Kansas school funding formula yields oddity: Some wealthy districts get extra state aid

The Blue Valley School District easily evokes images of wealth and prosperity.

McMansions lining golf courses. Neighborhoods where the average household earns $140,000 a year and average home values approach $400,000. A hot new upscale shopping mall with trendy shops and a museum.

Nothing about the Blue Valley School District screams poverty — unless you look at the Kansas school finance formula.

While the district’s residents enjoy personal wealth, the school district is considered poor in the eyes of the formula.

Compared to other districts educating far fewer students but enjoying more taxable property — a nuclear power station, oil wells, a food processing plant — Blue Valley suddenly doesn’t look quite so elite.

As a result, Blue Valley shares in a pot of money meant to put property-poor school districts on equal footing with property-rich school districts — an oddity that puts the district at the center of the state’s school funding debate unfolding in the capitol. It’s a fight already made contentious by midyear budget cuts announced this week.

Some lawmakers point to Blue Valley as an example of a flawed formula, questioning why an upscale district gets money aimed at helping poor districts.

The state supplements those property-poor districts — through a process known as equalization — so they don’t have to increase property taxes higher than wealthy districts to raise the same amount of money.

Blue Valley didn’t start receiving the money until it took in $230,000 in 2012. This year, the amount jumped to $3.3 million as property values and student enrollment changed across the state.

“Everybody who knows Blue Valley knows it’s not poor,” said Sen. Ty Masterson, chairman of the Senate Ways and Means Committee. “It’s not a comment about whether or not Blue Valley needs this $3.3 million. I believe it’s deceptive to say they need it because they’re poor.”

Masterson, an Andover Republican, wants to change the way the cash is dealt out. As proposed, the move could potentially cost Kansas schools $40 million, including $11 million in Johnson County.

School officials statewide are fighting the change, predicting dire consequences if they lose the money in the middle of the year.

They contend that property wealth in relation to the number of students enrolled in a district is the important measure because that’s what is taxed at the local level to help fund schools.

“There may be districts that do not seem wealthy and don’t get aid, but they do have wealth that you can tax,” said Mark Tallman, lobbyist for the Kansas Association of School Boards.

The current formula provides money to all but 19 percent of the state’s wealthiest school districts based on the amount of taxable property per student enrolled in a district.

That means a school district such as Burlington — located roughly halfway between Kansas City and Wichita and where the average household income is about half of Blue Valley’s — gets no supplemental state aid because it has a large tax base supported by a nuclear power plant coupled with low enrollment.

Meanwhile, districts like Blue Valley and Shawnee Mission get aid because they enroll so many more students than some rural districts, where the ratio of students to tax base offers a stronger foundation.

Shawnee Mission, where the average household income is about $84,000 a year, received the aid for the first time two years ago and again this year. It now gets $4.2 million in supplemental aid, which is used to hold down property taxes.

Blue Valley and Shawnee Mission have about $108,000 of taxable property per student. Burlington, home of the Wolf Creek power plant, has almost $500,000 in taxable property per student, making it the richest school district in the state.

Blue Valley Superintendent Tom Trigg points out that his district is not as wealthy as it’s perceived when taxable property and student enrollment are factored into the equation.

He said it’s unfair portraying the district as receiving money it shouldn’t because of its income wealth. Blue Valley may have the highest average household income of any district in the state, but Trigg points out that it still ranks 62nd out of 286 school districts in the amount of taxable property per student.

“There are 60-some districts where their property taxpayers are in better shape than ours,” Trigg said. “I know that’s hard for people to believe. But the facts say that.”

Trigg said the debate over supplemental funding has nothing to do with how much is spent in the classroom because that money goes toward reducing property tax rates.

“This whole argument is about taxpayers, not school budgets,” Trigg said. “If the (formula) changes, it’s going to have negative impact on our taxpayers, not the school district’s budget.”

Trigg added, however, that if the formula changed this year as initially proposed, it would affect the current school budget because tax rates are already locked in place.

The debate ignited last year when the Kansas Supreme Court ordered lawmakers to spend more on schools to bridge a funding gap between rich and poor districts.

Lawmakers thought they allocated about $130 million for supplemental aid, but the amount later increased by more than $50 million after final property values and student enrollment numbers were tallied.

Many lawmakers say they were caught flat-footed when the amount of money for supplemental aid spiked so much.

They said they wouldn’t have voted for a plan that allocated that much money, especially at a time when the state is facing a massive deficit blamed on income tax cuts.

They said the unanticipated increase underscored the unpredictability of the finance formula.

“We’re trying to put the cat back in the bag,” said Sen. Jim Denning, an Overland Park Republican. “I know it’s going to be a disruption for (schools), but I don’t see any other way around it.”

Gov. Sam Brownback is pushing lawmakers to change the way supplemental aid is calculated. He said a round of education cuts he announced Thursday — costing schools $28 million — could be reversed if lawmakers changed the calculus for the supplemental aid.

State Rep. Melissa Rooker, a Fairway Republican, warned that recalculating the supplemental aid formula could put the state in more legal trouble with the courts.

A three-judge panel approved the Legislature’s funding plan for fixing the gap between rich and poor school districts. Changing the formula now upsets what the court approved, she said.

“There is no way,” she said, “that this does not end up back in court.”

The Masterson proposal has stirred criticism in the capitol because it would require districts to make midyear cuts.

But Masterson said he is trying to bring transparency to a formula that doesn’t accurately reflect wealth.

He said there are many districts that can barely raise any money with one mill of taxes but are considered rich under the formula because they don’t have many students.

“I am not trying to put any district in the red,” Masterson said. “I am trying to more clearly focus the dollars and create transparency for the guy paying the bills, which is the taxpayer.”

This story was originally published February 6, 2015 at 7:33 PM with the headline "Kansas school funding formula yields oddity: Some wealthy districts get extra state aid."