Kansas House and Senate roll out new school funding equalization plans

Senate Ways and Means Chairman Ty Masterson, R-Andover, and ranking Democrat Laura Kelly of Topeka confer during a hearing on a new proposal for school funding equalization formula.

? New school finance bills were introduced in the Kansas House and Senate Tuesday that would rewrite the formulas for distributing so-called “equalization” aid to local school districts.

But unlike earlier versions that failed to gain traction in either chamber, the new bills would spend only about $4.4 million more than the state is already spending, and no district would get less overall funding than it is getting this year.

The bills are aimed at addressing a Kansas Supreme Court ruling in February that struck down the current method of distributing those funds as unconstitutional because it resulted in some districts, including Lawrence, being over-taxed compared with other districts.

Still, the complexity of the new proposal left many people scratching their heads, trying to figure out which districts would be better or worse off than they are now, and whether it would be seen as acceptable when it’s reviewed again by the Supreme Court.

Senate Ways and Means Chairman Ty Masterson, R-Andover, and ranking Democrat Laura Kelly of Topeka confer during a hearing on a new proposal for school funding equalization formula.

“If you look at what the court actually asked for, it would have been $71 million this school year and $38 million next year, so I’m not sure the way we’ve designed this that it would jibe with the adequacy piece (of the lawsuit),” said Sen. Laura Kelly, D-Topeka.

But Senate Ways and Means Chairman Ty Masterson, R-Andover, said he was confident the bill would pass court muster because it is based on a formula used elsewhere in the state’s school funding system that the court has previously upheld.

The purpose of equalization aid is to subsidize the property tax levies of less wealthy districts so that all districts can raise comparable amounts of money with comparable tax rates.

The bill deals with equalization aid in two areas: local option budgets, which districts can choose to provide on top of their base, state-funded budgets, within limits; and capital outlay budgets, which are generally used for big-ticket purchases such as new equipment and furniture or building renovations.

Previously, each of those has been governed by different equalization formulas, ones that Masterson said were developed more for political reasons than for any real policy consideration. But last year, lawmakers repealed those formulas, used a different method of calculating that aid, and folded both of those funds in with each district’s general state aid, and distributed it all in the form of a block grant.

The two new bills would pull capital outlay and local option budget aid back out of the block grant and apply a single, uniform formula for calculating each type of aid.

Under the new formulas, most districts would receive more aid for capital outlay but substantially less for local option budgets. The net effect statewide would be a reduction of $59.4 million, compared with what districts are receiving this year. But that money, plus about $2 million more, would be redistributed to those districts that would otherwise lose money, holding them harmless from the change.

Under that plan, the Lawrence school district would gain $656,309 in capital outlay aid, but it would lose nearly $2.4 million in local option budget aid, for a net loss of $1.7 million. But that money would be replaced with $1.7 million in “hold harmless” money.

That new system would be in place only for the 2016-2017 school year. Lawmakers are expected to adopt a new, long-term funding formula before the end of the 2017 session.

The Lawrence district has already adopted the highest local option budget allowed, roughly 33 percent of its general state aid. The loss of state aid in that category would result in the district having a smaller local option budget, although there would be more in its general operating budget. The district could, however, raise its local option budget property tax to make up the difference, resulting in higher overall spending authority.

The Senate Ways and Means Committee plans to continue its hearing on the bill Wednesday morning, and could vote as early as Wednesday afternoon to send it to the full Senate. The House Appropriations Committee is working on a similar schedule.

Lawmakers are planning to adjourn the 2016 regular session on Thursday and will not return until late April for the annual wrap-up session.