Kansas K-12 funding lags personal spending growth

Kansas’ investment in public education has been growing much slower than total income of Kansas residents and spending on most personal goods and services since 2010, according to new data from the Bureau of Economic Analysis. (Link)

The decline occurred as Kansas per pupil funding has fallen behind inflation and other states. There is a strong, positive correlation between education funding, educational attainment, higher state average income and lower poverty rates. (See previous posts on funding and the link between education and economic prosperity.)

The BEA annually reports personal consumption expenditures by state, defined as “goods and services purchased by or on behalf of households and the net expenditures of nonprofit institutions serving households (NPISHs) by state of residence for the 50 states and the District of Columbia.” (These figures do not include increased funding for school districts beginning in 2017-18 because income and spending data is not yet available.)

KASB compared Kansas personal consumption expenditures with total Kansas personal income and total expenditures on K-12 education by Kansas school districts as reported by the Kansas State Department of Education.

Between 2010 and 2017, Kansas personal income increased from $112.1 billion to $141.5 billion, or 26.2 percent. Personal consumption expenditures increased from $86.1 billion to $106.4 billion, a slightly lower rate of 23.7 percent.

Total school district expenditures increased from $5.5 billion to $6.1 billion, or 8.8 percent. School expenditures dropped from 5.0 percent of Kansas personal income in 2010 to 4.3 percent in 2017.

The 8.8 percent increase in K-12 expenditures between 2010 and 2017 was lower than any category of personal expenditures except for gasoline and other energy goods, which decreased 2.6 percent 2010 and 2017.

Expenditures on Financial Service and Insurance (37.2 percent), Food Services and Accommodations - dining out and lodging (31.6 percent), Housing and Utilities (29.0 percent), Recreational Services (28.9 percent) and Motor Vehicles and Parts (28.0 percent) increased faster than Kansas personal income.

Expenditures on Furnishing and Household Equipment (26.0 percent), Transportation Services (23.1 percent), Recreation Goods and Vehicles (21.8 percent), Health Care Services (21.5 percent), Food and Beverages Consumed at Home (16.7 percent) and Clothing (10.1 percent) increased less than personal income but more than K-12 expenditures.

The amount of spending on K-12 educational also ranks low compared to major personal expenditure categories. Kansas spent $21.9 billion on Housing and Utilities in 2017, $18.7 billion on Health Care Services, $17.7 billion on Financial Services and Insurance, $10.1 billion on transportation services, vehicles and fuel, $8.7 billion on Food and Beverages at home, $7 billion on recreational good ands services and $6.3 billion on Food Services and Accommodations (dining out and lodging), compared to $6.1 billion on K-12 education. Only Clothing and Footwear, at $2.7 billion, was lower than school district spending.

This data indicates that Kansas expenditures on public education have actually been a declining share of total income by Kansas since 2010, and that other categories of expenditure have growing faster than education funding. In fact, that has been true as far back as 2000. Since 2000, K-12 expenditures increased 74.6 percent, personal consumption expenditures 78.6 percent and Kansas personal income 84.9 percent.

There would be no problem spending less on K-12 education and more on personal goods and services if Kansas were getting the education results they want and need, and/or if funding made no difference in educational results. However, Kansas education funding has fallen behind inflation and other states, as have Kansas average teacher salaries. Although Kansas ranks above average national and regionally in educational outcomes, other states have been increasing funding more and improving results faster.

To meet future employment needs and compete with other states, Kansas needs to graduate more students from high school and postsecondary education. The states with the highest educational outcomes tend to spend more per pupil than most states, already spend more than Kansas; and have higher personal income and lower poverty rates. If Kansas continues to spend less on K-12 education, it will ultimately mean less personal income to spend on everything else.

There is another impact of personal expenditure changes. Since 2000, spending on “goods” has increased by 56.1 percent and spending on “services” increased 92.5 percent. Because the Kansas sales tax is generally applied to goods and not to services, this shift in consumption from goods to services is one major reason state revenues have been growing more slowly, and why lowering state income tax rates and relying more heavily on consumption taxes that do not includes services will likely further reduce revenues for public services like K-12 education.

