Topeka A top Kansas education official warned of possible dire consequences to public schools if the Legislature fails to address equity issues in one part of the state school finance system by July 1.
Deputy Education Commissioner Dale Dennis said districts could lose as much as $1 billion statewide, or about 25 percent of their total operating budgets, if lawmakers fail to fix equity issues in the Local Option Budget portion of the state school finance formula.
"A billion dollars would be devastating," Dennis said.
Dennis spoke Tuesday morning to the House and Senate Democratic caucuses about Friday's Kansas Supreme Court decision in the school finance case, Gannon vs. Kansas.
Under state law, local districts are allowed to supplement the base budgets they receive from the state by as much as 31 percent with money they raise from local property taxes. Those are referred to as Local Option Budgets, or LOB's.
Most years, the state subsidizes the LOB's of less wealthy districts that would otherwise have to impose huge property tax levies to raise the same LOB percentage as a wealthier district. That money is provided through an "equalization" formula.
Since 2009, however, the state has not fully funded that formula, meaning the money available is distributed on a pro rated basis. As a result, the Supreme Court said, the poorest districts lose the most money because they are entitled to the largest equalization subsidy.
The court said Friday that the Legislature must either fully fund that equalization formula or find some other way of solving the unconstitutional inequities.
"If by July 1, 2014, the legislature takes no curative action," the court said, "the (lower court) should enjoin operation of the local option budget funding mechanism ... or enter such other orders as it deems appropriate."
"What they kind of said is, if you're going to do it, you have to equalize it," Dennis said.
For the Lawrence school district, which levies the full 31 percent allowed by law, eliminating Local Option Budgets entirely would cost local schools $23.4 million. Under the formula, it is supposed to receive $4.6 million in equalization aid, but this year will receive only $3.6 million.
If the Legislature were to fully fund the formula, the additional $1 million in state aid would replace money the district now raises through property taxes, and thus would allow the district to lower its property tax levy about 1 mill. A mill is $1 in taxes for every $1,000 in assessed property valuation.
The Eudora school district has a $3.1 million LOB. Of that, $2 million is supposed to come through equalization, but the district receives only $1.6 million due to underfunding, a loss of $447,191, which is charged to local taxpayers.
And the Baldwin City levies a $2.8 million LOB, of which $1.4 million is supposed to come through state equalization. But the district actually receives only about $1.1 million due to underfunding, for a loss of $303,972, which is charged to local taxpayers.
In the Kansas House, the job of addressing the court's decision has been assigned to the Appropriations Committee where Chairman Marc Rhoades, R-Newton, said today he plans to begin drafting legislation next week.
Rhodes said the committee would begin working on a bill next Tuesday, but he declined to predict the final outcome.