School Funding Loophole in Peril

February 9, 2010

TOPEKA | The Shawnee Mission School District’s clever interpretation of state law now has other school districts urging legislators to close a loophole in school finance law.

Sixteen years ago, lawmakers created a fund to help local districts pay for special-education students whose schooling was expensive — more than $25,000 per pupil.

Lawmakers said they intended the money, known as “catastrophic aid,” to pay for services for students whose educational needs would constitute an unusual expense for schools. In 2008, the state spent $6 million on the program.

But last year Shawnee Mission changed the way it calculated special-education expenses by adding the costs of such services as busing and instruction. As a result, more special-education students qualified for catastrophic aid, and Shawnee Mission received an additional $3 million.

But services such as busing and instruction, critics pointed out, already are covered by other funds.

Olathe and Blue Valley schools soon adopted a similar interpretation, and state auditors warned that the cost of catastrophic aid would rise to $48 million a year if other districts fo llowed suit.

Other districts complained, since more special-education money sent to Shawnee Mission meant less money for other districts.

Lawmakers are reviewing two bills this year that would close that loophole. Both would reduce claims for catastrophic aid by raising the $25,000 threshold. Lawmakers also are looking at preventing “double-dipping,” where a district can claim catastrophic aid for expenses already covered.

But Tim Rooney, Shawnee Mission’s budget director, defended the district’s interpretation, saying it was approved by the state Department of Education. He said Kansas’ special-education system already underfunds larger districts.

“We think the overall formula needs to be fixed,” Rooney said. “And we don’t want to lose our money.”

Olathe and Blue Valley schools, meanwhile, stand to lose more than $1 million each if the loophole is closed.

Senate Vice President John Vratil, a Leawood Republican who is on the committee reviewing the legislation, said the loophole shows that lawmakers should revise the entire special-education funding law to eliminate disparities.

“It’s not fair to fix one problem without fixing the other,” Vratil said.

In other Kansas school finance news, a state audit released Monday concluded that Kansas could save as much as $138 million if school districts with fewer than 1,600 students were consolidated. The audit looked at the potential savings of merging some of the state’s 293 districts.

In the scenarios examined by auditors, most local districts would not be affected. But in one scenario, Piper School District would be merged into the Kansas City, Kan., district and the Easton School District would join the Leavenworth district.

Consolidation is on the minds of m any lawmakers looking for ways to eliminate a $400 million budget deficit. But auditors cautioned that savings wouldn’t be realized immediately because it takes years for districts to complete a merger.

Read more: School funding loophole in peril – KansasCity.com