HCS SS SCS SB 287 -- ELEMENTARY AND SECONDARY EDUCATION FUNDING

SPONSOR:  Shields (Baker, 123)

COMMITTEE ACTION:  Voted "do pass" by the Special Committee on
Education Funding by a vote of 15 to 8.

This substitute comprehensively revises the state education
funding formula to be phased in over seven years beginning July
1, 2006, if the contingency in the effective date is met.  The
current formula is levy-driven with an equalizing factor, the
guaranteed tax base, to achieve the goal of providing the same
amount of money per student, per penny of the tax rate.  The
formula in the substitute is based on student needs with the
chief feature of the new formula being a minimum amount of money
that is needed to educate each child, known as the state adequacy
target (SAT).

To establish the SAT, every two years the Department of
Elementary and Secondary Education will identify schools that
have made perfect scores on their annual performance reports.
These districts are known as performance districts, and their
characteristics form the basis for several calculations in the
formula.  The expenditures in those districts, through a process
specified in the substitute, become the basis for the SAT, which
cannot decrease.

The new formula uses weighted average daily attendance (WADA) to
direct additional money to students who qualify for free and
reduced-price lunches, those in special education, and those with
limited English proficiency.  Additional average daily attendance
resulting from the weights in excess of the threshold is added to
the average daily attendance.  The SAT multiplied by the WADA
becomes the basis for the first calculation in the state aid
formula when it is multiplied by the dollar value modifier (DVM),
an index of the relative buying power of a dollar on a regional
basis that captures 15% of the deviation from the median, keyed
to wage-per-job data.

The district's local effort is subtracted from the SAT multiplied
by the WADA multiplied by the DVM figure.  If the result is a
positive number, it is the state aid payment.  If the number is
zero or less, the district is held harmless and will receive no
less revenue on a per-WADA basis than it did in the previous
year.  The hold-harmless year is 2005-2006.  The DVM is applied
to the hold-harmless payment, which is phased in over three
years.

The local effort that is deducted from the first line includes a
calculation of revenue based on a performance levy of $3.50.
Every subsequent year, local effort will be calculated on the
basis of the first calculation, plus growth in fines, except that
a district that has less local revenue because its assessed
valuation has fallen from the base year will have its local
effort calculated based on its current assessed valuation.  No
growth in local revenue will offset state aid, as it does under
the current formula.

The current formula has several categorical aid streams:
transportation continues unchanged, as do the career ladder,
vocational education, and educational and screening programs.
The line 14 "at-risk," gifted, special education, and remedial
reading categoricals are folded back into the district's base,
along with the fair share (cigarette tax) and free textbook
(foreign insurance) moneys.  Revenues from gaming, which will be
deposited into the Classroom Trust Fund, also established by the
substitute, will be distributed on an average-daily-attendance
basis.

The substitute creates option districts, which may elect to forgo
state aid in return for regulatory relief, and a program to
distribute additional moneys to districts with an average daily
attendance of 350 students or less.  A motor fuel tax exemption
is authorized for school buses under certain conditions.
Placement of moneys in school district funds and the transfer of
moneys between funds are revised to reflect the new formula and
changes to the certificated salary compliance requirement.  The
substitute increases teacher minimum salaries; permits teacher
salary incentives; and enacts other changes relating to
accountability, including a revision to procedures for districts
that move between unaccredited and provisionally accredited
status.  Many of the sections of the substitute revise existing
law to the new terminology and delete obsolete provisions.

FISCAL NOTE:  Estimated Cost to General Revenue Fund of Up to
$2,654,593 in FY 2006, $119,646,047 to Unknown in FY 2007, and
$221,608,056 to Unknown in FY 2008.  Estimated Effect on Other
State Funds of an Income of $0 in FY 2006, a Cost of $2,237,280
in FY 2007, and a Cost of $2,270,840 in FY 2008.

PROPONENTS:  Supporters say that the current formula has outlived
its usefulness and has some inherent flaws, such as its reliance
on assessed valuation and an equalizing factor that has its basis
in assessed valuation resulting in an emphasis on a district's
fiscal characteristics rather than students' needs in the
district.  The proposed formula directs additional moneys to
districts based on students' needs and bases its level of support
to characteristics of school districts that are succeeding in
meeting the state's standards.

Testifying for the bill were Senator Shields; Cooperating School
Districts of Greater Kansas City; Missouri State Teachers
Association; Missouri School Boards Association; Missouri Public
Charter School Association; and Missouri Farm Bureau.

OPPONENTS:  Those who oppose the bill say that it contains
several amendments that are not relevant to school funding, like
the superintendent compensation reporting requirements.  The
charter school financial amendments could cause the disruption of
issues that were previously thought to be settled.

Testifying against the bill were School Administrators Coalition;
Edison Schools; Bernard Taylor; and Bonnie McKelvy.

OTHERS:  Others testifying on the bill say that the issue of
assessment practices is still not addressed in enough detail.  A
clear growth factor needs to be included.

Others testifying on the bill were St. Louis Construction Career
Center; Steve Gardner; St. Louis Board of Education; Kansas City
Board of Education; Missouri National Education Association;
Cooperating School Districts of Greater St. Louis; and Coalition
to Fund Excellent Schools.

Becky DeNeve, Senior Legislative Analyst

Missouri House of Representatives
93rd General Assembly, 1st Regular Session
Last Updated August 25, 2005 at 1:21 pm