Concerns from some school districts about a reduction in state funding is premature, according to the consulting firm hired by the Legislature to propose a new education funding formula.
But for a school district like Choctaw County, the possibility of a reduction in half of its budget as a result of a new funding formula is distressing.
New Jersey-based firm EdBuild released its report of recommendations Jan. 16 to legislators and the public. CEO Rebecca Sibilia told legislators that in her view, and compared to surround states, Mississippi bears too much of the cost of school funding.
“We are recommending that you consider whether or not holding the state to a 73 percent guarantee to cover the cost of education is either fair or promotes an adequate school funding system,” Sibilia said.
According to the EdBuild report, the state is paying in excess of what it should to about 50 school districts because of a part of the Mississippi Adequate Education Program (MAEP).
The MAEP formula establishes a basic per pupil cost with some additional add-ons allowed for special categories of students, such as special needs or those qualifying for federal free and reduced price lunches. That base per pupil cost is applied to each school district to determine the amount of basic state funding for education required in that district.
When established, the MAEP formula required that each local school district pays no more than 27 percent of the calculated funding for that district. That means the state is obligated to pay at least 73 percent of that MAEP calculated cost for each district regardless of how much money is raised by local taxes.
The MAEP formula requires local school districts to assess a minimum of 28 mills in taxes for school support. It was assumed that tax rate would provide the 27 percent required to come from local school district taxes. Mills are a traditional taxing unit in which each mill represents $1 of tax per each $1,000 in assessed property value.
As the MAEP formula works today, if a district is slated to receive $100 million to run its schools under the MAEP formula, and the value of the revenue produced by the 28 mill tax in that district is $27 million, the district would receive $73 million from the state.
But if the 28 mills in the same district brought in $40 million because of a higher tax base, the state still would provide $73 million, representing the state’s 73 percent responsibility of the MAEP calculation of $100 million required funding for that district. The result is that district would have a total of $113 million for education (combining the state and local revenue). EdBuild considers the additional $13 million an overpayment by the state for public education.
Statewide, EdBuild estimates that about $120 million annually is spent in overpayments to school districts because of the provision that local districts are only required to provide share 27 percent of the MAEP calculated cost.
Similarly, if the 28 mills does not raise the required 27 percent at the local level, state law allows school districts to raise the local taxes up to 55 mills. The EdBuild report notes that this year, only one school district remains at the 28 mill local tax level. The report says that 17 school districts are at the 55-mill limit. Another 13 school districts have been given special permission to exceed the 55-mill limit, the report says.
The report calculates that, if the Legislature adopts EdBuild’s proposal to eliminate the 27 percent rule, the Pascagoula and Madison County school districts would be the top two districts with the highest loss of state funding.
The difference in the required local contribution and the value of 28 mills for Pascagoula is around $18 million. For Madison, the difference is $13.7 million.
Madison County School District Finance Director Barry McKenzie said until the district got to the part of the report about removing the 27 percent rule, things looked good for Madison.
He also said he was unsure where some of EdBuild’s numbers, including how the group calculated Madison’s “at risk” population.
“If they hit us like that, we would have to go up on local millage,” McKenzie said.
Choctaw County Superintendent Glen Beard said if these recommendations go through without adjustments, the impact on his small, rural district would be devastating.
The district of 1,200 would stand to lose about $7 million in state funding, or half of its budget, he said. And a resulting increase in property taxes could drive the county’s businesses out or to run into major problems.
“We would need an additional 34 mills (to make up for the lost state funding) – that would throw those businesses and that business model out the window. That would affect their bottom line,” Beard said. “That in and of itself would create another catastrophic snowball because we have a lot of families that work at the coal mine and the power plant.”
But Sibilia says it is far too early to conclude these are the amounts school districts could lose in state funding. The recommendations also include adding funding weights for students in poverty, with disabilities and those whose second language is English, among other characteristics.
“We presented this change as part of a package that would put significantly more resources into student based funding that would benefit all districts. It’s way too premature to judge overall winners and losers based only on the 27 percent rule when the Legislature hasn’t decided which of the other proposals they will accept,” Sibilia said.
The Associated Press released a report last week showing the majority of school districts would receive more funding overall if all of EdBuild’s recommendations were adopted, but the total amount of school funding would be about $100 million less than what full funding of the MAEP would require.
But House Education Committee Chairman John Moore, R-Brandon, said the group’s recommendations will “never be adopted in full.”
“That’s an erroneous speculation … I’m not even paying attention to what they print,” Moore said of the AP’s projections.
Opponents of changes to school funding, particularly MAEP co-author Sen. Hob Bryan, D-Amory, also point out EdBuild’s recommendations do not include an automatic recalculation of the base student cost based on inflation. Currently, the MAEP automatically recalculates the base cost every four years.
In making the EdBuild proposal, Sibilia recommended the Legislature provide a transition period which would allow it to provide additional funding outside the new formula to districts to help them transition to the new financial reality.
Still, some are skeptical of whether the recommendations will truly benefit all districts.
“The legislature is trying to lay the groundwork to raise your local taxes by shifting the responsibility of K-12 public school funding down to your counties and cities,” Rep. Jay Hughes, D-Oxford, stated in an email.
Legislators have not yet drafted any bills based on EdBuild’s recommendations but say their goal is to pass the revamp this session.