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The ABCs of school finance: How we got here and where we go next
If you want to understand the the debate over school finance in Kansas, a shouting match might be the place to start.
A debate on the House floor Thursday briefly erupted into a shouting match as lawmakers were debating a bill that, in essence, makes only minor changes in the way hundreds of millions of dollars are distributed among the state's 286 school districts.
Rep. Tom Burroughs, of Kansas City, the House Democratic leader, shouted and pointed his finger directly at Rep. John Whitmer, a Wichita Republican, calling him "an ideologist (and) a politician" (sic) in response to Whitmer's accusation that, for all their criticisms of the bill, Democrats had not offered a solution of their own.
The ruckus was quickly brought to a halt when Burroughs was called out of order for directing remarks at another member, a violation of House protocol. But the volume of emotion and anger that flared up in that brief moment illustrated just how much is at stake, both legally and politically, in the school finance debate.
The state of Kansas spends more money on K-12 public education than any other single program — roughly $4.6 billion out of a $15.4 billion all-funds budget. Public schools in Kansas employ more than 68,000 teachers, administrators and other staff, and they shape the lives of nearly 487,000 students who are currently enrolled.
The bill passed by the Legislature Thursday involves the shifting of only about $38 million of education funding, less than 1 percent of the total K-12 budget. And yet, the way in which that money is shifted — who receives it and who gives some of it up — may well determine whether the Kansas Supreme Court allows schoolhouse doors to open this fall.
And looming on the horizon is an even more significant question before the court: whether the $4.6 billion is enough to satisfy the Kansas Constitution's mandate that the Legislature "make suitable provision for the finance of the educational interests of the state."
To understand why there is so much at stake in the issue, it's necessary to understand the basic elements of school funding and why that seemingly complicated formula was cobbled together in the first place.
The current language in the Constitution was adopted through an amendment that Kansas voters approved in 1966. That was while the state was going through a gut-wrenching process of "unification," merging literally thousands of school systems throughout the state into a collection of "unified school districts" offering a full, standardized K-12 education curriculum.
Before that amendment, each county in Kansas had its own elected superintendent of public instruction. But with the amendment, K-12 education became the responsibility of the state, to be supervised by an elected State Board of Education and the board's appointed commissioner.
Through the 1970s and 1980s, the state exercised its power by delegating most of it back to local districts. Funding public schools was still largely a local responsibility. School districts and their elected local boards had virtually unlimited authority to levy local property taxes to fund their programs. The state kicked in only a small amount to supplement their budgets. How much each district got was determined by the number of students enrolled.
By the late 1980s, though, it was apparent that there were huge disparities in the level of funding between wealthy districts and poor ones. Children who grew up in low-income neighborhoods in, for example, Kansas City, Kan., routinely received lower-quality education than children in neighboring Shawnee Mission.
In addition, taxpayers in less wealthy areas routinely paid significantly higher property tax rates than those in wealthier areas because a single mill of property tax in a wealthy area produced vastly more money than a similar mill in a poor community.
In Kansas, and in many other states, plaintiffs began filing constitutional lawsuits. Whenever a state constitution says education is a state responsibility, plaintiffs argued, the state must provide adequate funding for an education, and it must deliver education services equally, on a nondiscriminatory basis.
The 1992 finance formula
Faced with such a lawsuit, the Kansas Legislature adopted an entirely new method of funding in which the state took over primary responsibility for levying taxes, setting the budgets and distributing money to all the school districts, which numbered more than 300 at the time.
Under that system, the state levied a uniform statewide property tax, and it set the general fund budgets of every school district, based on a uniform per-pupil formula.
Those ideas met with stiff resistance at the time on a number of fronts.
Lawmakers from Johnson County and other more affluent suburban communities saw it as a form of "state-mandated mediocrity," putting artificial limits on how much they could spend on their schools to make sure they couldn't be superior to anyone else's schools. Johnson County had grown accustomed to having superior schools. That's what made Johnson County an attractive place to live, especially for middle-class families, and they didn't want to give it up.
Meanwhile, the uniform tax levy was also unpopular in some corners. While it represented a substantial tax cut for most parts of the state, it was a huge tax increase in places like Burlington, home of the Wolf Creek nuclear power plant, and southwest Kansas, which was still rich in oil and gas wealth at the time.
