Superintendent gives math lesson on financial outlook for Kansas schools

Ed. note: The following statement was issued by USD 336 Superintendent Dennis Stones, Holton, Feb. 9. It provides an overview of how Kansas schools are funded and how Governor Sam Brownback’s funding cuts can affect Kansas school districts.

 By Dennis Stones, Superintendent, USD 336 Holton 

Dear Colleagues and Community Members:

Several people have approached me with questions about the Governor’s recent funding cuts. The Governor wants us to believe the cuts are due to school funding being “out of control” and that these cuts are simply a reduction of last year’s increase. That might be true for the state, but this is mostly false for school districts. I will attempt to explain this issue.

School finance is complicated for good reasons. Our system is set up to ensure the quality of a child’s education is not determined by a student’s zip code or school district’s wealth. Also, some students, such as those who are labeled “at-risk”, sometimes require different programs that are more expensive.

To summarize:

  1. For many, if not most, school districts, last year’s Kansas Supreme Court ruling, as well as the resulting new law, did not increase their revenue; rather, it only reduced their local property taxes. USD 336 would have been able to reduce the overall tax requirement to operate the district by approximately 14 mills, but since we are in the beginning of a bond issue for the new Holton Elementary School, we increased about 7 mills. The bond issue state reimbursement aid is not being affected by the governor’s reductions. That part of the law is still in effect.
  2. Last year’s increases were for “equalization” funding and were ordered by the Kansas Supreme Court. Equalization refers to giving more funding to poorer school districts. School districts build their budget solely based on state law that is passed by the legislature.
  3. The Governor’s reduction in the Base State Aid per Pupil (BSAPP) this last week is not equalization funding and will reduce all school district funding by 1.5 percent, regardless of any impact from last year’s equalization changes.
  4. The Supreme Court will rule about “adequacy” separately, probably next year. Adequacy refers to overall funding. Reducing the BSAPP reduced adequacy.

What does equalization mean as it pertains to school funding? I will attempt to explain how it works with local property taxes. Some districts can raise a substantial amount of money with one mill of property tax (a mill is $1 of tax for $1,000 of assessed property value) and some can generate very little. For example, the highest property wealth school district per student in Kansas is Burlington that, because of the Wolf Creek power plant, garners about $480,000 per student for each mill. The poorest school district per student in Kansas is Galena, which receives about $20,000 per mill. USD 336 ranks 162nd out 186 districts in terms of wealth per student. We can generate $33,185.00 in General Fund (GF) and $37,889.00 in all other funds per student.

Therefore, under current law, the state is required to offset the wealth disparity by “equalizing” three locally financed funds: Local Option Budget (LOB), Capital Outlay, and Bond and Interest (B&I). B&I is the only fund not affected by the reductions at this time.

As a result of the recession and large income tax cuts, the state of Kansas stopped equalizing districts as much. When that happened, poorer school districts had to make up for that loss with more local property taxes. Essentially, local property taxes replaced state income taxes.

Last year, the Kansas Supreme Court ordered those equalization funds to be reinstated and the legislature passed such a law. When that happened, state funding once again replaced local property taxes, but school districts did not necessarily receive more money to operate their schools.

The main locally financed school district fund is called the Local Option Budget (LOB). Originally, the LOB was created to supplement state funding for extra programs desired by local school districts. As a result of state cuts to school district’s general funds, the LOB has become a crucial fund for the day-to-day operations of school districts. The state began reducing equalization for LOB several years ago, so school districts had to make up for that with local property taxes.

Please note that the LOB is calculated only after the General Fund (GF) has been calculated. A school district’s General Fund is mostly made up of state funding called the Base State Aid Per Pupil (BSAPP). At its highest point in 2008, the BSAPP was $4,400; last August, school districts calculated their GF based on $3,852. The Governor’s reduction this week lowered the BSAPP by about $42 to about $3,810, which is about the same level as budget year 2000. If the BSAPP had simply kept up with inflation since its creation, it would now be about $6,059.

Since some students are more expensive to educate than others, the GF also includes “weightings,” which adds to the amount of funding school districts receive. For example, weightings provide more funding for students who are transported by school bus, qualify for free lunches, and take vocational classes. One weighting actually reduces funding: Kindergarten students only count as 50 percent of the BSAPP, so we have to make up the rest in order to have full-day kindergarten.

The LOB can only be 30 percent of the GF without holding an election. Therefore, when the new law restored equalization to the LOB, school districts, the majority of which were already at the maximum, could only reduce local property taxes. They didn’t gain any new funding to operate schools. The law also allowed districts to raise that maximum to 33 percent of the GF if they held a mail-in ballot election. USD 336 chose not to do this.

The other local fund impacted by recent cuts was Capital Outlay. Previously, this fund could only be used to purchase equipment and maintain buildings, but the new law also allows districts to pay custodians and maintenance personnel from this fund. The maximum mill levy for Capital Outlay is 8 mills. Equalization for this fund was completely stopped several years ago, but it was restored as a result of the Supreme Court decision and the resulting new law. Holton is scheduled to receive around $186,000 above local taxes in state aid this fiscal year. USD 336 utilizes this fund to repair buildings, as well as pay lease/purchases payments on the new addition at the High School. These payments equate to $272,000.00 per year. We have nine payments left to make.

The other equalized fund is Bond and Interest, which is used to make payments for bond issue projects. At this time, equalization for this fund has not been reduced.

Therefore, USD 336’s budget will be reduced by approximately $70,000.00 on March 7, 2015. This will be done through allotments as ordered by the Governor. I have made budget adjustments by reducing the transfers that were planned in the budget for this year to renovate the auditorium at the High School. It is my fear that this is not the last adjustment that USD 336 will need to make this year by reducing reserves. We are fortunate that previous USD 336 Boards of Education had the foresight to build some reserve funds. I have also asked the principals and directors to only purchase what is really necessary.

I am also reminded that in September 2014, prior to the elections, Governor Brownback sat across the table at Central Elementary School and guaranteed me there would not be any cuts to education this year. I didn’t believe him then because of the monthly shortfall in state revenues, and he has now proven me to be correct.

Please feel free to come and see me if you have any questions. I truly appreciate the willingness of the entire staff to continue educating all students at a high level and the support of the community to offer a quality school system for their children.

2 Responses to Superintendent gives math lesson on financial outlook for Kansas schools

  1. Happygolucky says:

    Especially in a county that doesn't have enough population to need a stoplight. We are paying the salaries for five superintendents in five small districts in our county. This was one reason I was not happy with the bond issue for USD 421. I thought we needed to talk about consolidation before we bit off more than we could pay for. It should be about providing the best education we can provide within our means for our children. Not about boundary lines.

  2. Insurgent says:

    One money saving device would be to consolidate superintendents.

    Every school district does not need a superintendent.

    Most are very highly overpaid for the amount of actual work and responsibility they have.

    If you are not working daily with the students, both your position and salary needs to be re-evaluated !!!!

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