K 12 Funding (1 27 09)

Funding
K-12 Public
Schools
The “nuts & bolts” of school
finance in Washington State

Ben Rarick
Office of Program
Research
January 27, 2009

Overview of the Presentation
A presentation in 2 parts:

Part 1 - Build a basic foundation of knowledge about the

funding formulas.
Part 2 – Tracking the data on school funding

Provide an overview of school spending & funding statistics.

Identify emerging policy issues and areas of rapid change in the

finance of Washington public schools.

2 1/19/2009
Prepared by the House Education Appropriations Committee Staff, OPR

Part 1 – The formulas

3 1/19/2009

General Apportionment
Basic Funding Concepts

Student Enrollment

Formula Staff Units
(Cert. Instructional, Administrative, & Classified Staff)

Salaries & Benefits
(LEAP 12E document)

Nonemployee Related Costs (NERC)
(provided on a per cert staff basis)

=
State General Apportionment
“The State funds a certain number of staff units based on how many students are enrolled. Staff units are
funded at different amounts in different districts”

4 1/19/2009

Formula factors - enrollment

Factor #1 - Enrollment

Reported by districts first school day of each month,

September – May.
Average of 9 monthly counts produces “annual average

enrollment” (AAFTE).
FTE defined in W.A.C. as minimum 4 hrs/day Grades 1-3;

5 hrs/day Grades 4-12.
FTE enrollment is different than headcount enrollment.

About 979,594 FTE enrollment for SY 2008-09.

About 1,031,311 October headcount enrollment.

The difference? Some students are part-time.

E.g. running start and skill centers


5 1/19/2009

Formula factors – staff allocations
Factor #2 - Staff Units for 3 types of school staff

Certificated Instructional Staff


Up to 53.2 staff units per 1000 in grades K-4 (18.8 pupils/staff)

The minimum allocation in K-3 is 49.0/1000 and in grade 4-12, 46.0/1000.


The difference between the minimums and maximums K-4: “use it or lose it”


CIS includes Teachers and Educational Staff Associates (Nurses, Social

Workers, Speech/Language Pathologists, etc)
Vocational & Skill Centers get enhancement, as do small schools/school

districts.
Certificated Administrative Staff

4.0 staff units per 1000 AAFTE (250 pupils per staff)


Includes superintendents, principals, vice principals, etc

Classified Staff

17.02 staff units per 1000 AAFTE (58.75 pupils per staff)

Statutory minimum: 16.67 per 1000 students
 (RCW 28A.150.260)

Includes janitors, aides, bus drivers, clerks, etc


6 1/19/2009

Formula factors –
Salaries & Benefits
Factor #3 - Salaries & Benefits

Certificated Instructional Staff - salary determined by multiplying base salary by “staff

mix” factor (a metric combining years of experience & education level).
Example: Everett School District (grandfathered school district)


SY 2008-09 base CIS salary: $36,135 (x) staff mix of 1.53947


Therefore, state-funded CIS salary allocation for SY 2008-09: $55,629


13 districts are “grandfathered” at higher base salaries for 2008-09.


Certificated Administrative Staff salary allocations are set in the Budget (LEAP doc

12E) and are subject to I-732 increases annually.
SY 2008-09 - Salary amounts range from a high of $84,362 (4 districts) to a low of

$57,986 (89 districts).
Classified staff salary allocations are similarly established in the Budget.


SY 2008-09 - Salary amounts range from a high of $36,777 (Seattle) to a low of

$31,865 (225 districts).
Fringe Benefit Rates & Insurance Benefit Rates


Fringe: Includes pensions, Medicare, other


Governor‟s budget for FY10: Certificated: 16% of salary & Classified: 17% of salary


Governor‟s budget for FY10: Insurance benefits (including health, life, disability): $774

per employee, per month ($9288/year).
7 1/19/2009

Formula factors - NERC
Factor #4 - Non-employee related costs (NERC)

Includes such things as supplies, materials, texts, computer costs, etc


Estimated $10,179 per certificated staff unit for SY2009-10.

Translates to about $504 per student FTE.

This $504/student is spent by districts, on average, in following

distribution (approximate):
 Central Purchases - $141

 Technology - $117

 Utilities - $97

 Instructional Materials (books, etc) - $70

 Professional Development - $48

 Insurance - $23

 Maintenance & Custodial Costs - $17

 Security - $5

Vocational ($24,999) and skill centers ($19,395) receive more.


