Funding Shortfall Splits Missouri Schools

March 8, 2010

Missouri’s budget troubles have reopened divisions among public schools, which after uniting in a quest for more money now are splintering over who should bear the brunt of state funding cuts.

The budding disagreement at the Missouri Capitol comes down to a difference of opinion about what is fair — an argument not unlike what occurs almost every day among children on ele mentary school playgrounds.

It’s the type of argument that happens when there are more children wanting to shoot baskets than there are basketballs. In this case, it’s money that is in short supply.

With state tax revenues down 12.5 percent from last year, Gov. Jay Nixon has concluded that Missouri does not have enough money for the midyear funding adjustment called for under the state’s school financing formula. Many schools had been banking on the money, based on the state’s recent history of providing it.

Now with barely four months left in their budget years, schools are scrambling to adjust to the fact that their state payments will be about $43 million less than they had expected.

It’s a situation never even contemplated in the 2005 law that revised Missouri’s school funding method. The law includes no direction about what the Department of Elementary and Secondary Education should do if the state fails to provide the full amount of money called for during the seven-year phase-in of the new formula.

So the department is making its own solution. It distributed a memo last week to public schools describing a plan to reduce the state’s June monthly payment by about 2 percent for each of the state’s 523 school districts. The memo detailed exactly how much less money that would mean for each district.

But on the same day that the department distributed its plan, a divided House Budget Committee voted in favor of an alternative funding-reduction plan. By adding some new wording to an appropriations bill, lawmakers essentially would slow down the phase-in of the 2005 funding formula, resulting in larger reductions this year for some districts and no cuts for others.

Both options are being cast as unfair to some schools, depending on who is making the argument.

At issue are about 150 school districts that currently are treated differently from others. These districts are "held harmless" (the term used in the Capitol) from the effects of the 2005 school funding formula, which otherwise would call for them to receive less money per pupil than they did under the prior funding method.

Mid-Missouri schools in the "hold harmless" category include Fulton, South Callaway R-2/Mokane, Jamestown C-1, Osage County R-1/Chamois, School of the Osage R-2, Miller County R-3/Tuscumbia, St. Elizabeth R-4, Camdenton, Climax Springs, Macks Creek and Columbia.

None of the Cole County school districts are in the "hold harmless" category under the new formula.

Missouri also had designated some "hold harmless" districts under the 1993 school funding formula, including Jefferson City. But the number of districts in that category has tripled since 2004, when the prior version of the financing formula still was in place.

Included among the school districts held harmless from spending reductions under the financing formula are the state’s two largest districts — St. Louis and Kansas City — as well as some of the largest suburban districts and a mixture of small, rural districts.

Advocates of the House Budget Committee proposal say it’s not right to cut funding for held-harmless schools when state revenues fall, because they didn’t receive funding increases under the financing formula when other schools did.

"I think it’s an issue of fairness. Why would you penalize a school district who has not benefited from the four years of increases?" said House Budget Committee Chairman Allen Icet, R-Wildwood.

But proponents of the flat 2 percent cut contend the hold-harmless schools have benefited fro m the 2005 law that revised the formula — by not sustaining the cuts they otherwise would have been due. They assert that when state revenues fall short, all schools should share the burden.

"With the resources we have, we just want the funding to be fair and not start picking out certain schools in the state that won’t have to take their fair share of reductions," said Rep. Rachel Bringer, DPalmyra.

Bringer has asked the Department of Elementary and Secondary Education to produce a district-by-district list showing how schools would be affected by the approach that exempts held-harmless districts from this year’s reductions. She also has asked the department to analyze the effect on each school district under an alternative approach that would reduce funding on a per pupil basis.

Those results should give lawmakers plenty of data over which to argue on behalf of their local districts when the full House debates the school funding reductions. Lawmakers were armed with similar statistic sheets five years ago as they debated the best way to write the school funding formula.

About half of the state’s school districts — including a mix of "held-harmless" districts and those financed by the traditional formula — united to sue the state on a contention that it failed to provide enough money to schools and distributed that money inequitably. The schools lost after a prolonged court battle that finally ended last year.

With state funding falling below the expectations of the financing formula, "it reopens this whole issue of equity, and what does equity mean?" said Brent Ghan, a spokesman for the Missouri School Boards’ Association, which is neutral on the issue.