Mo. Lawmakers Back Increase In Funding, Rewrite Formula

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Gov. Mel Carnahan of Missouri last week completed the state's rapid response to a judge's school-finance-equity ruling by signing a bill that will pump significant new state funding into a rewritten school-aid distribution formula.

Officials said the new plan, when it is fully implemented in four years, will channel at least $320 million in new state funding into the state's overhauled funding formula.

To raise the new funding, the bill boosts corporate-income taxes and limits both corporate and personal income-tax deductions.

In addition, analysts said, proceeds from riverboat gambling and a settlement of desegregation suits could put another $100 million into the formula by fiscal 1997, the first year all state school funding will go through the new system. (See Education Week, May 19, 1993.)

Enactment of the bill came only four months after Circuit Judge Byron L. Kinder declared the existing system unconstitutionally inefficient and unfair.

State leaders said they decided to move quickly on the funding changes, instead of appealing the decision, both because they realized the system needed repair and because they wanted to avoid any more court involvement.

"We've seen what happened with desegregation in Missouri, and even though that came through the federal courts, it has been a bottomless pit,'' said a Senate aide. "No one wanted a judge to decide what we would spend on this.''

Pupil Count Shifted

The new finance system answers the chief complaint of the school districts that brought the lawsuit by shifting the way the state counts pupils in awarding aid.

Previously, districts could receive aid based on pupil counts from the preceding three years. But critics said that system unfairly benefited districts with declining enrollments.

Under the new plan, the state will use attendance figures from the previous year.

A hold-harmless provision and four-year phase-in were added to soften the blow to districts that stand to lose funding under the new formula. Beginning next year, 75 percent of aid will be awarded under the old formula and 25 percent through the new system.

But observers said the increase of money going into the formula was even more significant than the changes in the formula itself.

The plan also will require districts to increase their local property-tax rates to a minimum level in order to receive aid from the state formula. Analysts expect the requirement will persuade the state's wealthiest districts to rely solely on local funds.

Vol. 12, Issue 36

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