$250,000 per classroom: how is it spent; what is the return?

In 2017, Kansas schools invested $6.084 billion to educate a total of 490,000 students (headcount enrollment). That is about $12,500 per K-12 student or $250,000 for a classroom of 20.  How is that money being spent?  More important, what are Kansans receiving for that investment?

Every dollar invested in Kansas schools is used to support student learning. Higher earnings by more educated students pays back that investment many times over.

One important note: these are statewide average numbers. Individual school districts will vary because of big differences in population, student needs, geography and local priorities.

How do school districts use their funds?

Start with the teachers. Thanks to efforts to keep classes small, the average class size in Kansas is less than 20 students. Kansas had the 8th lowest pupil to teacher ratio among the 50 states in 2016, the year of the most recent national data. Counting all teachers and other instructional staff, including special education paraprofessionals and other classroom aides to assist these teachers, there are almost two instructional positions for every 20 students. 

Salaries for teachers and classroom aides, along with textbooks and instructional supplies, make up just over 53 percent of that “quarter-million dollar” classroom: about $134,000 for a class of twenty. That pays for the salaries of two people, plus benefits, other employment costs, retirement contributions, as well as textbooks and other supplies.

The next largest share of classroom costs is the classroom itself, along with the rest of the school building: the library, gym, auditorium and lunchroom, as well as equipment like computers to go with textbooks and chalkboards. On average, Kansas school districts spent 12 percent of funds on facilities acquisition and debt service, or $30,000 for every 20 students for buildings and equipment, including payments on construction bonds.

Once constructed, schools also must be maintained and operated. Districts spent 8.8 percent, or about $22,000 for every 20 students for heating, cooling, lighting and cleaning school facilities, as well as keeping them safe and secure.

Next, students have to get to school. Districts spend 3.9 percent of funding, about $10,000 for every 20 students, on transportation. State law requires transporting children who live more than 2.5 miles from school and special education students; and many more are bused for safety reasons or to provide a choice in schools or programs. On average, nine students out of a class of 20 will receive transportation services from the school district.

Schools also provide meals for students. Lunch and breakfast programs cost about $10,000 for every 20 students, or 4.1 percent of all funds. Most of this cost is paid by federal student meal programs or fees paid by students and staff. (These fees are also part of the total cost per pupil.)  This provides $2.78 cents per day for 180 school days for each student.

In addition to teachers, schools also provide counselors, social workers, psychologists, speech pathologists, audiologists, nurses, attendance and resource officers and security staff. Kansas schools have one of these student support positions for every six classrooms of 20 students, at a cost of 4.8 percent of funding or $12,000 for a class of 20.

Schools also need libraries, technology support and professional development programs to continuously improve teaching, and assessment of how students are learning. Kansas districts spend 3.3 percent of funds on these purposes (about $8,500 per classroom). Districts have about one staff member for these instructional support activities for every eight classrooms.

In charge of each school is a principal and his or her staff. These individuals supervise and evaluate teachers and other school support staff, oversee student discipline, and support relations with parents. In small schools, the principal is also responsible for many of the duties listed above. Kansas districts spend 4.9 percent, or about $12,000, for every 20 students on school leadership. Districts have on average one principal or assistant for every 275 students.

All other expenditures - about 4.5 percent of the total or $11,500 per classroom – include general administration and central services, including the superintendent, business office, human resources and legal costs.  In small districts, the superintendent is often also a principal and handles these duties and more.  Most districts participate in cooperative organizations to share many of these functions and reduce costs.

Return on investment

A quarter-of-a-million dollars per year is a big investment in a classroom of students. But the payoff is even bigger.  The earnings difference between a high school graduate and a high school dropout in Kansas is over 5,000 per year; for attending some college up to an associate degree over $9,000; for a bachelor’s degree over $23,000 and for a graduate or professional degree $34,000.

Using current educational levels of Kansans over 25 to project the average number of students in a class of 20 who will reach each of those levels results in total additional earnings of $266,000 each year.  If 85 percent of that class is participating in the workforce (current Kansas rate) for an average of 40 years, that results in lifetime increased earnings of over $9 million for each class, compared to the $3.25 million invested in that class ($250,000 for each of 13 years).

In other words, estimated lifetime higher earnings for students who graduate high school and reach various levels of postsecondary education is almost three times the cost of K-12 education.

Supreme Court: Legislative solution can restore suitable school funding if it keeps up with inflation

In considering some of the responses to the Kansas Supreme Court's most recent Gannon school finance case, let’s start with what the court did NOT do.

The court did NOT require the Legislature to increase funding based on its own new education cost study. It did NOT require the Legislature to follow the recommendations of the Kansas State Board of Education. It did NOT impose new, higher academic performance targets.

