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What the 2022 Legislative session means for school finance


Posted Date: 04/26/2022

What the 2022 Legislative session means for school finance

As the 2022 Kansas Legislature convenes for the final part of the session, almost none of the major education issues have been settled. Several bills have been vetoed but overrides could be attempted. Funding for K-12 education was pulled out of the rest of the state budget bill and packaged with other education proposals in an agreement that was not submitted to a vote.

However, as school districts begin serious work on budgets, teacher negotiations and planning for next year’s programs and staff, there are some clear issues emerging:

  • Both the House and Senate approved fully funding Gannon school finance plan.
  • As funding has increased, the Legislature is expecting measurable results in student outcomes – and more documents on how districts use funding to improve outcomes.
  • School districts are expected to improve a wider set of outcomes than state assessments alone.
  • Other Legislative proposals may impact students and school district budgets, including mental health and safety funding, open enrollment and bond and interest aid changes.
  • Expect continued questions about other budget and funding issues after state audits; including at-risk funding; cash balances, IT security, virtual programs and special education aid.

Details:

Both the House and Senate approved fully funding Gannon school finance plan.

Both the House and Senate passed separate bills which would fully fund the final year of the Gannon school finance plan next year and include an estimated cost-of-living adjustment for the following year. However, they have not agreed on other possible components that might be packaged with funding.

This means districts can reasonably count on increased per pupil funding over the next two years. But there are several important considerations. First, Kansas public education had its biggest enrollment decline in 30 years in 2020-21 during the COVID pandemic, and those numbers did not fully recover last year. Because funding is partly based on enrollment in the prior two years, many districts will have less money in their operating budgets next year.

Second, soaring inflation is eating into the purchasing power of those base increases. Although base state aid is supposed to be increased using an average of inflation rates for the prior three years beginning in the 2023-24 school year, that will not help districts with costs right now.

The State Board of Education and many school leaders and organizations are asking the Governor and Legislature to add more funding to special education state aid, which is now $150 million underfunded compared to the commitment of 92 percent of the excess cost formula in state law.

As funding has increased, the Legislature is expecting measurable results in student outcomes – and more documents on how districts use funding to improve outcomes.

If there has been one overriding theme by Legislative leaders – at least those from the majority Republican party – it is disappointment over student outcomes and an expectation that school boards focus on improving those results, especially test scores.

Both the House and Senate passed separate bills making changes to the current state law requiring school boards to conduct a building-based needs assessment as part of the district budgeting process. Both bills would require boards to document the needs assessments, to annually review state academic assessments, and use such assessments and the needs assessment when reviewing and approving the school district’s budget. Specifically, boards would have to identify barriers that must be overcome for all students to achieve proficiency on state assessments; budget actions that should be taken to address and remove barriers; and the amount of time the board estimates it will take for all students to achieve above level 2 on state assessments if budget actions are implemented.

Although these changes have not yet passed in final form and would likely not take effect until July 1, districts are already required to use a needs assessments process as part of the budget adoption. The proposal to require a formal review of barriers to student success and identify budget choices to address and remove those barriers can be immediately implemented if boards are not already doing so.

School districts are expected to improve a wider set of outcomes than state assessments alone.

Although the focus of the Legislature has been mainly on state assessments, the State Board of Education has identified many more outcomes under its Kansans Can vision that will be used for school accreditation and recognition. School boards can take these goals into account as they review student needs and barriers to progress.

Academic preparation for postsecondary success. These measures include state reading and math tests, which began declining in 2015 during an eight-year period of K-12 funding cuts and dropped further during the COVID pandemic. The percentage of students scoring as “college ready” on ACT tests also began declining in 2015 and continued as more students started taking the ACT when provided at no charge and during COVID.

High school graduation rates. While test scores have fallen, Kansas graduation rates have been rising since 2010, with lower performing groups improving faster – until a small decline in 2021, also following the COVID disruption of schools.

Postsecondary attainment. The number of postsecondary credentials earned at Kansas postsecondary institutions by young Kansans, both age 19 and under (generally still in high school) and up to age 24 (generally attending college right after high school) increased annually from 2009 to 2019 but declined during the COVID years of 2020 and 2021.

Kindergarten Readiness, Social-emotion Growth, Individual Plans of Study and Civic Engagement. There are not standardized measures of these objectives, but they are part of the State Board’s accreditation process and the Kansas Star Recognition program.

Legislators and others will be looking at how school districts are using increased state funding under the Gannon plan, which is to be fully implemented next year, to address these outcomes. They also know districts are receiving over $1 billion in total federal ESSER funding for COVID relief, which can be used to address learning loss.

Districts will be scrutinized on these funds not only because of the state’s constitutional charge for educational improvement, but also to test the idea that additional funding results in improved education outcomes.

Other Legislative proposals may impact students and school district budgets, including mental health and safety funding, open enrollment and bond and interest aid changes.

In addition to the major school finance programs, the Legislature is considering adding funding for school-based mental health programs and restoring funding for school safety grants, which could help address social-emotional issues and student safety.

A tentative budget proposal would require school districts to pay fees to support a dyslexia coordinator in the Kansas State Department of Education to address reading issues, and would establish a statewide, on-line supplemental math program to be funded by a mix of state COVID relief funds and fees to districts based on the number of secondary students scoring below “effective” (Level 3) state math assessments.

Both the House and Senate have passed separate bills requiring districts to allow non-resident students to attend, but which also allow districts to set their capacity levels and other attendance criteria. It is unclear how many students would want or be able to use the provision, but changes in enrollment could have a budget impact on both the sending and receiving districts.

Other provisions under consideration would allow districts to keep the entire amount of any federal impact aid, rather than deducting 70 percent under the school finance system. Also proposed is extending the statutory cap on school district general obligation bonds approved by the State Board of Education to June 30, 2027, and exempting school districts that are not eligible to receive capital improvement state aid or have opted out of receiving such aid from the cap.

Proposals would also change the calculation of bond and interest state aid for all general obligation bonds approved at elections held on or after July 1, 2022, by removing Unified School District 207, Fort Leavenworth, but keeping current aid rates basically unchanged; and exclude all students enrolled in a virtual school within a school district from the determination of that district’s assessed valuation per pupil, which would generally reduce the aid rate for such districts.

Expect continued questions about other budget and funding issues after state audits; including at-risk funding; cash balances, IT security, virtual programs and special education aid.

The “high density” at-risk weighting funding for districts with high percentages of low-income students is still scheduled to sunset in 2024 without Legislative action, and the Legislative Post Audit Division is directed to conduct a follow-up to the audit from 2019 that raised questions about how districts are using at-risk funding and State Board oversight. Boards may want to review their at-risk programs and results.

Questions continue to be raised about school district cash balances, despite a Legislative Post Audit study that found neither the Legislature nor State Board of Education has adopted any guidelines for appropriate cash reserves. The percentage of unencumbered cash varies significantly among school districts. Boards may want to adopt a statement on how they decided on appropriate levels for reserves.

A post audit released last year indicated many districts have not adopted adequate policies and procedures to safeguard information technology, exposing districts to legal and financial risk. Boards may want to review their operations, including getting expert help.

A new post audit of school district virtual programs is underway. The audit will look at school district expenditures and student outcomes related to virtual programs, and compare them with other states, with a special focus on states that have state-run virtual programs.

As the Legislature wraps up work in the next week or two and the Governor gives final approval (or veto) to these measures, school leaders can use this information as a “checklist”, as they develop and make budget choices and consider programming for the upcoming year.