Updated school funding estimates cut costs to state

The school finance formula adopted in response to the Gannon lawsuit will cost the state less than expected over the next several years, according to new estimates from the Kansas Department of Education, Division of Budget and Legislative Research Department. 

In a memo presented Tuesday to the Legislative Budget Committee, KLRD staff say they now believe the major K-12 state aid programs will need $32.9 million less in the current year than projected last Spring, and $32.6 million less next year. 

The State Board of Education has recommended that any savings in formula be used to increase special education state aid, which remains far below the 92 percent state target. But some Legislators are likely to see these funds as available for other state programs which have not been increased as much K-12 funding, for tax cuts or for higher state ending balances. 

Every November and April, the three agencies develop estimates of enrollment, weightings, equalization formula costs for Local Option Budgets, capital outlay and bond and interest payments, and contributions for Kansas Public Employees Retirement Systems payments based on covered payroll. The Governor and Legislature use these estimates to plan budgets and make appropriations. 

Most of the savings is in general state aid, which has been reduced for two main reasons. First, the state is phasing out the new facilities weighting, and those costs are dropping faster than expected. Second, unweighted enrollment growth is even slower than expected, with statewide student counts almost unchanged. 

Equalization aid formulas are also down in some cases. LOB state aid estimates were unchanged in the current year and down $5.9 million next year. Bond and interest aid estimates were reduced by $7 million this year and $17 million next year. However, capital outlay aid estimates were raised $5.4 million this year and $5.8 million next year. 

Finally, KPERS aid for school districts estimates were reduced $1.8 million this year and $5 million next year. 

It should be stressed these changes do NOT mean expenditures on these programs are expected to decline. Rather, it means the projected increases have been reduced. Total aid this year is expected to increase over $400 million over last year, and over $100 million in the next several years as funding for the Gannon case is phased in and equalization costs rise. 

Special education state aid is scheduled to increase $7.5 million per year as part of the Gannon settlement, but special education costs are rising faster. As a result, percentage of “excess cost” covered by state special education aid is expected to drop from 75 percent this year to 72 percent in 2021 and 69 percent in 2022. Under state law, the state is supposed to cover 92 percent of the excess cost formula. However, the Legislature can underfund that amount if chooses, which has been the case for over a decade. 

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