8 1/19/2009

Additional amounts for
higher cost students
Special Education

.9309 x‟s the Basic Education allocation, 12.7% cap per enrollment

Basic Education Allocation Rate (“BEA Rate”) estimated at about $5,225 for

SY2008-09.
Birth - to - Pre-K: BEA x‟s 1.15.


Opportunity for safety net funding.


Bilingual Education

$904 rate per bilingual student for SY2008-09.


Free/Reduced Lunch Eligible (Learning Assistance Program)

$285 rate per student unit in SY2008-09.

Additional LAP units provided for districts with:

Concentrations of poverty above 40%; and


Concentrations of English Language Learners above 20%.


Highly capable

Maximum 2.3% of district enrollment.


$406 rate per eligible student in SY2008-09.


9 1/19/2009

Local Effort Assistance (LEA)
Districts cannot levy more than 24% of their levy base (comprised

of eligible state & federal funds)
91 districts are grandfathered at higher levy rates (e.g. Kahlotus @ 33.9%)


The issue: property poor districts must tax at higher rates to raise

the same dollar amount.
Property Poor Districts Property Wealthy Districts
Highest 12% Levy Rates Lowest 12% Levy Rates

Wellpinit $ 36.76 Shaw Island $ 0.16
Nespelem $ 20.91 San Juan $ 0.20
Taholah $ 12.29 Orcas Island $ 0.21
Keller $ 9.45 Lopez Island $ 0.22
Mount Adams $ 6.86 Grapeview $ 0.28

State LEA formula equalizes to 12% - “meeting half way”

10 1/19/2009

A few notable levy facts…
16 districts with no voter approved levy

9 more districts have levies too small to maximize LEA eligibility.

These 25 districts represent $2.7 million in unrealized LEA

payments.
244 districts raise less than their levy lid allows

196 districts raise less than 95% of their levy lid (66% of districts).

132 districts raise less than 80% of their levy lid (45% of districts).

Represents approximately $158 million in unrealized levy

capacity.
51 districts in “roll back status” – voter approved levy exceeds lid.


11 1/19/2009

Pupil Transportation formula
The formula multiplies the number of children transported for each radius mile

route category, x‟s a distance weighting factor, x‟s a funding rate per mile.
The distance weighting factor is designed to adjust for the use of “as the crow flies”

linear miles, rather than actual miles driven.
The minimum load factor is designed to adjust for diseconomies of scale associated

with low ridership & the special load factor is designed to adjust for transporting
specialized populations.
Formula does not pay for routes within a mile of school; however, K-5 students within

a mile generate additional funds which may pay for roadway improvements, crossing
guards, bus routes, etc.

Example for one basic student on a two-mile bus route*:

# of students Distance weighting # of Trips to/from Funding Rate
Transported Factor for 2mi route school per Unit (FY06)
X‟s X‟s X‟s
1 3.2 2 $42.52
Total (for example student)
$272.13
Source: OSPI
*if district qualified for minimum load factor, the amount for this child would be more

12 1/19/2009

Formula overview
Why do some districts get more money than others?

Grandfathered Salary Status for certificated instructional staff.


Differences in # of high cost students (special education, bilingual,

free/reduced lunch eligible, etc).
Differences in staff mix (less experienced staff generate fewer state

dollars).
Differences in administrator and classified salary rates (LEAP

Schedules).
Small school/district enhancement (remote & necessary).


Levy Equalization Assistance (State Assistance for Property Poor

Districts).
Local deductible revenues (e.g. timber sales).


Transportation formula (radius miles, # of riders, etc).


13 1/19/2009

Part II –
Selected Spending & Funding Statistics
A)
B) Areas of Rapid Budget Growth

14 1/19/2009

Projected K-12 Enrollment Growth
K-12 FTE Enrollment Projections – 1997 to 2021
Source: Caseload Forecast Council, November 2008 forecast
1,150,000

K-12 FTE Enrollment
1,106,837.24

1,100,000

1,050,000

988,847.91
1,000,000
979,594.18
993,996.40
984,825.18
936,434.76
975,278.50
950,000

900,000

850,000

School Year
1/19/2009
15 Prepared by the House Education Appropriations Committee Staff, OPR

