Category Archives: School Finance 101

Creating a Roadmap for our Future

IMG_1863

One of the strengths behind every successful organization is the ability to plan for the future.  This can be challenging (since the perfect “crystal ball” has yet to be perfected), but it can also be quite rewarding.

The Eudora Board of Education assembled a group of stakeholders last week to help create the next strategic plan for the school district.  The group was mad up of a cross-section of employees and district parents,  as well as community members who don’t currently have kids in school. That day, dozen of volunteers took time to reflect on the old plan while looking to the future.

IMG_1864

The work we did last week further built upon a foundation first laid out by the board in 2009.  That foundation was a set of core values —  collaboration, class size, personalized education and early childhood programs — that board members believed were key to define what we do as a district.

These core values then inspired the district’s first strategic plan, adopted in January 2010. Nearly six years later, the board is now working on the 2015-2017 plan with five target areas: organizational strength, academic excellence, whole child education, technology and community partnerships.  At our meeting last week, our stakeholders worked together to determine action items that should be considered under each target area.StrategicPlan-GroupRot

It was a great day, filled with new ideas and excellent conversations about our future as a district, among a group of supportive, dedicated and thoughtful people. Just one more impressive example of the incredible support Eudora Schools gets from our community.

 

 

Kansas School Finance Formula

At first glance, the Kansas school finance formula — the way that the state fulfills its constitutional duty to provide an adequate public education to all Kansas students — is complicated.

But keep in mind that the work of educating all students is a complicated task! The Kansas landscape includes densely populated urban and suburban areas, but it also includes small, remote districts surrounded by hundreds of miles of farmland. And every community is different. Our challenges and our opportunities are different, based on the community where we live and the students and families we serve.

It is important to realize that some students require more resources to educate, and this creates more expenses. The general fund has “weightings,” which add to the amount of funding a school receives. In Eudora, we receive weighting funds for students in our high school career/technical education courses, special education, students who qualify for free/reduced lunches and those who are transported to school.

The genius of this formula is that it was built to respond immediately to changes in a local district, if there are population changes, a decrease or increase in the number of at-risk students, each year. (If you’ve heard about a proposal to fund public schools through block grants, keep in mind that it would be incredibly difficult for this type of a system to be responsive to our district in the same way.)

First adopted in 1993, the Kansas school finance formula has managed to ensure stability and success for every community in Kansas, in spite of the wide variety of local needs each district naturally has. Public schools will look different in Wichita, or Kansas City Kansas, or Blue Valley, than they do in Eudora. And that’s because our communities are different. But the finance formula was written to ensure equity — that each community, regardless of zip code, would have the resources necessary to provide their students a high-quality public education.

So, the next time you hear someone say that we should rewrite the finance formula because it’s broken, or because it’s too complicated, I hope you’ll take a moment to respond with something along these lines…

If we get a new finance formula for Kansas schools, let’s just make sure it still meets the complicated needs of every local district in the state, and that it can change and adapt each year as local districts change.

And — although it should go without saying — let’s make sure the Kansas Legislature does what it takes to fund the formula completely. Because in the end, a partially-funded formula just doesn’t work.

Capital Outlay

The Capital Outlay Budget is made up of funds that, by law, can only be spent on very specific things. Traditionally, capital outlay funds could only be spent on expenses related to building or maintaining facilities and purchasing certain equipment.

In 2014, the Kansas Legislature allowed a bit more flexibility in how capital outlay funds could be spent, permitting districts to also use the money to pay for custodial/maintenance expenses, as well as certain uniforms. Districts are allowed to collect a maximum of 8 mills in Capital Outlay, and in Eudora we have done that. This is an area of the budget where districts are allowed to carry over funds from one budget year to the next. For many districts, it is the fund that will pay for a boiler going down or a roof blowing off a building. Given the costs of things today (a bus at $80,000 or a new roof at several hundred thousand), it is important for districts to maintain a positive balance in this fund.

According to the state finance formula, capital outlay budget equalized with state aid to assist property-poor districts that are unable to raise as many mills as districts with greater property wealth.

Mill rates

In Kansas, property taxes are figured by taking the mill rate and multiplying by the taxable portion of the property’s assessed value. In other words, the mill levy is the “tax rate” that applied to the value of your property. One mill is the equivalent of one dollar per $1,000 of assessed value (or .001 percent).

The mill rate consists of a local portion — used to fund things like schools, the city pool construction, utilities, and other municipal services — as well as a state portion.

