School Finance Partnership Programs Outside of Per Pupil: What Other States Are Doing

1. School Finance PartnershipPrograms Outside of Per Pupil: What Other States Are Doing Mary Wickersham, Colorado Children’s Campaign

2. What is a categorical? • Funding delivered outside of per pupil funding; • Particular students or programs; • Required to be spent in specified ways;

3. Colorado’s current categoricals

4. Other State Programs Source: Joint Budget Committee Staff

5. Categorical funding • All of state categorical funding is state $$, there is no local share. • Except that none of the categorical programs provides 100% of the costs associated with the services or students identified. • On average unreimbursed categorical programs accounted for about 17% of total district SFA revenue (nearly 30% in Denver)

6. Substantial underfunding of some categoricals • Special Education: The state and federal government collectively provide about 35% of special education funding. • Unreimbursed Special Ed. costs can amount to 16% of a district’s school finance revenue. • Transportation: Just under 25% of school district expenditures on transportation are covered by the state. • Unreimbursed transportation costs can amount to 8% of a district’s school finance revenue. • ELPA: On a per student basis, students that do not speak or comprehend English receive an additional $182, while those with better skills receive as little as $17. • For a district like Denver, total ELPA funding ($1.7M) covers about 2% of the expenditures for those students/programs.

7. The use of categorical funding in other states • 49 states use categorical funding as a mechanism to direct additional funds to targeted students and schools. • Ohio reported 105 separate categorical programs. In contrast, Alaska, North Dakota, Texas, and Wyoming each reported only 2. • Colorado ranks 34th in dollar allocation for categorical programs per capita.

8. Advantages of using categorical funding • Some programs do not easily lend themselves to per pupil distribution • Transportation: the cost per pupil for transportation varies from over $3800 per pupil (Agate) to a low of less than $150 per pupil (Estes Park). • Capital: on a per pupil basis local capital capacity varies 21,000%. • As an equity measure, programs for at risk students are sometimes created as categoricals to ensure the $$ do get spent on those students. • Often state educational priorities get created as categoricals to ensure $$ be used in a specific way. • Reduced class size in Florida. • After school programs in California. • Counselor Corps here in Colorado • Federal funding examples (outside of formula distribution): TIF, I3, Turnaround grants

9. Disadvantages of using categorical funding • Because funding is not tied to students, programs are less likely to see regular increases and programs are more likely to be underfunded. • Because of funding uncertainty, problems with fiscal sustainability of programs. • In general, because categorical programs are created separately, they are more easily eliminated. • Specific spending constraints impede flexibility and innovation.

10. Capital funding in Colorado: BEST • About half of the state’s school districts to not have the total local capacity to build a single school. • Dedicated funding stream from the School Land Trust; • Grant-based distribution based on need; • Local matching amount requirement is means-tested; • Statewide needs assessment identified $17.9 billion in unmet needs and the current program is on target to deliver $1 billion before leverage capacity runs out. • Has created/saved nearly 9000 jobs to date.

11. New development of incentive/reward categorical programs • Because of the nature of performance-based incentives and/or rewards, these programs would most easily designed as categorical programs (instead of built into the formula). • They are not automatically delivered; • They do not go to each student/district equally.