School Finance Bill – HB2445
The House committee passed out HB2445 on Thursday. We expect it to hit the floor of the house Monday or Tuesday.
It solves the three lesser equity violations but does not solve the LOB by protest petition and election equity violation.
Here is the money part of it.
- FY18 $4006
- FY19 $4170
- FY20 $4307
- FY21 $4444
- FY22 $4581
- FY23 $4718
For comparison purposes, the State BOE asked for these bases:
- FY18 $4604
- FY19 $5090
You will note that while they are attempting to get back to the Montoy last adopted base and update it for inflation, which is what the State BOE asked for, this plan comes up $372 short even after five years.
After the five year phase-in, they plan to apply a CPI adjustment annually. Despite having a CPI adjustment in the statute for many years, it has never followed it in the past. They have simply ignored it.
FY19 $189,428,148 – SB19 $95,606,000 = $93,822,148
Total new money over SB19 $533,422,148
Only one year, FY19, is appropriated.
You will note that this looks like $533M of new money. It is not.
Inflation is not included in the plan until after the five-year phase-in. Inflation in the system at 1.5% amounts to $70M per year. During a five year phase-in, the plan falls $350M behind just due to inflation.
Because inflation is NOT included for five years, the amount of new money is actually only $183.4M.
It is our opinion that the court will not accept this fix. A $183.4M fix for a $1.5B to $2.0B problem is not close. The state will not be able to meet their burden to show that with this new money schools will get ALL kids to the Rose competencies. We now know that the Rose competencies cost $1.5B to $2.0B due to the Taylor study and the Myers-Picus study.
That being said, we do not oppose HB2445, but we are NOT claiming that it fixes the problem. We do not oppose it because, incrementally, it helps the schools. Think of it as fixing the mess in several steps. This is the first step.
HB2445 as an outlier…
The supreme court rejected SB19 last year because all other evidence pointed to much more money being needed. Last year the comparison was $293M on a $893M problem. The court cited the $293M as being an “outlier” and declared SB19 unconstitutional.
This year, HB2445 is also an outlier… a bigger one. See the chart below.
Court Accepts Fix
SCHOOLS FOR FAIR FUNDING
Court accepts fix… equity resolved for now. We have spared you from hourly updates through the special session. We assumed most of you were following in a more “real-time” manner than we could provide anyway. Here is a summary recap of the past week or so.
We began the session with the same position that we have had for years:
(1) Equity must be fixed.
(2) The “safe harbor” was the best approach at this late date to avoid school closures.
(3) Hold harmless provisions were likely to be rejected by the Supreme Court and should be avoided.
(4) The funding for the plan should not come from the schools. (The schools-funding-the-plan card had been played by the legislature in March and the Supreme Court rejected this approach.)
Our position was also the court position as shown in the Gannon I, Gannon II and Gannon III opinions. It was our strong belief that any deviation from the above positions would be rejected by the court and cause a shutdown. It was also our strong belief that a court rejection, school closures, and a second special session were not in anyone’s best interest.
Just prior to the session the JoCo schools and all the JoCo Chambers of Commerce held a press conference insisting that any plan must contain a hold harmless provision so that no school lost money. We opposed this. The purpose of equalization is to… equalize. The system would not equalize if those with an advantage that is no longer warranted by the formula were allowed to retain the advantage.
Legislative leadership early on agreed that a full funding of the LOB equalization under the old formula for $38M was the most certain path to compliance. Hurdle one cleared.
Legislative leadership came to the realization that a hold harmless would most likely be rejected, cause a closure and require a second special session. They, therefore, moved away from the hold harmless provisions fairly early in the discussions. Hurdle two cleared.
Then we hit the “how do you fund it” wall.
Legislative leadership decided to run the schools-funding-the-plan game again with a .005 cut to all schools. We opposed this. The court had said that the solution could not harm adequacy. The funding source became the point of negotiation.
Leadership wanted the .005 cut. The schools did not. Once leadership determined that they did not have 63 votes in the house, due to the opposition from the schools and the prospect that the court would not accept the cut, leadership began to get creative and search for other funding sources.
We offered to join in a stipulation to the Supreme Court that equity had been cured if they could get to a “clean” fix that did not have a bunch of extraneous policy stuff in it and could be appropriately funded without cuts to the schools.
Leadership proposed to drop the .005 cut and substitute any excess from the sale of the Bio Science assets, but insisted that if this was not enough that any shortfall come from the .005 cut. We rejected this due to the potential cut. Leadership came back with a .0025 cut. We rejected this also.
The extraordinary needs fund was in play also. This is school funding, but no district could budget for it and the process had been a sham in its first year. The fund was not even consumed the first year and was swept to cover part of the state deficit. Leadership had already tapped the fund for part of the solution and the final agreement was to make the extraordinary needs fund absorb the excess if the Bio Science asset sale did not cover the cost. If the extraordinary needs fund did not cover it, then the state general fund would make up the difference. No cuts. Hurdle three cleared.
At this point there was agreement. Bill Brady signed the agreement on behalf of SFFF, which is attached. The bill was printed and we waited to review the actual language. The bill drafting was sufficient. Bill Brady testified in favor of the bill on behalf of SFFF, as agreed, and the House then passed the bill 116-6.
The Senate had not been involved in the process to this point. Upon the House passage, the Senate agreed to support the same bill if Alan and I signed the agreement also. We requested that President Susan Wagle sign the agreement. She did and we did. The Senate then passed the bill 38-1. HB 2001 Agreement
On Sunday, we prepared a stipulation draft and submitted it to the Attorney General. Negotiations over the language continued throughMonday and the stipulation was filed with the Supreme Court late yesterday. Here is the stipulation: 2016-06-27 Joint Stipulation Constitutionally Equitble_ Compliance
The Supreme Court accepted the stipulation late today. I attach the decision. The court ordered that “The planned implementation of HB 2001 and full funding of that formula for 2017 would be in compliance with the equity component of Article 6 Section 6 of the Kansas Constitution…. Therefore, no judicial remedy is necessary at this time. Oral arguments to address the adequacy portion of this litigation will be set by future court order.”Order062816
Kudos go to Bill Brady and his team for managing this entire process. We would not be where we are now without his efforts. Thanks also to the schools and supes that participated, both directly and indirectly. The meetings, calls and emails mattered. It simply would not have happened without everyone’s efforts.
Assuming the legislature does not back up on equity after the election, like they did last time, we should be finished with equity. It is now on to adequacy.
Attached is an article by John Celock that gives a bit more detail about the process. He gets it mostly correct. 91163 Celock Report – How Game Changer Kansas Schools Deal Was_ Reached (1)