Easier to fully fund school formula but districts have mixed emotions

The Missouri Legislature passed a bill that will make it easier to fully fund the K-12 state basic aid, but local schools have mixed feelings about it.

The bill, sponsored by state Sen. Jay Wasson, reinstates a 5 percent cap on the foundation formula, which shrinks the underfunded sum from approximately $550 million underfunded to about $140 million underfunded.

When the formula was created in 2005, it was written with a cap to keep the formula from growing more than 5 percent each year, but the Legislature opted to remove the cap in 2009 when the state expected an additional $75 million more in revenue from casinos, Wasson said.

However, the anticipated gaming revenue never came to fruition.

“I guess you could say Missourians were a little smarter than the Legislature because they didn’t go spend all their money (at casinos),” he said.

The formula began to grow disproportionately from what it was meant to, and the $550 million became an unattainable number that continued to balloon. With the cap placed back on the formula, Wasson said, the formula could be fully funded in a couple of years, which would trigger additional funding for early childhood education.

State Rep. David Wood, who sponsored a similar measure, believes the formula could be fully funded as early as next year with the cap reinstated.

“Once we fully fund it, we’ll do our best to fully fund it each year,” Wood said. “When you know you can’t catch up, why try?”

Without the cap, Wood described the formula as a stick with a carrot attached to the end. Every time the Legislature added money to the formula, the stick would get longer and the carrot — i.e., fully funded — gets farther away. Placing the cap back on the formula makes it so the stick is restricted from growing no more than 5 percent each year, making the carrot more attainable.

Wasson said his main motivation for writing the bill was to save the formula. If the Legislature doesn’t think it can ever fully fund the formula, then the formula becomes obsolete. If legislators didn’t reform it with a cap, then Wasson said they’d have to write a new formula.

“I just think it’s important; I really do,” he said. “I’m not trying to play politics; this is just something that I think is important.”

After passing overwhelming in the House and unanimously in the Senate, the bill now sits on Gov. Jay Nixon’s desk. He has expressed strong opposition to the bill and will likely veto it.

Last Friday, Nixon campaigned against the bill when visiting with students at Rock Bridge High School in Columbia, one of the growing districts he said will be negatively affected by the cap.

“I don’t think lowering the expectation in the state of Missouri so that future governors and legislatures can grade themselves on a curve is good policy for the state,” Nixon said during a press conference. “Secondarily, it’ll put additional pressure on the local taxpayers to fund public education. I don’t think either of those is a good policy.”

Nixon said he believes the formula, without the cap, could eventually be fully funded, and placing the cap on the formula will take state aid away from schools.

Wasson and Wood retorted their bills don’t take money away from schools because the revenue will never be able to support the $550 million deficit.

“What I would say to that is, if the governor thinks it’s so easy to do, why hasn’t he fully funded the formula in eight years?” Wasson said. “He’s not one time in his budget recommendation fully funded the formula in eight years. If it’s so easy, how come he’s never done it? He’s never proposed it.”

Nixon suggested an $85 million increase in the foundation formula, and the Senate and House passed the budget for about a $70 million increase — far short of the fully funded figure of $3.784 billion under the current law.

Wasson thinks the bill is veto-proof because of its “tremendous” support from the General Assembly, and he predicts an easy override if it comes to that.

At this point, local schools aren’t sure how much state aid they may miss out on. School officials doubted the formula would ever be fully funded, so it’s unclear if districts will lose any state aid they would have received without the cap.

“I’m kind of torn on exactly how I feel about it,” said Jason Hoffman, Jefferson City Public Schools chief financial officer. “I don’t like it because I feel like it’s kind of taking the Legislature off the hook. I mean, it’s cheapening the formula. So it’s taking them off the hook for them to come up with the $500-plus million that they’d need to fully fund the formula. But that’s really the only negative.”

Current law states accredited districts can receive formula aid for free-and-reduced-lunch students attending early childhood education if the formula is fully funded. If the cap is written into law, Hoffman said, they have hope the formula will be fully funded in the next couple of years.

The district’s Southwest Early Childhood Center is funded primarily through federal dollars and a small percentage from Scholastic, the Jefferson City Public Schools Foundation and some district matching funds.

In theory, once the formula is fully funded, the state will appropriate more money to the district to support Southwest, and the district could use its federal Title 1 money toward additional preschool classrooms.

“What that would do for us is it would free up that Title 1 money, and we wouldn’t have to add more preschool students. But, we turn about half of students away that would qualify for that program and really need it and want it.”

If the Legislature can fully fund the formula, it also makes it easier for districts to plan their finances.

Currently, districts are at the whim of whatever the state can appropriate for the formula, making it impossible for districts to guess what they’ll receive in state aid.

“Right now, it’s impossible for us to do a long-range plan for our state aid because there’s no rhyme or reason for what they might put in the formula,” Hoffman said. “If they were fully funding the formula, you could project out what the full funding would be and project what your state aid payments might be.”

Jim Jones, superintendent for the Blair Oaks School District, agreed it would make it easier to plan how many teachers the district can afford to hire. But, he said, funds are never really guaranteed no matter what the Legislature appropriates.

A couple years ago, the district received notice in the spring, nearly a year after funds had been appropriated, that $240,000 could be withheld from their state aid because revenue forecasts weren’t matching reality. The funds weren’t withheld after all, but Jones doesn’t rely on promises from the Legislature.

“The more concrete information you have will assist in planning, but even after that point, the state revenue projections may not come through,” Jones said. “A budget is a living, breathing document, and we’re constantly in the evaluation of that.”

Blair Oaks doesn’t have a preschool currently, but it may be an option once the district constructs a new high school a few years down the road. The potential for formula money to put toward the operation of a preschool is a positive, he said.

Jones said if the district receives less state aid due to the cap, it won’t affect Blair Oaks students’ education.

Wood’s bill passed through the House and is making its way through the Senate. Wood said it’s possible his and Wasson’s bill could be packaged together.