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Archive for Sunday, March 16, 2014

Editorial: LOB lifeline

Kansas legislators have some time to examine the state’s school finance formula, but they must act now to avoid a devastating funding loss to Kansas schools next year.

March 16, 2014

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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.

Comments

Dave Trabert 9 months, 1 week ago

I agree that the Legislature should fund the LOB equalization and believe they should do by reallocating money from non-K-12 sources as outlined in my own commentary. http://www.kansaspolicy.org/PressRoom/Commentary/115915.aspx

It should noted that the inequity in LOB funding resulted from allowing districts to calculate their LOB on a higher amount of funding than they actually received. It is this 'phantom' piece that wasn't equalized. Districts didn't lose money...they lost an opportunity to collect more money. In fact, equalization aid increased from $323 million in 2009 to $339 million last year.

Steve King 9 months, 1 week ago

Uh no Dave. Maybe you need to turn the page and read the article about Moody's lowering the State credit rating. They specifically cited the States failure to properly fund and manage the LOB plus the fact the income tax revenue stream was cut and further significant costs will be added once the Court rules. I'll take Moody's opinion over yours any day.

Spin it like you want, we all know your a hired gun.

Dave Trabert 9 months, 1 week ago

Not spinning anything...just citing numbers provided by KSDE last week to the education committees. I was in the hearing and testifying beside Dale Dennis. I explained that the numbers showed that, contrary to claims by one representative, schools didn't lose money...they only lost the opportunity to collect more money. The representative finally agreed with me. But more important, Dale Dennis did not disagree with me.

Moody's said having to spend $129 million more was the basis for their decision.

James Howlette 9 months, 1 week ago

You spin everything. It's your job. You're a registered lobbyist and represent both ALEC and the Koch-sponsored Kansas branch of the State Policy Network (SPN). http://stinktanks.org/kansas/

Steve King 9 months, 1 week ago

Dave you saying you aren't spinning anything is like Putin saying there are no Russian troops in Crimea. No one believes it . You are the consummate spin master. A paid gunslinger.

What Moody's said was "The decision is a credit negative for the State of Kansas because the mandated increase will pressure state finances that are already stressed by revenue losses from income tax cuts."

And: "Because our 42 rated Kansas school districts rely on state aid for an average of 65 percent of operating revenue, in recent years most districts have reduced operating expenditures in line with state funding cuts to maintain operational balance,” Moody's said. "Any increased aid following the court decision will likely be used to reinstate recently cut programs or undertake deferred capital projects, rather than to bolster district fund balances or cash positions.”

Any "increased aid following the court decision", i.e.: it's not over yet and more to come once the Courts rule. So in effect the policies you espouse have been deemed by the courts to be inadequate and Moody's is lowering our credit rating because of Brownback's irresponsible actions. Because of "state funding cuts". How on earth do you spin a false positive here. The facts are plain. You plan is failing.

Dave Trabert 9 months, 1 week ago

Hey, thanks for confirming that the potential for increased spending was the trigger for Moody's decision.

By the way, you aren't fooling anyone by continuing to have no factual criticism of the information I posted. Ad hominems might make you feel better but they don't fool informed people.

James Howlette 9 months, 1 week ago

It's not the spending. It's the need for spending money we no longer have, thanks to Brownback's completely unwise elimination of your Koch sponsor's state income tax obligations. Spending wouldn't be a problem for a wise leader that didn't believe in magic fairy pixie dust Laffer economics.

Step 1, cut revenue by 1/3.

Step 2 ???

Step 3 Profit.

PS - Brownback could have given us all a sales tax cut and still had enough revenue to avoid this problem. Your solution seems to be to give us all the option of a large property and local tax increase to raise the revenue.

Julius Nolan 9 months, 1 week ago

Rule number 1 on any web site! If Dave Trabert posts it, it's a flat out, Koch approved lie!!!!

James Howlette 9 months, 1 week ago

There's magic efficiency cuts that he can't specifically name but they're there because lists of numbers show that some districts spend more and some spend less, so no need to ask them why - just "efficiency" the school formula into justifying why you're giving them less money, and it will all totally work out.

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