Tracking the two-year increase in state aid to school districts

Tracking the two-year increase in state aid to school districts

The Kansas Legislative Research Department has posted a new memo
comparing state aid to school districts in 2017 with the Legislature’s appropriations
for Fiscal Years 2018 (the school year just ending) and 2019 (the school year
beginning in August) following the Kansas Supreme Court Gannon decision.
The memo shows total state aid increasing by about $475
million over the two years, which is more than 11 percent. The Legislature also
approved foundation aid increases for the next four years expected to add over
$500 million, allows the state attorneys to tell the Court state funding is
increasing about $1 billion in response to the Gannon school finance order.
Several facts stand out in this report.
Most – but not all – of the additional funding is for “foundation”
aid and special education state aid
. Over $300 million of the $475 million
is for a higher base amount per pupil and higher pupil weightings. Much of that
is available for general educational purposes, but a portion must be used for
specific programs such as at-risk services, bilingual education and pupil
transportation.
The second largest increase is state special education aid
($54.9 million). With this increase, special education state aid is expected to
cover 83.2 percent of the “excess cost” of special education services next year.
That is $51.9 million short of the 92 percent of excess cost that is supposed
to be covered under state law.
Special education costs not covered by state special
education aid must be paid by transfers from general education funding.
A growing share of state aid is earmarked for special
programs, rather than general operations.
Over $44 million, or more than 9
percent, of the increased funding is for special programs and grants. Some of
this money is available to every school district, but many programs are
targeted to specific districts, or are limited pilot programs or competitive
grants.
Increased funding includes a new $10 million pilot program
to support mental
health intervention teams in Wichita USD 259, Topeka USD 501, Kansas City USD
500, Parsons USD 503, Garden City USD 457 and Abilene USD 435; $5 million for
school safety grants; $2.8 million to allow every high school junior or senior
to take the ACT test or the Workkeys test at no cost; $520,000 to launch a
Teach for America program in Kansas; $300,000 to expand school technology
infrastructure; $500,000 for increased mentor teacher funding; $300,000 for a
juvenile transitional crisis pilot program in Beloit; and increased funding for
parent education, Pre-K grants and career and technical education support.
The balance of the increased funding is for state aid for
capital projects (bond and interest aid and capital outlay state aid), local
option budget state aid and KPERS contributions.
KPERS funding is … complicated. Accounting for Kansas
Public Employees Retirement System contributions has been contentious. The state
pays the employer share of pension contributions for school districts and other
local education agencies. This money is distributed to school districts then
immediately transferred to KPERS. These funds, which support school employee
retirement benefits, are clearly a state educational expenditure; however, they
simply “pass through” the school budget and do not provide any additional
operating money. In addition, the state has deferred millions of dollars in
previous payments, leaving a large unfunded liability that must be made up for
higher future payments.
In 2017, school district KPERS aid was $253 million, but
that was a reduction from the level required to be on track to eliminate the
unfunded liability by 2033.  The
Legislature committed to repaying that reduction through a process called
“layering” payments of $6.4 million per year starting in 2018. The
regular USD KPERS payments jumped back to the correct level of $384.9 million
in 2018, but the appropriation dropped to $260 million in 2019 when the
Legislature delayed another $194 million in payments. (The 2018 Legislature did
add $9.8 million for FY 2018 and $32.1 million for FY 2019 to cover higher
school district payrolls resulting from increased funding.)
In addition to school district KPERS payments, the
Department of Education funding also includes contributions for local education
agencies that are not school districts, including special education
cooperatives and other interlocals which provide services to school districts,
but also including community colleges and technical colleges. These non-USD
KPERS contributions also increased by $21 million over the two-year period.
Finally, the Legislature also approved an $82 million direct
transfer from the state general fund to KPERS, plus up to $56 million more if
actual state general fund revenues this year exceed the April revenue
estimates. These funds will help make up for the deferred payments but will not
be counted as state aid or as part of school district budgets.
Federal and
Children’s Cabinet funding is largely unchanged
. The memo also notes federal
education aid has increased by about $16 million, almost entirely in school
food service assistance. Major education aid programs such special education
and the Elementary and Secondary Education Act Title I and other programs have
been basically flat from 2017 through 2019.
Funding for education-related programs through the Kansas
Children’s Cabinet increased by $2.5 million, mostly in the early childhood
block grant. School districts are eligible to apply for these funds. Children’s
Cabinet programs are funded by revenues from the state settlement with tobacco
companies.
In 2017, the Parent Education Program (Parents as Teachers)
was funded by federal Temporary Assistance for Needy Families (TANF) dollars.
In 2018 and 2019, it was funded through the Children’s Cabinet.
Almost $1 billion in
school district state aid comes from sources other than State General Fund
appropriations
. Although the SGF is the largest source of funding for
school aid, over $720 million is raised by the statewide 20 mill property tax
levy for schools, or local tax levies for certain weightings. Capital
improvement state aid for bond and interest payments is an automatic transfer
from the state general fund of $200 million in 2019. Since the 2012 income tax
cuts, the Legislature has shifted $107 million from the state highway fund to
fund school district transportation and special education transportation aid.
In 2019, those transfers were reduced to $45 million with the balance replaced
by state general fund dollars.