Saturday, March 5, 2011

SEEK reduction: why would districts take different cuts?

A commenter on my earlier SEEK reduction post has asked "Why doesn't the cut affect every district equally?"  Here's an example, in two parts.

SEEK funding in normal times
Usually, the SEEK formula provides matching dollars for matching student needs, by combining local and state funding.  For example, here's the base funding two Kentucky districts would receive if there were no SEEK shortfall for 2011-12.

For both districts, the local portion comes from taxes that raise 30¢ for each $100 of taxable property. Jackson Independent has very little taxable property to support each student, so its local effort only raises a little money.  Fayette has more property per pupil, so its local effort yields more money.

The state portion then adds the dollars needed to get them to almost equal funding.  In the chart, Jackson Independent's base funding totals $5,058, while Fayette's is $5,009.

The amounts aren't identical, because the SEEK formula calls for added money for children with disabilities, limited English, low income families, and transportation needs.  That is, SEEK ensures that similar students qualify for similar dollars.  That's why I described the formula as about providing matching dollars for matching needs.  (Doing it that way also meets the requirements of constitutional equal protection: the children aren't treated identically, but there's a rational basis--and even pretty substantial good sense--behind the variations.)

SEEK reductions in bad times
The current SEEK regulation, set by the Kentucky Board of Education, calls for any shortfall in state SEEK funding to be covered by a "pro rata reduction."  Reducing each district's state funding by the same percent, though, means reducing each one's state funding by a different dollar amount.  For example, a 1% cut to the district above would look like this:
Added information
I've simplified this example in two ways. First, I've used a simple 1% reduction, so readers can easily see the arithmetic.  Second, I've only shown how base SEEK funding is equalized, but the total SEEK formula also includes dollars for facilities and for added equalization if districts voluntarily set higher tax rates.  

The basic principle, though, is the same.  

Because some districts have lower property wealth, they have lower local revenue.  

Because they have lower local revenue, equalization gives them more state revenue.

Because they get more state revenue, cutting state funding by an equal percent means cutting them by unequal dollars.

Or, to take it back to basics, it means that students with matching needs do not receive matching reductions, and living in a poorer district means the students lose more state support.

5 comments:

  1. So is the pro-rata, percent across the board in line with the KERA and the Kentucky Constitution?

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  2. No, it certainly is not compatible with the Kentucky Constitution, or the U.S. Constitution, or the key principles behind putting the SEEK formula into the Kentucky Education Reform Act. I'll work on making that argument in more detail later in the week.

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  3. melanie tyner-wilsonMarch 6, 2011 at 11:26 AM

    Susan- How does the ARRA stiumuls dollars allocated to Title 1 and students under IDEA factor into any of these amounts or is it included. As I recall there was a significant infusion of dollars specific to these populations. Did SEEK dollars capture these amounts or were they kept separate?

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  4. Mel,

    If you think mentally of Kentucky schools spending $9,000 to $10,000 a student, the SEEK base funding comes out being around half of that--and the graphs above only show that.

    On top of SEEK base, schools also can spend:
    • additional local dollars, coming from taxes above the 30¢ required level.
    • state money, including Tier 1 and facilities nickels to equalize some of those local dollars, and the state categorical programs like preschool and ESS (though those have been especially battered the last few years), and the state contributions to staff benefits.
    • federal money that's been around for a long time, with regular Title I, regular IDEA and school lunch being the largest items there.

    And then, the ARRA stimulus comes into the picture two ways.

    ARRA beefed up a number of existing programs. It provided extra dollars for Title I and IDEA, just as you mentioned. HeadStart, preschool and some others also got a temporary boost. That's ending now, so districts are facing the dropping away of some funding, some services, and some staff they've had for a couple of years.

    ARRA also provided a straight-up addition to state budgets, called the "State Fiscal Stabilization Funds." For 2010-11, the last of those dollars really have been used to pay part of the state share of SEEK base. For 2011-12, we're back to paying our own way, so the whole green section of the graphs above really does come from state revenue.

    (And I love being asked questions like this!)

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  5. What about the "hold harmless" districts? It was my understanding that the hold harmless provision guarantees a school district will not receive less state SEEK funding per pupil than it did in FY 1992; however, your numbers indicate that there are districts that will be funded under the 1992 levels?!?

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