THE NEW "PROPOSED" FUNDING FORMULA 

WINNERS AND LOSERS...AND MORE (Part 2)

Though the Funding Formula Committee has been meeting for three years, according to the chair, the first version of the new formula came out only a couple of months ago. Upon seeing that there were significant winners and losers in the proposal, the Idaho Association of School Boards (ISBA), The Idaho Association of School Administrators (IASA), the Idaho Education Association, and the Superintendents of the Southern Idaho Conference all spoke to the need to keep the Salary Distribution Formula legislation and the Career Ladder out of the new formula, at least until we could see how it worked.

Thus far, the Funding Committee Chair has insisted that the majority of the money currently funding schools be included in the new Funding Formula, against the wishes of united education stakeholders. So, let's have a look at the important elements of  the proposed new formula. Fair warning: though the formula authors promote it as being simple and transparent, it is neither.

Further, after presenting "apples to apples" (17-18  old formula vs. 17-18 new formula) comparisons in the first two versions of the formula, the committee changed the comparison to 17-18 old formula vs. 18-19 new formula, therefore moving to an "apples vs. oranges" format, and making many more "winners" because of the $87 million increase in funding for k-12 education in 2018-19.

Here is a  a link to the valid comparison, between 17-18 old formula and 17-18 new formula.


SYSTEM WEIGHTING

The idea of the new formula, at least initially, was to fund students and not classroom units, and to weight students based on particular characteristics. So a student who qualified for free/reduced lunch was weighted at 1.25, an English Language Learner at 1.35, and a Special Education student at 1.5. Gifted and Talented students received a lesser credit, as well.

Originally, this was to be the primary purpose of the new formula, and it was what we heard about at our meetings with the Education Commission of the States representative, and from Marguerite Rosa, the Georgetown professor and funding expert who visited with various education leaders in the state.

Though we knew that there would be winners and losers in this arrangement unless additional funds were pumped into funding, we did understand the logic of the changes, since students with the characteristics described above often require more resources to effectively teach.

But we also knew that a formula with these factors would clobber Charter schools, which have many fewer students with any of the 3 characteristics, and have long been the subject of criticism because they are not at all diverse. Indeed, using just those factors, most charters took major funding hits. So in the most recent version of the formula, poverty (free/reduced lunch percentage) and ELL (Limited English) are minimized initially, and the Small District factor plays a large role.

THE CHARTER WINDFALL - SMALL DISTRICTS?

There's an obscure piece of the current funding formula which was meant to help tiny districts which don't have enough students to even fill particular grades. They have for years been given help because they have particular fixed costs which have to be met, and they are isolated with no way to consolidate with another entity.

In the the proposed funding formula, the "small district" factor is applied to almost very charter school in the state, even though the purpose of the factor never was to help schools with full grade levels and "waiting lists". 

It's sort of a square peg in a round hole solution, but it serves to provide a windfall to charters who have not from the beginning been as diverse as public schools . Each and every charter that meets the requirements of this factor reaps big bucks. It's no wonder BLUUM Executive Director Terry Ryan came out in favor of the formula and chided educators who oppose it.

Here's an example of why charters and true "small districts" are not the same.

Small rural districts such as Bliss and Salmon River have always been given some benefit because they have fewer than a "full class" at each grade level; Rolling Hills and Legacy are typical smaller charters, and have full classes at each grade level.

Even with a recent "tweak" to their status, small rural districts are losers in the proposed formula and smaller charters make gains. But they are not similar in any way, including demographically, where small districts are usually economically diverse and charters are typically not.

There are some large charters (Sage, Coeur d'Alene, and North Star, for example) that do not qualify for the "Small District" factor. They do not fare well in the proposed formula, as you will see.

THE WEALTH FACTOR

With this factor, known jokingly as the "Robin Hood" weight, the formula takes from the "rich" and rewards "poor" districts, even though all but a few of Idaho school districts are funded well below the national average. 

Whether or not the districts in question have an ongoing levy, the "wealth factor" uses property values to assess a penalty to districts which meet the wealth criteria and provides a bonus to those that don't. The biggest losers here are the property rich areas of the state - Ada County, Kootenai County (Coeur d'Alene, Lakeland, Post Falls), and Lake Pend O'reille (Sandpoint), Teton County, and others, which essentially donate to other areas of the state.

But since the wealth factor relies on property values rather than poverty among students, we get some odd winners and losers in the overall formula. Here are a few of the anomalies:

Some of the issues with the wealth adjustment are:

• Disparity from Student Poverty Levels - Districts with similar free/reduced lunch percentages are penalized or given a bonus, because of the available "wealth" in those districts in the form of property value. But the real indicator of wealth or poverty is the status of the students in the district. No one thinks of Bliss or American Falls as "wealthy" districts, because 64% and 82% of their students meet qualification criteria for free/reduced lunch, but neither district qualifies for the wealth adjustment because of their market values.

• Rapid Market Value Growth Leads to Revenue Loss 

• The formula is pretty simple, really; market value divided by student enrollment in a given school district, compared with the average in the state. So, a particular school district which in the current proposed formula gets a wealth adjustment but is ripe for rapid market value growth (Twin Falls, Nampa, West Ada, Kuna, Vallivue, Middleton, Post Falls, for example) would see the wealth adjustment go from being a positive to a negative in just a few years. 

• We can see an example of this phenomenon just by updating the data in the spreadsheet presented to the committee to 2018-19 numbers. West Ada's market value has grown by an astonishing $4.7 billion since 2016-17, an annual rate of increase of about 14%. The district's enrollment has grown rapidly as well, but at a lower rate. As a result, West Ada will fall out of qualification if the new formula is approved, and instead of losing about $880k overall, will lose $10.4 million dollars in ongoing funds! To put it into perspective, $880k is equivalent to about 18 teachers; $10.4m is equivalent to about 210 teachers.

• Districts just above or below qualification for the Wealth Adjustment may "yo-yo" back and forth, getting it one year and the losing it the next. For these districts, gains in Market Value or fluctuations in enrollment could cause nightmares for budgeting, because they will gain or lose depending on the fluctuations. Districts in the most precarious position for this phenomenon include small districts like Buhl, Hansen, Murtaugh, Kamiah, Castleford, Wilder, Potlatch, Troy, and Kellogg, and larger districts such as Post Falls and West Ada.

In Part 3 of this series, we will take a look at the overall losers in the proposed formula, and compare SES for those districts to some of the "winners". In Part 4, we will suggest an alternative to the committee's proposal.