When the Kansas Legislature was debating how to address the Gannon school finance lawsuit in the mid-2010’s, some legislators said they worried that the school funding would take over the state budget, squeezing out other important state programs. But according to the latest Governor’s Budget Comparison report, in the upcoming school year – when the six-year Gannon plan is fully funded, and the first cost of living adjustment is in place – K-12 funding will be $4.55 billion out of $9.47 billion in State General Fund expenditures, or 48%. That would be the lowest percentage of the State Fund spent on K-12 since 1997 when it was 47.3%.
K-12 expenditures have accounted for approximately 50% of the state general fund budget since 1994, when a new school finance system similar to the current law was fully implemented. That plan passed in response to a school finance lawsuit over big differences in local school district property tax rates due to the wide variations in local property wealth.
The new system significantly increased state aid to unified school districts in order to reduce and equalize school district mill levies. K-12 aid jumped from about 40% of the state general fund budget to 50%, and most school districts saw decreased property taxes for schools.
For 30 years, K-12 funding has continued to average about 50% of the state budget. Kansas provides more school funding from the state government than most states but also allows much less reliance on local revenues, especially property taxes. According to the most recent federal data on school funding, in 2021, local revenues provided 24.7% of Kansas K-12 funding, compared to 44.1% nationally. Only seven states had a lower percentage of local funding than Kansas.
However, Kansas ranked 28th in total revenue per pupil, with $15,446 per pupil in total funding from all sources, or almost 12% lower than the national average of $17,448 per pupil.
In other words, spending 50% of the state general fund budget on K-12 does not mean Kansas provides a high level of per-pupil funding. Rather, it means Kansas schools rely less on local revenue sources, mainly property taxes.
Although some state leaders said they feared that school funding would be unsustainable after the Montoy school decision in 2005 and the Gannon decisions in the mid-2010’s, K-12 aid has remained stable as a share of the budget, averaging 50.3% of SGF spending since 1994. K-12 aid did jump to 52.6% in 2020 and 54.3% in 2021. However, those increases were inflated by two factors unrelated to the school formula. First, legislators approved large increases in employee pension contributions to shore up the Kansas Public Employees Retirement System. Those contributions pass through school districts' budgets but do not give districts any more funds to operate. Second, COVID-era adjustments in spending cut SGF expenditures by $255 million in 2021 before increasing by $928 million in 2022, when K-12 aid dropped back to 50%.
In fact, K-12 aid would have been just 47.1% of the general fund last year, 2022-23, if the Legislature hadn’t added one-time payments of $176.6 million in general state aid and Local Option Budget Aid. Those funds were made to end the practice of delaying state aid payment into the next fiscal year but did not give school districts any additional spending power – it was essentially an accounting change.
The Legislature fully funded the six-year phase-in of base state aid increases from 2018 to 2023 and associated increases in local option budget aid, as well as the first year of a cost-of-living adjustment for 2024 approved to settle the Gannon case. It also funded the equalization aid formula for bond and interest and capital outlay state aid according to state law. However, it has not been funding special education state aid at 92% of excess cost, as directed by state law.
Funding 92% of special education excess costs would have required an additional $182.9 million in 2023-24 rather than the $7.6 million actually approved by the Legislature. Adding $175.3 million more for special education and adding that same amount to total SGF spending would have put K-12 funding at 49% of the budget next year rather than the current projection of 48%.
The State Board of Education and Gov. Laura Kelly proposed adding $72 million in 2024 to begin a five-year phase-in to reach 92%. Adding $64 million to both K-12 aid and total SGF spending means K-12 aid would be at 48.4%.
Whether adding enough to fund special education at 92% in one year or through a five-year phase-in, K-12 aid would still be lower than the average percentage of the SGF spending since 1994 (50.3 %).
These projections assume the Legislature increased total spending to fund more special education aid rather than shifting from other programs. Under the current budget, the SGF is expected to end 2023-24 with a balance of $2.67 billion or 28.1%. Adding enough to fund special education aid fully under state law would require just 6.6% of that ending balance.
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