Inequity remains in school funding

Published 12:00 am Sunday, June 16, 2002

BNI Newswire

The state’s "Robin Hood" approach to education funding may actually be robbing from some districts that can’t afford it.

An education funding program designed to deal with a decade-old equity funding lawsuit actually takes money from nearly 20 school districts whose per-student spending falls below the state average, according to an analysis of state Department of Education figures.

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Seventeen school districts receive less money from the state than they actually commit through their 10-mill match to the Foundation Program.

Meanwhile, 38 school districts whose per-student spending is above the state average receive more money from the Foundation Program than they contribute.

The discrepancy seems to contradict the original point of the Foundation Program ­ often called a "Robin Hood" approach to funding because some say it was intended to "take" money from the richer districts ­ those with a higher tax base ­ to "give" money to poorer districts. The effect is a redistribution of state resources so that funding is more equitable. Most people ­ educators and legislators alike ­ agree the Foundation Program isn’t perfect.

"Is it completely equitable? Absolutely not," said Chuck Ledbetter, director of instruction for Tallapoosa County Schools. "Is there a better way? I don’t know."

How it works

It’s no secret that some school systems "lose" money because of the Foundation Program; it’s what the program was intended to do. But an analysis of fiscal year 2000 figures by Alexander City Schools Superintendent Jim Nabors found that 17 school districts you might not expect to lose money ­

those with a per-pupil local funding base less than the state average ­ are among those who lose money, mainly because their property tax values are high but their local support is actually low.

Some of those districts are in the poorest counties in the state ­ Greene County, Washington County and Marengo County are among them.

Any understanding of the problem, though, requires a basic understanding of how the Foundation Program works. (See box, page 8A.) School systems receive state funding for teacher "units" based on their enrollment the previous year. That minimum standard for teacher-pupil ratios and salaries is known as the Foundation Program.

But each school system receives its Foundation Program funding from the state minus a local "match" of 10 mills of property tax revenue. In fiscal year 2000, Troy City Schools had local revenue of $2.779 million, with an average daily membership of 2,307.82. That’s an average per student of $1,204.34 ­ greater than the state average, which is around $1,170. Troy’s 10-mill match to the Foundation Program was $744,150, or $322.45 per student, which is about $10 less than the state average allocation per student under the Foundation Program. If Troy gets relatively that state average from the program, it nets about $23,000 ­ although its per student local revenue is higher than the state average. Pike County had $2,064,062 in local revenue, with an enrollment of 2,275.16. That works out to $907.22 per student in local revenue ­ far below the state average. But Pike County, as was probably intended in the Foundation Program, benefits from it. The county’s 10-mill match is $580,340, or 4255.08 per student. Considering the average per-student allocation from the Foundation Program, Pike County would net just more than $175,000 from the program to help offset its low property values.

What’s the problem?

Nabors’ initial concern over equity in the Foundation Program began with what he thought was a purely local problem: In the upcoming fiscal year, because of a pending appeal of Russell Corp.’s tax assessment, Alexander City Schools stand to lose $300,000 in revenue.

But because the 10-mill match was calculated on two-year-old figures, Alexander City still has to account for that money ­ even if Russell wins its appeal.

So Nabors went looking for relief. He has found a willing ear in local legislators and state department of education officials, but no one seems to have an immediate solution that wouldn’t raise eyebrows among other school districts. Could Alexander City just expect to be absolved of part of its 10-mill commitment, while other schools, in essence, pay up?

"Alexander City does have a terrible problem," said Robert Morton, finance director for the Alabama Department of Education.

Morton, who has had "dozens" of conversations with Nabors on the issue, said he’s not fighting Alexander City in finding a solution. It’s finding an immediate solution that’s the problem.

Digging further into the Foundation Program figures, Nabors made some interesting discoveries.

Fiscal year 2000 figures show that Alexander City isn’t the only school system whose local tax revenue amounts to such a high per-student match -­ despite low local support per student.

Washington County, in fact, has the second-highest per-student match in the state ­ despite being a relatively poor county with a 15.5 percent unemployment rate.

