Tag: School Funding

Kansas Ranked 6th for State School Funding

New data from the U.S. Census Bureau shows Kansas had the 6th highest share of school funding provided by state government in 2015.  State school funding comprised 66 percent of total funding in Kansas, while the national average for state school funding was 47 percent.  The national average for local taxpayer support was 45 percent but Kansas local taxpayers only provided 26 percent of funding.  The federal taxpayers’ share of funding was 8 percent in Kansas and across the nation.

No other regional state comes close to Kansas for state school funding.  The next highest share among neighboring states is Oklahoma at 49 percent, followed by Colorado (45 percent), Missouri (42 percent) and Nebraska (32.5 percent).

Kansas also made the Top Ten list for Capital Outlay spending per pupil and Bonded Indebtedness per pupil.  Kansas’ $1,939 per pupil on Capital Outlay was the 5th highest spend in the nation and almost double the national average of just $1,075 per pupil.  Kansas was #8 nationally for Bonded Indebtedness at $10,865 per pupil.  Census uses headcount enrollment rather than full time equivalent enrollment as does the Kansas Department of Education for its per-pupil calculations, so the averages are a little lower than Kansans are used to seeing.

At $12,418 per-pupil, Kansas is ranked #25 for total spending and is #32 for current spending (excluding Capital Outlay, Debt Service, Interest and other amounts designated by Census) at $10,040 per-pupil.  Kansas had the 14th highest per-pupil Cash & Securities holdings in the nation, which, as explained recently, includes a little over $1 billion in unspent bond proceeds.

Kansas also has relatively high rankings for growth rates since 2001.  Total spending per-pupil growth of 70 percent was ranked #16 and far exceeded the national average of 51.6 percent.  The growth in current spending was just below the national average (54 percent versus 56.4 percent) but Kansas could easily exceeded it if local school boards hadn’t put so much money into cash reserves.

Kansas added $781 million to its Operating and Capital reserves between 2001 and 2015; diverting just 10 percent of that increase to current spending would have increased current spending per-pupil to the national average and still left $775 million in operating reserves and $412 million in capital cash reserves.  And Kansas would still have had the 2nd highest Cash & Securities growth rate in the nation.

Spending Per-Pupil Exceeds $13,000

Average per-pupil spending was $13,015 last year and 2016 marked the third consecutive year that Kansas set a record for per-pupil spending without counting KPERS retirement funding, at $12,458.  If not for a partial deferral of a KPERS payment last year, total funding per pupil would also have set a new record.

2016 per pupil spending

School spending continues to run well ahead of long term inflation.  Total funding is 43 percent higher than if increased for inflation of the course of the old school funding formula and non-KPERS funding is 40 percent above inflation.

per pupil graphs

Spending Allocated to Instruction by School Boards

The portion of spending allocated to Instruction, Administration and other cost centers varies by district, as local school boards alone make those decisions.  Some aid, such as Bond & Interest, must be spent on that cost center but a school board’s decision to incur debt is the trigger.  The temporary block grant system affords tremendous discretion on the use of state and local aid; even Capital Outlay aid may be spent on some operating functions.  KPERS retirement aid is only used for that purpose but the allocation of those amounts to Instruction and other categories is determined by school board staffing decisions.  The 2005 Legislature placed a recommendation in state statute (K.S.A. 72-64c01(a), signed by Governor Kathleen Sebelius) that suggests 65% of all funding be spent on instruction or in the classroom, but local school boards alone make those decisions.

School funding increased nearly $2 billion between 2005 and 2016, but the allocation to Instruction actually declined from 53.6 percent to 52.5 percent (excluding any capital expenditures allocated to Instruction.  School boards generally reduced allocations to current operating costs and increased the allocation to Capital Outlay and Debt Service.  The chart below reflects the statewide averages for 2005 and 2016 but the intervening years and complete reports for each district can be found here.

% Instruction 2016

District-level calculations of the percentage allocated to Instruction exclude Capital to avoid spikes and declines associated with periodic expenditures, but the percentage allocated to Instruction declined even if Capital Outlay on Instruction is included as shown in the table below.

The Legislature’s policy goal of allocating 65 percent of total spending to Instruction was to encourage local school boards to devote the vast majority of court-ordered funding increase under Montoy to Instruction, but that obviously didn’t happen.  For perspective, $6.4 billion more would have been spent on Instruction over the last ten years had that policy goal been met.

65% goal 2016

2016 school funding sets record without KPERS

2016 marked the third consecutive year that school funding set a new record without counting KPERS retirement spending, at $12,458 per-pupil. That amount is 40 percent more than if non-KPERS funding adjusted for inflation over the course of the old school funding system.  For perspective, non-KPERS funding would have been $1.65 billion less last year if it had just been increased for inflation.

Non-KPERS chart Rev

Total funding including KPERS was $13,025 and would have set a record if the Legislature hadn’t deferred the final KPERS payment.  The Department of Education estimates that total funding for 2017 school year will be $13,145 per-pupil.

Non-KPERS record

Kansas Ranks #7 for State Aid Provision

The most recent data from the U.S. Census Bureau shows that Kansas is ranked #7 among the states for share of total school funding being provided by state government.  The Census report includes all state funding, not just the amount provided through the General Fund.

The 2014 funding reported by KSDE did not include $522.5 million in state-mandated property tax (20 mills in each district) that had erroneously been reported as Local Aid in state records until 2015. It was also discovered that Census inadvertently left the Shawnee Mission district out of its totals, but provided revised totals to Kansas Policy Institute.  This table properly reflects state-mandated property tax as State Aid.

state aid share #7

With the national average at 47 percent, Kansas is providing 65 percent of total funding through the State.   But even before the 20 mill reporting error was discovered, Kansas still had the highest rank in the region; as reported to Census for 2014, the State of Kansas provided 56 percent of total school funding and would have been ranked #16.

