Accelify Blog

Schools Still Face Hurdles (KS)

July 6, 2010

Here are a few stark facts about the 1-cent increase in the state sales tax that Kansans began paying Thursday:

–About 58 percent of the revenue generated by the sales tax is going to K-12 education.

–That 58 percent just replaces $172 million in federal stimulus money that was used last year to somewhat prop up school spending in the face of dramatic drops in state revenues.

–It is no guarantee against another financial crisis for schools in the coming years.

"The tax increase just went to fill the hole," said Mark Tallman, assistant executive director of the Kansas Association of School Boards. "It didn’t increase funding and many budgets are still below where they were a year ago. The economic decline affected state revenues so much that even with a significant tax increase we’re just holding even."

Continuing to "hold even" will be as nerve-racking for legislators and school administrators in the coming school year as it was in the last.

The budget passed by the Legislature in May projects that the state general fund will have an ending balance for the 2010-11 fisc al year of $1.4 million, which is essentially nothing in a budget of $5.4 billion. And that modest surplus assumes that the U.S. Congress at some point will approve a Medicaid bill that will direct about $130 million to Kansas.

If that doesn’t come through, or state revenues don’t meet projections, there will have to be more mid-flight budget corrections, as there were five times last year, during which base state aid per pupil was cut from $4,433 to $4,012.

And if state revenue projections were a roulette wheel, you’d be better off betting on red because in the past 12 months, revenues have fallen short of projections nine times.

Down the road a couple of years, Tallman told a group of school superintendents and legislative candidates this week in Hutchinson, the picture continues to look bleak. The Kansas Legislative Research Department estimates that the general fund’s ending balance for the 2012 fiscal year will be $216 million in the red — if state revenues grow 4 percent.

Two years beyond that, state leaders may have to worry about what to do when the temporary sales tax increase expires at a cost of $350 million to the general fund.

"A lot of people in education feel like all we’ve done the last two years is cut (budgets)," Tallman said. "It’s been terrible. The Legislature has felt the same way, and nobody has had any fun. Well, it doesn’t look like that’s going to dramatically change any time soon."

***

A few more facts:

–State aid payments to school districts have been late nearly every month this school year.

On Wednesday, the last day of the fiscal year, school districts finally received the last half of a general state aid payment that had been due May 3 and a special education payment that had been due June 1. But they received only half of a general state aid payment due June 21. They won’t get that or a local option budget aid payment until July 8.

Statewide, the money still owed school districts for the recently completed fiscal year totals about $400 million. For the Hutchinson school district, it’s about $2.5 million.

–"By law," the state is supposed to pick up 92 percent of the tab for the excess costs of special education. But only 86.2 percent was funded this year.

–Local option budget state aid was funded at 90 percent of the formula governing distribution to poorer districts.

–Capital outlay state aid was eliminated from the budget in its entirety for the 2009-10 and 2010-11 school years. That cost school districts $22 million in the school year just ended and $26 million for the coming school year.

Professional development programs for improving teachers, though required by the state, were not funded, a savings of $7.5 million for the state.

–"By law," base state aid per pupil is supposed to be $4,492, not the $4,012 the state is struggling to pay currently.

Despite all that, most school districts are downright grateful for what they’re getting in next year’s budget.

Lori Blakesley, the director of fiscal management and business operations for Hutchinson schools, said this week it was a "miracle" they ended up with $4,012 in base state aid per pupil. During one long, cold stretch of winter into spring, school administrators across the state had worried that aid would drop to $3,726 if a tax increase wasn’t passed.

School districts got by this past year by spending down cash reserves and postponing buying new buses, textbooks, computers and software. They closed buildings during breaks and reduced the total number of school days to save on utilities. They eliminated or cut back on overtime, library purchases, classroom supplies and general maintenance. At least one district asked its teachers to take a midyear pay cut. Some laid off support staff and eliminated some minor sports.