Definitions:

Total personal income is the income received by, or on behalf of, all persons from all sources: from participation as laborers in production, from owning a home or business, from the ownership of financial assets, and from government and business in the form of transfers; from domestic sources as well as the rest of world. It does not include realized or unrealized capital gains or losses.

Essentially, the difference between personal income and consumption expenditures is the total of taxes paid, personal interest payments and transfer payments to governmental programs such as social security, and personal savings.

Total K-12 expenditures is all spending by Kansas school districts, including state, federal and local funding. Most of this revenue is from taxes, but a portion is personal payments, such as lunch fees and charges for student materials and transportation.

How school districts used increased funding 2017-18: for students and teachers, more salaries and benefits, and programs for student success

A review of final 2017-18 budget information for school districts shows how districts used increased funding in response to the Gannon school finance adequacy decision, following almost a decade of lagging behind inflation.

Key points:

• Over 80 percent of increased funding went to instruction and other programs and services directly impacting students and teachers.
• Over 80 percent of the increased funding went to school district employee salaries, benefits and retirement contributions or to contracted services.
• School districts used most of increased funding provided for general operating purposes on programs for students with special needs, as identified by the Kansas Supreme Court.

In depth:

Total school district expenditures increased $407 million in the 2017-18 school year over the previous year. Approximately $200 million of that increase was provided by the Legislature for base state aid, students weightings and local option budget authority in response to the Gannon school finance decision.

Another $130 million was appropriated by the Legislature for Kansas Public Employees Retirement System contributions, which had been reduced previous year. These funds “pass through” district budgets and are based on employee salaries, but school districts have no control over how these funds are spent.

The remainder of the increase came from increased capital outlay revenues from local mill levies due to higher valuation; increased payments for school construction bonds approved by local voters, and other local revenues such fees for meals and materials.

Here are highlights:

By “function” – Over 80 percent of increased funding went to instruction and other programs and services directly impacting students and teachers.

The largest increase in funding - $229 million – went to instruction, which pays for salaries of teachers, paraprofessional, classroom aides and classroom supplies.

Other functions providing direct services to students and teachers – student support, instructional support, school administration, transportation and food services – accounted for $98.2 million.

Functions that provide for construction and operation of school facilities – operations and maintenance, facilities construction and debt service – increased $63.1 million.

The smallest increases – a total of $16 million – went to central services and district administration, which supports superintendents, district office, legal and business operations.

By “Object” – Over 80 percent of the increased funding went to school district employee salaries, benefits and retirement contributions or to contracted services.

As noted, the Legislature provided a significant increase in KPERS contributions. The increase was partially due to the reduced funding the year before (Fiscal Year 2017) to balance the state’s budget, and partly due to a scheduled increase in contribution rates to address the unfunded liability in the KPERS system. These funds simply pass through a school district’s budget and cannot be used for any other purpose. These funds are also not part of the district’s general fund budget or local option budget.

The largest portion of the 2018 school funding increase went to employee benefits: $170 million. Approximately $130 million of that increase was due to the increased KPERS contribution. The balance would be other employee benefits, such as increased health insurance contributions.

The second largest share of the increase, $138 million, was for school district employee salaries (which do not include KPERS and other benefits.

In total, salaries, benefits and retirement contributions for school employees accounted for approximately three-quarters of the 2018 school funding increase.

Another $37.8 million was use for “purchases services or property services” – basically, to pay contractors for services provided by employees of other entities, such as education services centers, construction contacts, transportation and food service (for districts that “outsource” those activities).

Districts spent $41.5 million of the increase to purchase property, equipment, supplies and materials.
Increased payments on school debt and other costs accounted for less than $20 million of the increased funding.

