State K-12 Funding, Aid Formulas High on Legislators’ Radar

With the state legislative season now in full swing, K-12 funding—as well as the prospect of changes to how that money is distributed among schools—has emerged as a top issue for lawmakers.

While bickering over how much money public schools should get is a perennial drama, school finance analysts predict that real and lasting change to states’ school spending habits could be on the horizon.

The supreme courts in Kansas and Washington have threatened those states’ legislatures with shutting down schools this summer if they don’t boost their spending in the coming months. Iowa, Maryland, Texas, and Wyoming are considering bills that would fully replace their funding formulas, and dozens of states have commissioned studies on their school funding formulas.

In plenty of other states, governors proposed in their State of the State speeches last month major cuts or increases to their public schools’ budgets.

Confluence of Factors

Analysts attribute the flurry of activity to a confluence of factors:

• Health-care and pension costs continue to squeeze K-12, which, for years, has dominated states’ budgets.

• Rising anti-tax sentiment paired with soaring school technology and special education costs have left legislators little choice but to act this year.

• State courts in recent months have ruled in several school funding lawsuits from parents and districts to either free up or force legislators to replace their funding formulas.

• The Every Student Succeeds Act gives states more control over their own education agendas, and many governors want their spending habits to be in line with new statewide initiatives and school accountability systems.

• With Republicans in complete control of several statehouses, many are rushing to replace school funding formulas before this fall’s election, when 36 governors and two-thirds of state legislative seats are up for grabs.

• Although the recession is in states’ rearview mirror, some continue to struggle with collecting sales-, income-, oil-, and coal-tax revenue. That’s led to cuts in some states’ K-12 budgets.

• But the relative rebound of property tax has given states breathing room to consider more fundamental changes to their school funding formulas, said Daniel Thatcher, a school funding analyst for the National Conference of State Legislatures.

“States for so long have been in catch-up mode,” Thatcher said. “They finally feel like they can put their heads up and look at changing their funding formulas now that revenue has caught up.”

Funding formulas—those complex calculations that dictate how most education funding is distributed—are both technically and politically volatile. If legislators tinker with one tiny rule, they can cause dramatic budget cuts for one district and a windfall for another, upsetting a broad bipartisan and vocal coalition of parents.

Experts suggest funding formulas should be replaced every seven to 10 years, though the average funding formula today is more than 20 years old. Some states, such as Delaware and Vermont, have funding formulas that are more than 40 years old.

Local district officials have complained that antiquated funding formulas aren’t responsive to shifting demographics and 21st-century-classroom needs.

Courts Weigh In

This year in particular, state supreme courts in some instances have instigated changes to their states’ funding formulas.

In Kansas, the supreme court said last year that the amount of funding the legislature sent to the state’s schools was still not enough to meet a 2016 ruling that determined the state’s school spending is constitutionally inadequate. The court said the legislature must come up with a solution by April or risk the shutdown of all public schools.

Republican Gov. Jeff Colyer, who recently replaced current U.S. Ambassador Sam Brownback, said in a speech last week that he wants to add a $513 million increase in public school aid over the next five years. But he’s opposed to raising the state’s taxes or levying any new ones, as the state did last year, and hopes to get the money mostly from economic growth.

“We must keep our schools open,” he said.

Similarly, in Washington, that state’s legislative chambers are at odds over how to speed up the timeline to provide teachers with a pay raise as that state’s supreme court has demanded. In a damning ruling last year, the court said the legislature was still in contempt of court for failing to adequately fund its schools as the court asked the state to do in its 2012 McCleary v. Washington ruling. Taking a cue from Kansas, the court said it’d ramp up penalties if the state failed to provide a solution before the end of this year’s session in March.

In some instances, court rulings against plaintiffs and in states’ favors have sparked a rush by legislators to replace funding formulas.

Texas’ supreme court in 2016 ruled that even though the state’s funding formula was wanting, it wasn’t the court’s place to determine how the legislature spends its money.

Since that ruling, the state’s GOP-dominated legislature has made several attempts to dismantle the state’s “Robin Hood” funding formula, which redistributes more equitably oil money between richer and less-wealthy districts.

This year, Republican Gov. Greg Abbott said he wants to place a 2 percent cap on property taxes for school funding. The state’s legislature will consider the proposal in its 2019 bienniel session.

Connecticut’s supreme court in January struck down a lower-court ruling that took issue with several portions of the state’s funding formula and teaching practices.

Although the ruling freed up the legislature to spend as it likes, Democratic Gov. Dannel Malloy said that it’s still necessary to replace the funding formula because of rising pension costs, aging demographics, and the large achievement gap between the state’s white, black, and Latino students.

And in Mississippi, a court last fall struck down a lawsuit from 15 school districts that claimed the state failed to fully fund the state’s funding formula. The Mississippi Senate is currently debating a bill passed by the House that would provide $107 million more to schools over the next seven years. Mississippi has one of the lowest per-pupil spending rates in the country.

On the Horizon

Some states are rushing to change their funding formulas before pending court rulings.

Iowa’s restrictive funding formula, crafted in 1971, has left many of its impoverished urban districts and depopulated farming communities with little cash to spend on schools. Parents there sued the state last year, arguing the formula is unfair and discriminatory against poor students. A lower court struck down the case, but the state’s supreme court could soon weigh in.

Meanwhile, the Iowa Senate last year passed a replacement of the state’s funding formula, but the House has yet to vote on it.

Elsewhere, while major changes to states’ funding formulas aren’t being debated, governors and legislative leaders are pushing major decreases or increases in school spending.

States heavily dependent on natural resources are looking to reduce their budgets.

Alaska’s legislature is attempting to stave off cuts to its school system by pulling $1.2 billion from its reserves, a solution that’s unsustainable, many school advocates say.

In Wyoming, Gov. Matt Mead, a Republican, is proposing that the state take $66 million out of its $1.8 billion in school spending. A state-hired consulting firm recently recommended to the legislature that it avoid cuts hitting English-language learners and disadvantaged students.

And in Oklahoma, Gov. Mary Fallin, a Republican, used her State of the State speech last week to roll out a proposal to raise taxes to stave off an ongoing fiscal crisis. As part of that plan, dubbed “Step up Oklahoma,” teachers would get an ongoing $5,000 bump in pay.

“Let us make no mistake about it,” Fallin said. “This is a historic, defining moment before us. What we do as a unified group of people elected by the citizens of our state could be considered the moment in time that changed Oklahoma.”