Special Report


January 04, 2005 1 min read

Arkansas’ school finance formula was ruled unconstitutional in 1983 and again in 2001. In the 2001 case, Lake View School District, No. 25 v. Huckabee, the court ordered the state to conduct an adequacy study, which found that the state needed to spend an additional $848 million on education. In response to those cases, Arkansas has carried out significant reforms in its finance formula over the past 20 years. Currently, Arkansas pays for education using a foundation formula, which in the 2004-05 school year guarantees $5,400 per student. State aid is determined by subtracting a local 25-mill property-tax levy from the $5,400 guarantee. Local districts raise revenue through the property tax, as well as other sources, such as severance taxes, local sales and use taxes, and federal forest reserves. At the state level, at least portions of the sales and use taxes, rental-vehicle tax, beer excise tax, and corporate-franchise tax are dedicated to K-12 education. The state gave education a significant boost for fiscal 2005, increasing funding for the foundation formula by more than $289 million and adding almost $209 million to its categorical programs. Arkansas has 12 categorical programs, including money for school construction, professional development, the Better Chance program for prekindergarten pupils deemed at risk, extra aid for isolated districts, and early-childhood special education.