Thursday, September 24, 2015

Block Grants Are a Bad Recipe

By Duane Goossen

Unsurprisingly, 16 school districts applied to the State Finance Council for “extraordinary needs” funding in August to help cover growing enrollments. Under the new block grant system, that’s the only way to get additional funds. However, the Finance Council granted only a fraction of each request. The districts were told that block grants already provide a record $4 billion in aid.

Is that true? Is more money going to the classroom than ever before? Are schools out of line in asking for more funding when enrollments go up?

For an answer, consider the chart “Major Categories of State Aid for K-12 Education in Kansas” on page 60 of the Comparison Report released recently by the Kansas Division of Budget. The chart traces state aid history from FY 2011 to the present. According to the chart, in FY 2011 the grand total of state aid was $3.802 billion. In FY 2016, the current budget year and current school year, the total rises to $4.059 billion—the number often referred to by the governor as a “record.”

Over a 5-year period that’s an increase of $257 million, but what does that increase pay for?

The numbers from the Comparison Report show that aid went up in 4 categories:
  1. Retirement System Payments (KPERS) — The amount school districts must put into the public retirement system for education employees rises every year. In FY 2011 this payment was a separate funding category. In FY 2016 it become part of the block grant, but school districts must still pay the bill.
  2. Local Option Budget Aid — The Kansas Supreme Court ordered lawmakers to increase this aid to solve “equalization” problems between districts. Almost all of the increase was used to lower local property taxes, and did not produce additional classroom resources.
  3. Capital Improvement Aid — These funds are disbursed through a formula to help some districts with bond payments for buildings, but do nothing to cover enrollment increases.
  4. Capital Outlay Aid — The Kansas Supreme Court also ordered this funding to help some districts cover equipment purchases.
These 4 areas more than explain the entire $257 million increase. Each one, considered separately, is a worthy and necessary item, but these areas do not provide general classroom aid—the heart of day-to-day educational activity.

State aid for classrooms has actually gone down in the 5-year period covered by the chart, even when the amount set aside for “extraordinary needs” is included in the FY 2016 total. Yet enrollment in that period went up by 6,420 students. Costs for things like electricity, transportation, salaries, and supplies also went up.

Classroom aid goes down, but costs go up. Of course school districts are going to seek more funding. Under the now-expired school finance formula, a rise in enrollment brought more funding to a district. With block grants, school districts must appeal to the Finance Council, but have no assurance that the larger enrollment will be covered.

And what about next year? The costs that school districts face will keep going up, but the block grant will stay flat, and that’s the best-case scenario. The state’s financial outlook is so tenuous that even flat funding may not be possible.

This block grant system is not a recipe for creating world-class schools. It allows lawmakers to say they put more money into the classroom, but they didn’t.

— This entry was originally posted on the Kansas Center for Economic Growth website.

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