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Legislative Update

How might last Thursday’s JFC actions impact K-12 education?

by | May 10, 2021 | Federal Issue, Legislative Update Blog, State Budget

The Joint Finance Committee (JFC) met last Thursday and took executive action to remove more than 380 items from the Governor’s proposed budget.  

The JFC actions also reduce anticipated federal revenues to the state by $2.4 billion over the next biennium. Those potential dollars were principally associated with Medicaid expansion. The JFC’s actions also nixed roughly $1 billion in tax increases the governor had proposed. One consequence of these combined actions is that they potentially reduce the amount of revenue the state has available to fund increases in K-12 school funding.

Here’s a look at a few of the specific consequences of the JFC’s actions:

Sparsity Aid: The Sparsity Aid program benefits small, sparsely populated rural school districts with fewer than 746 pupils and fewer than 10 students per square mile. Districts meeting those two criteria are eligible for payment of $400 per pupil.  Sparsity Aid is currently funded from general purpose revenues (GPR)–money that comes from income and sales taxes.

The Governor had proposed two changes, both in the second year of the biennium:  1) creating a second tier of aid to sparsely populated districts with enrollments greater than 745 and provide $100 per pupil to those district; and 2) converting Sparsity Aid funding from GPR funding to segregated (SEG) funding using anticipated new revenue from legalizing and taxing the sale of marijuana.  The proposal to convert this funding would have applied to both the base funding for the program of $24.8 million, as well as the proposed nearly $10 million expansion of the Sparsity Aid program   

As a result of nixing provisions to legalize and tax the sale of marijuana, the JCF will have to find revenue, presumably GPR revenue, to support the program in 2022-23. One suspects (or at least hopes) that JFC will at least maintain current law Sparsity Aid funding levels with GPR, but would need to find more GPR to expand the program as proposed by the Governor. If your district receives Sparsity Aid payments under the current program or the proposed expansion, you should be talking with your legislators about this.

Counting of Four-Year-Old Kindergarten Pupils for Revenue Limit and Aid Purposes: The JFC’s action last Thursday also removed the governor’s proposal to count 4-K pupils enrolled in a full-day 4-K program for five days a week as 1.0 pupil for membership purposes, beginning with the distribution of school aids in, and the calculation or revenue limits for, 2022-23.

Under current law, a 4-K pupil is counted as 0.5 member if the pupil attends for at least 437 hours, unless the program provides at least 87.5 additional hours of outreach activities, in which case the pupil is counted as 0.6 member.  School boards that are concerned about this change should contact their lawmakers.

Voucher Expansion Freeze and Special Needs Voucher “Fix”: The JFC’s action removed the governor’s proposal to cap voucher program participation in 2022-23 and thereafter at 2021-22 levels.  It also means that well-noted problems with the special needs voucher program will not be fixed anytime soon.

Since the Special Needs Voucher Program started in the 2016-17 school year, private schools that participate in the program have been eligible to receive per pupil payments equal to the per pupil transfer amount established for special education students who participate in the full-time public school open enrollment program. Originally, that amount as set at $12,000 per pupil.  As the result of subsequent legislative adjustments that per pupil payment amount is now $12,977 in 2020-21.

In the 2017-19 state budget, the Legislature changed the Special Needs Voucher program so that starting in the 2018-19 school year, a participating private school may submit to DPI a financial statement and supporting documentation indicating the actual costs it incurred to implement the modified IEP or services plan for a participating special needs student. And since the 2019-20 school year, the DPI has been required to pay all submitted actual costs for educating a given participating student in the previous school year, up to 150 percent of the amount DPI would have otherwise paid for that student had no itemized actual costs been submitted or had the special needs student open enrolled to another public school district. In 2020-21 that amount is $19,466. The DPI pays this amount by deducting an equal amount from the state aid of the special needs pupil’s resident school district. This payment is never prorated. It is also never subject to challenge by the special needs student’s resident district. 

DPI is further required to reimburse the participating private school for 90 percent of any additional costs that exceed the 150 percent level.  Because this payment comes from a sum-sufficient appropriation, it is never prorated. The private school is responsible to pay the ten percent that is not reimbursed.

While public schools’ special education costs are generally reimbursed at a rate of less than 30 percent, participating private schools’ costs are fully covered up to the 150 percent level (about $19,500 per pupil) and then are covered at 90 percent with no limit. The JFC’s action means this unfair and inequitable situation likely won’t be addressed during the current legislative session.

We will explore other potential impacts of the JFC action further in another upcoming post.

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