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How much money will be there for state aid to schools, anyway?

I am at the Nebraska School Boards conference in Papillion. Yesterday were the pre-conference workshops and the regular sessions run today and conclude with a Friday luncheon. Yesterday afternoon I attended the NE School Business Officials meeting. The meeting was attended by about 50 school finance leaders (Superintendents, Assistant Superintendents, Business Managers, etc.) from across the state. 

One factor that was discussed was the uncertainty around how much money is actually available for state aid.  Amazingly, it doesn't appear that anyone knows.  Even Dr. Dulaney, who is one of the most knowledgeable and informed in the state about these matters said, "Pick a number, you might be as accurate as one I'd come up with or what the Revenue Forecasting Board just predicted."  One state department official, acknowledging the speculative nature of budget forecasting and guesstimating dollars available for state aid, said "I work with it every day and I'm not sure I can even explain it." 

One number that has been floated quite a bit is $810 million; that the total money allotted to schools will be that amount.  However, now there is the latest wave of stimulus money, $58.9 million in "EduJobs" or Saving Teacher Jobs recovery money.  It is unclear whether the nearly $59 million is going to be on top of the 810 million or if the $810 million will be reduced by $59 million.  I don't know how much is in your checking account, but in my little personal finance microcosm, I think there's a big difference between $869 million and $810 million.

The Edu-Jobs money is actually going to be allocated to schools in the spring of 2011 but the intent of the legislature is that the schools carry that money over for 2011-12 because it will be basically considered stabilization money for part of the state aid to schools in 2011-12.

So, what would it take to fully fund state aid?  One of the numbers I heard yesterday was that we had $950 million in state aid total for 2010-11.  So if we run with $810 million that's about between an 8 & 9 percent reduction from this year to next.  However, the projected needs following the statutory formula (and apparently what the Revenue Forecasting Board based their projections on) would be 1 billion dollars for state aid in11-12 and 1.1 billion for 12-13.  To quote one of the meeting participants, "That ain't gonna happen."  The state does not have a billion to spend on schools' state aid; to the contrary, the state may have a projected needs versus revenue available shortfall of 890 million to a cool billion.  There will be some reduction in state aid, it's just not clear how much.  The game schools get into is that there are so many facets to the state aid formula that fluctuations occur yearly anyway - and even in a year of cuts, some schools may not be fazed much while others get dismembered by the vagaries of the formula. 

What will the legislature do about it?  Here's what the speculation was yesterday about legislative fixes for state aid shortfalls:
1) Increase the expected local effort rate. (That means shifting the burden more to local taxpayers and telling districts they have to be taxing at a higher rate in order to qualify for state aid: The current lowest legal limit is .95 cents; they would raise it from that to compel districts that are lower to either surrender state aid entirely or generate more revenue locally through property taxes).
2) Zero out basic averaging adjustment for allowable growth rate.  Reduce or don't allow any additional aid for student growth to districts. 
3) Expand the comparability array from 5 schools above and 5 schools below (by student enrollment) to include 10 above and 10 below (by student enrollment); there is an averaging adjustment that occurs based on the array.  The point of this is to level out the wild swings that sometimes occur in state aid year to year now for schools that have outliers in their comparability group.  It would conceivably be more equitable in dispersing the pain more evenly, but it's not really a revenue fix. 

There are no easy answers and the legislature has their work cut out for them.  Some state aid fixes would be more palatable to Norris than others; I'm sure most districts would say the same. 


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