Overview of K-12 State Funding
2009-11 BASIC EDUCATION PROGRAMS
Maintenance-level Estimates
Highlights:
(Dollars in Millions)
GENERAL APPORTIONMENT (RCW 28A.150.260) $10,048 66.7%
•About $15 billion per biennium in
SPECIAL EDUCATION (RCW 28A.150.370) $1,325 8.8%
K-12 (at Maintenance-level).
TRANSPORTATION (RCW 28A.160.150) $610 4.0%
LEARNING ASSIST. PROGRAM (RCW 28A.165) $260 1.7%
•Basic Education usually about
BILINGUAL (RCW 28A.180) $164 1.1%
80% of total.
INSTITUTIONS (RCW 28A.190) $41 0.3%
SUBTOTAL: BASIC EDUCATION PROGRAMS $12,448.1 82.6% •Largest Recent % Growth is in
2009-11 NON-BASIC EDUCATION PROGRAMS Education Reform Budget (2003-
(Dollars in Millions) 05: $75.6 million).
STUDENT ACHIEVEMENT FUND (I-728) $911 6.0%
INITIATIVE 732 COLA & OTHER COMP INCREASES $355 2.4%
LEVY EQUALIZATION (LEA) $486 3.2%
EDUCATION REFORM $377 2.5%
ENHANCED STAFFING RATIOS (K-3 CIS & Classified) $296 2.0%
TWO LEARNING IMPROVEMENT DAYS $71 0.5%
STATEWIDE PROGRAMS/ALLOCATIONS $40 0.3%
STATE OFFICE & ED AGENCIES $35 0.2%
HIGHLY CAPABLE $19 0.1%
EDUCATIONAL SERVICE DISTRICTS $18 0.1%
FOOD SERVICES $6.3 0.0%
SUMMER, OTHER SKILLS CENTERS, & VOC. EQUIPMENT $5.7 0.0%
PUPIL TRANSPORTATION COORDINATORS $1.8 0.0%
Subtotal: Non-Basic Education Programs $2,623.0 17.4%
TOTAL - STATE FUNDS $15,071.1 100.0%
This is not a complete list of every non-basic education programs

16 1/19/2009

Where does the Money Come From?
Total K-12 Revenues by Source

Washington is
heavily state
funded. National
Other Revenues & average is
Reserves around 50%.
3.6%

State
71.6%
Federal
8.9%

Local Taxes
16.0%

17 1/19/2009

What is the Money Spent On?
K-12 expenditures by function

Teaching & Teaching Support
Food Services
is over 70% of budget.
3.5%
Pupil Transportation Administration is about 12%.
4.1%

Building
Administration Teaching
5.9% 60.7%

Central
Administration
6.2%

Teaching Support
8.5%

Other Support
Services
11.0%

18 1/19/2009

Per Pupil Spending Over Time
All Funding Sources

Total Per-Student Spending
1994 to 2008
$10,000 Note: This chart shows the rate of funding changes $9,418
over time as compared to inflation. It is useful for
Seattle
evaluating rates of change in funding, but not
$9,000 Consumer
necessarily the level of funding.
Price Index
$8,000 Adjusted

$7,000 Implicit
Total Per Student Spending

Price
$5,608
$6,000 Deflator
Adjusted
$5,000

$4,000

$3,000

$2,000

$1,000

$0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Sources: Reflects school year amounts from OSPI F195/F196 School Financial Services and OSPI enrollment reports. From Citizen’s Guide for K-12 Finance

19 1/19/2009

Per Pupil Spending Over Time
Just State Funding Sources

State Funding Per-Student Spending
1994 to 2008
$8,000 Seattle
Note: This chart shows the rate of funding changes
Consumer
over time as compared to inflation. It is useful for
Price Index $6,740
evaluating rates of change in funding, but not
$7,000 Adjusted
necessarily the level of funding.

$6,000
Implicit
Price
State Funding Per Student

$5,000 Deflator
$4,342 Adjusted

$4,000

$3,000

$2,000

$1,000

$0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Sources: Reflects school year amounts from OSPI F195/F196 School Financial Services and OSPI enrollment reports. From Citizen’s Guide for K-12 Finance.

