The Richmond Register

State News

January 4, 2014

Funding education area of debate, concern

FRANKFORT — Since 1990, Kentucky has been viewed as a leader in education reform, first with passage of the landmark Kentucky Education Reform Act in 1990 and then with passage of Senate Bill 1 in 2009.

A key part of KERA was a new funding formula designed to comply with court rulings requiring “adequate and equitable” funding for all districts, using state money to boost poorer districts’ per pupil funding to a level roughly equal to the state’s richest districts.

Since 2009, basic funding for public schools, called SEEK, has been frozen while enrollment increased, producing an effective cut in per pupil funding of about $500. During the same period of tight state budgets, funding for teacher development has been cut 65 percent; after school services cut 61 percent; technology funding cut 21 percent and funding for textbooks eliminated.

Gov. Steve Beshear wants to change that in the next two-year budget. The Kentucky Department of Education is asking for an increase of $152 million next year and $183 million in the second year. But the state revenues are expected to rise by only $550 million over those two years and education isn’t the state’s only funding need.

Senate President Robert Stivers, R-Manchester, suggested that growing property valuations will allow local districts to increase their share of school funding to offset some of the needed increase, but others say that won’t work.

SEEK combines local property taxes with state funding in a complicated formula designed to “equalize” funding between rich and poor districts. Before KERA there were wide disparities between affluent districts which raised more in local taxes for schools and poor districts which were often loathe to raise property taxes. In the late 1980s, 61 districts sued and won a court decision throwing out the old system because the state constitution required funding for “common schools” to be equitable and adequate.

SEEK requires a “minimum local effort” to encourage poor districts to raise money for their schools. In return, the state funds the difference between those amounts and what richer districts can raise to produce roughly equal funding per pupil in all 173 districts. Every district receives sine state funding but poor districts receive a higher percentage of the total from the state.

Districts may raise additional funding beyond that minimal level if their voters approve higher tax rates. But the state doesn’t match all those extra dollars. KERA also “grandfathered” some rich districts with higher rates so they weren’t required to roll back local taxes.

When KERA was passed in 1990, the gap between the richest district and the poorest was $1,600 per student, primarily because of those grandfathered rates. By 1997, SEEK had reduced the gap to $600. But it is growing again as lawmakers froze SEEK funding at 2009 levels. In 2010, the gap was $1,200.

On Friday, House Speaker Greg Stumbo, D-Prestonsburg, said relying more on local property increases would lead to more inequity between districts, the situation which led the courts to declare Kentucky’s pre-KERA school funding system unconstitutional.

Property valuations have increased 2 percent statewide, said Hiren Desai, associate commissioner of education. But that is fueled largely by increases in affluent counties such as Boone, Kenton, Jefferson, Fayette and Warren. Valuations haven’t grown much in eastern Kentucky, which includes both Stivers’ and Stumbo’s legislative districts.

So a 4 percent increase in property taxes in Whitley County in Stivers’ senatorial district wouldn’t generate as much as a 4 percent increase in Kenton County.

An analysis of by the Kentucky Center for Economic Policy, based in Berea, lays out the differences for all 173 districts.

If all school districts raised local property taxes by 4 percent, the state’s most affluent district, Anchorage in Jefferson County, would receive about $457 more for each student. But Whitley County would have only $22 more per pupil, according to KCEP’s analysis.

The largest per pupil increase in any of the six counties in Stivers’ district would be $39 in Knox County and in Corbin. Wolfe County would get only $20 more per student.

Stivers said Friday those differences would be offset by the state portion of funding for those districts, but Jason Bailey, KCEP Director, said the amounts in the analysis are net changes including both state and local funds.

That’s because the SEEK formula ties state funding to local tax efforts, Bailey said. If local taxes exceed the minimally required local taxing effort, the state doesn’t chip in as much.

“If it weren’t designed that way, why would any district raise local taxes?” Bailey asked. “They’d just let the state provide the funding.”

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.

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