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Tuesday, Sep. 16, 2014

Some schools say hold harmelss rule is causing harm

Sunday, December 15, 2002

NEW MADRID -- As the new year approaches, a new legislative session comes with it, and an upcoming education bill could mean a great deal for one school district in particular -- New Madrid County R-1.

For the 10th year, New Madrid County R-1 is one of 48 hold harmless school districts in the state. New Madrid County R-1 and Bernie R-1 are the only school districts in Scott, New Madrid, Mississippi and Stoddard counties that are impacted by the hold harmless rule.

"Something that concerns me greatly as the superintendent of a hold harmless school district is the growing sentiment among state legislators that it may become necessary to use funds, known as categorical funds, that districts are currently receiving that are not tied directly to the foundation formula to help pay to keep it fully funded," said Dr. Mike Barnes, New Madrid County R-1 School District superintendent.

In 1993, the Outstanding Schools Act was signed into law. As a result, a new school formula was created in an attempt to equally redistribute the amount of state funds each school district would receive on a per pupil basis.

Under the hold harmless provision, no district would receive less state aid per pupil as a result of the new complex formula; but those districts which were receiving more than they were entitled to under the new formula, such as New Madrid County R-1, would have their per pupil funding level "frozen" at the 1992-1993 level.

"When you hear or read that Missouri's elementary and secondary schools received an additional $133 million from the foundation formula this year, you should know that the New Madrid County R-1 School District actually received less money from the formula. This is typical of what hold harmless districts have been experiencing in funding, or really lack of funding. 'Held fundless' might be a more appropriate term than 'held harmless,'" said R-1 Director of Business and Finance Paul Northington.

Dale Carleson, director of school finance for the Department of Elementary and Secondary Education in Jefferson City, thinks there's nothing wrong with the current foundation formula and said it's perfectly fair.

"Every school district is different," he said. "They have different tax rates. They deduct differently and the kids are different. You can't compare one to the other."

The net effect of being a hold harmless school district is that it shifts more of the funding burden from the state to the local taxpayers. That shifting of the burden was what state officials were trying to accomplish when the hold harmless provision was included in the current foundation formula.

As a result of the recent tweaking of the foundation formula, New Madrid R-1 now receives about 8 percent more per pupil than it did in the 1992-1993 school year, Barnes said.

Barnes noted that today's dollar is worth only about 75 percent of its 1992 value. New Madrid Schools currently receive about $1,400 per pupil from the state's foundation formula.

"If our 1992 payment of $1,300 per pupil had at least been adjusted for inflation on an annual basis, we would be receiving about $1,600 per student this year. With about 1,800 students, that equates to somewhere around $360,000 that we've lost this year to inflationary factors alone," Barnes said.

To offset the loss of state funding dollars, New Madrid County R-1 has taken steps to reduce its operating costs and has raised local taxes at a faster rate than would have been necessary if its student population had remained constant, according to Barnes.

Barnes did note that the burden on the local taxpayer would have been much greater had there been no hold harmless protection at all included in the 1992 rewrite of the foundation formula.

"The R-1 School District is a member of the Hold Harmless Coalition, which for the past few years has been attempting to gain some sort of legislative relief for hold harmless school districts. But, our success has been limited at best. Given the state's extremely bleak budget picture for the upcoming year and beyond, I just hope we are able to hold onto what we are currently getting," Barnes said. Carleson said local aid is increasing.

But what happens if local taxpayers of hold harmless districts vote down bond issues? Where do they get extra funding?

Carleson said he didn't have an answer, but added, "Bond issues never enter into the calculation of the state aid." The previously mentioned categorical funds include dollars that help all districts, whether they're hold harmless or not, pay for special education programs, gifted education programs and student transportation, Barnes said.

"When these separate funds are put into the formula to keep it fully funded, they become 100 percent takeaways from hold harmless districts," Barnes said.

If a new education bill that could provide hold harmless school districts with financial relief doesn't pass, they must keep looking to local taxpayers for help.

Barnes said: "Districts that are on the formula will get back most, if not all, of the categorical moneys they lose in the form of more formula money. Hold harmless districts get back zero dollars. When this happens, it again shifts more of the funding burden back to the local taxpayer."