The Kansas Supreme Court’s recent ruling on school finance may have a significant long-term impact on how the state funds K-12 schools across the state. However, the ruling also handed legislators another urgent issue that it must handle now in order to avoid a major funding disruption for the next fiscal year.
House Speaker Ray Merrick has wisely advised legislators not to try to rewrite the state’s complicated school funding formula before the end of the session in May. Trying to rush action on the formula, he contended, could cause lawmakers to “end up making a lot of mistakes.”
The issue, however, that legislators must deal with by July 1 — and hopefully before the end of the current session — deals with equalizing school district funding through their local option budgets (LOB’s). Individual school districts are allowed to supplement their budgets by establishing LOB’s that are funded by local property taxes. The amount raised in local property taxes varies according to how wealthy the districts are, and the state uses a formula to supplement LOB’s for poorer districts that need that help. For instance, the Lawrence district received $3.6 million from the state toward its $23.4 million LOB this year; Eudora received $1.6 million, more than half of its total $3.1 million LOB.
However, since the Great Recession, the state hasn’t fully funded its LOB obligation to any state school district. That, according to the court ruling, has resulted in a growing inequity between richer and poorer districts in the state. Therefore, the court said, the state must either correct that inequity by fully funding LOBs or find another way to correct the discrepancy. If it does not, the three-judge panel overseeing the school finance case has been ordered to completely discontinue the LOB program across the state or “enter such other orders as it deems appropriate.”
As Merrick has pointed out, the Legislature really doesn’t have time to come up with another equalization strategy. However, dropping the LOB program entirely would be devastating. According to a veteran Kansas Department of Education staff member, dropping LOB’s would cost school districts across the state up to $1 billion or about 25 percent of their total operating budgets.
State education officials have estimated it would cost about $129 million to satisfy the court’s option of fully funding LOB’s for the next year. That’s a significant, but not overwhelming, amount of money to find in the state budget. Whether or not legislators think the LOB program will be part of the state’s long-term school funding strategy, they should look at that $129 million as a short-term life preserver for Kansas schools. Legislators have time to study the complicated school finance formula but, for now, they need to take the relatively simple action of warding off a court action that could severely handicap public education in the state next year.