By “Fund” – School districts used most of increased funding provided for general operating purposes on programs for students with special needs, as identified by the Kansas Supreme Court.

School districts are required to use fund-based accounting to track spending in specific programs. For example, state aid for at-risk students and special education and required to be deposited in those funds and spent on programs in those areas.

The largest increase in spending by fund was for KPERS retirement contributions, over $130 million. As noted, these funds are deposited in this fund and immediately transferred to the KPERS system, and cannot used for general operating purposes.

As far as funds provided for the Legislature in response to Gannon school finance decision on adequacy, an increase of $78.7 million was spent from the At-Risk and At-Risk preschool funds for services to students who are not performing at standards. Another $48.7 million was spent from the special education and special education cooperative funds for students with disabilities. An additional $8.7 million was provided for increased vocational education and bilingual education programs.

These programs targeted special needs students had a total increase $136.1 million. Increased expenditures from the school district general fund and local option budgets for general education and operating purposes totaled $81.7 million.

Most of the remainder of the increase in spending was in restricted funds that cannot be used for general operations. Expenditures from the capital outlay fund, which is supported by local capital outlay mill levies and state aid, increased by $40 million. These funds can only be used for construction, remodeling, equipment and limited building maintenance purposes defined by the Legislature.

Payments from school district bond and interest funds rose by $7.3 million. These funds come from local mill levies for construction bonds approved by local voters, and state aid for this purpose.

Common questions about Kansas Public Schools Answered

What are the long- and short-term trends in Kansas educational outcomes?

Long-term Kansas education levels have improved steadily for decades and have never been higher, as measured by years of education completed. Short-term, the record is more mixed.

A higher percentage of students are completing high school, attending college, and completing college degrees than ever before, both adults over age 24 and recent high school graduates age 18-24.

High school requirements have gotten tougher. Students are taking more courses, and more core academic subjects. Graduation requirements and admissions standards for Kansas universities have increased. These changes are adding value, because average income rises with each additional level of education.

Kansas state reading and math test scores rose in the 2000’s before falling in the early 2010’s. On new tests, scores declined slightly in the past three years.  On national reading and math tests at 4th and 8th grade, Kansas scores rose during the 2000s but have fallen back since 2011. The percentage of students scoring “college ready” on ACT tests increased from 2006 to 2014 but declined the last several years.

The “four year” graduation rate and percentage of students participating in or completing postsecondary education has improved over the last several years (These are new measures).

What are the long- and short-term trends in Kansas school funding?

Long-term Kansas K-12 funding has increased more than inflation, but not in the past ten years.

Prior to 2010, total school funding typically increased about one to two percent more than inflation each year. From 2010 to 2017, funding usually increased at less than the rate of inflation or declined. Even after the Legislature increased funding last year, total school funding was below 2009 levels when adjusted for inflation.

However, Kansas education funding has not increased more than the state’s overall economy. Education funding is at a lower share of the total income of all Kansans it was in 1990.

As noted, long-term educational outcomes have increased as long-term funding increased; short-term outcomes have been mixed as funding didn’t keep up with inflation.

How have school districts used increased funding in the past?

Schools used “real” (more than inflation) increases to improve services to students and maintain quality.

School districts used additional funding to:

• Cover increasing student enrollment.
• Keep school salaries and benefits competitive with other states and the private sector (which have usually increased faster than inflation).
• Lower class sizes.
• Serve more students in preschool and all-day kindergarten.
• Expand special education services.
• Increase funding for safety, mental health and school nutrition.
• Improve technology and school facilities.

These efforts were limited from 2009 to 2017 as funding fell behind inflation. Districts have begun to restore efforts last year and this year with additional funding approved by the Legislature.

How do Kansas educational outcomes compare to other states?

Kansas ranks at or above that U.S. average on a wide range of education outcomes, and very high when all measures are averaged. But other states are improving faster.

