Governor Signs School Finance Changes

Governor Signs School Finance Changes

KASB will provide reports on major education bills signed by the Governor. Governor Sam Brownback signed SB 23 yesterday, April 16. The bill contains provisions from five different bills considered during the regular Legislative session that were bundled together by a conference committee.

Continuation of the 20-Mill Levy

The bill authorizes the 20 mill school district property tax levy for the 2013-2014 and 2014-2015 school years, and continues the $20,000 residential property tax exemption to the end of tax year 2014. The statewide levy raises an estimated $575 million each year, which equals about 22% of total statewide school district general fund budgets, and about 10% of total school district spending.

Capital Outlay; New Uses and When Authorized
The bill expands the authorized uses of district capital outlay funds to include property maintenance, various equipment for academic uses, computer software, and performance uniforms. However, expanded authorization will not take affect until the Director of the Budget and the Director of Legislative Research jointly certify to the Secretary of State that capital outlay state aid is fully funded at 100 percent of the amount a district is entitled to receive. Currently, no funding for capital outlay state aid has been appropriated by either the House or Senate in their budget bills for the next two years. As a result, capital outlay is currently funding entirely by capital outlay mill levies and transfers from other funds. The State Department of Education estimates that it would require over $25 million to fund the capital outlay state aid at 100%.

The three judge panel is the Gannon school finance case ruled in January that any use of school district capital outlay funds is unconstitutional unless the state aid program is fully funded. That decision has been stayed pending appeal to the Kansas Supreme Court.

Changes to the Kansas Uniform Financial Accounting and Reporting Act

The bill requires each school district and the Kansas Department of Education (KSDE) to report on their websites the budget summary for the current school year, as well as actual expenditures for the immediately preceding two school years showing total net transfers and amounts spent per pupil by specific functions, disaggregated to show the per-pupil revenue amounts from local, state, and federal sources.

The specific functions required to be reported are the following budget areas: (1) instruction, including classroom teachers, aides and paras; (2) student support, such as counselors and health services; (3) instructional staff support, as as libraries, technology support and professional development; (4) administration, including principals, superintendents, and board expenses; (5) operation and maintenance, such utilities, insurance, safety and security; (6) transportation; (7) food service; (8) other “current” spending; (9) capital outlay, including equipment, repair and remodeling; and (10) debt service on bonds. The bill also requires reporting the spending allocated to instruction, excluding capital outlay and debt service expenditures, as a percentage of total expenditures; and the same spending on instruction as a percentage of current spending, which is the sum of expenditures less capital outlay and debt service expenditures.

State law makes it a “public policy goal” for districts to spend at least 65% of state funding on instruction, but does not define how that percentage is calculated. According to state and federal reports, Kansas districts on average spend about 62% of current expenditures on instruction, which ranks 13th highest in the nation, but the percentage of spending on instruction is about 50% of total expenditures, which includes capital spending on building and equipment, and debt service. However, these percentages vary considerably among districts, partly because of different local circumstances and partly because of different spending choices by boards.

The bill does not require districts to spend a specific percentage on instruction, but may draw more attention to districts that spend below the state target.

Continuation of Military Student Second Count

The bill continues a second count date of military students on February 20 to determine the number of students enrolled in a school district through the 2017-2018 school year. The authorization is currently set to expire at the end of the 2012-2013 school year. This count was adopted to provide additional funding for districts serving military families that transfer during the school year.

Extension of Ancillary School Facilities Tax

The bill allows a local school board that has levied a property tax for ancillary school facilities for two years to continue to levy the tax for up to six years. The amount of the levy would be reduced to 90 percent in the first year of the six-year period; 75 percent in the second year; 60 percent in the third year; 45 percent in the fourth year; 30 percent in the fifth year; and 15 percent in the sixth year.

Current law allows local school boards that have levied an ad valorem tax for ancillary school facilities for two years to continue to levy the tax for up to an additional three years. Currently, four rapidly growing districts qualify and have adopted mill levies for this weighting.