Tuesday, February 10, 2015

Less is still less

There has been a flurry of reports in the media the past few days as a result of current activity in Topeka. First, SB71 was introduced - and testimony received - that would result in a reduction of state equalization aid for local option budgets (which I addressed in a post last week). On Friday, the governor announced that he would be issuing "allotments." Such action by the governor is a method to reduce expenditures without legislative approval. His allotments to address current revenue shortfalls in the state included a 1.5% cut to K-12 education. Following the announcement, all school districts received a printout of just what impact the allotment would have on their local schools.

So, what does this mean for Newton? As mentioned previously, should SB71 be signed into law, USD 373 will receive $191,451 less in LOB equalization aid. The governor's allotments, set to take effect March 7, will reduce our district's general fund by $188,045. The governor has indicated that, should the legislature rewrite the current equalization formula that impacts LOB and Capital Outlay state aid, they could possibly negate the need for the allotment. However, it is also possible - and we feel highly likely - that both reductions will occur during our current fiscal year.

One phrase being repeated regularly by some legislators, along with the governor's office, is that these actions do not represent a "cut" to school funding, but merely a "reduction to an increase." This leads to confusion when the state is referencing how much additional funding was provided to K-12 in the current year at the same time districts across the state are informing their communities of further cuts in education funding. Can both statements be true? Lets break this down.

Didn't the legislature increase funding for K-12 in our current year? The simple answer is yes. The school finance bill from last spring increased the base state aid per pupil (BSAPP) from $3,838 to $3,852, and in response to Gannon v. State of Kansas budgeted to fully fund LOB and Capital Outlay equalization aid. So, the legislature gave education more money, right? Yep. But you keep saying you took a cut, right? Yep. And here's why...

While the "equalization fix" did indeed include "new money"  for school funding, a portion of the increase was funded by changing several weightings in the BSAPP formula. Districts could no longer count part-time students who meet the poverty criteria in the "at risk" weighting, and the "non- proficient at risk" weighting was eliminated completely. These two changes alone resulted in nearly $250,000 less in the Newton general fund this year. And along with a projected reduction in special education aid we knew to expect around $400,000 less for 2014-15, which is why we budgeted to use a portion of our contingency reserve funds...just to keep the general fund close to flat.

But we got that back on the LOB equalization, right? Nope, nope, nope. The maximum LOB budget is set by law at 30% of the general fund. For Newton, we had been at 30% for several years, so raising additional funds was not an option. The district did indeed receive a higher amount of LOB state aid, which served to reduce the tax levy locally but did not increase the amount of available funds at all. In fact, another change made to the finance formula included not counting any virtual school students when calculating the maximum LOB. Since we sponsor a small virtual program that is run by our local educational service center, we also lost ground on our maximum LOB. Due to this change in calculation, along with a smaller general fund (30% of less is, um, less), our LOB is approximately $120,000 less than a year ago. And that does NOT include the "reduction to an increase" discussed previously.

So, even with increased state funding going to support K-12 education, we started the year with smaller general fund and local option budget - our two primary operational funds - than the prior year. With the state now indicating we will receive less LOB state aid (-191,451) than expected, or less base state aid in the general fund (-188,045) than promised, or potentially additional reductions in the days ahead, the phrase "reduction to an increase" rings a bit hollow. No matter how you try and phrase it, less is still less. And less in the latter part of the school year creates tremendous challenges to reduce and limit spending to the level required.

Hiring freezes, cancelled professional development activities, limited overtime, use of contingency funds. It all has to be considered - because less is still less.

© 2015 Russell K. Miller, EdD

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