Wednesday, August 1, 2018

Adequate and Timely School Funding Remains High on the List of Priorities

If extending the one cent sales tax beyond 2029 is the highest priority for the school board, then ensuring timely and adequate supplemental state aid is a close second. Supplemental state aid is the percentage by which the state cost per pupil increases from one year to the next. For the fiscal year that began on July 1, 2018 the state cost per pupil rose by 1% or $67. Base funding for school districts is calculated by multiplying the number of students by the cost per pupil. Considering Hudson Schools is currently experiencing enrollment growth, a 1% increase in basic funding makes it very challenging to adequately staff our facilities. Even after giving our largest employee group a meager raise, our expenses for this new fiscal year are expected to rise in excess of 3.5%. This, primarily due to the fact that in a period of growth we need to add staff in order to keep class sizes comfortable. 

Setting the growth in the per pupil rate used to be among the easiest, least controversial, and first orders of business when the legislature would convene each January. That has changed dramatically over the course of the last [approximate] decade. State law actually dictates that this growth rate must be set within 30 days of the governor releasing budget targets during the Condition of the State address. Interestingly enough, prior to just a few short years ago, that 30 day target applied to the fiscal year set to begin 18 months in advance. This way school districts would have time for planning if budget adjustments needed to be made. For example, a school district would have 18 months advance warning to contemplate a budget cut if the growth rate was too low. In a scenario such as this, the school would have ample time to mitigate the budget reduction, perhaps through a retirement incentive designed to spur natural attrition.

But instead of following the law as originally intended, the legislature just decided to change it. Now instead of 18 months of lead time, schools are left to make major budget decisions with less than 6 months notice. And that is only if they meet the new deadline, which is to set the rate of growth within 30 days of the governor's budget targets being released during the annual Condition of the State address.

Now, you can imagine with split party control over state government it would be difficult to come together with an agreement in 30 days. Yet interestingly enough, the legislature has proven it can't even meet the deadline when only one party is in power. The last time the legislature met that deadline was in 2011 (split control). Further, the last time it could be classified as adequate was 2015 when it grew by 4%. Now, we have been lucky in Hudson because our reserves are healthy enough right now that we can add staff without too much difficulty. (This is due largely to strict budgeting discipline and philosophy on the part of the board.) Nevertheless, at some point low per pupil budget growth will catch up to us. The only way to combat this is to go through a budget reduction, which inevitably would mean larger class sizes.  

Arguably K-12 schools are in better shape than other sectors of [government] that rely on the state general fund for resources. Indeed, K-12 was one of the only areas that didn't see a cut during the last legislative session. However, a strong argument might be made that the number and quantity of tax credits in the budget have exacerbated the problem to a point where revenue is simply being choked off. Yet I digress. That is a topic for another day.

The solution would seem to rather simple, and in many ways would force bipartisan cooperation that not only sets the growth rate adequately, but in a manner that makes it untenable to ignore the 30 day deadline. Consider a mechanism that automatically sets the growth rate if the deadline isn't met. It would seem this is an idea with merit. Further, I would suggest the automatic rate be set at a level that simply can't be ignored. It would certainly ensure and honest and open dialogue about the cost per pupil rate that holds people accountable, while at the same time ensures we don't just put the growth rate on autopilot. 

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