University of Arkansas Office for Education Policy

Funding Losses in the Millions!

In The View from the OEP on April 10, 2013 at 8:26 am

The OEP has recently been spending a great deal of time studying the categorical funding in the state of Arkansas as our state legislators wrestle with ways to improve the funding mechanism.  We have written on this in a recent blog post and in our new OEP policy brief, Categorical Poverty Funding in Arkansas.

A quick refresher — poverty funds have been allocated to districts based on the numbers of disadvantaged students served since the 2003-04 special legislative Lakeview session.  The categorical funds for poverty students are allocated in an odd manner in that the funds jump sharply up at 70% poverty and 90% poverty; these jumps were intended to assure that districts with higher concentrations of poverty receive additional resources to combat the ills that go along with concentrations of poverty. HOWEVER, there is no good reason for the jumps at 70% and 90% and most agree that a more reasonable “smooth” formula would be appropriate.

FortunatelySB811 sponsored by Senator  Johnny Key (R-Mountain Home) and Representative James McLean (D-Batesville), brought forth a bill that made common sense modifications to the poverty funding formula (see earlier post on this issue). Unfortunately, the reaction by most lawmakers and stakeholders had little to do with the logic behind the changes and revolved much more around the question of Will my local district get more or less?”  

Moreover, the press has aided the negative reaction to this bill with headlines such as the following (4-4-13):  “School districts’ losses under bill put in millions”.

This is quite a headline and it sounds like a big deal. Indeed, this immediately reminded me of Dr. Evil from the Austin Powers’ movies, as shown below:

Let’s start with the press, and then on to the lawmakers. Stories on SB811 have, in my view, exaggerated this issue. (An April 5 story in our local paper boasted a much more moderate headline: “Schools Concerned over Legislation“). While stories have mentioned the potential losses of “millions”, these losses were never placed in the context of total budgets. Indeed, the sum total of all poverty funding in the state of Arkansas approaches $200 million, which represents under 4% of the total Arkansas education budget of more than $5 Billion.

And yes, some districts will lose millions…and some will gain millions. But, in each case, before we overstate the importance of this, we must realize that most districts (win or lose)  in the state will see differences of 1% or less of total education funding. For example, under the new method, the Little Rock School District, would receive approximately $4 million less than it would under the current scheme. For the sake of context, it is worth nothing that the total annual district budget for Little Rock hovers around $350 million. Thus, while not trivial, this new funding method would result in a budget decrease of just over 1% in Little Rock (the reason the new formula would negatively affect Little Rock is that the district sits atop one of the formula’s “cliffs” — that is, the district serves just over 70% FRL).

However, some districts who sit just under the cliffs (with poverty percentages in the high 60s), such as Springdale, would stand to gain “millions” of dollars.  Specifically, Springdale would gain $2.5 million in an annual budget of over $200 million and thus see a gain of over 1%.

YES…if the formula changes, some districts will get less than what was expected and some will get more.  Moreover,  many of the districts that would receive less under SB811 are relatively wealthy since the proposed formula is tilted in favor of high-poverty districts (after all, the category is intended to address concentrations of poverty).

And, this leads us to the lawmakers…some of whom represent these affected districts and may be more concerned with bringing in a share of the funding than with the appropriateness of the policy. As reported in the Arkansas Democrat Gazette April 4 edition, one lawmaker was particularly clear in his sentiments during legislative discussions:

“There’s no way from where I stand that I can support the bill,” another education committee member, Sen. Jason Rapert, R-Bigelow, told Key. “I am going to be loaded for bear on this issue.”

When he says “from where I stand”, I wish he were describing his principled beliefs on how these funds should be distributed … but it is far more likely that he “stands” in a district that would lose some funding in the proposed scheme.  And this is a problem.

However, it is possible that some districts are actually upset about the potential loss of funding, simply because they are losing overall revenue. We are concerned that the focus on the “bottom line” is taking away from the focus of low-income students, as these funds can be spent across number of different categories – not necessarily those that specifically benefit low-income students. In fact, this concept is not lost on some. In the same April 4th article, Jerri Derlikowski, Education-Policy and Finance Director for the Arkansas Advocates for Children and Families, was quoted saying:

“The problem is it’s become an unrestricted fund…If you don’t need it for low-income students, maybe you don’t need it at all.”

However, we also know that there are districts who are spending their NSLA funds with the intent to benefit their low-income students. In fact, we applaud these districts.

We believe that this system should be fixed, so that poverty funding is more effectively directed to the students who need it the most…and hopefully those who are benefiting from the problems of the system will not stand in the way of its improvement!

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