Indicators include national reading and math tests at grades four and eight, graduation rates, ACT and SAT college readiness tests, and high school completion and college participation by 18-24-year-olds. Where possible, this includes data for low-income students and other subgroups. Although many states do better than Kansas on SOME of these measures, very few do better on all or most. Overall, Kansas ranks 9^th when these indicators for the most recent year are averaged.

However, in recent years, many other states have improved more than Kansas on these indicators. In other words, other states have been “catching up” with Kansas outcomes.

How does Kansas educational funding compare to other states?

Kansas has consistently spent below the national average and has fallen further behind in recent years.

Since 2008, Kansas has fallen behind further behind the national average. In 2016, the most recent year national data is available, Kansas total per pupil funding was 30^th in the nation. Kansas ranked 40^th in the increase in funding between 2008 and 2016. Kansas has also fallen behind most states in the region.

How is Kansas school funding used?

Most school funding goes to instruction (direct teaching of students) and other services for students and teachers. Less than five percent is used for general administration and central services. The rest goes to school facility construction, operations and maintenance.

Specifically, 54 percent to instruction; 5 percent to student services; 5 percent to school building principals and staff; 4 percent to transportation; 4 percent to food services; 3 percent to libraries and teacher support; 10 percent to debt service on school construction bonds; 9 percent on operations and maintenance; 2 percent on building construction; 2 percent on general administration and 2 percent on central services. (2017 school district budgets.)

Kansas provides less total per pupil funding than most states, and also less than most states on non-instructional spending, including administration.

Who determines how much schools can spend and how the money can be used?

School funding is mixture of state, local and federal funding, with many “strings” attached.

The Legislature mostly determines how much general operating funding districts receive by setting a base amount per pupil, enrollment weightings and state special education aid; and setting a cap on local option budget. Local school boards a lot of flexibility in how these funds are spent, but some are limited to specific programs, like special education, at-risk and bilingual services.

School building and facilities costs are mostly determined by local voters through bond issues and capital outlay levies. These funds generally cannot be used for general operating purposes.

The federal government provides about 8 percent of Kansas school funding, and about 40 percent of federal funding is food service support. Most federal funds can only be used for specific purposes.

Path to prosperity: invest in education

In the debate over educational funding versus tax cuts, it’s important to understand the economic impact of state spending on K-12 education.

Data on state income levels and poverty rates show a strong positive correlation between economic status and education levels. The same data shows that states spending more on K-12 education have higher income levels and lower poverty rates.

In addition, higher levels of state and local spending per capita also have a positive correlation with higher state income. This indicates that a low tax burden and lower spending do not promote higher incomes and reduce poverty.

Furthermore, states that spend more on education and other public services are more likely to be economically prosperous. This likely because U.S. economy increasing relies on higher-skill employees. Investing more in education leads to a population that is both better educated and more prosperous.

Key Points

• States with the highest average income tend to have the highest levels of college-educated residents.
• States with the lowest poverty rates tend to have the highest levels of college attainment
• The highest-income states tend to spend more on K-12 education.
• States with a lower rate of taxes compared to income are more likely to have lower incomes and higher poverty for residents than states with higher taxes.
• Higher spending on education and other public services supports economic growth, especially in an economy that demands higher skilled employees.

States with the highest average income tend to have the highest levels of college-educated residents.

There are large differences among states in average income levels. State per capita income (total income of all residents divided by population) in 2017 ranged from a high of about $70,000 (Connecticut) to a low of $36,000 (Mississippi), meaning average income in the top state is almost double that of the lowest state.

The range in the percent of persons over 24 with a four-year college degree or higher is even greater, from a high of almost 45 percent (Massachusetts) to a low of 20 percent (West Virginia). In other words, the state with the highest college attainment level is more than double the lowest state. Kansas ranks slightly above average in per capita income ($47,603, 24^th) and well above average in college attainments (33.7 percent, 14^th).

Because persons with higher educational attainment on average earn more than those with lower levels, it is no surprise that there is a strong correlation between these measures at the state level. As educational levels rise, income levels rise, with the positive correlation of almost 0.782 (the highest possible correlation is 1.0).

