New bill would radically overhaul how Kansas schools are funded

Kansas Statehouse in Topeka, February 2014.

? A new bill recently introduced in the Kansas House is likely to be the starting point for discussions about a new school funding system when state lawmakers return to Topeka later this month.

House Appropriations Committee Chairman Ron Ryckman Jr., R-Olathe, said he hasn’t decided whether to hold formal hearings on House Bill 2741 when lawmakers return for their wrap-up session April 27, but he said he does think it’s time to begin discussions on a long-term funding formula.

“I’m not certain of the direction we’re going to go, whether it’ll be that particular bill or something else,” he said.

Last year, lawmakers repealed the old, per-pupil funding formula that had been in place since 1992 and replaced it with a system of block grants that effectively froze funding in place for two years at the 2014-2015 levels.

Since then, the Kansas Supreme Court has declared at least part of the block grant system unconstitutional because of the way it distributes so-called “equalization aid” to less wealthy districts, and it has threatened to close public schools if lawmakers fail to pass a constitutional funding system by July 1.

Before adjourning for their five-week spring break, lawmakers passed a bill that they hope addresses the court’s concerns. Gov. Sam Brownback has until Friday to sign the bill, after which it will be sent to the Supreme Court for review.

“I anticipate he’ll sign it this week,” Ryckman said.

Meanwhile, the new long-term funding bill, known as the School District Finance and Student Success Act, was introduced March 23, the day before lawmakers adjourned. And while some of the concepts in that bill might sound familiar to some, the overall philosophy behind it would mark a major departure from any earlier funding system.

Ryckman said the bill was mainly the work of the Legislature’s two Education Committee chairmen, Sen. Steve Abrams of Arkansas City and Rep. Ron Highland of Wamego.

The major difference between the new bill and previous funding systems lies in what the bill does and doesn’t pay for.

“The legislature hereby declares that it is the purpose and intent of this act to provide for the financing of instruction through the public education system for grades kindergarten through 12 in this state,” the bill states in its preamble.

It goes on to define “instruction” as “those school district functions that directly impact the provision of education services.” It specifically excludes such things as extracurricular activities, food service, central office administration, capital improvements, construction and remodeling, and facility maintenance, functions that school districts would be responsible for financing themselves.

“This would be a significant change in not just a formula, but in what we expect schools to do and how to fund them. And it’s important that Kansans need to know and be thinking about this,” said Mark Tallman, a lobbyist for the Kansas Association of School Boards.

The 95-page bill contains dozens of sections dealing with a wide range of funding issues.

Some of the central elements include:

• A single pot of state funding called “enrollment state aid” that would replace the two pots of money that districts have grown accustomed to, general state aid and supplemental aid, also known as local option budgets.

• A per-pupil formula for enrollment state aid that would vary by the size of the school district: $8,490 per student for small districts with fewer than 400 students; $7,269 per student for districts with enrollment between 400 and 999 students; and $6,137 per student for districts with 1,000 or more students.

• Specific mandates on how that money would be divided among instructional costs, student support services and other operational expenses.

• Limited “weighting” factors that would provide additional funding for students deemed more expensive to teach, including those from lower income households and non-English speaking families.

• A two-year “hold-harmless” provision that would prevent any district from losing funding for the first two years, although districts would first have to show that they’ve spent down excess fund balances and realized other kinds of savings.

• A uniform statewide property tax levy of 35 mills to replace the current 20-mill levy, plus additional levies districts charge for their local option budgets.

• Authority for districts to levy additional taxes, with no limit, for up to five years, subject to voter approval, with a strict prohibition that says that money could not be used for instruction, but only for things like extracurricular activities, food service and other noninstruction expenses.

• Incentive payments, or “success grants,” for districts that meet certain benchmarks on graduation rates, post-secondary retention rates, number of students needing college remedial courses and other factors.

• Limits on the types of projects eligible for state aid for bond and interest payments.

• A uniform, statewide health benefits plan for school employees, similar to the State Employee Health Plan, that would only offer participants a high-deductible health policy coupled with a health savings account.

• And a voucher program, known as the Education Freedom Act, that would allow up to 70 percent of the state aid attributed to a student to be used to pay tuition at a private or parochial school.

According to an analysis by the Kansas Association of School Boards, the result would be an increase in general state aid to school districts, but there would also be significant new limits on how districts could manage their operations.

Tallman said he thinks it’s unlikely that the Legislature would try to pass the bill in the few days or weeks remaining in the 2016 session, but he does think it will frame future discussions about school finance.

“In the short term, it’s what people are going to be talking about because it’s the only thing that’s out there,” he said. “While I think it would be surprising to move this quickly, we think we need to be ready. But more important, I just think this really raises issues that, frankly, Kansans need to be talking about.”

If the bill is not acted upon this year, it would have to be reintroduced in the 2017 session.

Ryckman, however, said he wants to start the discussion this year anyway, even if it is unlikely to pass this year.

“The amount of work and effort and data that go into this could be carried forward into next year,” he said. “It’s still a conversation starter.”