Governors Take Varied Paths in Boosting K-12 Aid

As states consider increases to K-12 spending amid better economic conditions, governors on opposite sides of the partisan divide are proposing significantly different plans and arguments for the best ways to use new education aid.

Two prime examples: Minnesota and Ohio, a pair of Midwestern states with chief executives intent on pumping more money into education—and sharply contrasting visions of how to do it.

In Minnesota, Gov. Mark Dayton, a member of the Democratic-Farmer-Labor Party, is urging an expansion of early-education services such as all-day kindergarten, as well as a $118 million hike in the standard per-pupil funding system. The total price tag for his plan: $344 million over two years.

Ohio Gov. John Kasich, a Republican, is proposing $1.3 billion in new education spending, a new approach to local property taxes, and one-time funds for districts. The increase would include new revenues his administration says are for low-wealth districts, a broad expansion of the state’s tuition-voucher plan, and a one-time fund for districts to use on new instructional methods.

Mr. Kasich’s proposals would bring general- and lottery-fund spending for the upcoming K-12 biennial budget to $15.1 billion, roughly a 9 percent increase from the previous biennium.

While the Minnesota and Ohio governors’ education budgets have some common ground, the tax changes that would help pay for the new spending—including broader sales taxes—differ in fundamental ways. Mr. Kasich’s plan also includes nonfiscal policy shifts enjoying increasing popularity among states.

Michael Griffith, an education finance consultant with the Denver-based Education Commission of the States, classified Mr. Dayton’s approach as a plan designed to essentially continue or bolster the old funding system, adding money to specific programs along the way.

But he said Mr. Kasich appears interested in “overhauling education funding at the same time that they’re adding to it.”

“In both cases, you’ve got governors who are trying to figure out what the public is looking for,” Mr. Griffith said.

‘Mitigate Those Barriers’

Barring big tax changes that reduce revenue, all 50 states are in a position to spend more on education next year than they are in this current fiscal year, Mr. Griffith said.

Other states considering funding increases include Indiana, where Gov. Mike Pence, a freshman Republican, has proposed tying financial-aid increases to academic performance, and Colorado, where state Sen. Mike Johnston, a Democrat, has proposed increased funding for all-day kindergarten and preschool.

Ohio and Minnesota, like many other states, are emerging from years of budget gloom and significant cuts or delayed expenditures.

In Ohio, total education spending dropped by $735 million during the last biennial budget, although the Ohio office of management and budget said state spending on schools actually increased during that time.

In Minnesota, the state for years has delayed some payments of aid to school districts as a way to shore up its budget.

But this year, Mr. Dayton has made the pledge that for Minnesota’s 2014-15 biennial budget, the state government will no longer “borrow” from districts through aid delays, said Brenda Cassellius, the Minnesota education commissioner.

The highlights of Mr. Dayton’s proposed K-12 funding increase include a $344 million rise in funding separate from scheduled increases because of enrollment hikes and other factors. It puts a priority on encouraging more districts to offer all-day kindergarten and special education through increased state aid, as well as new money for preschool scholarships.

Beyond dollars for the state education department, Mr. Dayton has also focused on so-called wraparound services that recognize the importance of social factors outside the school, said Ms. Cassellius, who was appointed by the governor in 2010.

Those efforts include a $20 million initiative with the state department of human services to expand access to high-quality child care and school-based mental-health services.

“He’s thinking about all the things that go into helping to mitigate those barriers to learning,” Ms. Cassellius said.

Mr. Dayton’s proposed education budget is also notable for leaving out policies that are popular in some other states, such as vouchers or new accountability measures, such as an A-F grading system and vouchers, although these policies are more closely associated with Republican governors.

Minnesota recently instituted a $10 million program to bolster reading skills between age 3 and the 3rd grade, called Reading Well by 3rd Grade. But the state doesn’t require retention of struggling pupils as many states do.

Ms. Cassellius added that she has recently fought proposals like vouchers in the state.

But adding money to the budget without new accountability requirements is one of the biggest problems with Mr. Dayton’s plan, said state Sen. Carla Nelson, a Republican and the ranking member of the Senate education committee. While she praised investments in early-reading programs, for example, she said the state should be ready to take what she called the logical next step and retain 3rd graders who can’t demonstrate literacy.

If Mr. Dayton’s budget does in fact “overpromise” in terms of spending, Ms. Nelson said, the state could soon “go back to that bad habit” of delaying money for districts.

“It’s about outcomes. And it might take money for outcomes. But the bottom line is that we need to make sure our kids are graduating ready for college and career,” she said.

Ohio’s Path

In Ohio, Gov. Kasich’s K-12 spending increase under his “Achievement Everywhere” plan totals about $1.2 billion over fiscal 2013 funding levels, and includes so-called one-time money intended to drive innovation at the district level and targeted funding for low-income students.

A big piece of Mr. Kasich’s funding increase is to dampen the disparities in local property taxes. Under his proposal, a district meeting a minimum threshold of property-tax effort would, through state assistance, end up getting the same revenues in state education aid as all but the top 4 percent of districts by property wealth.

Mr. Kasich said the plan is intended to diminish wealth gaps between districts. There are also additional funds for special education and English-language learners.

But part of the increase, $300 million, would be made available in one-time grant form to districts. This “Straight A” fund would help districts set up “ambitious new strategies” for instruction.

Robert Sommers, Mr. Kasich’s education adviser for a year until February 2012, said: “There’s a lot of tradition and inertia in our system. It takes some catalytic money for people to realize, ‘Oh, I can do blended learning? Oh, I don’t need grade levels?’ ”

The governor is also proposing two efforts on top of the Achievement Everywhere initiative.

One would extend vouchers for the first time to all kindergartners from families earning at or below twice the federal poverty level in the 2013-14 school year. (The poverty line in 2012 was about $23,000 for a family of four.) For the next school year, the same threshold would be extended to 1st graders. The two-year cost: $25.5 million.

The state is also committed to spending money separate from the $1.2 billion advertised by Mr. Kasich to implement an A-F school grading system.

Despite Gov. Kasich’s contention that his finance proposal would produce property-wealth parity, an analysis of district-by-district-funding levels shared by the Ohio School Boards Association shows that some relatively poor districts would be largely flat-funded, while relatively wealthy districts would receive significant increases.

Damon Asbury, the director of legislative services for the school boards’ association, said that while he thought the budget was a good effort in some respects, “I think Governor Kasich is a person who wants to shake up the status quo. He thinks that people don’t understand that their schools are not performing well.”

Tax Changes

Both governors are relying on very different tax changes to support their K-12 funding increases.

Mr. Dayton’s revenue plan in Minnesota, which calls for $2.1 billion in new revenue through a new “business to business” tax, a tax hike on high earners, and a broadening of where the sales tax applies, has come under fire.

The Minnesota Chamber of Commerce blasted the plan in a statement: “Spending reform is absent from the proposal. State budget reforms must focus on outcomes and priorities.”

The tax agenda laid out by Mr. Kasich in Ohio includes significant cuts in income and business taxes, which his office estimated would total $4 billion, as well as a reduction in the sales tax, from 5.5 percent to 5 percent.

Mr. Kasich said his plan focuses on “tearing down tax barriers.” But Policy Matters Ohio, a liberal-leaning think tank, wrote of the governor’s proposal: “Ohio tried cutting income-tax rates 21 percent eight years ago, and it didn’t work.”

Both governors appear to have a strong political hand. Mr. Dayton’s DFL party controls the Minnesota legislature, while Mr. Kasich’s fellow Republicans control both chambers in Ohio.