School Funding: This Is How We Do It

The Kirwan Commission is taking one more year to finish formulas. There’s a lot at stake. Here, we start a review of how things work today, setting up an ongoing analysis of the issues the Commission will be dealing with in 2019, preparing its final proposals.

The Commission on Innovation and Excellence in Education will continue its work into 2019, eyeing a 2020 introduction of its final recommendations. The general ambitions of the Commission have been reported. But, the means to get there – formula changes affecting county-by-county distributions and the overall state/county funding responsibilities – remain unsolved.

In its January 2019 Interim Report, the Commission laid out its plans for 2019:

Due to the extensive time devoted to finalizing policy recommendations and the complexities of the cost estimating process, as well as correspondence from the General Assembly’s Presiding Officers indicating it would be very difficult for the Legislature to consider both policy recommendations and funding formulas in the 2019 legislative session, the Commission’s charge will be extended in order to complete its work in 2019. The Commission will resume its work after the 2019 legislative session and task a small group to work over the summer to review and develop formula recommendations to distribute the costs of implementing the policy recommendations between the State and local governments. These recommendations will be considered by the full Commission in fall 2019.

Conduit Street remains committed to serving the county community and other stakeholders, and will publish some analysis of school funding issues as they sit before this “work group.” To be fair, the deepest analysis of these issues is embedded within the materials from the Commission meetings themselves – the legislative and Department of Education staff guiding that process, along with outside experts, have assembled an impressive tableau of information to help inform the Commission’s work.

In this article, we lay the groundwork by encapsulating the current system of state school funding: how each system receives state funds today. We will heavily rely on material from a DLS presentation from October 2018 to help illustrate the facets of our current system. You may visit the General Assembly website to watch and hear the full Commission meeting from that day for a deeper walk-through of these issues.

Maryland’s current funding system is largely driven by the Thornton Commission, which issued wide-ranging recommendations in 2001, driving 2002 legislation. The DLS report reviews this history – here, we will focus just on “how it works today.” The two main components of school funding being centrally debated by the Commission are generally known as Foundation and Targeted funding.

SchoolAid1920

This is the year-end summary written after the 2019 legislative session… the latest set of numbers available. With the Governor’s agreement to fund the FY 2020 funds, the footnotes offering caveats about some funding have been rendered moot.

Foundation Program

Foundation

This is the workhorse program. Developed through a combination of “successful schools” and “professional judgment” models (more thoroughly discussed by DLS in its report) the result is an overall amount of funding per pupil, generally associated with the funding level required to offer a successful school.

This figure is then “wealth-adjusted” to develop a state share of these funds for each public school student. (The wealth formulas, where they come from and how they work, will be the subject of a future analysis here) Based on each jurisdiction’s conceptual “ability to pay,” the state contributes a certain share of these foundation costs to each school system – with a statewide split of essentially 50/50 state/county.

On the summary table above, the Foundation Program represents about $3.1 billion in state funds for the coming year’s budget, just about half the entire school funding total.

Targeted Funding

Targeted

Taken together, these three separate (but conceptually similar) funding formulas represent the other major tier of state funds.

In essence, Maryland recognizes that certain classes of students drive real costs beyond the basics incorporated into the foundation formula. Students with special needs, students from economic disadvantage, and students with limited English proficiency all represent an additional funding modifier to drive needed resources to those systems. In essence, a special education student triggers additional expected funding of 74% of the foundation amount for other students.

These funds are then, just like the foundation funds, adjusted based on local wealth, and the state share is calculated and distributed to the school systems for each county.

Taken together, these three components represent about $1.9 billion in the coming year’s state budget, the second largest driver of state funding to school systems. The Commission has spent extensive time and energy assessing and considering these additional categorical funds, and is making its most substantial recommendations in those fields.

In addition, the targeted populations driving this additional level of funds has been growing, relative to the statewide school enrollment – making these components even more central to the state’s school funding approach than at the time of the Thornton Commission’s research.

TargetedGrowth

Summary

The state relies on a foundation funding amount per student as the centerpiece of its school funding approach. Certain classes of students add to this amount, based on their own selected weights, to reflect funding realities for those education needs. The resulting funding level is then implicitly apportioned between the state and each county based on each county’s relative wealth, to promote overall funding equity.

In subsequent analyses, Conduit Street will look more closely at the components of this system that are most closely under review: the wealth calculation, the effects of concentrated poverty on education costs, the needs for special education services, and other matters relevant in the year-by-year funding calculations.

Michael Sanderson

Executive Director Maryland Association of Counties
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