COST STUDY ANALYSIS Elementary and Secondary Education in Kansas: Estimating the Costs of K-12 Education Using Two Approaches Scott Frank Kansas Legislative Division of Post Audit NSAA Annual Conference June 15, 2007

COST STUDY ANALYSIS Sneak Preview Background information on the school finance formula, the lawsuit against the State, and the legislation that required the cost study. A brief summary of the cost study methodology and findings. An update on what happened as a result of the cost study.

BACKGROUND School Finance and the Kansas Constitution According to Article 6, Section 6(b) of the Kansas Constitution: The legislature shall make suitable provision for finance of the educational interests of the state.

BACKGROUND Two Important Concepts in School Finance Schools need adequate funding to help ensure the education they provide is of acceptable quality. School funding should be distributed equitably so all students get a similar quality of education.

BACKGROUND Basics of the Kansas School Finance Formula Base State Aid Per Pupil (BSAPP) – The minimum amount of funding per student that is guaranteed by the State. Pupil Weights – Additional funding that is provided because it costs more to educate some students (e.g., small school districts, special education, ESL students).

BACKGROUND Lawsuit Against the State In 1999, two school districts sued the State, alleging the funding formula failed to finance a suitable education: inadequate because the Base State Aid Per Pupil hadnt kept up with inflation. inequitable because the pupil weights for children with special needs werent sufficient.

BACKGROUND Lawsuit Against the State In January 2005, the Kansas State Supreme Court ruled that funding wasnt suitable. The Court ordered the Legislature to increase total funding by $285 million for the school year as a down payment on new funding. The Legislature required Legislative Post Audit (us) to do a cost study to help figure out what education should cost.

LPA COST STUDY Timeframe and Resources The entire audit staff (26 employees) worked on the cost study from July 2005 to January The final report was presented to the Legislature on January 9, 2006.

LPA COST STUDY A Tale of Two Cost Studies The cost study legislation directed us to answer two questions: What should it cost school districts to provide the services and programs mandated by State statute? What should it cost school districts to meet the performance outcome standards set by the Board of Education?

LPA COST STUDY A Tale of Two Cost Studies Input-Based Methodology Identify the resources districts would need to provide the required services and programs. e.g., how many teachers would they need? Estimate the cost of those resources. e.g., how much should each teacher cost?

LPA COST STUDY A Tale of Two Cost Studies Outcomes-Based Methodology Use statistics to understand the relationship between historical costs and a variety of factors, such as district size, student demographics, teacher salaries, district efficiency, and student performance. Use these relationships to build a model that estimates what it should cost each district to meet the States performance outcome standards.

LPA COST STUDY Summary of Main Results Need significantly more money under either the input-based or outcomes-based approach additional $399 million Statewide to provide the required services and programs (Input-Based) additional $469 million Statewide to meet the States performance outcome standards (Outcomes-Based)

LPA COST STUDY Summary of Main Results Some of the key pupil weights didnt reflect actual costs: Low-enrollment weighting for small districts was higher than cost data would suggest. At-risk weighting for low-income students was too low. Also found at-risk students cost more to educate in high- poverty, urban districts. Special education was underfunded because of a flaw in the way costs were estimated.

RESPONSE TO THE COST STUDY RESULTS New School Finance Plan In May 2006, the Legislature passed a new school finance plan. Phases in $466 million in new funding over a three- year period. More than doubles funding for at-risk students. Adds high-density at-risk weighting for districts with concentrations of poverty.

RESPONSE TO THE COST STUDY RESULTS New School Finance Plan Key findings the plan didnt fully address: No changes to the low-enrollment weighting. Modest increases in special education funding but no change to the method for estimating costs.

RESPONSE TO THE COST STUDY Lawsuit Against the State On July 28, 2006, the Court found that the new three-year plan was in substantial compliance with the Legislatures constitutional obligation to provide suitable funding. It sent the case back to the district court with instructions to dismiss it.

THE END