Lawmakers get a tutorial in rewriting school funding formulas

As a research professor in Georgetown University’s “Edunomics Lab,” Marguerite Roza specializes in studying the ways states pay for education.

Marguerite Roza
Marguerite Roza

On Monday afternoon, Roza offered several pieces of advice for lawmakers — especially the legislators who are working to rewrite Idaho’s school funding formula.

On hand were eight of the 10 lawmakers on the funding formula committee, a House-Senate panel expected to make its recommendations in 2018.

Here are a few thumbnails from Roza’s remarks:

‘Tap and tame.’ It is sometimes easier to collect money for schools at the district level, tapping into local property taxes. Local funding can be more stable. Schools don’t have to compete with many other community needs. Local taxpayers are sometimes more likely to support districts. (That’s the case across much of Idaho, where 93 of 115 school districts have supplemental property tax levies on the books.)

States can figure out ways to “tame” the power of local tax collections. That is, states can factor local collections against the amount of money districts receive at the state level. But there are limits. A “Robin Hood” approach that takes from rich districts and gives to poorer districts is wildly unpopular.

Give schools discretion. Roza generally frowns on line items that earmark state school dollars for specific needs. Idaho’s funding formula is cluttered with some two dozen line items — and many have been added to tweak a funding formula that has been in place since 1994.

Gov. Butch Otter has proposed one more line item: $15 million to carve off a portion of schools’ health insurance costs. The problem with line items is that they take local school administrators off the hook. They have no incentive to worry about rising costs, or look for ways to trim costs, Roza said.

Winners and losers. When states rewrite their funding formula, some districts will inevitably come out ahead, and others will inevitably lose money. That’s when a funding formula rewrite gets tough.

States can cushion the shock with funding stopgaps that keep all schools whole. But stopgaps should be just that: stopgaps. “My recommendation is not to do too long of a hold-harmless,” Roza said.

Building ‘a system that lasts.’ Idaho education is much different than it was in 1994. Charter schools, classroom technology and online learning have fundamentally changed the state’s school system.

That’s the impetus for rewrites, in Idaho and elsewhere. “You want to build a system that lasts.”

States should try to write a funding formula in 2017 for the school system of 2037. The problem is, no one knows what that’s going to look like.