And lawmakers from other areas objected because a single, uniform per-pupil funding formula did not take into account the higher cost of educating students from poor neighborhoods and immigrant backgrounds, or the economies of scale enjoyed by large districts compared with smaller ones.
Eventually, lawmakers struck a series of compromises and passed a formula that provided each district with the following:
• General operating fund budgets, based on a "weighted" per-pupil formula that adjusted a district's enrollment based on various cost factors such as low-income status, non English-speaking families, and low total enrollment in the district.
• Local Option Budgets, or LOBs, that gave districts the option, within certain limits, of levying additional taxes to enhance their general fund so they could provide additional programs and services.
• And equalization formulas so that the property tax levies charged at the local level for LOBs, capital outlay funds and debt service funds would be comparable to one another, regardless of the wealth of the district.
Through most of the 1990s, that system remained fairly stable, and the relative economic prosperity that Kansas and the rest of the nation enjoyed made it possible for the Legislature to continue funding it without worry of running the budget into the red.
But that era also marked the rise of a growing conservative movement in Kansas, creating tension between those who wanted to put more money into the base per-pupil formula to keep up with growing costs, and those who thought growing revenues indicated a need for tax cuts.
During that time, base per-pupil funding increased only marginally while the statewide property tax was cut from 35 mills down to its present 20 mills.
Meanwhile, lawmakers continued to tinker with the weighting formulas, the equalization formulas and the caps on local option budgets in order to satisfy different constituent groups. So by the early 2000s — amid the post 9/11 recession in Kansas that forced cutbacks in state spending — a new group of plaintiffs argued, overall funding had become inadequate, and the same pattern of disparities that prompted the 1992 change in the first place had all re-emerged.
In the landmark case Montoy v. Kansas, a unanimous Supreme Court in 2005 sided with the plaintiffs, ordering an overhaul of the equalization formulas and, more importantly, ordering the Legislature to phase in a $285 million per-year increase in base state aid for public schools.
Then, as now, the court threatened to close public schools if lawmakers refused to comply, saying it would not allow the state to operate schools under an unconstitutional funding system that deprived many students of their right to adequately funded and equalized educational opportunities.
That ignited a firestorm of controversy, and sparked tension between the courts and the Republican-controlled Legislature that still linger today, as evidenced Thursday by the blow-up between Reps. Whitmer and Burroughs on the floor of the Kansas House.
Reluctantly, lawmakers did eventually comply with the Montoy ruling, but things quickly changed again in 2008 with the burst of the housing market bubble that brought down some of the nation's biggest financial institutions, sending the U.S. and global economies spiraling into a Great Recession.
In the face of rapidly declining revenues in 2009, then-Gov. Mark Parkinson, a Democrat, ordered across-the-board cuts in all categories of state spending, including public education, some of which were back-filled with temporary federal assistance through the American Recovery and Reinvestment Act, part of newly elected President Barack Obama's stimulus plan for the economy.
In 2010, after the Supreme Court declined to reopen the Montoy case, lawyers from that case filed a new lawsuit in Shawnee County District Court, Gannon v. Kansas, which is the case that is still on appeal.
But circumstances have become massively more complicated since then. In November 2010, Republican Sam Brownback was elected governor, bringing with him his own economic plan to stimulate the Kansas economy through a massive series of tax cuts.
And the Legislature itself made things even more complicated when, in 2015, at Brownback's urging, even as the Gannon case was still being litigated, lawmakers repealed the 1992 school finance formula, replacing it for two years with a system of block grants.
Those block grants effectively froze school funding in place, redefined how equalization aid was calculated and consolidated several different kinds of funding into a single grant that school districts could spend as they chose.
In the midst of all that, the Gannon case has essentially been broken into two parts: adequacy and equity.
A three-judge trial court panel has ruled that the block grant system violates both standards: equity, because of the disparities in tax rates levied between rich and poor districts; and adequacy, based on the number and the racial-economic profile of students in Kansas who are still performing below the state's minimum level of expectations.
The Supreme Court still has not reviewed the adequacy question, which could involve an order for hundreds of millions of dollars per year in new funding, at a time when the state is already facing revenue shortfalls.
In February, though, the court upheld the panel on the question of equity, and gave the Legislature until July 1 to come up with a remedy, again saying it would not allow schools to reopen in the fall under an unconstitutional funding mechanism.
The bill that the House and Senate passed Thursday represents the Legislature's answer to that order. The state now waits to see whether it will satisfy the court's demands.