Missouri education funding may face overhaul

JEFFERSON CITY, Mo. -- There seems to be wide agreement that Missouri's method of distributing money to local schools is broken. But fixing one of the most complex and critical aspects of state government will prove a difficult and politically controversial task.

When the Missouri Legislature last overhauled the system a decade ago, it did so under the threat of a court order. The resulting changes pumped vast amounts of additional money into public education and, it was thought, closed the financial gulf separating rich and poor school districts.

But State Auditor Claire McCaskill says that gulf has actually widened to the point that the current funding method is less fair than the one it replaced.

While Missouri's financial inability to continue major annual boosts in education funding had already nudged lawmakers toward a re-examination of the system, McCaskill's recent audit serves as a warning that the state is vulnerable to another lawsuit that could force action.

And that lawsuit, led by some Southeast Missouri educators, could be just weeks away.

"I am fully confident enough school districts will get together that a lawsuit will come about. I just don't know when it will happen," said Carter County Presiding Commissioner Gene Oakley.

As superintendent of the Greenville School District in 1992, Oakley was chairman of a group that played a key role in the first lawsuit. He is advising area educators considering a second effort.

"I don't think we can ever get to where funding would be exactly the same for all students," Oakley said. "But I do think it is possible to be more equitable than it is now."

First correction

Equity is what the legislature sought in passing the 1993 Outstanding Schools Act, which rewrote the formula for distributing state aid to local schools.

The law followed a judge's ruling that the old formula was unconstitutional because it didn't compensate for the disparity between rich and poor districts.

McCaskill said that in 1992 there was a $6,000 gap in per-pupil funding between the most wealthy district and the poorest. That difference grew to more than $9,000 for the 2001-2002 school year.

The Clayton School District in St. Louis County led the state's 522 school systems by spending $13,748 per pupil. At the bottom end was the McDonald County School District in southwest Missouri, which spent $4,591 per student.

Among the 58 districts serving 14 Southeast Missouri counties, the difference was less severe.

The New Madrid County School districts, ranked 98th highest in the state, topped the region with $7,156 in per pupil spending. The Holcomb School District in Dunklin County trailed other area districts with per pupil expenditures of $4,691 -- fourth-lowest in the state.

The Jackson and Puxico districts joined Holcomb among the bottom 10 districts statewide in per-pupil funding.

While the state budgeted $2.49 billion in direct school aid for the current school year, education funding is driven by local property taxes.

Since the ability to raise local revenue varies widely from district to district, the formula is intended to equalize the disparity by sending a greater share of state money to poorer districts.

The goal is for each district to receive the same amount of total revenue -- state and local combined -- per penny of local property tax.

Holding harmless

However, certain inequities were built into the system.

During the last fight to rewrite the formula, some districts complained they would lose state funding under the new version.

As a result of political compromise, it was agreed to "hold harmless" such districts, meaning they would perpetually be guaranteed the same level of per-pupil state funding they received for the 1992-1993 school year.

In the beginning, only a handful of districts were held harmless. Today, 48 districts carry the designation.

The New Madrid district -- Southeast Missouri's leader in per-pupil spending -- is among them, as are the Cape Girardeau, Perry County, Bell City and Cooter systems.

Because they receive more state money than they would under the formula, hold-harmless districts took an extra $244.4 million last year, according to the audit.

Another problem McCaskill sees is so-called "add ons" for costs such as transportation. That money, about $509 million last year, isn't distributed on the basis of equity.

"You have the add ons and the hold-harmless districts, and with that combination instead of getting everyone closer together we in fact have moved districts further apart," McCaskill said.

Cape Girardeau schools superintendent Mark Bowles said his district, which according to the audit garnered an extra $515,000 in state aid last year, and others like it aren't unfairly benefiting.

"We get so little through the formula that we certainly are not contributing to the overall funding problem in the state," Bowles said.

The Cape Girardeau district, which has been held harmless since the 1994-95 school year, generates 70 percent of its revenue locally, Bowles said.

A larger culprit

Former state budget director Jim Moody, a lobbyist for hold-harmless schools, agrees with many of the audit's points but sees a larger culprit in the inequities that wasn't addressed.

To receive state funding, districts are required to maintain a minimum local property tax of $2.75 per $100 of assessed valuation. However, 273 districts used what is called the "calculated levy" for determining state aid.

When property assessments rise, districts are required to lower their levies so they don't profit from the increase. But they are allowed to use the pre-rollback figure for state funding purposes.

Because of that, Moody says, a number of districts actually have levies lower than $2.75. Such districts are a much larger drain on the system than hold-harmless schools, Moody says, though he acknowledges that argument has gained little traction in the legislature.

"I think the calculated levy is unfair, but half the school districts have got it," Moody said.

State Sen. Harold Caskey, D-Butler, helped draft the existing formula and said it is due for revision.

"With the method and manner of adjustments that have been made to fit a particular instance for a school district, it is probably no longer equitable," Caskey said. "But we won't know that until a court makes that decision."

Time running out

Insufficient time remains in the current legislative session, which ends May 16, to tackle the issue. However, a special legislative committee plans to study the issue over the summer to develop legislation for next year.

Dr. Kent King, Missouri's commissioner of education, said the massive differences in local wealth around the state make it difficult to develop a formula that would make all parties happy.

"There probably isn't a perfect formula," King said. "And you certainly do have to realize the political process the formula adoption goes through."

If the distribution system sounds complicated, it's because it is. And that's part of the problem, McCaskill said. Lawmakers and others make decisions without fully understanding what they're doing.

"I think it would be better for everyone to at least have a formula that more than six people in the building understand," McCaskill said.

mpowers@semissourian.com

(573) 635-4608

RESULTS OF THE FORMULA

Total per-pupil spending by Southeast Missouri school districts during the 2001-2002 school year and how they rank among the state's 522 public school districts:

Rank District County Per-pupil expenditure

183 Meadow Heights Bollinger 6,532

189 Cooter* Pemiscot 6,497

226 Cape Girardeau* Cape Girardeau 6,304

275 Scott Co. Central Scott 6,081

316 Oran Scott 5,925

319 Zalma Bollinger 5,915

338 Delta Cape Girardeau 5,851

390 Perry County* Perry 5,651

404 Leopold Bollinger 5,605

428 Woodland Bollinger 5,509

430 Scott Co. Scott 5,492

438 Oak Ridge Cape Girardeau 5,462

462 Sikeston Scott 5,358

479 Scott City Scott 5,237

492 Kelso Scott 5,123

500 Chaffee Scott 5,023

511 Altenburg Perry 4,831

512 Nell Holcomb Cape Girardeau 4,823

517 Jackson Cape Girardeau 4,743

* Hold-harmless district

SOURCE: Department of Elementary and Secondary Education Southeast Missourian