And they’re doing more of the same for the next school year, including eliminating some teaching positions, because their contingency reserve funds have fallen and because costs, including fuel and utilities, are rising.

"What we know to be a fact is that just to do business this year exactly as we did last year will cost more," said Nickerson Superintendent Bill Hagerman. "So that means we have to do less. We have to reduce our expenditures or increase our revenues. We have to do one or the other. Well, we didn’t increase our revenues, obviously, so we’re going to have to decrease our expenditures. I would venture to say that almost every district across the state decreased their expenditures this year by a significant amount through lots of different things. … We all know we cut teachers. We did all these other budget cuts because we are not going to have what we had (in the past)."

***

Even more facts:

–School districts get about 70 percent of their money from the state.

–School districts are limited in how much money they can raise locally. E very district is required to levy 20 mills for their general fund; no more, no less. Schools can assess an additional levy for a local option budget, but that is limited to a percentage of their general fund set by the state.

–School district voters also can approve bonds for construction of new schools and other facilities or renovation of old ones, and depending on a district’s wealth, the state will help pay off a portion of the bonds. Bond and interest was the fastest-growing segment of school spending from 1999 to 2009, up 198 percent.

–Although base state aid per pupil was $4,400 in 2008-09, total spending, including other forms of state aid, federal dollars and local levies, came to an average of $12,554 per pupil statewide. That includes money for repayment of construction bonds, additional capital outlay funds, payments into the state retirement system for teachers and other expenditures that do not figure into general operating expenses.

"By and large," Tallman said, "it is the state that determines how much local school districts have to spend, because it is the state that sets the base budget, the state sets the weightings, the state sets the maximum on the LOB, distributions out of federal aid go out on a formula. So, for the most part, what local school boards decide is not how much they spend but how they are going to spend the dollars that they have received."

But even that’s highly restricted. Much of what school districts receive from the state and federal government must be spent on specific programs, such as for special education students, English Language learners and students considered "at-risk" because of low scores on assessment tests.

Schools are expected to improve student achievement a cross the board, and in general they’ve made significant strides in that area in recent years, especially when the Legislature increased state aid and passed a three-year funding plan in the wake of the Montoy case, a lawsuit filed by Schools for Fair Funding.

But the state didn’t have enough money to fully fund the third year of that plan, and over the past two years, base state aid per pupil has fallen below what the state paid before the three-year funding plan was passed.

That has prompted Schools for Fair Funding, supported by Hutchinson, Nickerson, Buhler, Wichita, Dodge City and Garden City and 58 other school districts, to serve notice with the Legislature that it plans to file a new lawsuit over the adequacy of state funding. The group argues the state has not met its constitutional obligation to adequately fund schools and that a policy of passing numerous tax cuts and exemptions doomed the three-year funding plan adopted in 2006 even before the economic downturn began.

"The answer is not always more money," said Walt Chappell, a member of the state Board of Education from Wichita. "Suing is one option. But that might be a five-year thing. It may be another five years before we have an answer from the Supreme Court. Montoy was at least that much. We’ve got to have some answers now. The next couple of years are really going to be major, in my opinion."

"People are really counting on us to use our heads now and not just keep putting hands out for more (money) because there’s not a whole lot more out there to grab."

***

A few final facts to remind that it’s not all doom and gloom:

– Forty years ago, in 1970, just un der 60 percent of the adults in Kansas had graduated from high school. Today, it’s about 90 percent.

– Just over 10 percent of Kansas adults had earned a college bachelor’s degree in 1970. Today, it’s more than 30 percent.

– A U.S. Chamber of Commerce study ranks Kansas K-12 education No. 7 in the nation in academic achievement, No. 3 in academic achievement for low-income and minority students and No. 8 on return on investment.

But educators are worried about how they’re going to keep that up.

"The long-term vision is going to be important because this (economic downturn) won’t last forever," Hagerman said. "It’s going to be hard for the next year, probably two, and after that we’ll come out the other end, hopefully, and see things in a little better light."