"Who would have expected Washington County to have the No. 2 match (per student)?" Nabors said.

In fact, Washington County’s match to the program ­ $2.75 million ­ is 73 percent of its local revenue.

Based on the average $332 per student allocation through the Foundation Program, that amounts to a $1.5 million loss for the school system. What happened to account for such a discrepancy? Washington County was once blessed with oil and gas futures that reaped high property tax revenue ­ but that land is gone now, Morton said. And a revaluation of property is still at least a year away, so Washington County is still contributing based, essentially, on out-dated property values.

"Washington County is suffering terribly as we speak," Morton said.

But Washington County and Alexander City, with their unique problems, are not the only school systems Nabors considers losers because of the 10-mill match. (See chart).

Fifteen other systems -­ most in the mid-range of local revenue ­ wind up with a disproportionate local match.

Why is the difference in local funding so important?

What’s left over in local revenue is what a school system can use to pay for additional costs ­ local teacher units, for example. With property tax rates so low in most counties, however, that local money doesn’t often amount to many extra teachers ­ it might go to pay the light bill instead.

Is it unfair?

Is the whole program unfair? It depends on whom you ask. Morton knows that some communities are being hit hard due to changes in the local economy, but at its heart he sees the Foundation Program as a fair distribution.

Rather than "taking" money from richer districts to "give" to poorer districts, he points out that each district is assessed the same 10 mills ­ it’s just a difference in property values.

"The 10-mill value still hurts those counties, the value of the mill is just much less," Morton said of the districts with lower property values. "If you make less money than I do, it still hurts you as much as it hurts me to take money out of your pocket."

Nabors, though, points out that the flip side of the issue is just as frustrating. While some places are giving more than their fair share to the Foundation Program, some communities are giving less.

Take Madison County, for example. The community, which recently released Census figures show is one of the richest in the state, gives just 16 percent of its local revenue to the Foundation Program – $211 per student.

Using the average $332 per student allocation from the Foundation Program, that’s a net of $121 per student ­ or $1.8 million.

"It’s just as bad on the other side of the coin," Nabors said.

Other superintendents caught in that middle ground are frustrated as well but don’t know what the solution is.

Suzanne Freeman, superintendent of Cullman City Schools says it is frustrating to lose so much in local funding.

"It’s hard when you have local money that you can’t spend locally," she said.

What’s the solution?

An easy ­ and immediate ­ answer probably isn’t available, according to state education officials.

But Morton said he is working with school and legislative officials to try to find some workable solution.

Beyond that, there are many more larger issues to education funding, not only in equity but in adequacy. The two are tied together, however, as a plan state Superintendent Dr. Ed Richardson has developed shows.

Richardson and other state officials had hoped later this summer to sway a judge that a $1.7 billion plan to provide adequate education is necessary for the state.

But a Supreme Court decision in the decade-old equity lawsuit states that the courts cannot decide such matters of education funding ­ that’s the Legislature’s domain.

"What it amounts to with the court decision is that we have to sell the adequacy plan to the Legislature," Morton said.

That’s no easy feat. The $1.7 billion plan is already half as much as the current education budget, and Alabama is strapped for cash as it is.

For many education officials, another answer is raising the local millage required for schools. A 10-year-old bill that resurfaces just about every year would, at its last writing, require that local systems have at least 20 mills of property tax dedicated to schools.

The measure, known as the Starkey bill, has failed ­ or failed to come to a vote ­ in each session, however.

Ledbetter thinks even the Foundation Program match should be higher. If that were the case, school districts would be required to raise their minimum millage rates.

"Ten mills is a mighty weak effort," he said. "I wish they would make the Foundation match 30 mills. But that’s not going to happen anytime soon."

Freeman, in Cullman, saw a tax referendum fail two years ago. Her district is going to try again this year.

"The bigger issue is that we need to see that all school systems are fully funded," she said. "All kids, no matter whether they are rich or poor, deserve an adequate education.

"So far, we’ve provided a lot for nothing."