Instead, it ACCEPTED the Legislature’s method of calculating constitutionally suitable funding for K-12 education, which found funding remains $522 million short. It ACCEPTED all legislative changes to local option budgets for school districts. It ACCEPTED the Legislature’s six-year phase-in to bring funding up to its own calculation for a suitable level.

Essentially, the court had just one problem, which would be recognized by anyone in their personal financial life: any amount of money today will be worth less in six years without adjusting for inflation.

The court only asked the Legislature to continue what it used to calculate the $522 million in the first place: an annual inflationary adjustment.

Let one fact sink in: by the Legislature's own calculation, Kansas school operating funds had fallen more than three-quarters of a billion dollars behind inflation by 2017, without considering any higher standards or performance targets, or any other cost studies. The consequences of this fact are clear.

Kansas school districts had cut more than 2,000 positions since 2009, and teacher salaries had fallen $4,500 behind inflation. Kansas had fallen from 24th to 31st in total per pupil funding, and 37 states increased funding by a higher percentage since 2008. Kansas teacher salaries had fallen from 38th to 41st, and now trail Iowa, Nebraska and Missouri.

Most critically, other states were improving faster than Kansas in graduation rates, college participation and test scores; giving their students an advantage in preparation for postsecondary education and employment.

In 2017, the Legislature added over $200 million in school aid for the 2017-18 school year. That allowed school districts to begin to recover, adding back nearly 1,000 employees, giving the largest teacher salary increase since 2009, adding new programs aimed at student success and launching a school redesign project. But based on the Legislature’s own calculation of suitable funding and inflation, funding remained over $500 million short. The 2018 Legislature approved a plan to close that gap in five years but did not provide an adjustment for inflation.

The additional funding approved by the 2018 Legislature will allow school districts to “make up” ground lost to past inflation and “catch up” with other states that compete with Kansas schools for teachers and Kansas students for jobs. The court has asked the Legislature to provide an adjustment to “keep up” with future inflation.

Some legislators have said Kansas cannot afford this final step. This should raise an even more important question: why not? How are other states able to provide higher funding per pupil, larger increases in funding, higher teacher salaries, and in some cases, better student results?

Just among the other Plains states, Nebraska, Iowa and North Dakota have higher total per pupil funding, higher teacher salaries and rank above Kansas on multiple student outcomes. Missouri increased funding faster, now spends almost as much per pupil, and moved ahead of Kansas in teacher salaries. All of these states - and many others - also seem able to provide postsecondary education, transportation and social services as well.

Some voices continue to call for a constitutional amendment to limit the court’s role and give more power to the Legislature in determining school funding. In the latest decision, the court was quite deferential to the Legislature, but made clear the Legislature must have some rational basis for determining “suitable” finance in providing for “intellectual, educational, vocational and scientific improvement through a system of public schools,” as required by the people of Kansas in their constitution.

The choice for Kansas is clear: comply with the court or allow our public education system to continue to slip behind.

How the Supreme Court answered questions about Kansas school finance

Here is how the Kansas Supreme Court answered questions raised in the briefs filed by both parties and oral arguments May 22, in yesterday's unanimous ruling.

1.       How much is enough? The state says actions by the Legislature over the past two sessions will provide $1 billion more in school funding over a six-year period. The plaintiffs want $500 million added to what the Legislature did immediately (for next school year) and up to $2 billion more phased in and adjusted for inflation. Gannon VI answer: The court accepted the state's argument that the Legislature could return to the funding levels approved by the court in the Montoy case for 2010, which was presumed constitutional, if that amount is adjusted for inflation. This is called the "Montoy safe harbor." However, the court said the amount of funding provided must be further adjusted for inflation for the years that additional fund has already been provided (2018 and 2019), and for the additional phase-in years approved this past Legislative session (2020 through 2023). The court directed the Legislature to make those adjustments during the 2019 session.

2.       Meaning of the latest cost study. The state says the $2 billion cost of meeting state standards developed by Dr. Lori Taylor and others is based on "moon shot" aspirational goals that should not be required constitutional adequacy. It argues the Legislature used another approach to adequacy, based on previous rulings of constitutional compliance in 2009. The plaintiffs say the new study's goals are based on what Kansas students need to be successful, as defined by the State Board of Education, and the new study confirms what previous state-commissioned studies, a peer review this Spring, and an alternative study commissioned by the plaintiffs found about the cost of meeting state standards. Several justices questioned why the Legislature has repeatedly paid for cost studies it then doesn't want to follow. Gannon VI answer: By accepting the "safe harbor" - assuming the Legislature complies with the adjustments for inflation – the court said it does not need to consider new studies. "As a result, we need not address whether the WestEd (Taylor) cost study and Myer-Picus Report (commissioned by the Plaintiffs) can be considered for the first time on appeal."

