K-12 Funding Consultants: Spend $2.6B More, Huge Winners/Losers

Consultants hired to review Maryland’s education funding structure released a draft final report that includes major re-distributions in state aid and new local funding mandates. 

These recommendations will inform the work of the major school funding commission empaneled to develop legislative changes in time for the 2018 session.

The Adequacy Study Stakeholder Group met in Baltimore today for a presentation of the draft final report prepared by APA, the State’s consultants in the follow-up to the Thornton Commission. In the hearing room of the State Board of Education, stakeholders heard a report from the consultants and asked many questions.

The report calls for an infusion of $2.6B in additional annual education funding, a 25% increase from current funding levels. The consultants recommend splitting the increase between state and county governments.

  • The total State share for major state aid programs, excluding transportation, would increase from $4.9 billion to $6.8 billion – an increase of $1.9 billion or 39 percent – over current fiscal year 2015 state aid.
  • While the local increase in funding required is only an estimate, the consultants state that using comparison data, the local share would increase from $5.7 billion to $6.4 billion, an increase of $710.5 million or 12 percent.

The consultants also recommend a change to the distribution of funding for education by raising the base amount provided per student, and lowering additional amounts provided to education students with limited English proficiency and compensate for other educational needs.

According to the consultants, this change would follow the trend of other states and is a way of bringing all students up to today’s higher education standards. In the words of the consultants, the shift represents

. . . more instructional supports and social supports for all students, with additional resources above that amount for some students.

The report totals 140 pages with an additional 199 pages of appendices. Following are a few recommendations in the report of particular interest to county governments, with links to the draft report.

Eliminate State Aid Minimums – Zero Fund Three Counties

The consultants recommend elimination of state aid minimums for education funding.

As a result of this recommendation and others, projections show that three districts in Maryland would not receive any state education funding. From the report,

Click for original chart.

Maryland’s current funding programs provide minimum state funding guarantees for the foundation and special needs state aid programs. . Eliminating the state aid minimums will free-up State funding dollars which could be used to provide additional support to those districts with lower local wealth and higher needs.

Mandatory Local Share of Special Education Funding

The consultants state in their draft final report that school districts are not currently required to provide a local share towards special needs education funding and recommend that such a contribution be made mandatory.

From the report,

. . . districts are not required to provide a local share for any of these special needs total program formulas. . . .the study team recommends that all districts should be required to appropriate the full local share for all of the special needs funding programs.

This recommendation did not appear in any of the preliminary documents or discussions before the stakeholder group, and prompted several questions by stakeholders regarding the way the requirement would be implemented considering the current maintenance of effort funding law. The consultants stated that they had not considered the maintenance of effort law in developing this report,but would put it on their to-do list for final revisions.

For more information, see a discussion of the minimum state share and special needs recommendation (charts follow the discussion).

Declining Enrollment

The study team recommends adjustments to cushion effects from declining enrollment. These issues have arisen in several parts of the state in recent years, raising questions about “fixed costs” and immediacy of funding changes. Maryland has reacted to these concerns with a patchwork of recent statutory efforts.

From the report,

The proposed methodology would use three years of enrollment information in the calculation of the total enrollment figure, allowing districts to absorb the loss of funding related to the loss of students over time. A district would receive the greater of two counts:

  1. the prior year’s enrollment count or
  2. the average of the three prior years’ counts.

As described, the calculation holds districts with growing enrollments harmless from a decrease in aid.

Cost of Education (GCEI)

The study recommends using a rolling three-year average of the Comparable Wage Index  (CWI) to replace the current Geographic Cost of Education Index (GCEI). This represents a far broader component than the current GCEI, with effects on every jurisdiction – all based on non-education salary data.

As described,

  • The study team further recommends all formula funds (foundation, compensatory education, Limited English Proficiency, and special education) be adjusted by the CWI.
  • The study team also recommends that adjustments be made for districts with CWI figures above and below the statewide average, which would result in funding increases for regions with higher than average costs and decreases for regions with lower than average regional costs.
  • Finally, the study team recommends the CWI adjusted total funding figures be used as the basis for calculating state and local share, meaning the costs of the CWI adjustment would be borne by the state and local jurisdictions.

See how the CWI index would shift funding under the new model and see the state/local cost share breakdown of the CWI.

Calculating Wealth

The study team recommended changes to the wealth calculation — creating indices of both property and income tax bases and multiplying the two — that would magnify its impact. Concern regarding this approach was raised by stakeholders and staff to the Commission. The consultants shared that this approach had been recommended to other states, but none had implemented it.

From the report,

Combining Assessed Property Values and NTI. Currently, Maryland includes both property and income wealth in its measurement of a district’s local wealth. The study team recommends continuing to include both of these components but recommends an alternative approach to combining them into a single local wealth figure. Instead of using the current additive approach for combining property and income wealth, in which a county’s assessed property value and NTI are added together, the study team recommends using a multiplicative approach. Using this approach, each county’s assessed property wealth is adjusted by multiplying by the ratio of the county’s NTI to the state average NTI. This method gives NTI a greater weight in the overall wealth calculation than is the case using the current method.

See an illustration of the way this change would affect wealth calculations.

Universal Pre-K

The consultants recommend universal high-quality pre-Kindergarten for 4-year old students in Maryland, with the expectation that 80% of 4-years old will enroll in pre-K programs. With approximately 77% of Maryland’s 4 year-olds currently enrolled, this recommendation focuses on improving the quality of existing programs, and making them full-day. The consultants stated,

The most bang for the buck is high-quality universal pre-K for all 4-year olds.

The report states,

Screenshot 2016-10-18 16.33.00.png
Consultants recommend including pre-K students in enrollment counts with a weight of 0.29.

Maryland currently provides funding for prekindergarten students who meet specific qualifying criteria related to the income of the child’s family. The study team recommends a goal of providing high-quality prekindergarten for up to 80 percent of four-year old students. The recommended program is six-and-a-half hours long in a public or private setting that has earned an EXCELS rating of level 5, and is nationally accredited or is a public school program.

The ACLU’s representative on the Stakeholder group, Bebe Verdery asked the Commission to provide cost and policy information on also providing pre-K to 3-year old children from disadvantaged backgrounds in their final report.

Next Steps

The consultants asked stakeholders to provide them with any comments on the draft report as they prepare to deliver the final report to the Kirwan Commission in November. The Kirwan Commission will have until the fall of 2017 to prepare legislative recommendations based on the report and other findings.

For more information, read the Adequacy Study: Draft Final Report.