Don Schroeder Legislative Report

By Don Schroeder
March 14, 2014

The mood of the legislature seems to be little changed after the Supreme Court released their decision on school funding Friday. This week will likely set the stage for ending the session as discussion on the school lawsuit did not begin in earnest until last Monday.

The decision as I understand it is this. The Legislature has been reducing the amount of state money in the capital outlay and Local Option Budget (LOB) funding formula since 2009. State money went into a formula for capital outlay and LOB that was originally designed to generally equalize the educational opportunity for K-12 students and provide additional funding with local effort (property taxes) if the school district wanted to access additional funds. These additional funds included a matching amount of money from the State. As the State portion of the match has declined from 100% in 2009 to 78% in 2013, the educational opportunity for poor districts has decreased.

Although the court did not specify a dollar amount, it said the State needs to review the capital outlay and LOB formula to rebalance the State share, thus providing equal educational opportunity. The number floating around would increase the amount of State money if the formula remains as it is today, but it is likely some of the parameters will change, so the number would change as well. A second option the Legislature has is rewriting the law for District Court review and deciding if the new law meets the equalization requirement. So, two options are available to the Legislature.

Another part of the decision says that total dollars spent is secondary as long as seven outcomes, based on Rose v Council for Better Education case in Kentucky in 1989, are met or exceeded. The Court did not totally dismiss school funding as a consideration but emphasized equity as a primary consideration while recognizing adequacy of funding was necessary to meet those educational outcomes. The Court agreed that State money put into teacher retirement and Federal funds count toward educational effort.

This could mean the State needs to put in additional money to rebalance the formula. But more State money may not translate into additional total money available for schools. In other words, it may be a shift from local property taxes to State funds in order to rebalance the formula with the overall amount remaining the same. It will vary from school to school, depending on how the formula affects each. At this point, the options to rebalance could lead to more, the same, or less State spending on education.

The Supreme Court decision is quite complex, yet the bottom line is that they are saying the State effort for capital outlay and LOB need to be fully funded. Let’s not confuse the LOB formula with Base State Aid Per Pupil. Base State Aid Per Pupil is the base amount of State education funding per student from which the educational weighting is calculated for things like transportation and special education.  

In other news, committees have begun meeting to process Senate bills. We only have this week to work through the Senate bills. After Friday of this week, nearly all legislation that has not passed out of committee will be dead for this year. It seems the session after turnaround has been shortened to restrict the total amount of laws the Legislature can change. I am of the belief that the legislature makes more changes, in many instances, than it should.

I hope the talk about the school court decision was not too confusing. Please contact me or one of the other Representatives or Senators if you have questions.