20 1/19/2009

K-12 Share of Total Budget has declined
Percent of Near General Fund-State Spent on K-12 Public Schools
60.0%

50.0%
44.0%
42.3% 41.7% 41.3% 40.5%
38.8%
40.0%

30.0%

20.0%

10.0%

0.0%
1997-99 1999-01 2001-03 2003-05 2005-07 2007-09

What percent K-12 comprises of the total budget reflects spending priorities, but also
Source: Winsum
caseload growth in K-12 relative to other budget areas (e.g. medical assistance).

21 1/19/2009

Two different ways of looking at K-12 finance
How much is funded ($’s) vs. What is funded (programs/services)

Estimate of Educational Programs & Service Levels Supported by the Budget, based on Statewide Averages
2009-10
General Apportionment to Public Schools
Estimated state-funded student-teacher ratio: Estimated state-funded class size:
21.0 grades K-4 26.2 grades K-4
24.3 grades 5-12 29.2 grades 5-8
29.2 grades 9-12

$55,094 Average state-funded teacher salary $62,382 Average state-funded administrator salary
$74,126 Average state-funded total teacher compensation $33,616 Average state-funded classified salary

Estimated number of state-funded staff in a school of 500 students:
1.4 Administrators 0.2 Student Health Services (Nurses/Social Workers)
0.5 Librarians/Media Specialists 6.8 Classified Staff (Aides, Secr, Custodians, Food Service)
0.8 Guidance Counselors

Non-employee Related Costs (NERC)
$10,179 Amount allocated per certificated instructional staff person
$504 Amount allocated per student
Of the amounts provided on a per pupil basis, districts on average spend the allocation in the following proportions:
$95 Utilities $17 Maintenance & Custodial Costs
$22 Insurance $137 Central Purchases
$46 Professional Development supplies $114 Technology
$68 Instructional Materials (books, etc) $5 Security

Important note: Most state allocations are for allocation purposes only. How districts choose to utilize resources will
vary considerably across the state, and will also vary considerably from what is depicted here.

22 1/19/2009

Two different ways…
(continued)
Learning Assistance Program
1.5 Estimated hours of additional instruction per week supported by LAP budget
Instruction assumed to be provided in groups of 15 LAP quot;studentsquot; by a fully certified teacher

Transitional Bilingual Education Program
4.9 Estimated hours of additional instruction per week supported by bilingual budget
Instruction assumed to be provided in groups of 15 bilingual students by a fully certified teacher

Highly Capable Student Program
2.1 Estimated hours of additional instruction per week supported by highly capable program budget
Instruction assumed to be provided in groups of 15 students by a fully certified teacher

Special Education Excess Cost Allocation
$4,862 Estimated excess cost allocation per eligible student for the 2008-09 school year
Based on 93.09% of basic education allocation rate, including compensation increases.

The Student Achievement Fund (I-728)
$460 Amount per pupil allocated from the Student Achievement Fund to support various reform initiatives.
Districts on average spend the allocation in
the following proportions (per pupil): Estimates of what these amounts fund in a school of 500:
$110 K-4 Class Size Reduction Teacher FTEs in a elementary school
0.9
$148 Grade 5-12 Class Size Reduction Teacher FTEs in a secondary school
0.9
$48 Extended Learning 0.9 Hours/week of extended day for 1/3 of the study body
$84 Professional Development 0.5 FTE coach or instructional facilitator
$6 Early Education Interventions
$3 Facility Improvements
$16 Indirect Costs
$44 Other (including savings)
$460 total

23 1/19/2009

Small school districts are prominent in
Washington State

Out of the 295 school districts in Washington:

106 school districts have fewer than 500 students.






Benge – 5.5 students (southeast of Ritzville)


Evergreen (Stevens) – 5.5 students (northwest of Spokane)


Star – 9.5 students (Pasco)


Small school/district subsidy in K-12 budget: $46 million/year.

26 districts had more than $20,000/pupil in total revenues for 2007-08;

however, none of them had more than 200 students.
Enrollment as of December, 2008

24 1/19/2009

Rapid change in Washington K-12 finance
areas of budget growth

Increase in English Language Learners (ELL)

Since 1987, K-12 enrollment is up 35%, while ELL enrollment is up 520%.


Safety Net for High Cost Special Education Students

2005-07 safety net: $16 million state funds.

2009-11 Governor Proposed: $74 million state funds.


National Board Certification (NBPTS)

By the end of the next biennium, National Board certificates in WA are projected to be 4

times larger in number than in 2006.
Budgeting for 4,550 NBPTS teachers for the 09-11 biennium.


