Federal funds help foundation formula

Sunday, June 8, 2003

In the midst of severe state budget cuts, Missouri legislators say an unexpected influx of $390 million in federal aid could be the solution to school districts' financial concerns.

Under a plan approved this week by the House of Representatives, more than $72 million of the federal funds would go toward public education.

The $72 million gives an additional $63 million to the foundation formula, the complex system used by the state to disseminate equal funding to districts, and the rest to categoricals such as transportation and gifted programs, for which funding is distributed on a per-pupil basis to districts.

The foundation formula, which was implemented in 1993 as the result of a school funding lawsuit, has not been fully funded this year, so that districts are receiving less money than originally planned under the formula.

A fully-funded formula has a pro-ration factor of 1. Even with the additional $72 million in federal money, the 2003-04 foundation formula would only be funded at .925 pro-ration factor.

With this in mind, local school districts have made huge cuts to staff and expenditures. But not all districts will bear the financial burden equally.

Districts that are hold harmless, like Cape Girardeau, will not be impacted as much by the shortfall since hold harmless districts don't receive as much in state aid under the formula to begin with.

The foundation formula takes into account factors such as local property tax revenue in an effort to disperse money equally, so that districts with a lower tax base receive more state aid and districts with a higher tax base receive less state aid.

Under the formula, districts with very high local property tax rates are considered hold harmless and are therefore funded at 1992-93 funding levels, the year the formula was implemented.

However, hold harmless districts get more money per-pupil for categoricals, like transportation and the gifted program, than they are entitled to under the formula.


335-6611, extension 128

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