General Fund Allocation to Education, Other Functions

Education, which includes K-12 (50.7 percent) and higher education (12.3 percent), will consume 63 percent of the General Fund budget.  Human Services accounts for the second largest piece (25.7 percent) and the remaining 11.3 percent is divided between Public Safety, General Government, Agriculture and Transportation.  Most transportation funding is in a different budget.  See Schedule 2.2 of the July Comparison Report for more details on the 2017 Approved Budget.

The General Fund is fully within the control of legislators; except for Motor Fuels sales tax, all tax revenue flows through the General Fund and they set all General Fund spending.  They approve the larger All Funds budget but it includes revenues that cannot be repurposed, including but not limited to federal funds, college fees and tuition and fees paid to licensing and regulatory boards.

SGF allocation chart

School Spending is 45% above Inflation

The old school funding system was established in 1992 and at that time, per-pupil funding was $5,302.  The state’s KPERS contribution was not included in total funding until 2005, however, but had it been, funding would have been $5,416 per-pupil according to the Kansas Department of Education.  Increasing that amount by inflation (Bureau of Labor Statistics, Consumer Price Index for Midwest Urban Cities on a fiscal year basis) would put per-pupil funding at $9,067 per-pupil in 2015.  Actual funding in 2015, however, was $13,124 per-pupil, or 45 percent above inflation.

spending 45% over inflation

And contrary to some claims, KPERS pension funding is not the reason that per-pupil funding is far higher than inflation-adjusted levels would indicate.  The second chart excludes all KPERS funding and the record set in 2015 of $12,445 per-pupil is 40 percent greater than 1992 inflation-adjusted spending of $8,885 per-pupil.

For perspective, 2015 total spending including KPERS would have been $1.88 billion less had it simply been increased for inflation since 1992; excluding KPERS, total funding would have been $1.64 billion less.

Some people contend that spending hasn’t kept up with inflation since 2008, and while technically a true statement of reported spending, school districts still had the ability to retain the same purchasing power if they had chosen to use all of the aid provided and chosen to operate more efficiently.  Aid used to increase operating cash reserves is not included in reported spending; districts had $911 million in the bank at the beginning of the 2016 school year, or $443 million more than ten years earlier.  Local school boards also chose not to implement many efficiency opportunities recommended by Legislative Post Audit according to testimony provided to the K-12 Commission on Student Achievement and Efficiency by LPA and school superintendents.  Other major opportunities to eliminate unnecessary spending, including state-negotiated purchasing discounts on commodities, equipment and services and providing non-instructional services at better prices through regional service centers, are openly opposed by school lobbyists.

There’s also the fact that 2008 funding was artificially inflated by the court-ordered funding increase in Montoy.  The courts based their ruling on a 2001 cost study that was supposed to have taken efficiency into account, but it was later learned that the authors admittedly ignored efficiency and inflated their findings accordingly.  Had the Montoy court known what the Gannon court now understands, it’s quite possible that funding wouldn’t have increased 26 percent between 2005 and 2008 (while inflation was 9 percent).

No One Can Identify Adequate, Efficient Funding

No one knows how much money schools need to achieve required outcomes while also making efficient use of taxpayer money because no such analysis has ever been done in Kansas.  The Augenblick & Myers cost study upon which the Montoy court ruling was based was supposed to include efficiency but they admittedly excluded efficiency from their calculations.  A follow-up report from Kansas Legislative Post Audit stipulates that they weren’t asked to take the efficient organization and operation of schools into account.

The March 2014 Supreme Court ruling also established a new test to determine whether schools are adequately funded.  Their first test is whether students are meeting or exceeding the Rose outcome capacities and if they are, the Court says funding must therefore be adequate even if not ‘optimal.’  School districts and the Department of Education, however, openly admit that they don’t know how to measure performance against the Rose capacities.  Accordingly, when the Supreme Court takes up the appeal on adequate funding, it will be challenging for the Plaintiff school districts to prove they lack sufficient funding to achieve the Rose capacities if they cannot measure performance against Rose.

The Court’s new test on adequacy also stipulates that all funding sources, including Federal and KPERS pension funding, should be considered.  That is a significant expansion from previous adequacy rulings, which primarily focused on a portion of state funding.

Article Six of the Kansas Constitution requires the Legislature to “…make suitable provision for finance of the educational interests of the state” but it does not preclude the Legislature from taking efficient use of taxpayer money into account.  That has not been the case thus far, but 73 percent of Kansans believe there should be some efficiency requirements included in school funding; only 20 percent disagree.  See Question #2 here for documentation of the scientific survey, including geographic and ideological breakouts on Kansans expectation for efficiency in school funding.

Further discussion of the March 2014 Supreme Court ruling by Mike O’Neal, an attorney and former Speaker of the House, can be found here.

Classroom Funding

My school district says the Legislature isn’t providing enough money for the classroom.  How much is provided for classroom instruction?

There is no official category of ‘classroom funding’ under the block grant system or the old funding formula. The Legislature doesn’t decide how funds are to be allocated funds between classroom, administration, transportation or other cost centers.  There is a recommendation in state statute K.S.A. 72-64c01(a) that suggests 65% of all funding be spent on instruction or in the classroom, but spending decisions, including teacher pay, are all made by local school boards.  Some districts choose to devote less than 50 percent of spending to Instruction, for example, while others allocate 65 percent or more to Instruction.  Some funding is reimbursement of school spending (e.g., special education and bond & interest payment for eligible districts) but districts have considerable discretion over most funding sources; even capital aid can be used for some operating purposes.   Each district’s allocation to Instruction and other cost centers can be seen here.

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