3.       What is required to meet the “Rose” standards? The Supreme Court has set the standard for adequacy as enabling "all" students to meet or exceed seven standards of educational competence, from basic skills to preparation for college and career, called the Rose standards after a Kentucky school finance case. A major reason courts found the current finance system unconstitutional is that about 25 percent of students score below "grade level" on Kansas state tests and nearly 15 percent do not graduate on time. The state says approved funding should[LF1]  allow 85 percent of students to reach grade level. Plaintiffs say the target should be at least 90 of students on grade level and 60 percent of students "college ready" on state tests. Justices asked how high the constitutionally acceptable bar had to be – can schools be expected to reach 100 percent? Put another way, can more money solve all educational issues? Gannon VI answer: The court essentially accepted that the level of funding committed in the Montoy case as constitutionally suitable, if adjusted for inflation.

4.       Does money matter? No debate here: both sides agree additional funding will improve education. The state says its billion-dollar increase will significantly improve student success and should satisfy the constitutional requirement. The plaintiffs say it won't go far enough. Gannon VI answer: As noted, there is really no debate that money matters; the court determined that, at this point, the Montoy level is acceptable if adjusted for inflation.

5.       The role of the court. Several justices expressed concern that any decision based on substantially new facts – such as the new cost study – would go beyond their scope as an appeals court. They raised the possibility of sending the case back to the three-judge panel to consider new evidence. Neither side expressed much support for a step that would add months or years to the process. Gannon VI answer: The Court accepted the Montoy safe harbor approach and avoided consideration of new cost studies as evidence.

6.       The role of the State Board of Education in funding. Article 6, section 1 of the Kansas Constitution gives the Legislature the duty to “establish a system of public schools” for educational improvement; and in later sections delegates to the State Board authority for “general supervision” of public schools; to local school boards the duty to “maintain, develop and operate” schools and to the Legislature the duty to “make suitable provision for finance.” The state says this means the Legislature has the primary role, and the State Board is to supervise the system the Legislature “establishes.” The plaintiffs argue the State Board has independent authority to set educational standards for schools and students which the Legislature then must support with adequate funding. When asked if that means the State Board could lower standards (and therefore costs), plaintiffs replied that the Supreme Court should then intervene to the enforce the provision that the public education system must provide educational “improvement.” Gannon VI answer: By accepting the Montoy safe harbor, the court did not address changing standards by the State Board.

7.       Retaining jurisdiction. The school finance bill passed in the 2018 session includes phasing in more than $400 million spread over the next four years. The plaintiffs want more money now AND a phase-in of additional funds. However, the state wants the court to dismiss the case, which means if the Legislature failed to follow through, a new lawsuit would have to be filed. The plaintiffs want the court to retain jurisdiction until any final resolution is fully implemented, which could be more than five years. The Supreme Court allowed a three-year phase-in as part of the Montoy case in the late 2000’s. Gannon VI answer: Because the court ruled the Legislature has not fully complied, the case will continue for at least another year.

8.       What happens to the Local Option Budget? The state claims the new requirement of a 15 percent LOB should count in its favor because it will increase the mandatory commitment of funding for each district. (For example, it would keep local school districts from using additional state aid to offset their LOB and reduce local property taxes.) Plaintiffs argue that a mandatory LOB should be 100 percent equalized by the state, rather than equalized to the 81.2 percentile under current law. The court has approved the 81.2 percent rate for the currently optional LOB. Plaintiffs also want the court to remove any voter protest or election requirements for the LOB and strike a provision that requires districts to use LOB funding for at-risk and bilingual education programs in proportion to amount of at-risk and bilingual weighting they receive. Gannon VI answer: Gannon VI answer: The court accepted the state's arguments on the LOB, which means districts will have to maintain a minimum 15 percent LOB; that adopting an increase in the LOB greater than the statewide average for the preceding year is subject to voter protest petition, which would result in an election; and that districts must transfer amounts from the LOB to at-risk and bilingual funds amounts in proportion to their at-risk and bilingual weighting.

9.       When will the court decide? That’s up the court. It previously promised a decision by June 30. If the Legislature’s action is found to be insufficient, the state has asked that the system be allowed to operate (schools remain open) during the upcoming school year (while about $200 million will be added) and the Legislature given next session to continue to work toward compliance. Plaintiffs say unless the Legislature approves additional funding for the upcoming school year, more funding committed for the future and changes to the LOB, the court should shut down the school finance system until it does – but want exceptions to allow maintenance of school district buildings and property while schools are closed. Gannon VI answer: Having reached this decision, the courts set a date of April 15, 2019, for briefs on the Legislature response next session, response briefs due April 25, and oral arguments May 9.

Tracking the two-year increase in state aid to school districts

The Kansas Legislative Research Department has posted a new memo comparing state aid to school districts in 2017 with the Legislature’s appropriations for Fiscal Years 2018 (the school year just ending) and 2019 (the school year beginning in August) following the Kansas Supreme Court Gannon decision.

