Missouri Formula Fight Likely to Produce Mostly Losers, Few Winners

Last Updated: April 28, 2012

This article appeared in the April 2012 Rural Policy Matters.

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Show-Me State legislators had promised to address the growing shortfall in state school funding this session, but the two bills that propose finance formula changes are stalled in committee. Estimates of the shortage range from $260 to $300 million dollars.

The growing deficit has been caused in part by the lagging economy, but legislators have been forced to address the issue this year because of the ongoing implementation of a new funding formula set to be fully funded next year. Missouri districts were supposed to receive an additional $800 million in school aid, phased in over seven years. The foundation formula, adopted in 2005, was meant to address differences in the ability of districts to raise school funds and reduce reliance on local property wealth.

Districts that were typically able to raise significant local taxpayer dollars for schools were put into a "hold harmless" category, ensuring that their state funding would not be reduced as the formula went into effect. And, in recent years, these districts have seen smaller budget cuts. Approximately one-third of the state’s 500 districts fall into that category and are typically located in more affluent areas. "Formula" districts are those that rely on the state formula for the majority of school aid, and as the formula has been underfunded, have had greater cuts to their budgets. Rural schools in the state are more dependent on the formula, and make up the majority of "formula" districts.

Another important aspect of the new formula is the "adequacy target," a figure calculated by averaging the per-pupil expenditures in high-spending and low-spending districts across the state. That amount has increased since 2005, and underfunding the target has contributed to the huge disparities between districts.

Currently, all Missouri schools have received equal cuts to their state allocation. But the effects of those cuts are far from equal. Districts that are heavily reliant on state aid have had to make serious budget reductions. One Ozarks school could not afford to replace a Spanish teacher, had to let its special education teacher go, and can only employ its physics teacher on a part-time basis. Some districts have said that with extreme belt-tightening, they can last another year, but still must figure out a way to provide for fixed costs like insurance that are not within their control. Meanwhile, wealthy districts claim that increased local revenue comes from local commitment to schools, not inequity in the school formula.

Rural Missouri districts had worked in a coalition to challenge the state’s funding formula in a school finance lawsuit, Committee for Educational Equity (CEE) v. State, but the Missouri Supreme Court ruled that education is not a fundamental right for students in the state and that students across the state are not entitled to equal funding.

In the decision, the state was found to be meeting its responsibility because it spent at least 25% of state revenues on education, a provision of the state’s constitution. Rural plaintiffs included school districts in Southeastern Missouri’s Ozarks region. (Editor’s note: The Rural Trust has studied school funding disparities in the area; see that analysis here.)

The Rural Trust also participated in the CEE case as a friend of the court, filing a brief that argued that the 25% spending requirement was not the only educational provision the state was required to follow and cited a phrase in the Missouri constitution that the education system provide for the “general diffusion of knowledge and intelligence.” The high court, however, refused to find any state responsibility in that phrase.

The lone partially dissenting justice in the CEE case, Judge Michael Wolff, now a professor at St. Louis University, has since said the current system of funding is set up to have wide disparities. "It's very hard to argue that the Missouri Constitution requires equality when the system is set up to ensure inequality," said Wolff.

Funding bills in both houses of the legislature are tied up in committee, at least in part because of other controversial measures attached to them — including eliminating teacher tenure and creating voucher programs. If the legislature does not solve the problem, it will fall to the Missouri Department of Elementary and Secondary Education to sort out how the funding cuts will be allocated, an outcome that is not sought by any group. The overall current education budget that will be finalized in conference committee in coming days would give a slight increase to basic aid for districts.

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Read more from the April 2012 Rural Policy Matters.