,” he said. “That’s what we’re asking.”

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