The memo shows total state aid increasing by about $475 million over the two years, which is more than 11 percent. The Legislature also approved foundation aid increases for the next four years expected to add over $500 million, allows the state attorneys to tell the Court state funding is increasing about $1 billion in response to the Gannon school finance order.

Several facts stand out in this report.

Most – but not all – of the additional funding is for “foundation” aid and special education state aid. Over $300 million of the $475 million is for a higher base amount per pupil and higher pupil weightings. Much of that is available for general educational purposes, but a portion must be used for specific programs such as at-risk services, bilingual education and pupil transportation.

The second largest increase is state special education aid ($54.9 million). With this increase, special education state aid is expected to cover 83.2 percent of the “excess cost” of special education services next year. That is $51.9 million short of the 92 percent of excess cost that is supposed to be covered under state law.

Special education costs not covered by state special education aid must be paid by transfers from general education funding.

A growing share of state aid is earmarked for special programs, rather than general operations. Over $44 million, or more than 9 percent, of the increased funding is for special programs and grants. Some of this money is available to every school district, but many programs are targeted to specific districts, or are limited pilot programs or competitive grants.

Increased funding includes a new $10 million pilot program to support mental health intervention teams in Wichita USD 259, Topeka USD 501, Kansas City USD 500, Parsons USD 503, Garden City USD 457 and Abilene USD 435; $5 million for school safety grants; $2.8 million to allow every high school junior or senior to take the ACT test or the Workkeys test at no cost; $520,000 to launch a Teach for America program in Kansas; $300,000 to expand school technology infrastructure; $500,000 for increased mentor teacher funding; $300,000 for a juvenile transitional crisis pilot program in Beloit; and increased funding for parent education, Pre-K grants and career and technical education support.

The balance of the increased funding is for state aid for capital projects (bond and interest aid and capital outlay state aid), local option budget state aid and KPERS contributions.

KPERS funding is … complicated. Accounting for Kansas Public Employees Retirement System contributions has been contentious. The state pays the employer share of pension contributions for school districts and other local education agencies. This money is distributed to school districts then immediately transferred to KPERS. These funds, which support school employee retirement benefits, are clearly a state educational expenditure; however, they simply “pass through” the school budget and do not provide any additional operating money. In addition, the state has deferred millions of dollars in previous payments, leaving a large unfunded liability that must be made up for higher future payments.

In 2017, school district KPERS aid was $253 million, but that was a reduction from the level required to be on track to eliminate the unfunded liability by 2033.  The Legislature committed to repaying that reduction through a process called "layering" payments of $6.4 million per year starting in 2018. The regular USD KPERS payments jumped back to the correct level of $384.9 million in 2018, but the appropriation dropped to $260 million in 2019 when the Legislature delayed another $194 million in payments. (The 2018 Legislature did add $9.8 million for FY 2018 and $32.1 million for FY 2019 to cover higher school district payrolls resulting from increased funding.)

In addition to school district KPERS payments, the Department of Education funding also includes contributions for local education agencies that are not school districts, including special education cooperatives and other interlocals which provide services to school districts, but also including community colleges and technical colleges. These non-USD KPERS contributions also increased by $21 million over the two-year period.

Finally, the Legislature also approved an $82 million direct transfer from the state general fund to KPERS, plus up to $56 million more if actual state general fund revenues this year exceed the April revenue estimates. These funds will help make up for the deferred payments but will not be counted as state aid or as part of school district budgets.

Federal and Children’s Cabinet funding is largely unchanged. The memo also notes federal education aid has increased by about $16 million, almost entirely in school food service assistance. Major education aid programs such special education and the Elementary and Secondary Education Act Title I and other programs have been basically flat from 2017 through 2019.

Funding for education-related programs through the Kansas Children’s Cabinet increased by $2.5 million, mostly in the early childhood block grant. School districts are eligible to apply for these funds. Children’s Cabinet programs are funded by revenues from the state settlement with tobacco companies.

In 2017, the Parent Education Program (Parents as Teachers) was funded by federal Temporary Assistance for Needy Families (TANF) dollars. In 2018 and 2019, it was funded through the Children’s Cabinet.

Almost $1 billion in school district state aid comes from sources other than State General Fund appropriations. Although the SGF is the largest source of funding for school aid, over $720 million is raised by the statewide 20 mill property tax levy for schools, or local tax levies for certain weightings. Capital improvement state aid for bond and interest payments is an automatic transfer from the state general fund of $200 million in 2019. Since the 2012 income tax cuts, the Legislature has shifted $107 million from the state highway fund to fund school district transportation and special education transportation aid. In 2019, those transfers were reduced to $45 million with the balance replaced by state general fund dollars.