Sunday, September 29, 2013

School funding in Kansas: Is it up or down?

By PETER HANCOCK, The Lawrence Journal-World

In a little more than a week, the Kansas Supreme Court will hear oral arguments in a lawsuit claiming that school funding in Kansas is unconstitutionally low.

Plaintiffs in the case argue that since the Great Recession began in 2008, state lawmakers have cut public funding to schools, reducing per-pupil funding to its lowest point since the mid-1990s.

But others claim just the opposite, arguing that "total" funding — counting all state, federal and local sources of revenue — is actually at or near an all-time high.

According to state budget reports, there is evidence to support both arguments.

“Total” spending — which includes everything from teacher salaries and retirement contributions to boiler repairs and federal subsidies for school lunches — has indeed increased since the last school finance case was resolved by the Kansas Supreme Court in 2006.

But almost everyone who works with school budgets on a day-to-day basis will argue that the amount of money available to pay for teachers and general operating expenses — what is often called “classroom” spending — definitely has gone down.

“The operating money is down, but KPERS (the Kansas Public Employees Retirement System) and bond and interest is up,” Deputy Education Commissioner Dale Dennis said.

What the numbers say

According to figures published by the Kansas Division of the Budget, in annual documents called the Comparison Report, “total” public spending on Kansas schools grew almost 24 percent from 2006 to 2013, to $5.24 billion.

In addition, total state spending has grown about 17 percent, to $3.4 billion in the current fiscal year.

However, according to budget reports, that increase is more than explained by the growth in KPERS contributions, the money the state puts in to cover the employer's share of school employees' retirement benefits.

That's the result of legislation passed in 2003 that called for stepping up the state's employer contribution rates each year in order to address the retirement system's long-term unfunded liability.

Although advocates on both sides of the school finance debate agree that it's legitimate to include the cost of retirement benefits as part of the overall cost of operating a school system, school officials argue that they have no control over those costs, or over the benefits that public employees receive through KPERS. Those are matters determined solely by the Legislature.

Another major category that has increased over the years is bond and interest aid — a subsidy the state pays to poorer school districts so their property tax rates for repaying bonds can be roughly equal to that of wealthier districts. According to state budget figures, that has grown 106 percent since 2006, to $118.5 million this year.

Classroom spending down

Under the Kansas school finance system, local districts have two major sources of money to pay for day-to-day operating costs: the Base State Aid Per Pupil formula, which provides a flat amount of money per pupil based on the district's "weighted" enrollment; and supplemental aid, often referred to as the Local Option Budget, or LOB.

The LOB allows districts to levy local property taxes to supplement their base funding from the state, but only up to 31 percent of their state aid. And like the bond and interest program, the state subsidizes the LOBs for poorer districts to help keep their property tax mill levies down.

Before the last school finance case went to the Supreme Court in 2005, the base aid formula was set at $3,863. As a result of that case, the Legislature agreed to a multiyear plan to raise that amount, eventually reaching a peak of $4,400 in Fiscal Year 2009, which began in the summer of 2008.

That translated to $1.9 billion in spending by the state for both base aid and LOB subsidies.

But that was the year the Great Recession hit, resulting in huge declines in revenue flowing into the state.

Then-Gov. Mark Parkinson, a Democrat, was the first to cut the base formula by executive order. A series of cuts continued into the first two years of Republican Gov. Sam Brownback's administration.

Today, the formula is set at $3,838 per pupil. But even that is misleading, education officials say, because in 2005 the Legislature also changed other parts of the formula. The equivalent under the pre-2005 formula would actually be $3,594 — or $269 per pupil less than it was before the last school finance case. That resulted in about $2.4 billion in spending by the state on base aid and LOB subsidies.

The base aid formula is scheduled to go up next year to $3,852.

In 2005, the Kansas Supreme Court ruled that amount was too low because it was not enough to cover the actual cost of providing all the educational services required under state and federal law, particularly in schools with large numbers of economically disadvantaged students.

One of the key questions the Court will be asked to decide on Oct. 8 is whether anything has changed to make that a suitable funding level now.