A study of school finance in Kentucky has established strong correlations between school-district property wealth and several indicators of educational quality, and has recommended changes in taxation and the distribution of state funds to ameliorate the disparities.
“Equitable Financing of Public Schools,” the report produced by a 23-member commission appointed by state Superintendent of Public Instruction Raymond Barber, warned that the state may be vulnerable to litigation if it does not act to correct the disparities. The panel included representatives of business, parents’ and professional organizations, the state department of education, the legislature, local governments, and a diverse group of school districts.
Although Kentucky provides a “minimum foundation” of financial support per pupil and an equalization formula to aid property-poor districts, the wealthiest districts in the state still are able to spend nearly twice as much per pupil as the poorest, the report says. At least $50 million more than budgeted would be required next year to put poor districts on an equal footing with wealthier ones, the document adds, and the state must both put more of its own money into education and enable districts to raise more revenue locally.
On average, Kentucky’s 180 school districts receive about two-thirds of their general-fund revenue from the state. But because of wide disparities in local property values, some are able to supplement their state aid only minimally. McCreary County in the Appalachian Mountains, for example, raised only $46 per pupil through property taxes in 1980-81, while Jefferson County, which includes the city of Louisville, raised $984 per pupil. State aid did not come close to closing the gap; taking state and local revenue together, McCreary took in only $1,332 per pupil, while Jefferson had revenues of $2,290 per pupil.
Influence of Wealth
The commission found that, although some districts put forth very little local tax effort, “the effort differences are only secondary and rather minor influences compared to the influence of wealth. School districts with insufficient local revenues are generally in that condition as a result of being poor, not because they put forth a low tax effort.”
In order to have the same local school revenues, the document added, “the taxpayers in the poorest school district in Kentucky would need to levy a property tax at a rate about 10 times that of the rate in the richest school district.”
Concluding that “fiscal inadequacies obviously translate into educational deficiencies,” the commission found that, compared with the 25 poorest districts in the state, the 25 wealthiest have:
More advanced high-school courses in mathematics, science, foreign languages, and art, and a higher percentage of students enrolled in such courses;
Significantly higher average scores on state-mandated tests of basic skills;
Teachers with higher levels of formal education and classroom experience, thus, higher salaries;
Higher rates of average daily attendance and lower dropout rates;
Higher per-pupil expenditures for all instructional categories, including salaries and instructional materials; and
Substantially lower percentages of economically disadvantaged children.
“I think the central thrust of that report is that we want a uniform high-quality program for all children in the state,” said Arnold Guess, assistant state superintendent and co-chairman of the commission. “What we’re hoping for is to get a commitment from the General Assembly that this is a good idea to achieve equalization.”
Superintendent Barber is expected to incorporate many, if not all, of the panel’s recommendations in his 1984-86 budget request, which is due in early October.
Couching its argument in economic-development terms, the commission noted that only 51.9 percent of Kentucky’s adults have a high-school education, limiting the adaptability of the workforce.
Compared with the national average, residents of Kentucky put forth a relatively low tax effort to support public schools, the report said, and despite the state’s relative poverty, “there appears to be no sound reason for Kentucky not to put forth tax effort, to support the schools, commen-surate with either the effort for bordering states or, at least, equal to the average for the nation as a whole.”
Furthermore, over the past decade, state and local revenues for Kentucky schools have increased by 21 percent in real dollars, but the relative position of poorer districts has actually slipped, according to the report.
Noting that the summer drought and a lag in coal shipments have made the state’s financial situation “fairly dark,” Mr. Guess pointed to “a countervailing climate” that might induce the legislature to adopt the costly recommendations. “Not a day goes by that you don’t see newspaper editorials in the state saying we have to do something about education,” he said. “I think there’s strong sentiment for making some improvements.”
The two largest cost items in the report are equalization aid for poor school districts and increases in teachers’ salaries. Equalization aid, budgeted at about $40 million next year, would have to be raised by at least $50 million per year to bring poor districts up to par. To bring teachers’ salaries (which now average about $18,400) up to the average in seven surrounding states would require an additional $60.8 million in 1984-85 and $107.3 million in 1985-86, the report estimated.
The commission also recommended:
A tax on unmined minerals, primarily coal. Out-of-state coal operators own thousands of acres of land, yet pay minimal taxes on it; one firm holds 88,000 acres and pays about $500 per year in property taxes, Mr. Guess said. Taxing unmined coal could raise more than $40 million per year.
A higher utilization of selective sales, license, and property taxes to raise school revenue. Property taxes are generally low throughout the state, while income taxes are relatively high, the report said, and better property-assessment techniques can improve the fairness of the property tax. The commission recommended repealing or relaxing the limit on annual growth in local property-tax revenue.
This part of the plan includes a requirement that each district levy a minimum property-tax rate as a condition of receiving equalization aid. Perhaps surprisingly, Mr. Guess said, officials in some districts hope the state will mandate a minimum, because they have not been able to pass levies locally. “The additional money raised is not nearly as much as the state would be putting in, but at least it would get us past the argument that there are some districts that will not do anything for themselves,” the assistant state superintendent added.
The state would also require that half the equalization aid received by a district be applied to correcting accreditation deficiencies; there are currently no restrictions on the use of the funds.
Establishment of regional consortia and use of community-college faculty and itinerant teachers to enhance upper-level course offerings in sparsely populated areas. “We think that will help us more effectively utilize teaching staff in areas where there’s a shortage and also bring down per-pupil costs,” explained Mr. Guess.
A major increase in the assets of the Kentucky School Building Authority, which allots money to districts according to their need and ability to pay, and an increase in the flat grant to districts for capital outlay so they can make and pay for building improvements without invading instructional funds.
Calculation of state aid on the basis of “weighted pupils"--with adjustment for special education, compensatory education, and other special needs--to allow districts flexibility in staffing and to more closely match funding to pupil needs. The state now uses the classroom unit as the basis for state aid, which hurts sparsely populated districts, and provides no extra aid at all for remedial help for low-achieving students.
A study of paying teachers based on performance, with special attention to developing fair evaluation procedures. Such “merit pay” would supplement, not substitute for, the state minimum-salary scale.
Support Appears Forthcoming
Mr. Guess said that reaction to the report has been “generally favorable,” and that the crucial support of wealthier districts appears to be forthcoming. “While we try to pull the lower end up, at the same time we need to give incremental increases to those that already have a good program,” he said.
“The districts that do have better financial support are perfectly willing to see those districts on the bottom make improvements, but at same time they want to see them make some effort,” he added.
