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Why the Flurry of State Action to Overhaul K-12 Funding?

A confluence of factors, from budget shortfalls and Medicaid costs to preparation for the new federal K-12 law, have forced an unusually high number of state legislatures this year to attempt dramatic changes to their school funding formulas.  

At the beginning of this legislative session, I tallied at least 10 states that were considering plans to change their funding formulas. That club has continued to grow:

  • A bill was proposed in Massachusetts this week to overhaul that state's funding formula, which advocates say is "eroded" and shortchanges schools by almost $2 billion annually.
  • Maryland's legislature set up a "Commission on Innovation & Excellence in Education" that will "review and assess current education financing formulas and accountability measures, and how each local school system is spending its funds."  
  • Legislators in Colorado attempted to pass a bill that would set up a commission to study what Colorado schools should look like by 2030 and figure out a way pay toward meeting that vision.  That bill failed in the house Wednesday.  
  • The Texas House of Representatives this week passed a major overhaul of its funding formula that would give more money to schools serving poor students and dismantle its so-called "Robin Hood" formula by allowing wealthy districts to keep a larger portion of their locally generated revenue. (The state Senate is considering a similar bill.)  
  • Amid overcrowding and at a time when K-12 funding that takes up more than half of Utah's budget, that state's legislature made changes to its funding formula this year and promised to study this summer ways to make even more changes.  A citizen-driven effort is pushing to place on the 2018 ballot an initiative that would make more permanent changes to the funding formula.  

State legislators are often reluctant to touch their delicate funding formulas because of the complex ways states distribute millions of dollars in property, sales, and income tax revenue to schools and districts.   

Most states' funding formulas are made up of dozens of weights for the countless—and growing— needs of schools. For example, states send more money to schools with a high portion of poor students and students with special needs. And court orders in places such as Kansas and Washington have forced states to offset local spending with state spending so that schools aren't so dependent on their local housing markets.  

Making even the slightest of changes can be a politically volatile act that, depending on who wins or loses, could animate parents and teachers guaranteed to show up at the polls. As a result, some states' funding formulas haven't been touched in almost 30 years. 

But legislatures, most of which are controlled by Republicans, are now being squeezed by a variety of factors that have intensified in recent months. 

Though states are more than eight years out of the recession, tax revenue has yet to rebound the same way the economy has, as I've described. While unemployment is in the single digits, income levels have remained stagnant, and people aren't spending the way they did before the recession.  

Meanwhile, with the ongoing wars over health care, Medicaid costs in some states are now "crowding out" K-12 costs which have typically taken up the largest share of  states' budgets, said John Hicks, the executive director of National Association of State Budget Officers.  State legislatures are desperate to find ways to cut, and K-12 has become, albeit reluctantly, a likely target. 

K-12 costs have risen dramatically in recent years, due to special education costs, teacher salaries and their associated health-care costs, and an accountability movement that's required more teacher training, curriculum and technology.  

Finally, the Every Student Succeeds Act requires "stakeholder engagement," a process that's led to some tough conversations between teachers, parents and state officials over the direction of states' public school systems. 

Legislators left those meetings eager to make dramatic shifts in what a K-12 education looks like in their states, said Michelle Exstrom the education program director for the National Conference of State Legislatures. And ESSA gives them plenty of flexibility to do so.

Legislatures can shift education policy in one of two ways: propose an unfunded bill to their chamber's education committee or, through their state's finance committee, change the funding formula.  

Funding formulas can serve as a heavy (and longstanding) accountability tool. Conservative legislators in many states have long complained that locally elected school board members have allowed for, among other things, bloated administrations and ineffective, overpaid teachers. They've been itching to more closely dictate how districts spend their money, and funding formulas are an easily accessible way to do as much. 

States have used funding formulas to force district consolidation, punish underperforming schools, reward high-performing schools, and roll out new initiatives. Many state legislators are looking to pair their new accountability systems under ESSA with their funding formula.  

District administrators, many of whom are being consulted for school funding formula reform attempts, are pushing back forcefully. They have long argued that local control will bring about better academic results, and they have encouraged states to "simplify" funding formulas by sending money down to districts in one big block grant and letting school board members and superintendents figure out where to spend.  

As long as states pay the majority of K-12 costs, Exstrom and Hicks anticipate school funding formula debates to roil on for the next several years. More states could be added to our list.


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