A for adequate, F for funding.

• Author: Bell, Julie Davis
• Position: School funding formulas

Providing equity and adequacy in school funding formulas has legislatures struggling.

There's nothing more difficult for a legislature than rewriting the way it pays for education. "We thought reapportionment was bad - this is worse," says Wyoming Speaker Pro Tern Peg Shreve, whose state is in Round 2 of a court-ordered school finance fight this session.

In Wyoming and other states around the country, the battle lines are drawn and the combatants have gathered - parents, school boards, teachers, senior citizens, farmers, developers, taxpayers - pitting rural lawmakers against urban lawmakers, Republicans against Democrats and governors against legislators.

There's a lot of money at stake in any battle over school funding. Nationwide, schools cost some $200 billion a year to operate. States provide about half of that, local districts 44 percent and the federal government about 6 percent. It's the local share - most often coming from property taxes - that causes the most disparities between school districts. Districts with wealthy homeowners simply raise more money than districts with poorer taxpayers. Only the legislature can fix that.

Legislatures in 14 states are currently rewriting their school funding systems all responding to court rulings that their present systems are unconstitutional. The business of changing how states fund schools is a major undertaking for legislatures and can dominate a session's agenda. And changing the way a state supports education forces legislators to confront some tough political issues they would probably rather avoid, such as tax increases, state tradition of local control of education and redistributing money from wealthy to poorer districts.

Assistant House Majority Leader Carolyn Oakley served on the House Education Committee when Oregon was in the midst of major property tax reform in 1990. She believes the voter initiative process was the only way Oregon could address property tax reform. The divisiveness of term limits and partisanship make the legislature ill-suited for devising good solutions to issues such as property tax reform and school funding, she says. "Term limits have created a lack of allegiance between legislators - everyone is out for themselves." School finance issues seem to exacerbate this divisiveness because of the pressure local school districts put on their individual legislators.

"There are 132 different people in the legislature and 132 different agendas for local school systems. It makes finding a solution very difficult," says Ohio Senate President Richard Finan, whose state is in the middle of court-ordered reform. Much of the difficulty comes from a Pandora's box effect. "School funding debates put everything on the table," he says. "Is more money really the solution? Can other reforms solve the problem? Should vouchers be considered? Is the problem really money, or is the problem the schools?"

Legislatures need not wait for courts to strike down school funding formulas before they redesign them. Although few legislatures voluntarily enter the fray, many respond to the threat of court action and attempt to ward off an actual judgment. It's not that lawmakers don't believe a problem exists, but responding to these issues is agonizingly difficult. The process of rewriting formulas is fought by organized and emotional interest groups and fraught with winners and losers. And even when a court determines a funding system is unconstitutional, it rarely offers guidance on how states should get from point A to B - only the directive that they do so.

This year, five states are in the spotlight with school finance issues. Ohio, Wyoming and New Hampshire are struggling to respond to court orders. Vermont has just dramatically reformed its state tax structure in response to a court decision. Illinois continues to wage a long and hard-fought battle not only to reshape how education is funded, but to enact some significant education reforms as well.

WHAT'S AN "ADEQUATE" EDUCATION?

School finance litigation in the past decade has largely been driven by equity - the gap between what rich and poor schools have to spend on students. The equity issue is tied to the pervasive use of property taxes to fund education. And it is assumed that more money means better schools and a better education. In recent years, however, "adequacy" of money has joined equity issues. Adequacy gets at whether the amount of school funding for each student is sufficient to produce a good education.

Enter Wyoming and Ohio who have taken innovative, but different, approaches to defining adequacy and attaching a price tag.

In 1995, the Wyoming Supreme Court ordered the state to eliminate spending disparities among its 49 school districts. Spending differences were significant largely due to the high cost of delivering education in rural schools. The court required the Legislature to identify the elements of a proper education, define an "adequate" education and determine what that would cost. The Legislature would then be required to provide money for schools at this level and equalize funding throughout the state.

In approaching the task, the Legislature started with a "market basket" of all the goods and services necessary for an adequate education. Once it agreed on the market basket, costs could be attached to each item and an overall cost determined.

An interim committee conducted hearings throughout the summer and determined that the basket of educational goods and services should be a common core of knowledge and skills defined by the state board of education. Included are student performance standards, mandatory statewide graduation requirements, a statewide assessment, free and accessible kindergarten programs, a maximum districtwide class size of no more than 20 students to a teacher and extension of the school year to 180 days.

A consulting firm was hired to figure the cost. The state department is now working to supply the necessary information and data. Estimates for required new money to finance the plan range between $49 million and $82 million. Debate is under way on whether to raise property taxes or initiate an income taxes as the best source for that new revenue. (A half percent to raise property taxes...