 

There are similarly strong correlations between percent of population with four-year degrees and both median household income (income of average household of one or more family members) and average earnings (the average amount individuals earn from salaries and wages).

There are also positive correlations between high school completion rates and income, but the correlation is only about half of strong, likely reflecting the substantial additional earning power of college attainment.

States with the lowest poverty rates tend to have the highest levels of college attainment.

There is a strong NEGATIVE correlation between college attainment and poverty; in other words, as college completion rates rise, poverty rates fall.

As with per capita income, the range of state poverty rates among all persons is quite large, from a high of 19.8 (Mississippi) to a low of 7.7 percent in New Hampshire. The Kansas poverty rate is 11.9, 30^th in the nation, meaning 29 states have a HIGHER poverty rate than Kansas.

 

The chart above shows that states with fewer than 25 percent of adults with a four-year degree or higher almost all have poverty rates of 15 percent or higher; while states with at least 35 percent of adults having a four-year degree almost all have poverty rates below 13 percent. The correlation is a negative 0.760. The negative correlation for high school completion and poverty is just as strong.

The highest-income states tend to spend more on K-12 education

Data not only show higher education levels are strongly associated with higher incomes and lower poverty rates, it also clear that higher education levels are almost always supported by higher per pupil funding at the K-12 level.

In fact, the correlation between total revenue per pupil by state in 2016, the most recent year available, and the percent of the population with a four-year college degree in 2017 is 0.787, almost identical to the strong positive correction between per capita personal income and college education levels.

Per pupil funding in 2016 ranged from a high of $25,730 [SR1] (New York) to a low of $8,244 (Idaho). Kansas total per pupil funding in 2016 was $12,245 (headcount enrollment), which was 30^th in the nation, while Kansas per capita income [SR2] was 24^th – in other words, Kansas ranks higher in per capita income than in per pupil funding.

For example, of the 22 states that exceed the national average in per capita income ($48,720), only four provide total revenue per pupil of LESS than the national average for 2016 ($13,894). On the other hand, of the 28 states below the national average in per capita income, only two provide MORE than the national average per pupil.

Why do higher income states spend more on K-12 education? It is almost certainly both a cause and effect. Additional educational spending allows states to offer higher salaries to educators, promoting higher quality; keep class sizes small to provide more individualized attention; provide more expanded services to students such as early childhood programs, more counselors, librarians, healthy state, school resource officers and programs to help students, families and teachers, and improved school facilities, equipment and technology.

At the same time, states with higher personal income can more easily provide additional school funding. In other words, higher income states may spend more on education in part because they have more income to spend; but they have more income to spend because they have high educational outcomes. Their investment in education has paid off in better economic results; allowing them to continue making that investment.

States with a lower rate of taxes compared to income are more likely to have lower incomes and higher poverty for residents than states with higher taxes.

Although reducing taxes is often touted as a way to promote state economic prosperity, the data does not support the idea that lower taxes as a percent of income result in higher incomes and less poverty. In fact, the reverse is true. There is a 0.304 POSITIVE correlation between higher tax levels as a share of income; in other words, higher tax states are somewhat more likely to have higher per capita income than lower tax states.

While this correlation is not as strong as the correlation between education attainment and income, it certainly does not show that LOWER taxes promote higher incomes

There is an even smaller, but also negative, correlation (0.157) between taxes as a percent of income and poverty rates, meaning poverty rates are slightly more likely to DECLINE as taxes rise.

Tax collections as percent of income in 2015 ranged from a high of 16.5 percent in North Dakota to a low of 6.2 percent in Alaska. Kansas, at 9.3 percent, was below the national average of 9.9 percent.

This data indicates that tax burden is not as significant a factor in state income and poverty levels as educational attainment, but to the extent it has a relationship, higher tax levels are more helpful than harmful.

Higher spending on education and other public services supports economic growth, especially in an economy that demands higher skilled employees.

