SB 287
Transitions the state away from a tax-rate driven education funding formula to a student-needs based education funding formula
LR Number:
Last Action:
6/29/2005 - Signed by Governor
Journal Page:
Calendar Position:
Effective Date:
July 1, 2006
House Handler:

Current Bill Summary

CCS/HCS/SS/SCS/SB 287 - Currently, the state's education formula is essentially an equalized tax-rate driven formula, meaning that the formula provides a certain amount of money per student, per penny of tax rate. This act seeks to transition the state away from this tax-rate driven philosophy to a formula that is primarily student-needs based.

The formula requires the Department of Elementary and Secondary Education to calculate a state adequacy target. The adequacy target amount is the minimum amount of funds a district needs in order to educate each student. In order to calculate the target, the department will identify certain high performing districts (performance districts) and extrapolate the amount that those districts spent on educating their students. This amount will become the new state minimum per student, or the state adequacy target. The state adequacy target will be recalculated by the department every two years using the most current list of performance districts. This number will not decrease due to any such recalculation.

The formula assigns additional weight to districts' student counts based on certain student characteristics, specifically, to students who qualify for free and reduced lunch, receive special education services, or possess limited English language proficiency. The department will identify the aggregate percentage of the performance districts' free and reduced price lunch, special education, and limited English language proficiency populations in order to create threshold percentage amounts. Any district with student populations above the threshold percentages in any of the weighted characteristic areas will be assigned additional "weight" for the number of the district's students above the threshold amounts. These additional weights will be added to the district's student population in order to arrive at that district's weighted average daily attendance.

Further, the act contains a proxy variable for the relative purchasing power of a dollar, the dollar value modifier. The modifier is an index corresponding to the wage-per-job (on a regional basis) that captures 15% of the percent deviation from the state's median wage-per-job.

A district's state aid calculation will be: The district's weighted average daily attendance multiplied by the state adequacy target. This figure may be adjusted upward by the dollar value modifier. From this total, the district's local effort will be subtracted, and if this number is above zero, this number is the district's state aid payment. If the number is below zero, then the district will receive no less revenue on a per weighted daily attendance basis than the district received in the 2005-2006 school year. This "hold harmless" calculation is adjusted to reflect usage of weighed average daily attendance. The dollar value modifier is also applied to the hold-harmless payment, and such application is phased in over a three-year period.

For very small school districts, the hold harmless calculation will be based on the actual amount of state revenue received by the district in the 2004-2005 or 2005-2006 school year, whichever is greater. This amount is not a per-student figure. The small school district "hold harmless" calculation also is adjusted to reflect usage of weighed average daily attendance, and the dollar value modifier is applied to this hold-harmless payment. The dollar value modifier application is phased in over a three year period.

The formula itself is phased in over a seven-year period, during which time the state adequacy target may not be adjusted downward. During the phase-in period, districts with significant decreases in gifted and summer school programs will have funds corresponding to those decreased levels reduced from their current-year payments.

The local revenue figure utilized in a district's state aid calculation is the amount of locally generated revenue the district would have received in fiscal year 2005 if its operating levy was set at $3.43. The $3.43 amount is called the performance levy. In every year subsequent to the first-year calculation, a district's "local effort" amount will be frozen, except for any growth in locally collected fines, so that any growth in local revenue collections will be retained by the district and not used to offset state aid payments.

The current formula comprises several categorical aid streams: transportation continues, unaltered, 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 into the district's base amount, along with the cigarette tax and free textbook moneys. Revenues from gaming, which will be deposited into the Classroom Trust Fund, also established by the act, will be distributed on an average-daily-attendance basis.

The act creates option districts, which may elect to relinquish state aid in return for regulatory relief. 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. A mechanism designed to aid small schools by distributing an additional $15 million annually among districts with 350 students or less is included. A financial incentive for districts to provide summer school may be triggered if a 25 percent decrease (from the 2005-2006 school year) in the statewide percentage of summer school attendance occurs. The act alters policies regarding special education services, including a provision that requires DESE to reimburse school districts for the education costs of high-need children with an IEP exceeding three times the current expenditure per average daily attendance. Clarifying language regarding state aid payments to the Metropolitan Schools Achieving Value in Transfer Corporation is included, as well as a provision stating that such corporation shall receive transportation state aid for each student who participates in the transfer program in the amount of 155% of the statewide average per-pupil cost for transportation. The act requires the joint committee on tax policy to analyze local property tax assessment practices and submit a report regarding such to the general assembly and the state tax commission, the latter of which is charged with ensuring that all counties are assessed accurately. The act increases teacher minimum salaries; alters charter school laws; and enacts other changes relating to accountability. Many sections of the act revise existing law in order to correspond to new terminology utilized in the formula. The act deletes numerous provisions rendered obsolete by the adoption of the new formula.

The special education policy alterations will become effective on August 28, 2005. The rest of the act will become effective July 1, 2006.