Koch influence present in school lawsuit

Judges to hear financing case this week

? Koch-funded groups recently helped push through historic tax cuts in Kansas. This week, they will battle against public schools seeking more funding.

Fifty-four school districts are taking the state to court to try to recover funding that was cut by state officials during the recession.

The trial, which starts Monday before a three-judge panel in the Shawnee County Courthouse, could take a month.

The school districts have argued that the state has underfunded schools by more than $1 billion.

The state of Kansas has hired three people to argue against that assertion and provide information to the court in the lawsuit.

One of those is Art Hall, executive director of the Center for Applied Economics at the Kansas University School of Business. Hall has submitted a written report to the court on what he says are the adverse economic consequences of providing an additional $1.2 billion in funding to public schools.

In Hall’s report to the court, he said that the Legislature could reduce state government spending in many different ways to save $1.2 billion and allocate that to schools. One way, he said, would be an across-the-board cut of 38 percent.

In his report, Hall said that Medicaid spending, proper funding of the state pension system, and implementation of federal health reform will “force state lawmakers to confront structural deficits.” And if taxes were increased to provide the $1.2 billion, it would result in the loss of $9.3 billion in gross domestic product over 10 years, he wrote.

Hall was chief economist of the public-sector group at Koch Industries Inc. in Wichita from 1997-2004.

The Center for Applied Economics is a research center funded by contributions from the Fred C. and Mary R. Koch Foundation and other private donors, according to KU. It was established in 2003 with support from the Koch Professorship in Business and Economics and the Koch Foundation.

Hall also has provided economic advice to Gov. Sam Brownback, who last month signed major tax cuts. Brownback has said the reduction in personal income tax rates and elimination of taxes on non-wage income for 191,000 business owners will provide an economic boon and increase jobs.

The Kansas Chamber of Commerce and Americans for Prosperity, or AFP, were vocal proponents of cutting taxes during the legislative session, and leaders of those organizations stood behind Brownback when he signed the bill into law during a ceremony in the Statehouse.

Koch Industries is a large contributor to the Kansas Chamber’s political action committee, and the Koch brothers, Charles and David Koch, founded AFP and a number of organizations that focus on public policies.

But critics of the tax cuts say the resulting reduction in revenue will force cuts in state spending and shift the tax burden more onto low-income Kansans. A legislative staff calculation says the cuts could produce a budget deficit in the $2.5 billion range within six years.

In the lawsuit, the state has also hired Eric Hanushek, who is with the Hoover Institution at Stanford University. Hanushek has provided information in the case that says there is lack of a scientific basis to draw a specific link to spending levels and student performance, and to “cost out” an adequate education.

Michael Podgursky, an economics professor at the University of Missouri, has also been hired by the state. He says that data show “no systematic or stable positive statistical relationship between spending per student in a district and student achievement.”

Their arguments are contrary to those that will be presented by the plaintiff school districts, which represent about 150,000 students, or one-third of the public school students in Kansas. The Lawrence school district has not joined the Schools for Fair Funding group.

The schools allege that the state has violated the Kansas Constitution by not adequately funding public schools. Under orders from the Kansas Supreme Court, the state in 2006 approved a three-year plan to increase funding and distribute those dollars more equitably. But before the plan could be implemented, the state started making cuts to classrooms as revenues tanked during the recession.

Meanwhile, the tax cuts, they argue, are undercutting the state’s ability to make the necessary funding to schools.