Friday, April 12, 2013

House and Senate Education Committees Finish Their Work.  It was a busy Thursday for both the House and Senate education finance-related committees as they finished up their work on their respective versions of the 2013 omnibus education funding bill.  The House actually had to come back this morning after adjourning last evening shortly after 10 PM to finish its work.  The Senate finished around 9 PM Thursday evening after being in committee session for about six hours.

I posted the high points of the House bill in Tuesday's post and I will do the same for the Senate (SF 453) here.  It's a bit difficult to totally "decode" the Senate bill because there are more moving parts due to their acceptance of the recommendations of the Governor's Education Finance Reform Working Group and their counting of the continuation of integration revenue as new money.  The bill also re-establishes the general education levy by combining three levy categories (safe schools, operating capital, and equity) and reducing the resulting sum by $150 million in property tax relief.  This is the $150 million in property tax relief that I thought would find its way into the bill in the form of referendum and debt equalization and I think everyone in every room of the Capitol and State Office Building knows that.  But, 'twas not the case (at least at this point in the discussion).  More on that later.

Here are the major initiatives in the Senate bill:

  • Governor's recommendation of $52 increase in basic formula amount for next year with no increase in the second year of the biennium.  Formula amounts are $5,276 for 2013-2014 and $5,687 for 2014-2015.  Second year amount is adjusted upward due to changes in pupil weightings.
  • New pupil weights beginning in 2014-2015.  1.0 for kindergarten students in all-day program, 0.55 for kindergarten students in half-day program, 1.0 for students in grades 1-6, and 1.2 for students in grades 7-12.  The 1-6 and 7-12 weights are the same as in recommendation of the Education Finance Working Group.  Marginal cost pupil units are eliminated and new declining enrollment aid established to buffer districts experiencing declines in student counts.
  • Funding for all-day kindergarten beginning in the 2014-2015 school year.
  • Change in equity formula with factors eliminated and replaced by a sliding scale based on a district's amount of referendum revenue and the distance of that amount to $2,000 per pupil.  Benefit delivered on a sliding scale with maximum benefit of $100 per pupil.
  • Creation of basic supplemental revenue category (not new money) of $56 per pupil that is combined in tandem with the new equity formula to mimic the previous equity formula.
  • Expanded transition revenue for hold harmless purposes.
  • $22/PU of revenue for non-alternative compensation districts for teacher evaluation beginning in the 2015-2016 school year.
  • Special education appropriations at current law (including growth factors) for the coming biennium.

If you read through the bill, there are a couple of numbers (and sentence constructions) that pop out.  The numbers are $411/PU and $826/PU.  Here is the reason for those numbers.  In 2001, as part of the Ventura administration's Big Plan, $415/PU was rolled into the general education formula basic amount from the referendum.  The constituted a misleading increase in the general education amount and $415/PU was subtracted from the basic amount when it was used as a multiplier for the compensatory, sparsity, and transportation sparsity programs.  With the change in pupil weightings, another revenue neutral increase in the basic formula is produced, requiring a subtraction of $411/PU to have an apples-to-apples formula value for the multiplier.  In this bill, the subtraction from the basic amount is $826/PU ($415/PU + $411/PU) for the compensatory program and simply $411/PU for the sparsity and transportation sparsity programs.

I would be remiss if I didn't express my disappointment that the committee did not pursue Senator Skoe's SF 177, which called for healthy increases in the referendum and debt service equalization programs, instead of re-establishing the general education levy.  Both these initiatives propose to deliver $150 million in education-related property tax relief and it's not like low property wealth districts won't get a lion's share of the benefit under either proposal.  The problem is that the general education levy approach does nothing to address the disparity in revenue between high property wealth and low property wealth school districts.  It can be argued that low property wealth school districts can use the "space" they get from the property tax relief to attempt to pass additional referendum levy authority, but so will a number of high property wealth districts.  Further, even if a low property wealth district can pass a referendum with the eroding value of the equalization program, the effort in low property wealth districts goes half as far as it does in high property wealth districts.  In other words, the property tax benefit of the general education levy to low property wealth districts will evaporate twice as fast as it will in high property wealth districts.

What often gets lost in the conversation is that equalization is both property tax relief and "tax power" enhancement.  Bringing back the general education levy without doing anything about the equalization factors won't do anything to remedy the property tax wealth disparities that exist between school districts and result in considerable differences in referendum revenue and educational opportunity.

I'm sure this will be discussed again as the session continues.

The education funding bills will likely reach the floors of their respective legislative houses by next week.  Both bills will make their next committee stop next Tuesday (Finance Committee in the Senate, Tax Committee in the House) and I wouldn't be surprised if they made their final committee stops (Taxes in the Senate, Ways and Means in the House) by the end of next week.  I will keep you posted.

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