Why do higher tax burdens have at least a somewhat stronger association with higher incomes and less poverty than lower taxes? One reason might be that higher spending on public services, including education, has a positive correlation with higher incomes.

For example, total per capita state and local expenditures (in other words, all spending by a state and its cities, counties, school districts and other local governments, divided by population), had a 0.538 POSITIVE correlation with per capita income, and per capita spending on K-12 education had an even stronger 0.689 positive correlation. In other words, states that spend more per capita on public services, especially education, tend to have higher average incomes.

Total state and local expenditures per capita ranged from a high of $19,965 (Alaska) to a low of $6,407 (Idaho). Kansas spending was $8,430, below the national average of $9,003 and ranking 27^th.

Why does higher spending on public services have a positive correlation with individual incomes? Likely two reasons. First, many public goods have a positive economic impact on a state. In an increasingly knowledge- and skill-based economy, business will expand and incomes will rise if a state’s educational system produces more skilled residents. In addition, state and local governments provide transportation infrastructure, law enforcement and quality of life services that attract and retain companies and their employees.

Second, states with higher-income residents can more easily afford to provide these services, so they can maintain or expand them. In other words, it is easier for high-income states to remain high-income because they already have the advantages of a more educated population, a strong school system and other public services. On the other hand, low-income states tend to have a lower-skilled workforce to start with, and a lower tax base to draw on for resources to improve education outcomes.

Lower taxes mean individuals may have more “take home” pay in the short term, but they won’t benefit from new jobs if they lack the skills those jobs require; and higher paying jobs are more likely to move to a state with a workforce that has the educational levels to fill them.

Key facts about school district cash balances

As final school district financial reports for the 2017-18 school year and budget year are being posted by the Kansas State Department of Education, KASB is updating information as well. Here is an update on school district cash balances.

Key Points:

July 1 statewide cash balances dropped this year as a percent of school district expenditures.

Almost all of the increase in cash balances in 2018 was in restricted school district funds, not available for general operations.

Statewide July 1 cash balances are at levels experts say is appropriate for moderate financial risk.

School district operating balance percentages are similar to the ending balances and internal borrowing for the State General Fund, approved by the Legislature and Governor.

School district cash balances vary significantly by month because of cash flow issues.

In Depth:

July 1 statewide cash balances dropped this year as a percent of school district expenditures

The statewide July 1, 2018, total of cash on hand in all funds increased this year, but total school expenditures increased even more. As a result, total cash balances dropped from 33.1 percent to 32.5 percent. The largest share of school district balances is in restricted funds, particularly bond and interest funds to pay for bond payments, and in capital outlay funds, in which districts accumulate cash to pay for capital projects like construction, remodeling and equipment without debt.

Other restricted funds include federal funds, gift and grant funds such as scholarship endowments, insurance reserves and student materials.

The remaining funds have fewer restrictions and are used to support general school district operations. These generally unrestricted funds dropped from 11.3 percent to 10.8 percent of total expenditures, the lowest since 2014 and approaching levels prior to the Great Recession in 2008.

Almost all of the increase in cash balances in 2018 was in restricted school district funds, not available for general operations

Total school districts cash balances increased from $2.016 billion to $2.109 bill from July 1, 2017 to July 2, 2018, but almost of that $93 million was in restricted funds that cannot general education purposes. Cash balances in unrestricted funds changed little and dropped as a percentage of expenditures because school funding increased.

Here the major changes in school district balances from 2017 to 2018:

Overall total, all funds: up $93 million (4.6%)

Capital Outlay: up $36 million (7.3%). Partially due to higher assessed valuation, which meant capital outlay levies raised more revenue than expected. State law limits these funds to building, equipment and maintenance costs, and certain limited building operating costs. Capital outlay levies are subject to voter protest petition.

Bond and Interest: up $26 million (4.6%). These funds are levied to pay for school construction bonds issue approved by local voters, which have increased.