The “appraised value” of a home is listed on the notice of value from the county appraiser’s office. Multiply the appraised value by the assessment percentage of 11.5 percent. The resulting amount is the “assessed value,” or the amount multiplied by the mill rate to determine the taxes. In other words, a home with a value of $100,000 would be taxed on 11.5 percent of that value, or $11,500. That sum is then multiplied by the mill rates, both local and state, to figure the property taxes owed. It is important to note that the assessed value of businesses is figured at a higher rate than the 11.5 percent for private homeowners.

The Eudora School District is property-poor — our assessed valuation of $57 million is much lower than most  districts in the area. This is because our community lacks the business and industry base that typically makes the biggest boost to assessed valuation.

For example, the school district in Burlington, Kansas, raises the most money of any other district in the state — $480,000 – per mill – because the Wolf Creek Power Plant is located in their district. In Eudora one mill raises just $57,000. This means Eudora taxpayers pay more mills (local property taxes) than most other districts in the state because we raise less money per mill. This is the biggest reason why equalization matters to the future of Eudora Schools.

Local Option Budget (LOB)

The largest locally financed fund is called the Local Option Budget, which is also sometimes referred to as the supplemental general fund. The idea behind this fund was to give districts the opportunity to supplement state funding for additional programs and services that would be determined by local school boards.

Unfortunately the state cuts to the general fund over the past several years have forced district to use the money generated by the LOB to help fill cuts in state general funds, rather than using it to supplement.

By law, a district’s LOB can equal only 30% of the General Fund without holding an election. Eudora has been at the maximum level of 30% for several years.

According to the state finance formula, the LOB is equalized with state aid to assist property-poor districts that are unable to raise as many mills as districts with greater property wealth.

In the spring of 2014, when the Kansas Legislature followed the orders from the Kansas Supreme Court to fully fund the LOB, most districts were already at the maximum 30%. In these districts, additional funding from the state allowed school boards to lower local property taxes. As a result, the Eudora board’s 2014-2015 budget reflected a nearly 7 mill drop in the overall mill rate.

General Fund and BSAPP

Most of the things you picture a Kansas school district spending money on comes out of the general fund. This is the fund we can use to buy textbooks and classroom materials and pay the salaries and benefits for teachers, counselors, principals, secretaries, nurses, bus drivers and other employees.

The general fund is largely made up from state funding called Base State Aid Per Pupil, or BSAPP. In 2008, the BSAPP reached it’s highest level of $4,400. As a result of funding cuts made during the Great Recession, the BSAPP was reduced dramatically. The Governor’s allotment (a cut of $42 in the BSAPP) lowered the BSAPP to $3,810. This is just about the same amount school district’s received in 2000. To put this in perspective, if the BSAPP had just maintained the rate of inflation, we would have a BSAPP of about $6,059.

Keep this in mind the next time you hear that state funding to schools in Kansas has increased over the past few years.

Infographic

A portion of the general fund comes from the 20 mills that every homeowner pays in property tax. In some districts, this 20 mills raises more than enough for the general fund. In that case, the extra money raised goes to the state to be redistributed to districts where the 20 mills does not cover the general fund needs — places like Eudora. In a property-poor district like ours, the 20 mills raise only about 10% of our general fund; the rest is made up by state aid and federal sources. Read more about equalization here.

Equalization

One of the key elements of the Kansas school finance formula is that it is designed in such a way to make sure that all districts in the state — rich or poor, large or small  — are able to provide an outstanding public education to their students.

This structure is based on a few factors, including …

  • Property wealth of a school district. This measures the ability of local boards to collect taxes from businesses and homeowners. Eudora is a property-poor district, which means we should receive additional funds from the state in several areas of our budget: the general fund, the capital outlay budget and the local option budget. It also helps fund construction projects. in fact, state aid on bond and interest made it possible for Eudora voters to afford the much-needed school bond issues passed in 1994, 2001 and 2007.
  • Student risk factors. This measures the additional needs that some students have and includes such categories as English language learners, homeless and migrant students and students who qualify for free and reduced lunch. Districts with larger number of students in these groups should receive additional funding to help schools provide the wide variety of supports these students may need to be successful.

Why does this matter? It matters a lot because Eudora’s school system would not be what it is today without the equalization aid we’ve received from the state, through the school finance formula. Districts with greater property wealth automatically generate the funds they need, but districts like ours depend on state aid. Don’t believe me? Consider this: Eudora taxpayers’ 20 mills account for only a little more than 10% of our total general fund. The rest comes in from state and federal sources. Click here to read more about mills and the mill rate.

Here’s the long and the short of it:Without equitable and adequate state aid, Eudora residents will pay much more – with sharp increases in local property taxes and student fees – and get much less. But when the Kansas Legislature meets its Constitutional duty to fund schools both equitably and adequately, every Kansas community can afford great schools, regardless of zip code.