Funding dilemma divides state districts into winners, losers

When it comes to shouldering education funding shortfalls, Missouri school districts are no longer created equal.

A new law effective in the coming school year will split the state’s districts into winners and losers.

“It’s a screwed-up mess,” said Raytown Superintendent Allan Markley.

It is, at least, the latest complication in the forever-complicated exercise of trying to equitably distribute state education money.

“The harsh reality,” said state Sen. David Pearce, a Warrensburg Republican and chairman of the Senate Education Committee, “is that you’ll have winners and losers every way you turn.”

The measure, which was inserted late in the 2014 legislative session at the bottom of an early childhood education bill, clarifies that “hold-harmless” school districts cannot have their state aid reduced by application of Missouri’s current funding formula.

When a new formula was written in 2005, the law included hold-harmless provisions to ensure that any district that would receive less funding under the new formula would be held at its previous funding level.

However, since 2010, when the state’s appropriations for education began falling short of the formula’s funding targets, the Department of Elementary and Secondary Education had been spreading the shortfall across all districts.

No more. Going forward, hold-harmless districts will not be subjected to the reductions.

And the majority of districts that are not hold-harmless will have to absorb all of any new financial pain if the state can’t put more money into education.

What could it mean?

The department ran some numbers for state superintendents, taking the evenly reduced appropriations of 2015 and projecting how the change in the law would affect each district’s appropriation in 2016 if overall funding does not change.

On the plus side: 263 hold-harmless districts, including 37 charter districts, would see their funding levels restored by hundreds of thousands of dollars — and in some cases, up to more than $2 million.

The biggest gainers in the Kansas City area would be Kansas City Public Schools, $2.3 million; Hickman Mills, $1 million; and Fort Osage, $772,000.

On the minus side: 297 districts would see most of their appropriations fall by anywhere from tens of thousands of dollars to more than $1 million.

The biggest potential area losers are the North Kansas City School District, which would lose $1.3 million; Park Hill and Lee’s Summit, more than $700,000 each; and Blue Springs, more than $600,000.

That’s if funding doesn’t change.

So education officials split by the change in the law have a unifying cause: Increasing state funding so the disparity is rendered moot.

Different analyses estimate that an infusion of $95 million to $125 million would at least keep the hold-harmless districts whole and duck the need to take from the other districts.

The economic and political climate will make that hard to come by.

Gov. Jay Nixon, in his State of the State address Wednesday, proposed a $50 million increase for K-12 education. The legislature might try to do more, Pearce said, but there’s no way of knowing how it will play out.

That means North Kansas City goes into its budget planning for 2015-2016 needing to prepare for a $1.3 million drop, said Paul Harrell, the district’s chief financial officer.

“This has significant ramifications for us,” he said. The state’s failures to meet funding targets over recent years “are a factor of the statewide economy,” he said. “We believe everyone should share equally in that loss.”

State Sen. Eric Schmitt, a St. Louis County Republican and proponent of protecting the hold-harmless districts, said districts funded through the formula have benefited more from the new distribution of dollars it put in place a decade ago.

Those districts, like North Kansas City, should bear the weight of formula shortfalls, he said. The 2005 formula law requires it, he said.

“Some may argue that (the department’s decision to spread the shortfall among all districts) was appropriate,” Schmitt said. “But the law did not allow it. DESE overstepped its bounds.”

Deputy Commissioner Ron Lankford said the Department of Elementary and Secondary Education was trying to avoid “a tsunamic effect.”

Dropping the level of funding for some and forcing a corresponding rise for others every year could mount an imbalance that eventually comes crashing down, he said.

“We thought everyone should share in the economic reality,” Lankford said.

The difficulty, he said, is that school funding formulas seek fairness but are imperfect and inherently unequal.

Changing formulas is a massive undertaking that strives to correct the process toward equity, but politically has to assure that no districts are harmed.

What’s a lawmaker to do? Pearce pointed out that his Senate district covers 48 school districts — 27 helped by the change in the law and 21 hurt by it.

As for superintendents, they don’t like being pitted against each other, Markley said.

“Everyone’s going to be fighting for their kids,” he said. “We need to fully fund (the formula) or write a new one.”

This story was originally published January 22, 2015 at 5:08 PM with the headline "Funding dilemma divides state districts into winners, losers."