Federal Funds: up $6.1 million (14.5%). These are primarily federal programs to assist disadvantaged students and improve teaching. Cash balances in these funds follow federal requirements.

Gifts and Grants: up $8.5 million (21.5%). These are funds received outside of the school finance formula, such as scholarship endowments and bequests, which are usually tied to specific programs.
Special Reserves: up $6.6 million (5.4%). These funds are reserve for self-insured school district insurance programs, based on actuarial needs.

All other funds: up $9.8 million (2.1%).

Increase in total expenditures: $408.1 million (6.7%).

Statewide July 1 cash balances are at levels experts say is appropriate for moderate financial risk

Unrestricted fund balances are about 11 percent of total expenditures, but a more appropriate comparison is to operating expenditures. From 2017 to 2018, unrestricted cash balances dropped from 16.6 to 16.1 percent of general operating budgets (general fund, local option budget and special education aid). The highest level was 17.5 percent in 2012.

A state efficiency report commissioned by the Kansas Legislature cited a report from the Governmental Finance Officers Association recommending operating reserve levels of 10 percent or less for low economic risk; 10-15 percent for low to moderate risk; 15-25 percent for moderate to high risk and 25 percent of more for high risk. At 16.1 percent, July 1 district cash reserves were 1.1 percent above the line between low to moderate and moderate to high risk.

School district operating balance percentages are similar to the ending balances and internal borrowing for the State General Fund, approved by the Legislature and Governor

While school district July 1 cash balances in operating budgets dropped from 16.6 to 16.1 percent general operating expenditures in 2018, the state general fund ending balance increased from 1.7 to 6.7 percent, and the state used $900 million in internal borrowing through “certificates of indebtedness” for total of 20 percent.

Total school district ending balances in operating funds are comparable to the state general fund ending balance plus certificates that borrow from other state funds. Both provide for contingencies such as reductions in revenue or unexpected expenses and to manage cash flow.

In fact, since 2011 school districts have generally maintained a similar level of cash balances as the state general fund:

School district cash balances vary significantly by month because of cash flow issues

July 1 cash balances are somewhat misleading because they are a “one-time snapshot.” Balances fluctuate significantly through the year because school districts receive revenue in certain months but must pay bills throughout the year. As a result, some funds have high balances when revenue is received but districts must make those funds last over the following months until additional revenue arrives, or to cover shortfall in other funds.

Some examples:
To manage the state’s cash flow, districts are required to account for the final state aid payment each year as if it were received in June, but the state does not actually send the money until after July 1. This amount fluctuates between $200 million and $300 million each year.

School districts must provide special education programs from the beginning of the school year, but state special education aid payments do not begin until October. As a result, districts have high balances in the special education fund to start the year (around $175 million), but those balances fall below $40 million during the year. Districts maintain some reserves for unexpected high cost for students, which can exceed tens of thousands of dollars per year.

Districts have almost $300 million in local option budget funds in March after receiving property tax distributions and state aid, but those balances are almost entirely spent down to zero at other points in the year.

Note:
KASB considers restricted funds to include: capital outlay, bond and interest, special liability, no fund warrants, special assessment and adult education (each of which is funded by restricted mill levies), plus federal funds, gifts and grants, school retirement, special reserve (insurance) and the student materials revolving fund.

Unrestricted funds are: special education, special education cooperatives, summer school, food service, contingency reserve, general fund, supplemental general fund (local option budget), virtual education, declining enrollment, cost of living, ancillary, professional development, activities, at-risk four-year-old, at-risk K-12, bilingual, extraordinary school programs, vocational education, parent education, adult supplemental education and driver training.

Latest reports show both short-term and long-term gains in Kansas education outcomes; positive impact on Kansas economy

Summary: Many people ask what Kansans are getting for their spending on public education. Despite what you might hear about no change in educational outcomes, the latest data from the U.S. census shows that Kansas education levels HAVE improved, and the state is reaping economic benefits. (Link to American Community Survey)

Key Points:

Short-term results: for Kansans aged 18-24 - the age group most recently in our public schools - the numbers who have completed high school, participated in postsecondary education and completed a four-year degree have increased more than the population increase.