Supplemental pay/TRI pay for teachers

Since 2001, base pay is up 18%, while „total supplemental pay‟ is up 80%.


Online learning/ALE

Number of students taking courses for credit online has more than tripled since „06.

In ‟08, about 6500 students enrolled online; in „06, there were about 1800 enrolled.


Running Start

Participation (headcount) has increased five-fold since 1993.

Currently about 13,500 FTE.


WASL Budget

2003-05 WASL budget: $35.9 million.

2009-11 Governor Proposed: $81.1 million.


25 1/19/2009

Emerging Issues in K-12 Finance in WA State

3 Lawsuits Pending

Special Education Coalition (Appeal) – Special Ed Funding

Federal Way – Salary Equity

McCleary – General Adequacy


Basic Education Finance Task Force

School Construction Task Force

Pupil Transportation Funding Study

WASL Work Group

Comprehensive School Health Task Force

Federal Stimulus Package & NCLB Negotiations

State Board of Education – “Core 24” & Accountability System


26 1/19/2009

Appendix – Tracking Districts with Low
Fund Balances
Districts with Ending Fund Balances Below 2% (2007-08)
Fund
Balance as
Total Ending Fund % of
Revenues Balance Revenues
District Enrollment
Evaline 47 -10.5%
$ 443,598 $ (46,560)
Montesano 1,271 -0.5%
$ 10,878,262 $ (49,597)
Onalaska 870 0.4%
$ 7,658,838 $ 27,508
Arlington 5,289 0.4%
$ 45,579,812 $ 184,713
Colville 2,183 1.2%
$ 18,251,355 $ 218,470
White River 4,297 1.7%
$ 39,140,008 $ 651,617
Cashmere 1,426 1.8%
$ 12,126,970 $ 223,390
Bridgeport 696 1.9%
$ 7,265,137 $ 140,215
North Thurston 13,158 1.9%
$ 114,173,567 $ 2,222,393

Statewide Average 7.5%

Source: OSPI F196 Report for 2007-08

27 1/19/2009

Appendix
National Comparisons of K-12 Spending
Public School Current Expenditures Per Student
School Year 2007-08
D.C.
Vermont
New York
New Jersey
Wyoming
Massachusetts
Delaware
Maine
Connecticut
Maryland
New Hampshire
Rhode Island
Pennsylvania
Alaska
Hawaii
Illinois
Michigan
Virginia
Wisconsin
Arkansas
Minnesota
West Virginia
Oregon, $10,773
Kansas
Montana
U.S. Average, $10,615
Georgia
Ohio
Indiana
Colorado
Louisiana
Kentucky
Washington, $9,980
New Mexico
California, $9,870
Nebraska
South Carolina
Iowa
Alabama
North Dakota
Missouri
North Carolina
Florida
Texas
South Dakota
Oklahoma
Tennessee
Idaho, $7,785
Mississippi
Nevada
Utah
Arizona

$0 $3,000 $6,000 $9,000 $12,000 $15,000 $18,000 $21,000
Source: Rankings & Estimates, National Education Association, Dec. 2008 From Citizen’s Guide for K-12 Finance

28
1/19/2009

Appendix
National Comparisons of Student/Teacher Ratios
Students Enrolled Per Teacher in
K-12 Public Schools, Fall 2007
Utah
Arizona
California, 20.9
Nevada
Oregon, 19.1
Washington, 19.0
Idaho, 18.1
Michigan
Colorado
Indiana
Alaska
Ohio
Minnesota
Kentucky
Illinois
Hawaii
Florida
Alabama
U.S. Average, 15.4
Oklahoma
Delaware
New Mexico
Wisconsin
Mississippi
Pennsylvania
Texas
Tennessee
North Carolina
South Dakota
South Carolina
West Virginia
Maryland
Louisiana
Georgia
Kansas
Iowa
Montana
Missouri
Massachusetts
Nebraska
Connecticut
Arkansas
New York
New Hampshire
Wyoming
North Dakota
New Jersey
Virginia
Maine
Rhode Island
Vermont
D.C.

0 5 10 15 20 25
Source: Rankings & Estimates, National Education Association, Dec. 2008 - From Citizen’s Guide for K-12 Finance

29 1/19/2009

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