Missouri’s K-12 Foundation Formula:

1. Missouri’s K-12 Foundation Formula: A Successful Schools Model Educated Citizenry 2020 July 2010

2. Objectives • The transition to the current formula. • Step-by-step review of the current formula calculation. • Missouri Supreme Court ruling on the current funding formula. Educated Citizenry 2020 July 2010

3. From the SB 380 (1993) formula to the SB 287 (2005) formula • SB 380 formula emphasized equity of financial resources. • Achieving equity through “leveling up” was not fiscally feasible in the long term. • By the mid 1990s, the concept of adequacy was replacing equity in school funding lawsuits. • Missouri’s SB 287 formula is a “successful schools approach”: What level of funding is necessary to provide an adequate education based on the spending practices of successful schools? Educated Citizenry 2020 July 2010

4. Equity and the Successful Schools Model • Horizontal equity – equal resources for all students • Vertical equity – varying resources for students to address different learning needs Successful schools models are based on vertical equity; they may or may not achieve horizontal equity. Educated Citizenry 2020 July 2010

5. Input Process Output Classic Business Model Analogy Resources Learning Achievement Previous Formula – Emphasis on equity of input. Current Formula – Emphasis on adequacy of input to reach an established level of output. Educated Citizenry 2020 July 2010

6. The Funding Formula: Definitions and Calculations Educated Citizenry 2020 July 2010

7. School Funding Formula (SB 287) Funding Under SB 287 Formula [(Weighted ADA1x Adequacy Target) x Dollar Value Modifier] - Local Effort = State Funding Required Phase-In Calculation (FY10) (SB 287 State Funding Required x .58) + (FY06 Funding x .42) = Current Year State Funding Required FY06 Funding Calculation FY06 Funding x DVM = FY06 Modified State Funding Hold Harmless Calculation If FY06 Modified State Funding ÷ WADA>Current Year State Funding Required ÷ WADA , then district is Hold Harmless. Educated Citizenry 2020 July 2010

8. SB 287 Funding Formula [(WADAx Adequacy Target) x Dollar Value Modifier] - Local Effort = State Funding Required • Weighted Average Daily Attendance = • Total ADA + FRL weight + IEP weight + LEP weight • Total ADA = Regular term ADA + summer school ADA • Formula Weighted ADA = • Highest ADA of most recent 3 years + current summer school ADA • Weight Count Example FRL • FRL Weight = [Count FRL – (ADA x threshold % FRL)] x .25 Educated Citizenry 2020 July 2010

9. SB 287 Funding Formula[(WADA x Adequacy Target) x Dollar Value Modifier] - Local Effort = State Funding Required • The adequacy target is based on the operating expenses (per ADA) of performance districts, excluding districts above the top 5% or below the bottom 5%. • DESE uses Annual Performance Report standards as the criteria for determining performance districts for the purpose of calculating the adequacy target. • The adequacy target is calculated every two years, but recalculation cannot result in a lower dollar amount. • The FY10 adequacy target is $6,117; the FY11 adequacy target is $6,124. Educated Citizenry 2020 July 2010

10. SB 287 Funding Formula [(WADAx Adequacy Target) x Dollar Value Modifier] - Local Effort = State Funding Required The dollar value modifier (DVM) is the measure used in the formula to represent the relative purchasing power of a dollar and as an indicator of cost of living differences throughout Missouri. Wage records are used to calculate the DVM. Other measures of regional cost differentials such as input prices and economies of scale are not part of the equation. By statute, the DVM will never be adjusted to lower than 1.0. Educated Citizenry 2020 July 2010

11. SB 287 Funding Formula [(WADAx Adequacy Target) x Dollar Value Modifier] - Local Effort = State Funding Required Local effort is calculated using assessed valuation fixed at the FY05 level. Any increase to a district’s assessed valuation since 2004 is not included in the calculation of state aid. However, if a district’s assessed valuation decreases, the lower assessed valuation is used in the calculation. Local effort is calculated using a fixed “performance levy” of $3.43. In the local effort calculation, all amounts are fixed except revenue received from fines and changes to collector and assessor fees. Educated Citizenry 2020 July 2010

12. Adequacy and the 2009 Supreme Court Decision Educated Citizenry 2020 July 2010

13. 2009 Supreme Court Decision Missouri’s funding formula • does not violate Article IX adequacy requirement. • does not violate equal protection. • does not violate the Hancock Amendment. • does not violate Article X and select statutes in 2004 assessed valuation calculation. Educated Citizenry 2020 July 2010

14. Questions orComments Educated Citizenry 2020 July 2010