Long-term results: the percent of Kansans age 25 and over reaching higher educational levels have improved since 1990, especially in terms of postsecondary education. Education levels have been steadily increasing since the Census began reporting data in 1940.

Because Kansans with higher educational attainment earn substantially more, the improved education levels since 1990 equal almost $7 billion in additional earnings in 2017, compared to what earnings would be at 1990 levels – more than the entire amount spent on K-12 education.

The same calculation also means increased education levels equals a reduction of nearly 40,000 Kansas in poverty, or 18.5%.

Conclusion: As funding has increased, school districts have invested in programs and staff that have helped more students complete high school, participate in postecondary education, and reach higher education levels. This, in turn, increases earnings and reduces poverty. That's why K-12 funding an investment that returns long-term benefits greater than the cost.

In depth

The latest update from the U.S. Census Bureau’s American Community Survey contains state estimates of educational levels, earning and poverty for 2017. The data shows Kansas educational levels have reached all-time high levels. This is important context for considering Kansas school funding, which has also increased over the long term.

First, short-term results. Consider Kansans aged 18-24 - the age group most recently in public schools. The numbers who have completed high school, participated in postsecondary education and completed a four-year degree have increased more than the population increase.

The number of Kansans in this age group increased by about 35,000 between 2005 and 2017. The number of young adults with any postsecondary participation, up to completion of a two-year degree, increased by 31,000 and those completing a four-year degree or more increased by over 5,000. The number of only a high school degree was almost unchanged, the number who had not completed high school dropped.

 Next, long-term results. Since 1990, the percent of Kansans age 25 and over reaching higher educational levels has improved, especially in terms of postsecondary education. Kansans with at least a high school diploma increased from 8 in 10 to over 9 in 10.

Kansans with any postsecondary education, from a few credits to a one- or two-year degree or certificate, to four years and beyond, increased from less than one-half to almost two thirds, and those with a four-year or advance degree increased just over 20 percent to nearly 34 percent.

These continue long-term trends for almost 80 years. Census data has reported high school completion and four-year degree completion since 1940. At that time, only bout about one-third of Kansans had completed high school and only five percent of Kansas had a four-year degree.

Next, consider the impact on this change on Kansas economic well-being. Because Kansans with higher educational attainment earn substantially more, the improved education levels since 1990 equal almost $7 billion in additional earnings, compared what earnings would be at 1990 levels – more than the entire amount spent on K-12 education.

The same calculation also means increased education levels equals a reduction of nearly 40,000 Kansas in poverty, or 18.5%.

Conclusion: This information is a measurement of how the Kansas public school system has been accomplishing its constitutional responsibility for intellectual, education, vocational and scientific improvement.

It also provides important context for school funding discussions. It is sometimes suggested that there has been not much change in Kansas educational outcomes, despite increased funding; with a further suggestion that additional funding will not result in improved outcomes.

In fact, as recent KASB posts have discussed, Kansas funding historically has increased more than inflation (except from 2010 through 2017). As funding increased, school districts have invested in programs and staff that have helped more students complete high school, participate in postecondary education, and reach higher education levels. This, in turn, increases earnings and reduces poverty.

Although K-12 funding has increased more than inflation, it has not increased at a faster rate than total personal income in the state. That's why school leaders consider K-12 funding a classic example of an investment, not simply an expense: “purchase of goods that are not consumed today but are used in the future to create wealth.”

Improved educational outcomes create far more than economic benefits: preparing students to be participate in democratic institutions, improving health, understanding and appreciating cultural heritage and the arts, to cite some of state’s educational goals (Rose capacities) set by the Kansas Supreme Court and Legislature. But fundamentally, improving education has both a cost and pay-back in long-term economic benefits.