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KASB Tallman Report: Common questions about Kansas Public Schools Answered

Friday, October 19, 2018

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.

Tuesday, October 16th last day to register to vote in November election

KASB Tallman Report: Path to prosperity: invest in education

Thursday, October 11, 2018

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.

In depth:

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.

KASB Tallman Report: Key facts about school district cash balances

Friday, October 5, 2018

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.

Get an A+ in Voting!

Dear School Staff, Parents & Patrons:

November 6th is the General Election in our state and your vote can make a difference for Kansas schools.

Whether you plan to vote in person or by advance ballot, there are a few dates you will need to keep in mind:

1. October 16th is the voter registration deadline. To confirm your registration is current, visit www.ksvotes.org.
2. October 17th – November 5th is the timeframe in which you can cast your vote early via an advance ballot by requesting an advance ballot by mail or at your county clerk’s office in the county you reside. The form to request an advanced ballot is at the website above. USD 331 is in 5 counties; Kingman, Reno, Harper, Sumner and Sedgwick.
3. October 30th is the last day to request an advance ballot; you can submit your request online at ksvotes.org.
4. November 6th is Election Day! Vote in person at your designated polling place.

Make your plan now to ensure your voice is heard this November, and encourage your friends, family members and coworkers to do the same.

Sincerely,

Robert G. Diepenbrock, Superintendent of Schools

KASB Tallman Report: Updated school finance information

Monday, September 24, 2018

Updated school finance information: funding increase, inflation adjustments, share of personal income and general state budget

Kansas school district expenditures hit a new high last year – but not after adjusting for inflation

The most recent update from the Kansas State Department of Education shows that total school district expenditures last year (20187-18) were $6.49 billion, or about $410 million more than 2017. About $325 million of the increase was state aid, and $130 million of THAT was to restore contributions for the Kansas Public Employees Retirement System that has been reduced the previous year.

Local funding increased by $94 million, party because an error in drafting the 2017 school finance bill reduced state aid for local option budgets, requiring more local funding, and party because of increased local funding for capital outlay and school bond payments.

Although $6.49 billion in total expenditures was the highest ever for Kansas school districts, when adjusted for inflation, it remains below the 2009 level. Total expenditures in 2018 were $124.3 million below inflation-adjusted 2009. That means total spending is less than it was a decade ago. (KASB adjusted for inflation using the Kansas consensus revenue estimate for inflation for 2018.)

Total expenditures include all dollars flowing through school district budgets.

KASB also tracks the total of school district general fund and local option budgets, plus special education state aid, which provide a basic state and local “operating” budget for educational programs. The final legal maximum budget reports posted by KSDE show these funds totaled $4.34 billion in 2018, up from $4.15 billion in 2017. That nearly $200 million increase was mainly due to higher base state and weightings as the Legislature responded to the Supreme Court’s decision on school finance.

When adjusted for inflation, general fund, LOB and special education in 2018 were $460 million below 2009. In fact, these funds in 2018 were lower than the 2007 level. The Legislature acknowledged this gap in its response to the Kansas Supreme Court in the Gannon school finance case. The Court ruled that the Legislature’s $500 million-plus, five-year school finance plan passed this session would be acceptable, but only if adjusted for inflation over the time it is phased-in.

School district general fund levels and special education is determined by the state through base aid, weighting factors and appropriations. The state also caps the amount of local option budgets.

Total expenditures include bond and interest payments approved by local voters, capital outlay funds raised by local mill levies (plus state aid for both programs); KPERS contributions which were underfunded in previous decades and now are increasing more rapidly as the Legislature tries to catch up; all federal funds; most food service costs; and other any local revenues like student fees for meals, materials and transportation. Most of these funds cannot be use for regular operating costs like teacher salaries.

A 10-year history of total expenditures statewide and for individual districts is available at KSDE’s Data Central School Finance Reports link. Select Total Expenditures from the drop-down menu.

  

Per pupil funding remains below 2006 and 2007 levels after adjusting for inflation

The latest information provided by the Kansas State Department of Education show that both total school district expenditures and the combined general fund, local option budget and special education state aid reached new high levels last year, following significantly increased state funding. However, when adjusted for inflation, both remain below previous high marks.

Because student enrollment has also increased in recent years, per pupil funding has increased less and remains farther behind inflation than overall spending. On a headcount basis (counting each enrolled student as one student), total expenditures per pupil was $13,106 in 2018. That remains below the level of $13,356 in 2007. General fund, local option budget and special education aid per headcount student was $8,771, lower than the 2006 level of $8,989.

In other words, even after substantial increases in funding last year, per pupil purchasing power is still less than it was 11 to 12 years ago.

In fact, total expenditures per pupil in 2018 was $962 below inflation-adjusted 2009, or a total of $476.5 million. General fund, LOB and special education aid operating funds were $1,444 per pupil below inflation-adjusted 2009, or a total of $715.3 million. That is a major reason the Kansas Supreme Court ruled that the Legislature’s $500 million-plus school finance proposal would be acceptable, but only if adjusted for inflation over the time it is phased-in.

In addition, the number of students with greater learning challenges due to poverty and disability has grown faster than the regular enrollment, and educational expectations on schools has also increased.

Note: KASB uses “headcount” enrollment to calculate a per pupil amount because until 2018, the full-time equivalent number reported by KSDE counted all kindergarten students as half-time students, even if they were attending full-time. The FTE number continues to count only preschool students funded by the state, not those funded by local districts. Because of the growth in such students, KASB believes the headcount number provides a more consistent comparison over the years and a more accurate count of the number of students the district is educating. Federal reports also use headcount.

School funding remains low compared to previous share of Kansans’ total personal income 

Kansas personal income is the total income the people living in the state receive from wages, proprietors' income, dividends, interest, rents, and government benefits. Comparing educational expenditures to that amount is an indicator of how much of people’s income is going to support public schools.

With increased state aid and more local revenue authority, in 2018 total school district expenditures increased to 4.51 percent of state personal income from 4.39 percent the previous two years. It was the highest level since 2011 (4.58 percent), but still well below the 20-year average from 1990 to 2010 (4.74 percent).

School district general funds, local option budgets and special education state aid were 3.02 percent of state personal income, up from 2.99 percent in 2017, but far below the 1990-2010 average of 3.65 percent.

This means that Kansans are currently spending or investing a lower percentage of total annual income to support public education than in previous decades, even after significant increases in funding last year.

Note: The 2018 levels are based on estimates of Kansas personal income growth projected by the state Consensus Revenue Estimating process. The April CRE projected Kansas personal income would increase 3.9 percent from $138.6 billion in 20127.

The share of state general funding spending going to K-12 state aid has remained stable for 25 years

Despite increases in state aid approved for 2018 and 2019, K-12 funding is not taking a larger share of the Kansas state general fund budget.

From the passage of the School District Equalization Act to the 1992 School District Finance and Quality Performance Act, the state constantly allocated about 40 percent of the general fund budget to K-12 aid. The 1992 law, fully implemented in 1994, raised state aid to reduce and equalize local property taxes for schools. As a result, K-12 aid increased from approximately 40 percent of the state general fund to approximately 50 percent.

Since 1994, K-12 aid has averaged 49.7 percent of the state general fund. In 2018, it was estimated to be 50.5 percent; in 2019, state aid is predicted to be 49.7 percent of SGF.

In other words, despite several decades of school finance litigation including the recent Gannon case, and increased state aid as result of these cases, school district aid is not taking a larger share of the state general fund budget.