Upcoming Education Issues: 2012 Legislature Prep for Negotiations Seminar November 2011 Mark Tallman

Key Issues for 2012 State Budget Recovery (How much, how fast?) Election Year – Reapportionment Year Governor’s School Finance Concepts NCLB Waiver/Reauthorization – New Kansas Accreditation system and other “reform” KPERS funding and benefit changes Other KASB Agenda: First in Education

State Budget and School Funding Nearly 60% of total funding comes from state aid. Increases depend on increase state general fund. Over 30% of funding from local sources. LOB and capital outlay capped by state, many districts at cap. Less than 10% of funding comes from federal aid; likely to decline if federal deficit is cut. What is the likely future of state funding?

Projections for state spending National Governors Association predicts most states will face: Very slow revenue growth if economy recovers, revenue shortfall if “double-dip” recession. Human service caseloads (especially health care) will grow much faster than revenues. Significantly underfunded pension obligations; will require significant funding increases even if benefits are reduced going forward. (KPERS in worse shape than many.)

Kansas Budget Projections Revenues have improved, new official consensus estimate Nov. 4. Beginning next year (FY 2013), must replace $200 million highway fund transfers. One-cent sales tax expires in FY 2014 ($350 million). Caseloads growth: at least $60 million per year. KPERS: $40 to $80 million per year. Rebuild state ending balance for budget stability (like school districts - $120 million increase in balances). Political pressure to reduce state income tax (50% of state general fund revenue).

Political Environment Significant increase in K-12 funding virtually impossible without major economic recovery or tax increase or shift. Governor can veto tax policy he opposes. Position of House conservative majority. Conservative challenge to Senate moderates. Re-apportionment: shift seats from western and southeast Kansas to Johnson County, Wichita area, Junction City/Manhattan.

Governor’s Key Finance Concepts A.Fully state-funded base per pupil without weighting, perhaps higher (with less funding for weightings). B.Switch multiple weightings to a few block grants. (1) Formula block grants – not competitive. (a) “District size” – presumably replaces low enrollment. (b) “At-Risk” – replaces at-risk and bilingual, based on poverty factor, proficiency factor, incentives for success. (2) “Semi-competitive” grant for Career Tech Ed; replaces vocational, encourage regional approach.

Governor’s Key Finance Concepts (3) “Very Competitive” grant for innovation. C.Hold harmless provision, at least for lower wealth districts (some may have to raise more locally); perpetual on per pupil basis? D.Replace LOB state aid by distributing a portion (10 to 15 mills?) of statewide levy to low-wealth districts. E.Remove any limits on increasing local mill levy; no equalization for local levies except statewide share. F.Allow counties to vote into a local sales tax “pool” that would share portion of sales tax receipts.

Governor’s Key Finance Concepts Governor’s staff indicates state aid will increase under this plan, at least initially, for hold harmless. Interest in two-year funding cycle. No change in special education formula. No state aid on FUTURE bond issues. Governor’s staff has proposed working to maintain the one cent sales tax hike to avoid tax revenue fall- off; reduce income tax rates by cutting exemptions.

Proposed KASB Positions Guiding principle: improving educational outcomes for all students. Legislature, not local districts, must provide suitable finance for state educational outcomes and requirements. Any new system must provide more funding. Any new system have hold harmless provision. Any change in weightings must provide (1) at least the same funding, (2) more stability, (3) more flexibility.

Proposed KASB Positions No competitive grants for required programs such as at-risk, bilingual. Block grants, other incentives may be appropriate to expand programs, reward performance and promote innovation if programs are not mandatory. Expanded local funding must have enhanced equalization to narrow disparities in local effort. Expanded local funding must be subject to local board approval, not local vote.

Proposed KASB Positions Local sales tax authority raises many concerns; at a minimum, it must be equalized. Fund all-day kindergarten, enhance early childhood. State aid must be continued for capital improvement (bond and interest) and restored for capital outlay. Support concept of multi-year funding, with need for greater stability in state budget to keep commitment.

Governor’s Concepts: Positive Offers opportunity for increased local funding with some equalization features when state funding may be limited for years. Alternative may be NO increased state funding AND more local authority with NO equalization aid. May provide increase in both state and local funding. May provide more stable and flexible use of some funds. Supporting some aspects of plan could result in positive movement, not deadlock or worse. Career/tech, innovation, performance incentives.

Governor’s Concepts: Negative Specific numbers unavailable. Breaks link between increased local effort and equalization; could be much harder for low wealth districts to maintain quality programs, outcomes. Breaks link between base and weightings. Increased reliance on local funding sources makes equalization much more difficult because of disparity on local resources. Current system produced significant improvement and high national ranking – should we risk change?

NCBL and Kansas Accreditation Obama administration to allow waiver of No Child Left Behind if states develop alternative systems. Must adopt Common Core standards, college and career-ready achievement, focus on lowest performing schools, teacher evaluation linked to performance. Allows broader curriculum focus, less rigid measurement. Congress could override – similar plan in Senate.

Kansas Accreditation Issues State Board to seek waiver in February. Revisions to Quality Performance Accreditation. Proposed 21 st Century model: based on results plus other areas of “best practice.” Key issue: state evaluation model (KEEP), must be negotiated under current law. Accreditation model vs other reform initiatives: grading schools, social promotion, school choice, alternative accreditation.

KPERS Issues Study commission focus on two options: (1) defined contribution plan or 401(k) model for all, or (2) defined benefit below certain salary level. Could apply to new employees only, or current. Commission proposal must be voted on to allow increased state contributions to go into effect. Governor, House support moving to 401(k) plan. Regardless of new direction, $8 billion liability remains; requires funding and/or benefit changes.

Other Issues KAN-ED – House voted to abolish; Senate agreed to 40% funding cut and study; no decision on future and funding from KUSF or other sources. Post Audit studies: eliminate funding for non-Kansas students; require state and school employees to live in state. School Choice: “Why Not Kansas?” campaign. Tenure, bargaining, licensure issues. Bullying, screening, other new mandates.

KASB Proposals Goal: “First in Education, the Kansas Way” Improving Education – New accountability system, broader college/career goals, individual student focus, strengthen evaluation, public engagement. Suitable Finance – State funding for all mandates, equity in local funding, maintain at-risk aid; tax policy to support high quality education and other needs. Local Leadership – Decisions at local level, review mandates; keep independent State Board; no public funding for private schools without local oversight.