Arkansas Commission Favors New Funding Formula

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Little Rock--A 15-member Arkansas commission has submitted its recommendations for revamping the state's school-funding formula.

The statewide citizens' commission was established in November of 1981 by the legislature in the wake of a ruling by Judge Harold Simpson, in the role of Special Chancellor, that the two-year-old formula was inequitable and unconstitutional.

Named by then-Gov. Frank White, the panelists, who represented a variety of constituencies within the state, were charged by the legislature with developing proposals to establish what the judge's ruling termed "a valid school-finance system." The ruling gave the state "a reasonable time" within which to develop a new financing system.

The commission's report was presented to the governor and legislature last month. The Arkansas Gen-eral Assembly, which convened its 1983 session Jan. 3, will consider the report either during its regular session or in a later special session.

Meanwhile, several school districts have appealed Judge Simpson's ruling, and the Arkansas Supreme Court is expected to decide the case this spring.

The possibility of a late decision, coupled with tight economic conditions, has prompted the incoming governor, William Clinton, and some legislators to endorse the idea of delaying action on the commission's report and setting funding levels for public schools later in the year.

The proposed new formula attempts to equalize the amount of money districts have to spend per pupil when state and local funds are combined.

Districts would receive a certain amount per student from the state based on each district's wealth. The result would be a per-pupil alloca-tion that would be the same across the state. Districts that wanted to tax themselves more heavily to generate additional funds could do that without penalty.

To be eligible for state funds, districts would be required to have at least a specific minimum millage rate. In addition, poorer districts could qualify for additional aid if they raised their millage rate above that minimum.

The additional cost to the state of the new allocation program would be $95 million, according to the commission.

The commission recommended raising the minimum rate over a three-year phase-in period and as the state increases its contributions to local schools. Other changes would also be phased in over the same three-year period.

Among other changes recommended by the commission are:

Establishing mandatory kindergartens.

Giving districts proportionately more money for educating handicapped and vocational students.

Giving districts with fewer than 360 students extra funds, a longstanding practice in Arkansas that is known as funding "phantom" students. There are now 115 districts with fewer than 360 students.

Giving districts a credit of up to $100 per student for payment on debt service for building projects. The districts would not actually receive that money, but in calculating a district's wealth, the amount would be subtracted from its total wealth, thus making it eligible for more money from the state.

Crediting a district with up to $1,200 for every teacher or counselor who has a master's degree, in an attempt to encourage districts to hire and retain qualified teachers.

Increasing the percentage of transportation costs for which the state would reimburse districts.

Requiring districts to spend 70 percent of their net revenues, not including the amount spent on transportation and debt-service bonds, on certified salaries.

Ending all general aid to the state's most wealthy districts, those that benefit from having generating plants or large industries within their boundaries.

The commission also made recommendations about the way a district's wealth should be calculated and suggested that property-tax assessments be set at the state level to equalize rates across the state.

Currently, each of the state's 75 counties has its own tax assessor. Several years ago, the Arkansas Supreme Court found great disparities among counties' property assessments and ordered a statewide reassessment to equalize property-tax payments. In its report, the commission expressed the belief that its plan "can begin a new era for Arkansas' public schools."

Vol. 02, Issue 16

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