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What increased K-12 funding means for Kansas students and schools

Posted Date: 05/18/2021

What increased K-12 funding means for Kansas students and schools

The Kansas Legislature approved funding for the final two years of Gannon school finance plan which will boost general operating budgets by over $900 million over six years. Lawmakers also added funding to higher education to help ensure schools will receive over $1.3 billion in one-time federal COVID-19 aid spread over four years, although a federal waiver will still be needed.

These funds will be used to restore positions, programs and salaries eroded when funding fell behind inflation from 2009 to 2017, address lagging academic success, and help students recover from the COVID pandemic. Even with these increases, K-12 funding is still not increasing as fast as the total income of Kansans.

Long term trends: increased funding and higher educational attainment

Prior to 2010, Kansas school funding usually increased more than the rate of inflation every year. Some reasons included increasing student enrollment and the cost of salaries and benefits and building construction, which tend to increase faster than inflation. But the largest spending increases were for staff and facilities to help improve student success, such as expanding all-day kindergarten and preschool, special education services, extra help for at-risk students, more counselors and social workers, and educational technology.

As funding increased, long-term educational attainment also rose. Since 1990, adults Kansans graduating high school increased from 81 to 92 percent, completing any postsecondary education from 48 to 65 percent and completing a four-year degree or more from 21 to 34 percent.

Despite this progress, in the 2005 Montoy school finance decision, the Kansas Supreme Court held that school funding was not constitutionally suitable due to large achievement disparities among students based on income, race, English-speaking status and disability.

In response, the Legislature directed its Post Audit division to conduct an education cost study. It concluded that additional funding was strongly correlated with higher achievement and recommended additional funding to bring lower performing student groups to higher standards. Although the Legislature did not fully fund those recommendations, the Supreme Court approved a plan that phased-in about $1 billion additional funding between 2005 and 2009.

Line chart showing annual Kansas K-12 education funding adjusted for inflation

The Gannon school finance plan: recovery after eight years of funding decline

However, following the Great Recession of 2008-09 and subsequent income tax cuts that reduced state revenue, the Legislature did not maintain funding at court approved levels. Inflation-adjusted total funding declined by almost $400 million from 2009 to 2017 and general operating budgets (school district general fund, local option budgets and special education state aid) fell over $500 million.

As funding declined, school districts cut almost 2,000 positions, reduced programs and fell behind other states in teacher salaries. Within a few years, Kansas test scores and other indicators begin to decline, and the Kansas Supreme Court ruled in the Gannon case that funding was again unconstitutional.

The Legislature commissioned another cost study from an independent researcher that found it would require approximately $2 billion more to achieve state educational outcomes.  Instead, the Legislature reached agreement with the court on a plan to restore operating funds to inflation adjusted 2009 levels over a six-year period. That would require approximately $500 million in funding lost between 2009 and 2017, plus an inflationary adjustment for the phase-in period.

The Gannon plan is a series of annual increases in base state aid per pupil, which increases general state aid, plus increased local option budget funding (because the LOB is tied to base aid) and increased special education aid. These funds are estimated to increase $930 million in actual dollars from 2017 to 2023. However, when adjusted to 2020 dollars, this increase drops to $378 million, and 2023 and the total is projected to still be about $200 million below 2009 levels, partly because inflation is projected to increase more than previously expected.

School districts have used Gannon funding to restore position, increase funding targeted at lower achieving students and improve Kansas teacher salary ranking – steps that improved results in the past.

Total Funding: COVID Recovery Aid and KPERS

Total school funding, which includes the amount above plus all other funding (capital costs, federal aid, KPERS pension contributions and fees) is projected to increase by $1.9 billion in actual dollars between 2017 and 2023, but when adjusted 2020 dollars, the increase drops to $1.1 billion.

While general fund, LOB and special education funding is expected to be about $200 million lower in 2023 than inflation-adjusted 2009 levels, total funding is expected to be about $850 million higher. However, most of this increase is either temporary federal aid or increased KPERS funding.

Approximately $430 million of that increase is federal COVID aid that expires in 2024, and nearly $300 million is for higher state payments to the underfunded Kansas public employees retirement system. The balance – about $130 million – is mostly due to construction costs and capital outlay spending.

Districts are expected to receive a total of $1.3 billion in COVID-19 federal aid to meet the unprecedented impact of the pandemic. This aid will be spread over four years (2021 through 2024).

This money is being used per federal guidelines for costs specifically linked to the pandemic, such as extended summer, after school and other services to make up for lost learning time, additional support for student and family social and emotional needs, helping affected graduates with postsecondary education plans, and mitigating the health risks of COVID-19.

As a result, schools cannot use these funds for on-going expenses after the pandemic ends and federal funding expires, unless they can find replacement funding.

Districts are also receiving nearly $300 million more in annual payments to KPERS retirement system, due to past underfunding. Although part of school district budgets, these funds are simply passed through to the KPERS system to pay for future benefits already promised, and do not provide any change in current school salaries and services.

School Funding and State Personal Income

Line chart shows Kansas K-12 funding as a percent of state personal income.

Although total school funding has been rising more than inflation since 2018, it is not rising faster than the income of Kansans. Kansas personal income is the total income of all state residents from all sources. Total school district expenditures rose increased gradually from about 4.5 percent of personal income in 1990 to just over 5.0 percent in 2009, then declined to 4.3 percent in 2020.

Total school funding is expected to increase just under $1 billion from 2020 to 2023, but the latest consensus revenue estimate projects that Kansas personal income will increase more than $30 billion over that period, and total school funding will fall to about 4.1 percent of personal income – the lowest level since at least 1990.