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Gov. Edward T. Schafer of North Dakota last week signed into law a school-finance measure that shifts some state funding from property-wealthy school districts to those less able to raise money through property taxes.

The new school-funding law moves the state a "major step" toward insuring financial equity among its public schools, Mr. Schafer said in an interview.

The bill passed both houses of the legislature on April 7, the last day of the session.

Others in the state were skeptical. The head of the state's school administrators' association said $14.2 million in state aid specifically targeted to less wealthy districts will not keep some schools from having to lay off employees or raise property taxes.

The new plan shrinks state-aid payments to wealthier districts, making a deduction from the amount of aid they would otherwise be entitled to, based on the taxable valuation of property in a given district. It will send that money--about $12 million in total--to districts that are relatively property poor.

Legislators set up the finance formula to automatically increase the deduction in later bienniums, further redistributing state aid.

The new funding scheme also creates a $2.2 million supplemental fund--in addition to the regular aid formula--that provides some districts with extra money. It will benefit those districts that have both low property wealth and relatively high educational costs.

9 Percent Increase

The new law also changes the way special education is funded in the state. Instead of reimbursing districts for expenses they incur, the state will give each district a lump-sum payment, or block grant, based on the number of special-education students they have enrolled.

Over all, elementary and secondary education will receive $42.3 million more in state aid in the 1995-97 biennium than in the current one--or about a 9 percent increase.

Cuts in administrative spending at state agencies as well as economic growth in the state provided the additional monies for education, Mr. Schafer said. He had pledged not to raise taxes.

However, the finance law falls short of the amount of funding for equity the Governor had sought.

He had proposed a $40 million increase for K-12 education inthe upcoming biennium--slightly less than was approved--but he wanted to see $25.5 million of that put into the special supplemental fund to even out funding disparities among districts.

The Governor had threatened to keep the legislature in session past the scheduled adjournment date to get the revisions he sought in the legislative proposals. (See Education Week, 3/1/95.)

But Mr. Schafer said last week that he was satisfied with the outcome, even though "I wanted to take a bigger step, and they took a lesser step."

"The legislature," he noted, "has got to deal with what they can get passed."

In answer to criticism that the plan provides insufficient funding to keep some districts out of financial trouble, Mr. Schafer noted that the measure fully funds the state formula in the second year of the biennium.

"I don't think it puts anybody under extreme pressure to raise property taxes to fund education," he said.

The Governor said he was pleased that a supplemental fund was included in the law. "We've made a stronger step toward equity than we have in 20 years," he said.

$150 Million More?

But Larry Klundt, the executive director of the North Dakota Council of School Administrators, said it was not enough.The school-finance scheme, he said, needs"at least 150 million more dollars to make a more equitable system out of what we've got."

"I think that in the future there has to be a complete new system, starting all over," Mr. Klundt said.

Mr. Schafer said he thinks the new funding law answered the concerns raised by an equity-funding lawsuit that had been filed against the state.

Last year, in reviewing that case, the state supreme court fell one vote shy of the supermajority needed to declare the state's school-finance system to be unconstitutional.

If recent talk among districts of filing another suit becomes reality, Mr. Schafer said, "I'm comfortable that I could in a courtroom defend what we did."

And he vowed more progress in 1997, when the next legislature convenes.

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