Plaintiffs, State argue school finance in briefs filed with Kansas Supreme Court

In briefs filed Friday, the State of Kansas says the new school finance act is “a dramatic, positive step for Kansas, its students, and its schools,” correcting the constitutional flaws in funding adequacy found by the Supreme Court; and asks the court to dismiss the case. The plaintiffs say the act “significantly underfunds K-12 public education – by all measures;” and ask the court to require almost $900 million for funding over the next two years.

The plaintiff school districts also say the new law introduces unconstitutional funding inequities, and ask the court to set a new deadline of Sept. 1 “for these unconstitutional provisions to be remedied” by the Legislature.

If the Legislature does not take corrective action, the plaintiffs want the court to declare the funding system void – effectively shutting down the operation of public schools in Kansas – but will ask the court for “exceptions to any spending injunction to allow for the preservation and security of district properties and systems should that be necessary.”

The state, on the other hand, says that if the court finds the Legislature has not fully addressed school funding adequacy, “the Court should allow year one of the law to remain in effect and allow the Legislature to address any remaining issues during the 2018 legislative session.”

Both sides have until this Friday to file a response brief to the other party. Oral arguments are set for 9 a.m. Tuesday, July 18. The state has the burden to prove it has addressed the court’s March ruling that school funding is not constitutionally adequate. The Supreme Court allowed the Legislative Coordinating Council to file amicus briefs on behalf of the Legislature, along with the plaintiffs and the state.

The state’s attorney argues the new school finance act, passed in SB 19, addresses the adequacy issue in four ways.

First, it notes the Kansas Supreme Court found “that not only is the State failing to provide approximately one-fourth of all its public school K-12 students with the basic skills of both reading and math, but that it is also leaving behind significant groups of harder-to-educate students.”

In response, the state says the new law increases funding for these students by (1) increasing the at-risk weighting factor; (2) funding all-day kindergarten students as full time students, freeing up at-risk dollars currently used for that purpose; (3) increasing at-risk preschool funding by $2 million each of the next two years; and (4) increasing special education state aid by $12 million each of the next two years. In addition, the new law requires at-risk funds be spent on “best practices” approved by the State Board of Education – although previous law required at-risk programs be approved by the Board, as well.

Second, the state says the Legislature used a “successful schools model” somewhat similar to a method used in the early 2000’s by the firm of Augenblick and Myers to determine a base or foundation amount for each student. The method used in SB 19 identified 41 districts with more than 500 students performing above expectations on state tests, graduation rates and ACT scores when considering their percentage of low income students. A formula was then developed that indicated these districts were spending a “calculated” base amount of $4,080 when the local option budget is also included.

Third, the state argues that if funding from the local option budget is included, the “effective” base amount per pupil next year under the new law will be $5,639, compared to an inflation-adjusted estimate from the 2006 Legislative Post Audit cost study for a base of $5,468. The court indicated in an earlier decision that all revenue sources, not only base aid, may be considered when determining adequacy.

Fourth, SB 19 provides that after the first two years of the statutory base increases, the base will be automatically indexed to the inflation rate, as supported by a number of school representatives.

The amicus brief filed by the Legislative Coordinating Council agrees with these four elements of the state’s argument that it has complied on adequacy, and adds another: that the bill creates a “dynamic partnership” between the on-going research of the State Board of Education and the Legislature’s funding for underperforming students; noting not only the new “best practices” requirements for at-risk and bilingual funding but a series of audits and legislative studies of weightings prescribed by SB 19.

In response, the plaintiffs say that none of these changes satisfy the adequacy test. First, the bill provides just under $300 million in additional state aid under the school finance formula at the end of two years, which is only one-third of the amount requested by the State Board over two years, or nearly $900 million.

Specifically, the plaintiffs note the base amount, special aid state aid, mentor teacher aid and professional development aid provided by SB 19 are far below the State Board’s request.

Second, the plaintiffs say both the Supreme Court and the State agreed that a base amount of $4,492 was constitutionally adequacy in 2009. Adjusting that amount for inflation to the current year would require over $800 million, compared to $300 million actually approved.

Third, the plaintiffs argue that the Legislature did not take into account either inflation or the increase in students since 2009; and ignored the base levels required after adjusting for inflation the two previous cost studies it commissioned (the Augenblick and Myers and Legislative Post Audit studies.)

Fourth, the plaintiffs say a significant portion of additional funding under SB 19 will be consumed by teacher salary increases and the Legislature failed to provide evidence the remaining amount will be adequate to improve performance by low-achieving students; that some districts with large number of low-achieving students will lose funding under the new system (primarily because of enrollment losses); and that a higher at-risk weighting based on the LPA study is still inadequate because the base upon which it is multiplied is below the level recommended by that same study.

The plaintiffs also say the bill inappropriately provides at-risk funding to districts which do not need it by setting a minimum at-risk funding level of 10 percent free lunch enrollment, even if actually enrollment is lower; and “freeing up” money by funding all-day kindergarten also allows more money for districts that did not use at-risk funding.

Finally, the plaintiffs says the tax bill passed by the Legislature, SB 30, is projected to fall short of state general fund expenditures by 2020, calling into question the future funding of the finance system; and that SB 19 continues to underfund certain programs specified in state law: special education, teacher mentoring and professional development.

In addition to the arguments on adequacy, the plaintiffs also say SB 19 violates the court’s pervious standard for equity, which is that school districts must have “reasonably equal access to substantially similar educational opportunity through similar tax effort.” The plaintiffs based this claim on three provisions in the law.

First, the bill makes adopting a local option budget of greater than 30 percent (up to the maximum of 33 percent) subject to voter protest petition, which can lead to an election. Although a lower requirement than the mandatory election required by the previous law, plaintiffs say this still creates a higher barrier for low wealth districts, where voters are more likely to reject an LOB increase than high wealth districts.

Second, the bill expands the authorized use of capital outlay funding to utility expenses and property and casualty insurance. The plaintiffs note that even with state capital outlay aid under the current formula, high wealth districts can raise more dollars per pupil for each capital outlay mill than poor districts. The court previously upheld a lower capital outlay state aid rate because it was for building and equipment, rather than operations. The plaintiffs argue utilities and insurance are operating costs.

Third, the plaintiffs object to the provision of SB 19 that makes LOB state aid based on the prior year’s LOB. “As a result of this provision, no district will receive LOB equalization aid for any LOB increases for the first year of its increase.”

In response to the charge of “equity” violations, the state first argues that because the Supreme Court previously ruled the Legislature had complied with equity requirements, equity in the new law should be presumed constitutional until a new trial determines otherwise. “Any new equity challenges the Districts may raise at this stage by definition have never been litigated before. Thus, there is no evidence introduced by the parties, no lower court record, and no findings or conclusions of a lower court.”

However, the state does offer some preliminary rebuttal to equity challenges. First, because the court previously allowed an election requirement for accessing LOB over 30 percent, the state says a protest requirement should be acceptable.

Second, the state argues utilities and insurance “logically and obviously relate to the purposes of capital outlay” and the bill fully funds capital outlay equalization.

Third, the state does not address the issue of prior year funding of LOB state aid, but says using a three-year average of assessed valuation per pupil to determine LOB state aid beginning in 2019 provides the state greater stability in appropriating state aid, and “an average over time necessarily smooths out temporary peaks and valleys in data for any district.”

The state also defends the 10 percent floor for at-risk funding as appropriate for districts that have low numbers of at-risk students but still have underperforming students due to reasons other than poverty.

 

 

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