How proposed Kansas school finance change helps growing districts and hurts shrinking ones

A controversial proposed change to school finance law would benefit districts with growing enrollment while hurting ones with declining enrollment.

Legislators are considering House Bill 2485 and Senate Bill 386, which would require school funding to be based on the current school year or the preceding school year. The Senate version could be passed out of a committee as early as Tuesday afternoon.

Using current year enrollment would benefit growing districts. Johnson County is typically pointed to as an example, but rural schools like Jackson Heights north of Holton have missed out on state funding because they can't use current year enrollment.

The bills would eliminate the current two-year look-back option that is used by schools with declining enrollment.

Opponents of the change typically point to the effects on rural districts, but the proposal could also hurt Wichita Public Schools, the largest district in the state.

Current year enrollment would also be mandated for any district that closed a school building — a provision that public education lobbyists derided as punishing districts for making academically and fiscally sound decisions.

How school districts with growing enrollment would benefit

Jim Howard, superintendent of North Jackson USD 335, said his district is a good case study about why current year enrollment should be allowed for growing districts.

Due to the closure of the Wetmore Academic Center by Prairie Hills USD 113, about 120 students had to go to a new school. For 90 of them, that was Jackson Heights.

"We had to buy buses, we had to hire staff," Howard said. "Ninety kids is a 22% increase in our enrollment, in one year. So as a school, we knew that was going to be a challenge. ... Because of that, we had around $600,000 in lost revenue because we were not able to count those students."

He said it has been a "painful" year financially.

"We're not trying to make an antagonistic position," Howard said. "We're not trying to take from one school. We will not benefit. What has happened has already happened."

However, if the district continues to grow by 20-30 students per year, it will continue to be behind on funding.

The proposed change also has the backing of the superintendents at Olathe Public Schools USD 233, which has seen consistent enrollment growth; Vermillion USD 380 and Nemaha Central Schools USD 115, which were also affected by the Wetmore closure; and Spring Hill USD 230, which has property tax rate 2 or 3 mills higher because it doesn't get current year funding.

How school districts with declining enrollment would be hurt

Last year, Gov. Laura Kelly line-item vetoed the provision from the school funding bill, Senate Bill 113.

It would have cut funding to 29 districts. Fowler USD 225 would have been the biggest loser at $500,000 — equating to an unplanned 47% budget cut.

"I am proud to stand up for rural schools, the heart and economic engines of communities throughout the state, by rejecting efforts to cut the funding necessary to keep them open and continuing to serve Kansas students," she said at the time.

Wichita Public Schools USD 259 has come out against the provision this year, with chief financial officer Susan Willis providing written testimony.

More: Wichita's declining enrollment and massive budget shortfall means multiple school closures

She said USD 259 is already facing a $42 million shortfall — the budgetary equivalent of 560 teachers. The district has also suggested it may turn to school building closures to cut costs. But changing the school finance formula effective July 1 "simply worsens an already significant budget deficit late in the budgetary cycle with fewer options to adjust."

The district has already begun the budget process under the current law, and school funding laws don't usually pass until May. Willis warned that such a timeline would likely mean layoffs, and losing the two-year look-back equates to 20 teaching positions.

If Wichita were to close schools to save money, the bill's provision mandating current year enrollment when schools are closed could mean lost funding and additional layoffs after next school year starts. Also remain to be seen is how Wichita and its suburban school districts fare under the new open enrollment policy, which has the potential for USD 259 to see enrollment increase or decrease.

"Wichita supports adding the current year enrollment criteria to the formula to help growing districts," Willis wrote. "But Wichita is adamantly opposed the immediate elimination of the two-year lookback and the move to current year counts if a district is closing building."

Superintendents of Douglass Public Schools USD 396, Leavenworth USD 453 and Prairie Hills have also come out in opposition.

Why not allow both current year and two-year look-back?

The two-year look-back has been part of school finance law since 2017 because it helped provide a greater degree of certainty in budgeting, said Angie Stallbaumer, general counsel of the Kansas Association of School Boards.

That policy has generally worked well, said G.A. Buie, executive director of USA-Kansas and the Kansas School Superintendents Association. But not for the districts with continual enrollment increases, "such as the Spring Hills or the Goddards or the Blue Valleys," because their funding never catches up to their enrollment.

For growing districts like Jackson Heights and those in Johnson County, Stallbaumer said, "This is a big issue."

"We certainly want to support them, as they need the funding to immediately care for students that that attend their school districts," Stallbaumer said. "The two-year look-back will not help them.

"We also realize for our districts that have either stagnant or declining enrollment, that having that budget certainty to be able to smooth out those transitions is very important. We really want to allow those districts to be intentional about how they allocate funds, to be intentional about staff shortages or staff cutting as necessary. You know, in a small district, a family of five moving out can essentially be the impact of one teacher's salary. So it's complicated when you don't know those changes are coming."

Both the school board association and the superintendents association testified as neutral on the legislation, indicating they would become supportive if lawmakers allowed both the current year enrollment and the two-year look-back while removing the the school closure provision.

If lawmakers do want to eliminate the two-year look-back, Buie recommended a transition period where districts could use either in budget year 2025.

"We feel that extra year would give those districts that are losing large chunks of money a chance to kind of have a glide path backwards and to plan appropriately, plan staff appropriately, restructure schools as needed," he said.

But Republican legislators are not keen to that idea of using current enrollment and the two-year look-back.

Sen. Renee Erickson, R-Wichita, likened the two-year look-back to the state paying for a student twice in the same year, if that student were to leave one district with declining enrollment and move to a district with growing enrollment.

Stallbaumer said, "I understand the concept of a phantom student," but disagreed with the characterization.

"It's not really a matter of one student is worth X number of dollars," she said. "It's a matter of a way to build a budget. There's just no way to follow each individual student in that way."

"With all due respect, but that's exactly how the system works," Erickson said.

"I think we should be funding the school district that is actually educating those children in those seats at that time, and not double and triple paying for students," she added.

Sen. Molly Baumgardner, R-Louisburg and the education committee chair, pressed the two organizations on whether they will remain neutral on the bill if it is advanced as is.

Stallbaumer said she would anticipate the school board association remaining neutral on the current language, while Buie said the superintendents association would change to opposing it.

Jason Alatidd is a Statehouse reporter for the Topeka Capital-Journal. He can be reached by email at jalatidd@gannett.com. Follow him on X @Jason_Alatidd.

This article originally appeared on Topeka Capital-Journal: Kansas lawmakers may change school funding to current year enrollment