Politics & Government

How Kansas lawmakers made an $80 million error in school funding bill

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Kansas lawmakers made an $80 million first-year error in their school funding plan when they included some local property taxes as part of base state aid.

They intended to include the local taxes; the mistake came in how the change was put into the plan.

“There were things that happened that didn’t get caught,” said Rep. Clay Aurand, a Belleville Republican who supported the inclusion of local taxes.

Districts had expected to receive about $150 million in new funding next year, but because of the error the amount will be closer to $72 million — unless lawmakers pass a fix when they return later this month.

The attorney general’s office called the error a “significant issue.”

Kansas lawmakers approved a $500 million funding increase for public schools early Sunday. The increase, set to be phased in over five years, passed with the minimum number of votes needed.

The plan came in response to a Kansas Supreme Court order that lawmakers show by April 30 how they plan to adequately fund schools. The court ruled last fall that schools are inadequately funded under the state constitution.

The Kansas State Department of Education disclosed the error on Monday, sending lawmakers scrambling Tuesday to understand exactly what had happened.

Districts can use a local option budget (LOB) to raise additional money through local property taxes. The LOB was originally intended to be used to pay for extra programs and purchases, like a shop class or new band uniforms.

But over the years, districts have come to use LOB money for core educational purposes.

Under current law, districts can set their local option budget at up to 33 percent of the amount that they receive from the state, but they are not required to.

The funding plan passed by the Legislature will require districts to set their LOB at 15 percent or higher. Every district already has an LOB higher than 15 percent, said Dale Dennis, deputy education commissioner.

In practice, requiring districts to set a minimum LOB is designed to allow the Legislature to take credit for that portion of funding. A 15 percent LOB requirement for districts statewide amounts to about $510 million a year, Aurand said.

Lawmakers hope the Kansas Supreme Court will credit the Legislature for that funding, Aurand indicated.

“The theory is hopefully the court would take that money into account,” Aurand said.

He emphasized that the $510 million in existing LOB money that the plan wants to count as state aid is in addition to the $500 million increase in state funding that is included in the plan.

Aurand said mistakes were made in working the requirement into the bill. Rep. Fred Patton, a leading Republican on school finance issues, also said there were issues in the LOB requirement.

According to the Kansas State Department of Education, the 15 percent of the LOB that lawmakers plan to count as base aid should exclude special education dollars. But in the bill lawmakers passed, special education dollars are counted.

The problems mean that the new funding districts receive next year would be about $80 million less than planned unless the error is fixed.

Rep. Melissa Rooker, R-Fairway, said the Supreme Court has previously taken issue with the approach advocated by Aurand. She said when lawmakers move to fix the bill, they should strip out the language attempting to count LOB money as base aid.

"I think it is a significant problem," Rooker said.

Susan Willis, chief financial officer for the Wichita school district, said news of the error was "kind of amusing" because she had been trying in vain to calculate the new formula and getting frustrated. The error lowers the size of the increase to Wichita schools next year by about $8 million.

"The way that it was worded was not working, so it was actually a little vindication, I guess," Willis said.

"When you push through a bill in those last possible hours, there's no time to vet the math, so it's not shocking."

District officials are concerned that the gaffe will "continue to delay what was already turning out to be a very elongated process for us to know what our budget numbers will be," Willis said. "But I do believe there was no malicious intent or anything like that."

After passing the school funding bill, lawmakers left for a nearly three-week break. They will return April 26, just a few days before the April 30 deadline set by the Supreme Court.

By that date, the attorney general’s office must submit briefs to the court explaining what lawmakers have done. The court is expected to rule later this spring on whether the plan is constitutional.

Attorney General Derek Schmidt had urged the Legislature to pass a school funding bill in March. Last week, before lawmakers approved the bill, he said each additional day of delay further damaged his team’s ability to prepare to defend the legislation before the court.

It was unclear Tuesday how the error affects his preparations.

“We are reviewing the situation. At first glance, it appears to be a significant issue,” said Jennifer Montgomery, a spokeswoman for the attorney general.

Lawmakers will likely have to pass another bill to fix the error contained in the first school funding bill. That gives opponents of the bill another potential chance to stop the plan, which some say is unaffordable and will require tax increases in the coming years.

“Gives us another chance to kill the bill!” Rep. John Whitmer, R-Wichita, tweeted.

Rep. J.R. Claeys, a Salina Republican who opposed the bill, said he would vote against additional legislation. He contends the Supreme Court won’t find the bill constitutional and that “this whole thing is an exercise in futility.”

Still, he acknowledged why supporters want the bill fixed.

“I think it would be irresponsible to put the attorney general in the position to defend something completely different than what was passed. I won’t be voting for it, but I can see how others might want to fix that and get that before the court,” Claeys said.

Rep. Kathy Wolfe Moore, D-Kansas City, also voted against the bill. She said she had been holding out for additional funding, but would support a fix to the bill.

“Without that $80 million, I don’t think we have much chance of passing constitutional muster, so I think we absolutely have to fix the bill,” she said.

The school funding plan the Legislature passed was unveiled Saturday morning, passed the House midday and then passed the Senate shortly after midnight on Sunday. That’s an extraordinarily fast pace for such a large bill, but lawmakers faced pressure from the attorney general’s office to finish and were up against a self-imposed deadline to begin their traditional April break.

“Anytime we add amendments or put something on at the last minute you hope there are not errors, but this time it looks like there’s one we’ll have to work through and address and we’ll get through it and come up with a solution,” Patton said.

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