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A PRIMER ON SCHOOL FUNDING:
DISPARITIES MUST BE ADDRESSED
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By Susan Caba
“School funding formula”—merely mention the words and the heads of sensible people begin to swim.
Missouri school districts rely on state money as a key ingredient in their budgets. And yet
the formula for determining how much money each school district gets is so complicated, few people understand it–and even they have a hard time explaining it.
But here’s the situation in a nutshell: The
formula is out of date and out of whack.
Schools aren’t getting enough money from the State to provide an adequate education for all students. Even worse, according to St. Louis business leaders and educators, the way the state distributes the money isn’t fair–metropolitan schools don’t get as large a percentage of their budgets from the State as more
rural districts.
Gov. Matt Blunt has promised that reworking the formula will be one of his first and highest priorities. State legislative leaders have pledged cooperation. And a consortium of 243 schools have sued in state court to force adjustments in the formula, which was last overhauled in 1993–as a result of a similar lawsuit.
 David Glaser, CFO of the Rockwood School District and president of the Coalition to Fund Excellent Schools |
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“Most folks thought that formula would have a useful life of about ten years,” says David Glaser, chief financial officer of the Rockwood School District and president of the Coalition to Fund Excellent Schools. “Those ten years have come and gone.”
None of which guarantees a solution
this year.
“I think it’s such a complicated issue, I’m not sure it will be done this year,” says Steve Hoven, chairman of the RCGA public policy council and vice president of public affairs for SSM Health Care. “I think it’s important that we as a business community get actively involved –to make sure that needs are being addressed throughout the whole state.”
The funding formula is like the handicapping system in golf. The idea is to take the
difficulty of the course and the abilities of the golfers into account, then handicap better players so everyone has an equal chance of shooting par for the course. In school funding, the goal is to give every school district enough money to educate its students on a par with the rest of the state, regardless of the district’s relative wealth.
The funding formula stands on three legs– equal spending per-student across the State, equitable distribution of available money, and adequate funding.
Everyone agrees that State school districts are not adequately funded–some estimates put the deficit at as much as $2 billion in operating and capital costs. Everyone also agrees that the State, which currently spends about $3.5 billion a year on education, is not going to increase spending by anywhere near $2 billion. The as-yet-unanswered question is, how much more–if any–will the State spend, and where will it get the extra money?
The idea of equalizing spending is easy to understand, but not that simple to implement. State courts across the country are steadily deciding that each school district–whether rich or poor–should have roughly the same amount to spend per student. The extra costs of educating special needs students and other special situations are taken into account.
But one factor not considered in adjusting the base amount is the higher cost of living in an urban area, say St. Louis leaders.
“Almost everything costs more in a major metropolitan area–the cost of car insurance, the cost of having work done on your house, the cost of parking in downtown St. Louis,” Glaser says. “To ignore that, and not take it into consideration, is blatantly incorrect.”
How to rank the cost of living? It’s already been done, says Glaser. The State Department of Economic Development ranks counties by the minimum subsistence wages required to live there. Using the county with the lowest wage as a base and assigning it a value of 1.0, Glaser’s organization ranked the rest of the counties and found that residents of St. Louis County, with a value of 1.75, and Platt County, outside of Kansas City, with a value of 1.85, need almost twice as much money to maintain the same lifestyle.
The most complicated–and contentious–
factor in the formula is distribution of State money. According to the Missouri Department of Elementary and Secondary Education, the percentage of State aid in each school district’s budget ranges from three percent–that’s Clayton–to 65 percent, in Hurley County.
Of the 25 school districts that receive the least amount of State aid, 15 are in the
St. Louis metropolitan area–and they aren’t all particularly rich districts. The State covers about eight percent of the Affton school
district’s budget, and about 12 percent of Maplewood-Richmond Heights. The rest of a district’s budget comes from local property taxes, though the federal government provides some money.
There are two variables in determining how much money a school district gets from
property taxes.
The first is assessed property value. In the St. Louis area, county tax assessors are required to consider market value when assigning property value. In many counties, though, actual market value–determined by comparing sale prices–is not part of the assessment. So, in a county like St. Louis, a house that would sell for $150,000 is assessed at approximately that amount. In a county that doesn’t consider sales comparables, a $150,000 house could be assessed at 75 percent of market value, or $115,000.
The second factor is the school tax levy. The state requires a minimum levy of $2.75 per $1,000 of value. At that level, the owner of the house assessed at $150,000 will pay $462.50 in school taxes. The owner of the house assessed at $115,000 will pay $316.25.
But residents of a school district can vote to raise that ssessment–and many have.
In the St. Louis metropolitan area, 31 of the 51 school districts have school levies of more than $3.50, according to Eric Schneider, RCGA’s director of public policy research. Affton voters, for example, just approved an increase of $1.36, bringing their school assessments to $4.40. By comparison, Schneider says, 365 of the 524 school districts in the State have levies of less than $3.50.
The school funding formula uses assessed property values and local tax levies to determine how much local money a district is collecting. That amount is deducted from the base amount needed to provide an adequate education. The remainder is what the State will pay per student–if the Legislature allocates the full amount, which it hasn’t for several years.
| Paul Doerrer, superintendent of Ritenour schools |
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The solution? Paul Doerrer, superintendent of Ritenour schools, chuckles at the question before answering: “The formula needs to be adjusted so that it is both fair and equitable. That’s easy to say and hard to do.”
Hoven offers a starting point for debate. He argues that the state should raise the minimum required property tax levy, to at least $3.25 and possibly as high as $4. And, he says, there must be more consistency across the state in assessing property values.
“I’m looking for a level playing field of local commitment before the State makes up the disparity.” |
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